Document:

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

Number R1                                                $400,000,000
                                                     CUSIP  093662AC8

                           Block Financial
                             Corporation

                           5.125% Note 2014

   Rate of Interest          Maturity Date         Original Issue Date
      5.125%               October 30, 2014         October 26, 2004

           BLOCK FINANCIAL CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of four hundred million
($400,000,000), at the office or agency of the Company in the Borough of
Manhattan, The City and State of New York, on October 30, 2014, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
at the rate of 5.125% per annum, from the date hereof or from the most recent
date to which interest has been paid or duly provided for, semi-annually on
April 30th and October 30th of each year and at maturity, on said principal
sum at said office or agency, in like coin or currency, commencing on
April 30, 2005. The interest so payable on any April 30th or October 30th will,
subject to certain exceptions provided in the Indenture referred to on the
reverse hereof, be paid to the person in whose name this Note is registered at
the close of business on such April 15 or October 15, as the case may be, next
preceding such April 30th or October 30th, unless the Company shall default in
the payment of interest due on such interest payment date, in which case such
defaulted interest, at the option of the Company, may be paid to the person in
whose name this Note is registered at the close of business on a special record
date for the payment of such defaulted interest established by notice to the
registered holders of Notes not less than ten days preceding such special record
date or may be paid in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed.
Payment of interest may, at the option of the Company, be made by check mailed
to the registered address of the person entitled thereto.

           This Note is one of a duly authorized issue of unsecured Notes, notes
or other evidences of indebtedness of the Company (hereinafter called the
"Securities"), of the series hereinafter specified, all issued or to be issued
under an indenture dated as of October 20, 1997 (hereinafter called the
"Indenture"), among the Company, H&R Block, Inc. ("Guarantor") and Deutsche Bank
Trust Company Americas (f/k/a Bankers Trust Company) (the "Trustee"), as
supplemented by that certain First Supplemental Indenture, dated as of April 18,
2000, among the Company, Guarantor, the Trustee and The

<PAGE>

Bank of New York, as separate trustee under the Indenture in respect of the
Company's 8.50% Notes due 2007, to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
respective rights and duties thereunder of the Trustee, Bank of New York, the
Company, the Guarantor and the holders of the Securities. The Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest at
different rates, may have different conversion prices (if any), may be subject
to different redemption provisions, may be subject to different sinking,
purchase or analogous funds, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided. This Note is one of
a series designated as the 5.125% Notes due 2014 of the Company (hereinafter
called the "Notes") issued under the Indenture.

           Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place. This Note shall not be valid or
become obligatory for any purpose until the certificate of authentication hereon
shall have been signed by the Trustee under the Indenture referred to on the
reverse hereof.

<PAGE>

           IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:  October 26, 2004            BLOCK FINANCIAL CORPORATION

                                    By    /s/ Mark Ernst
                                       ----------------------
                                       Mark Ernst
                                       Chairman of the Board,
                                       President and Chief Executive Officer

                                    ATTEST:

                                    By    /s/ Bret G. Wilson
                                        ----------------------
                                        Bret G. Wilson
                                        Secretary

               TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated:  October 26, 2004

This is one of the Notes referred to in the within-mentioned Indenture.

DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE

By    /s/ Susan Johnson
   --------------------------
   Name: Susan Johnson
   Title:   Vice President

<PAGE>

                           BLOCK FINANCIAL CORPORATION
                                5.125% Notes 2014

         The Notes shall be redeemable in whole or in part at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount of the Notes to be redeemed, plus accrued interest to the
redemption date, or (ii) the sum of the present values of the remaining
principal amount and scheduled payments of interest on the Notes to be redeemed
(not including any portion of payments of interest accrued as of the redemption
date) discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus
twenty (20) basis points, plus accrued interest to the redemption date.

         "Treasury Rate" means, with respect to any redemption date, the rate
per year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated on the third business day preceding the redemption
date, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
that redemption date.

         "Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the Notes that would
be used, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes. "Independent Investment Banker"
means one of the Reference Treasury Dealers appointed by the trustee after
consultation with the Company.

