Document:

Exhibit 10.26

QUEST DIAGNOSTICS INCORPORATED

NON-QUALIFIED STOCK OPTION AGREEMENT (CEO)

This Non-Qualified Stock Option
Agreement (the “Option Agreement”), dated as of February 12, 2007 (the “Grant Date”), is
by and between Quest Diagnostics Incorporated, 1290 Wall Street West,
Lyndhurst, New Jersey 07071 (the “Corporation” or the “Company”) and Surya Mohapatra (the
“Optionee”) 85 Fox Hedge Road, Saddle River, NJ
07458.

	
 
	
 

	
1.
	
Conditions. This Option Agreement is
 subject in all respects to the Corporation’s Amended and Restated Employee
 Long-Term Incentive Plan, which is incorporated herein by reference. The
 Optionee acknowledges that he 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, except for the provisions of Section 4(d) of this Option
 Agreement, the terms of the Employment Agreement dated as of July 31, 2006
 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: 280,000

	
 

	
 

	
 

	
 

	
 

	
 

	
Exercise
 Price per Share: $52.245

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Expiration
 Date: February 12, 2014

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Vesting Schedule:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Vesting
Dates 

	
 

	
% of Grant 

	
 

	
Incremental 

	
 

	
Cumulative 

	
 

	

	

	

	

	

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
February 12,
 2008

	
 

	
33.33 %

	
 

	
93,333

	
 

	
93,333

	
 

	
 

	
February
 12, 2009

	
 

	
33.33 %

	
 

	
93,333

	
 

	
186,666

	
 

	
 

	
February 12,
 2010

	
 

	
33.34 %

	
 

	
93,334

	
 

	
280,000

	
 

	
 

Page 1 of 6
EOAgmt

Non-Qualified
Stock Option Agreement

February 12, 2007 

Page 2.

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

	
 

	
 

	
 

	
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), (c),
 (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 the Date of
 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
 the Date of 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 as of the Date of Termination.
 

	
 

	
 

	
 

	
 

	
(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 24 -month period (or 36 month period if the termination occurs within 90
 days prior to a Change of Control) following the Date of Termination will
 vest on the appropriate date(s) as if the Optionee remained an employee. All
 other unvested options shall be cancelled on the 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 a percentage of the Shares subject to this Option determined by
 dividing (i) the number of whole months from the most recent February 12 to
 the Date of Termination by (ii) 36, and all unvested Options will be canceled
 on the Date of Termination. 

	
 

	
 

	
 

	
 

	
(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 Termination. 

	
 

	
 

	
 

	
 

	
(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 (which
 termination shall be treated as a without Cause termination under the
 Employment Agreement) 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

Page 2 of 6

Non-Qualified Stock Option
Agreement

February 12, 2007 

Page 3.

	
 

	
 

	
 

	
 

	
(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 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 (i.e., the Date
 of Termination) 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.

	
 

	
 

	
 

	
 

	
(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. 

	
 

	
 

	
 

	
 

	
(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.

	
 

	
 

	
 

	
 

	
(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.

	
 

	
 

	
 

	
 

	
(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 for ninety
 (90) days following such termination (but not beyond the Expiration Date). 

	
 

	
 

	
 

	
 

	
(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. 

	
 

	
 

	
 

	
 

	
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, 

Page 3 of 6

Non-Qualified Stock Option
Agreement

February 12, 2007 

Page 4.

	
 

	
 

	
 

	
 

	
 

	
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 which the
 Optionee knows or reasonably should have known are confidential to such third
 party. “Confidential Information” shall not include any information known
 generally to the public (other than as a result of an unauthorized disclosure
 by the Optionee).

	
 

	
 

	
 

	
 

	
(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. Notwithstanding the foregoing, the Optionee shall be permitted to
 retain documents and information to the extent permitted by Section 12(g) and
 Section 14 of the Employment Agreement and shall have other rights set forth
 in Section 12(g) of the Employment Agreement. 