         "Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for that redemption
date, after excluding the highest and lowest of the Reference Treasury Dealer
Quotations or (ii) if the trustee obtains fewer than three Reference Treasury
Dealer Quotations, the average of all Reference Treasury Dealer Quotations so
received. "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by that Reference Treasury Dealer at 3:30 p.m., New York
City time, on the third business day preceding that redemption date.

         "Reference Treasury Dealer" means (a) each of J.P. Morgan Securities
Inc. and Merrill Lynch Government Securities Inc. and their respective
successors, unless either of them ceases to be a primary U.S. government
securities dealer in New York City (a "Primary Treasury Dealer"), in which case
the issuer shall substitute another Primary Treasury Dealer, and (b) any other
Primary Treasury Dealer selected by the Company.

         Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Notes to be redeemed.
Notices of redemption may not be conditional.

         Unless the Company defaults in payment of the redemption price on and
after the redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption.

<PAGE>

           The Notes will not be entitled to any sinking fund.

           In case an Event of Default with respect to the Notes, as defined in
the Indenture, shall have occurred and be continuing, the principal hereof
together with interest accrued thereon, if any, may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.

           The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Securities at the time outstanding
of all series to be affected (acting as one class) to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) reduce the percentage
in principal amount of Notes whose Holders must consent to an amendment; (ii)
reduce the rate of or extend the time for payment of interest on any Notes;
(iii) reduce the principal of or extend the Stated Maturity of any Notes; (iv)
make any Notes payable in Currency other than that stated in the Notes; (v)
release any security that may have been granted in respect of the Notes; or (vi)
make any change in any of the foregoing provisions. It is also provided in the
Indenture that the holders of a majority in aggregate principal amount of the
Securities of a series at the time outstanding may on behalf of the holders of
all the Securities of such series waive any past default under the Indenture
with respect to such series and its consequences, except a default in the
payment of the principal of, premium, if any, or interest, if any, on any
Security of such series or in respect of a covenant or provision which cannot be
modified without the consent of the Holder of each outstanding Security of the
series affected. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
herefor, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.

           No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, if any, and interest on
this Note at the place, at the respective times, at the rate and in the coin or
currency herein prescribed.

           The Indenture permits the Company to discharge its obligations with
respect to the Notes on the 91st day following the satisfaction of the
conditions set forth in the Indenture, which include the deposit with the
Trustee of money or U.S. Government Obligations or a combination thereof
sufficient to pay and discharge each installment of principal of (including
premium, if any, on) and interest, if any, on the outstanding Notes.

           If the Company shall, in accordance with Section 10.01 of the
Indenture, consolidate with or merge into any other corporation or if the
Company or the Guarantor convey or transfer substantially all of the properties
and assets of the Guarantor, on a consolidated basis to any Person, the
successor shall succeed to, and be substituted for, the Person named as the
"Company" on the face of this Note, all on the terms set forth in the Indenture.

           The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. In the manner and
subject to the limitations provided in the Indenture, but without the payment of
any service charge, Notes may be exchanged for an equal aggregate principal
amount of Notes of other authorized denominations at the office or agency of the
Company maintained for such purpose in the Borough of Manhattan, The City and
State of New York.

<PAGE>

           Upon due presentation for registration of transfer of this Note at
the office or agency of the Company for such registration in the Borough of
Manhattan, The City and State of New York, a new Note or Notes of authorized
denominations for an equal aggregate principal amount will be issued to the
transferee in exchange herefor, subject to the limitations provided in the
Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.

           The Note is subject to redemption in whole or in part at any time at
the option of the Company as provided in the Indenture.

           Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee and any agent of the Company or the Trustee may deem
and treat the registered holder hereof as the absolute owner of this Note
(whether or not this Note shall be overdue) for the purpose of receiving payment
of the principal of, premium, if any, and interest on this Note, as herein
provided, and for all other purposes, and neither the Company nor the Trustee
nor any agent of the Company or the Trustee shall be affected by any notice of
the contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, effectually satisfy and discharge
liability for moneys payable on this Note.

           No recourse for the payment of the principal of, premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

           Unless otherwise defined in this Note, all terms used in this Note
which are defined in the Indenture shall have the meanings assigned to them in
the Indenture.

           THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

<PAGE>

           H&R BLOCK, INC., a Missouri corporation (the "Guarantor", which term
includes any successor under the Indenture (the "Indenture") referred to in the
Debt Security on which this notation is endorsed) has unconditionally
guaranteed, pursuant to the terms of the Guarantees contained in Article XIII of
the Indenture, the due and punctual payment of the principal of and any premium
and interest on this Debt Security, when and as the same shall become due and
payable, whether at the Stated Maturity, by declaration of acceleration, call
for redemption or otherwise, in accordance with the terms of this Debt Security
and the Indenture.

           The obligations of the Guarantor to the Holders of the Securities and
to the Trustee pursuant to the Guarantees and the Indenture are expressly set
forth in Article XIII of the Indenture, and reference is hereby made to such
Article and Indenture for the precise terms of the Guarantees.

           The Guarantees shall not be valid or obligatory for any purpose until
the certificate of authentication on the Debt Security upon which this notation
of the Guarantees is endorsed shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.

<PAGE>

Dated:  October 26, 2004            H&R BLOCK, INC.

                                    By    /s/ Mark Ernst
                                       -------------------------------------
                                       Mark Ernst
                                       Chairman of the Board,
                                       President and Chief Executive Officer

<PAGE>

                                  ABBREVIATIONS

           The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations

TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common

UNIF GIFT MIN ACT --              Custodian
                     ----------            ---------
                       (Cust)               (Minor)

Under Uniform Gifts to Minors Act
                                  --------
                                   (State)

    Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
                         and transfer(s) unto

---------------------------------    ----------------------------------
[PLEASE INSERT SOCIAL SECURITY OR    [PLEASE PRINT OR TYPE NAME AND
OTHER IDENTIFYING NUMBER OF          ADDRESS INCLUDING ZIP CODE, OF
ASSIGNEE]                            ASSIGNEE]

Within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

---------------------------------    -----------------------------------
               DATE                             SIGNATURE

NOTICE: The signature must correspond with the name as written upon the face of
the within Note in every particular without alteration or enlargement or any
change whatsoever.Exhibit 10.1

                                                                  EXECUTION COPY

                                   QMED, INC.

                            STOCK PURCHASE AGREEMENT

         AGREEMENT dated as of October 21, 2004, by and between QMed, Inc., a
Delaware corporation (the "Company") having an office at 25 Christopher Way,
Eatontown, New Jersey 07724, and Quest Diagnostics Ventures LLC, having an
office at One Malcolm Avenue, Teterboro, New Jersey 07608 (the "Investor").

                              W I T N E S S E T H :

         WHEREAS, the Company desires to sell an aggregate of 298,507 shares
(the "Shares") of its Common Stock, $.001 par value, (the "Common Stock") for an
aggregate of $2,000,000 to the Investor, who is an "accredited investor" within
the meaning of Rule 501(a) adopted under the Securities Act of 1933 (the "Act");
and

         WHEREAS, the Investor wishes, pursuant to the terms and conditions
hereinafter set forth, to purchase the Shares.

         NOW THEREFORE, in consideration of the premises, and the respective
representations and warranties hereinafter set forth, the Company and the
Investor agree as follows:

1. SUBSCRIPTION.

         The Investor, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase the Shares.

2. PURCHASE AND CLOSING.

         2.1 The Investor delivers herewith the sum of $2,000,000 (the "Purchase
Price") to the Company.

         2.2 The Company hereby delivers the following to the Investor:

         (a)      a certificate, in due and proper form, representing the Shares
                  purchased upon which a legend substantially in the following
                  form will be endorsed:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE
                  BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED
                  OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR

<PAGE>

                  AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER
                  SAID ACT"; and

         (b)      an opinion of the Company's counsel addressed to the Company
                  which indicates that the Investor may rely upon it as to the
                  matters set forth in Sections 5.1, 5.2, 5.3, 5.5, 5.6, 5.7 and
                  5.8 of this Agreement; and

         (c)      a counterpart of this Agreement executed by the Company; and

         (d)      a duly executed Registration Rights Agreement in the form
                  annexed hereto as Exhibit A.