	
 

	
 

	
 

	
 

	
(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 Chairman of the Compensation
 Committee of the Company’s Board of Directors (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 4 of 6

Non-Qualified Stock Option
Agreement

February 12, 2007 

Page 5.

	
 

	
 

	
 

	
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.

	
 

	
 

	
 

	
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 any 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. In addition, a breach by the Employee of
 any non solicit, non compete or confidentiality covenant or any other
 restrictive covenants of his or hers that may be in place that occurs after
 any exercise and delivery of shares pursuant to this Agreement (including any
 breach occurring after termination of employment) shall cause such exercise
 and delivery to be rescinded (and if the Employee has previously sold the
 shares issued pursuant to this Agreement, the Employee would be required to
 pay back to the Company the pre-tax proceeds received from the sale of such
 shares). 

	
 

	
 

	
 

	
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.
 Except as otherwise provided in the Employment 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 Chairman of the Compensation Committee of the
 Corporation’s Board of Directors 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.

Page 5 of 6

Non-Qualified Stock Option Agreement

February 12, 2007 

Page 6.

	
 

	
 

	
 

	
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 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. 

	
 

	
 

	
 

	
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
 York applicable to contracts made and to be performed entirely within such
 state. Each of the parties hereto hereby irrevocably and unconditionally
 submits, for itself and its property, to the exclusive jurisdiction of any
 New York state court or federal court of the United States of America sitting
 in New York City, and any appellate court from any thereof, in any action or
 proceeding arising out of or relating to this Agreement, or for recognition
 or enforcement of any judgment, and each of the parties hereto hereby
 irrevocably and unconditionally agrees that all claims in respect of any such
 action or proceeding may be heard and determined in any such New York state
 court or, to the extent permitted by law, in such federal court. Each of the
 parties hereto agrees that a final judgment in any such action or proceeding
 shall be conclusive and may be enforced in other jurisdictions by suit on the
 judgment or in any other manner provided by law. Each of the parties hereto
 irrevocably and unconditionally waives, to the fullest extent it may legally
 and effectively do so, any objection that it may now or hereafter have to the
 laying of venue of any suit, action or proceeding arising out of or relating
 to this Agreement in state or federal court in New York City. Each of the
 parties hereto hereby irrevocably waives, to the fullest extent permitted by
 Law, the defense of an inconvenient forum to the maintenance of such action
 or proceeding in any such court.

	
 

	
 

	
 

	
22.

	
Acknowledgements.
 By execution of this Non-Qualified Stock Option Grant Agreement, the Optionee
 agrees that he 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 2006 Annual Report (link to
 2006 Annual Report:

 http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=DGX&script=700to
 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:

	
 

	
 

	
 

	

	
 

	
 

	
Surya
Mohapatra  

	
 

Page 6 of 6Exhibit 10.29

QUEST
DIAGNOSTICS INCORPORATED

PERFORMANCE SHARE AWARD AGREEMENT (CEO)

(2007 – 2009 Performance Period)

	
   

  	
   

  
	
  This Performance Share Award Agreement (the “Share
  Agreement”) dated as of February
  12, 2007 (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”) 85 Fox Hedge Rd Saddle River, NJ
  07458.

  
	
   

  	
   

  
	
  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”, “Date of Termination”, “Disability”, and “Good Reason”, which terms
  shall have the meanings set forth in the Employment Agreement dated as of
  July 31, 2006 (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 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:  56,000 

  
	
   

  	
   

  
	
   

  	
  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 80th %ile

  	
   

  	
  2 × Target Performance Shares = Vested Shares

  
	
   

  	
  Equal to 50th %ile

  	
   

  	
  1 × Target Performance Shares = Vested Shares

  
	
   

  	
  Less Than or Equal to 20th %ile

  	
   

  	
  0 × 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 the Baseline to the end of the Performance Period
  (the end of fiscal year 2009 is at the 65th %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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2007 Incentive Stock Agreement

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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 Date
  of Termination 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 24 (or 36
  month period if the Date of Termination occurs within 90 days prior to a
  Change of Control) (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 in shares of the Company’s stock as
  provided in this Agreement 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 as soon as practicable
  after the final calculation of the number of Vested Shares.