3. INVESTOR REPRESENTATIONS AND WARRANTIES.

         The Investor hereby acknowledges, represents and warrants to, and
agrees with, the Company as follows:

         3.1 The Investor is acquiring the Shares for its own account as
principal, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person except the Investor's corporate parent has a direct or indirect
beneficial interest in such Shares;

         3.2 The Investor acknowledges its understanding that the offering and
sale of the Shares is intended to be exempt from registration under the Act by
virtue of Section 4(2) of the Act and the provisions of Regulation D thereunder.
In furtherance thereof, the Investor represents and warrants to and agrees with
the Company as follows:

         (a)      the Investor has the financial ability to bear the economic
                  risk of its investment, has adequate means for providing for
                  its current needs and contingencies and has no need for
                  liquidity with respect to its investment in the Company;

         (b)      the Investor is a corporation, trust, estate, benefit plan,
                  partnership other entity, which comes within a category of
                  "accredited investor" as that term is defined in Rule 501(a)
                  of Regulation D under the Act (17 C.F.R. 230.501(a));

         3.3 The Investor:

         (a)      has been furnished with the Company's Report on Form 10-K for
                  the year ended November 30, 2003, including the Company's
                  Annual Report to Stockholders, the Company's quarterly reports
                  on Form 10-Q for the quarters ended February 29, 2004, May 31,
                  2004 and August 31, 2004, the Company's Proxy Statement dated
                  May 24, 2004, and the Company's Current Reports on Form 8-K
                  dated February, 25, 2004, April 13, 2004 and June 25, 2004
                  (which are referred to as the "Documents") and any documents
                  which may have been made available upon request, and has
                  carefully read the Documents and understands and has evaluated
                  the risks of a purchase of Shares, and has relied solely

<PAGE>

                  (except as indicated in subsections (b) and (c) below) on the
                  information contained in the Documents;

         (b)      has been provided an opportunity to obtain additional
                  information concerning the Company and all other information
                  to the extent the Company possesses such information or can
                  acquire it without unreasonable effort or expense;

         (c)      has been given the opportunity to ask questions of and receive
                  answers from the Company concerning the terms and conditions
                  of this investment, and has been given the opportunity to
                  obtain such additional information necessary to verify the
                  accuracy of the information contained in the Documents or that
                  which was otherwise provided in order for the Investor to
                  evaluate the merits and risks of purchase of the Shares to the
                  extent the Company possesses such information or can acquire
                  it without unreasonable efforts or expense, and has not been
                  furnished any other offering literature or prospectus except
                  as mentioned herein;

         (d)      has not been furnished with any oral representation or oral
                  information in connection with the offering of the Shares
                  which is not contained in the Documents; and

         (e)      has determined that the Shares are a suitable investment and
                  that at this time the Investor could bear a complete loss of
                  its investment;

         3.4 The Investor represents, warrants and agrees that it will not sell
or otherwise transfer the Shares unless registered under the Act or in reliance
upon an exemption therefrom, and fully understands and agrees that it must bear
the economic risk of its purchase for an indefinite period of time because,
among other reasons, the Shares have not been registered under the Act or under
the securities laws of certain states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Act and under the applicable securities laws of such states or an exemption
from such registration is available. The Investor also understands that except
as set forth in the Registration Rights Agreement and the Company's independent
obligation to remain current in its filings under the Securities Exchange Act of
1934, as amended, the Company is under no obligation to register the Shares on
its behalf or to assist the Investor in complying with any exemption from
registration under the Act. The Investor further understands that sales or
transfers of the Share are restricted by the provisions of state securities
laws;

         3.5 The person signing this Stock Purchase Agreement on behalf of such
entity has been duly authorized by such entity to do so;

         3.6 No representation or warranties have been made to the Investor by
the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company herein;

<PAGE>

         3.7 The execution and delivery by the Investor of, and the performance
by the Investor of its obligations under this Agreement and the Registration
Rights Agreement in accordance with their terms will not contravene any
provision of applicable law or the charter documents of the Investor or any
agreement or other instrument binding upon the Investor, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Investor, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Investor of its obligations under such Agreements in accordance with their
respective terms;

         3.8 The Investor has been duly organized, is validly existing and is in
good standing under the laws of the State of Delaware. The Investor has full
power and authority to enter into this Agreement, and this Agreement has been
duly and validly authorized, executed and delivered by the Investor and
constitutes valid and binding obligations of the Investor, enforceable against
the Investor in accordance with its terms, except as such enforcement may be
limited by the United States Bankruptcy Code, laws effecting creditors rights,
generally and general equitable principles.

         3.9 The foregoing representations, warranties and agreements shall
survive the Closing.

4. INVESTOR AWARENESS.

         The Investor acknowledges, represents, agrees and is aware that:

         4.1 No Federal or state agency has passed on the Shares or made any
finding or determination as to the fairness of this investment;

         4.2 There are substantial risks incident to the purchase of Shares;

         4.3 The investment in the Company is an illiquid investment and the
Investor must bear the economic
risk of investment in the Shares for an indefinite period of time;

         4.4 There are substantial restrictions under the Act on transferability
of the Shares;

         4.5 The foregoing acknowledgments, representations, warranties and
agreements shall survive the Closing.

5. COMPANY REPRESENTATIONS AND WARRANTIES.

         The Company hereby acknowledges, represents and warrants to, and agrees
with the Investor (which representations will be true and correct as of the date
of the Closing as if the Agreement were made on the date of Closing) as follows:

         5.1 The Company and each of its subsidiaries has been duly organized,
is validly existing and is in good standing under the laws of their respective

<PAGE>

states of incorporation. The Company has full corporate power and authority to
enter into this Agreement and the Registration Rights Agreement, and each of
this Agreement and the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be limited by the
United States Bankruptcy Code, laws effecting creditors rights, generally and
general equitable principles.

         5.2 Subject to the performance by the Investor of its obligations under
this Agreement and the accuracy of the representations and warranties of the
Investor, the offering and sale of the Securities will be exempt from the
registration requirements of the Act.

         5.3 The execution and delivery by the Company of, and the performance
by the Company of its obligations under this Agreement and the Registration
Rights Agreement in accordance with their terms will not contravene any
provision of applicable law or the charter documents of the Company or any of
its subsidiaries or any agreement or other instrument binding upon the Company
or any of its subsidiaries, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any of its
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement and the
Registration Rights Agreement in accordance with their respective terms.

         5.4 The Company has filed all forms, reports and documents required to
be filed by it with the SEC since August 31, 2003 (each such report being an
"SEC Report"), including the Documents. Each SEC Report was prepared in
accordance with either the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
promulgated thereunder. The Documents did not, and through the date of the
Closing will not, contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made and at the time of their filing, not
misleading.

         5.5 All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
free of preemptive or similar rights. As of September 30, 2004, 40,000,000
shares of Common Stock are authorized, of which 14,789,105 shares of Common
Stock are issued and outstanding, 22,000 shares of Common Stock are held as
treasury shares and approximately 4,500,000 shares are reserved for issuance
under the Company's stock option plans and for the exercise of outstanding
warrants and convertible securities. The Company does not have any class of
authorized stock other than Common Stock. The Shares have been duly authorized
and are validly issued and fully paid and non-assessable, and the Shares are not
subject to any preemptive or similar rights and are free and clear of any liens,
claims and encumbrances other than any restrictions under the Act and applicable
state securities laws.

<PAGE>

         5.6 The Company and each of its subsidiaries are not in violation of
their respective charter or bylaws and are not in default in the performance of
any bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust, license, contract, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it is
bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except such as have been waived or which would not
have, singly or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole.

         5.7 There is no material litigation or governmental proceeding pending,
or to the knowledge of the Company, threatened against, or involving the
property or the business of the Company or any of its subsidiaries which would
adversely affect the condition (financial or otherwise), business, prospects or
results of operations of the Company and its subsidiaries, taken as a whole.

         5.8 The Company is not (and has not been) in violation of or has
received notice of any deficiency in or violation of any applicable law, rule,
regulation, license, permit or requirement of any governmental authority, with
such exception as would not have, singly or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole

         5.9 The consolidated financial statements set forth in the Documents
fairly present the financial position and the results of operations of the
Company, at the dates and periods therein specified. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the respective periods involved and are
complete and accurate and are in accordance with the books and records of the
Company. Since August 31, 2004, the Company and its subsidiaries:

         (a)      have not entered into any transaction outside of the ordinary
                  course of business; or

         (b)      suffered any material adverse change in its financial
                  condition or results of operations except as disclosed or
                  contemplated in these Documents.