  
	
   

  	
   

  	
   

  
	
   

  	
  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
  Target Performance Shares if, either:

  
	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  The Employee was terminated for Cause; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (y)

  	
  The Employee breaches any nonsolicit, non compete or
  confidentiality covenant or any other 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 is a key employee of the Company which was a reason,
  in part, for being provided with this Grant, and, 

  

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2007 Incentive Stock Agreement

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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. In addition, a breach
  by the Employee of any non solicit, non compete or confidentiality covenant
  or any other restrictive covenants of his or hers that may be in place that
  occurs after any shares
  have been delivered pursuant to this Agreement (including any breach
  occurring after the Date of Termination) shall cause such delivery to be
  rescinded (and if the Employee has previously sold the shares issued
  pursuant to this Agreement, the Employee would be required to pay back to the
  Company the pre-tax proceeds received from the sale of such shares).

  
	
   

  	
   

  
	
  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 that the Vested Shares are valued for purposes of
  reporting compensation for Federal income tax purposes).

  
	
   

  	
   

  
	
  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 York applicable to contracts made and to be
  performed entirely within such state.
  Each of the parties hereto hereby irrevocably and unconditionally
  submits, for itself and its property, to the exclusive jurisdiction of any
  New York state court or federal court of the United States of America sitting
  in New York City, and any appellate court from any thereof, in any action or
  proceeding arising out of or relating to this Agreement, or for recognition
  or enforcement of any judgment, and each of the parties hereto hereby
  irrevocably and unconditionally agrees that all claims in respect of any such
  action or proceeding may be heard and determined in any such New York state
  court or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that a
  final judgment in any such action or proceeding shall be conclusive and may
  be enforced in other jurisdictions by suit on the judgment or in any other
  manner provided by law.  Each of the
  parties hereto irrevocably and unconditionally waives, to the fullest extent
  it may legally and effectively do so, any objection that it may now or
  hereafter have to the laying of venue of any suit, action or proceeding
  arising out of or relating to this Agreement in any state or federal court
  sitting in New York City.  Each of the
  parties hereto hereby irrevocably waives, to the fullest extent permitted by
  Law, the defense of an inconvenient forum to the maintenance of such action
  or proceeding in any such court.

  

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2007 Incentive Stock Agreement

	
   

  	
   

  	
   

  
	
  10.

  	
  Acknowledgements.  By execution of this Share Agreement, the
  Employee agrees that he 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 2006 Annual Report (link to 2006 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; and 

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

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

  

EMPLOYEE:

	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  

  
	
   

  	
  Mohapatra, Surya
  N.

  

4 of 4

Appendix
A

QUEST DIAGNOSTICS INCORPORATED

PERFORMANCE SHARE AWARD AGREEMENT

2007 – 2009 Performance Period

Baseline
 –$2.50 per share
for the Company and fully-diluted earnings per share for Fiscal Year 2006 for
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 most companies in the Comparator Peer
  Group, the Fiscal Year ended on December 31.
  For certain other companies, the Fiscal Year ended during other months
  in 2006.

  

Final
Year – Fiscal Year 2009 for the Company and each company
in the Comparator Peer Group.

Performance
Period – The Performance Period will run from January 1,
2007 through December 31, 2009, 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 to the Final Year (i.e., for Fiscal
Years 2007, 2008 and 2009).

	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  The reported Fully-Diluted Earnings Per Share
  results will include the annual compensation cost of each company’s equity
  awards.

  
	
   

  
	
   

  	
  •

  	
  Final awards will be determined by the end of the
  first quarter following the end of the measurement period based upon publicly
  filed information.  If any company in
  the Peer Group has not publicly reported its Fully Diluted Earnings Per Share
  by February 28, 2010, 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, 2009.  

	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  Excluded from the list of companies in the
  Comparator Peer Group will be those companies reporting a negative EPS in fiscal
  Year 2006  since calculating CAGR will
  not be possible for these companies.

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