         5.10 The foregoing representations, warranties and agreements shall
survive the Closing.

6. OBSERVER RIGHTS

         6.1 The Company shall invite a representative of Investor (the
"Representative"), which Representative must be reasonably acceptable to the
Company, to attend all meetings of the Company's Board of Directors in a
non-voting observer capacity and, in this respect, shall give such
Representative copies of all notices, minutes, consents and other materials that
it provides to all of its directors; provided, however, (i) that the Company
reserves the right to withhold any information and to exclude such
Representative from any meeting, or any portion thereof, as is reasonably
determined by the Chairman of the Board or a majority of the members of the
Board of Directors to be necessary for purposes of confidentiality, competitive

<PAGE>

factors, attorney-client privilege or other reasonable purposes; and (ii) that
in no event shall the failure to provide the notice described above invalidate
in any way any action taken at a meeting of the Board of Directors. The Company
shall not compensate Investor nor reimburse Investor for expenses incurred in
exercising its rights under this paragraph 6.1. The Investor and its
Representative shall use commercialy reasonable efforts to maintain the
confidentiality of all financial, confidential and proprietary information of
the Company acquired as a result of the Investor exercising its rights under
this paragraph 6.1 in accordance with the same standard of care that the
Investor applies to protect its own confidential information of like character
(but which in any event shall be not less than a reasonable standard of care).
This obligation shall not apply to any information which (a) at the time of
disclosure or discovery, is in the public domain; or (b) after disclosure,
becomes part of the public domain by publication or otherwise except by breach
of this Agreement; or (c) was in the Investor's possession prior to the time of
disclosure by the Company and was not acquired, directly or indirectly, from the
Company; or (d) the Investor or its Representative receives from a third party;
provided, however, that to the knowledge of the Company, the source of such
information is not bound by a confidentiality agreement or other contractual or
legal obligation of confidentiality to the Company with respect to such
information; or (e) is developed by the Investor subsequent to and independent
of the receipt of information from the Company.

         6.2. The Investor agrees to provide the Company, with all information
reasonably requested by the Company, to ascertain whether the Investor's
representative is acceptable to the Company.

         6.3 The rights set forth under paragraph 6. l and 6.2 shall expire on
the earlier of: (a) the date on which a Quest designee is elected to the
Company's Board of Directors, and (b) the occurrence of any transaction by which
the Investor ceases to own or have a beneficial interest in at least 142,857
shares of the Company's Common Stock.

7. MISCELLANEOUS.

         7.1 Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.

         7.2 Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
in each case addressed to the Treasurer of the other party (or such other person
as may be designated) at the address indicated above or at such other address as
may be given herein, or (b) delivered personally at such address.

         7.3 Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such

<PAGE>

counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart.

         7.4 Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the Investor shall be
joint and several, and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.

         7.5 Entire Agreement. This instrument contains the entire agreement of
the parties, and there are no representations, covenants or other agreements
except as stated or referred to herein.

         7.6 Assignability. This Agreement is not transferable or assignable by
the Investor except as may be provided herein.

         7.7 Applicable Law. This Agreement shall be governed and construed
under the laws of the State of Delaware.

         7.8 Public Announcement. Each party agrees that neither it nor any of
its Affiliates will make any public announcement regarding the transactions
contemplated by this Agreement without the consent of the other party, except to
the extent such announcement may be require by law, in which case each party
shall reasonably consult with the other party prior to the making of any such
annoucment.

<PAGE>

8. EXECUTION.

         The Investor has executed this Stock Purchase Agreement on this 21st
day of October, 2004.

                                                  QUEST DIAGNOSTICS VENTURES LLC

                                                  By:  Leo C. Farrenkopf, Jr.
                                                     ---------------------------
                                                  Name: Leo C. Farrenkopf, Jr.
                                                  Title: Vice President and
                                                         Assistant Secretary

Accepted this 21st day of October, 2004.

                                                  QMED, INC.

                                                  By:  William T. Schmitt, Jr.
                                                     ---------------------------
                                                  Name: William T. Schmitt, Jr.
                                                  Title: Chief Financial Officer

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