Document:

<PAGE>

                                                                   Exhibit 10.17

                                 AMENDMENT NO. 1

                  AMENDMENT NO. 1 ("AMENDMENT NO. 1") dated as of December 17,
1999 to the Credit Agreement dated as of August 16, 1999 (as amended, amended
and restated or otherwise modified and supplemented and in effect from time to
time, the "CREDIT AGREEMENT") among Quest Diagnostics Incorporated (the
"BORROWER"); the guarantors party thereto (the "GUARANTORS"); certain lenders
(the "LENDERS"); Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH"), as joint lead arranger; Banc of America
Securities LLC, as joint lead arranger (in such capacity, together with its
successors and Merrill Lynch together with its successors in its capacity as
joint lead arranger, the "JOINT LEAD ARRANGERS"); Bank of America, N.A., as
administrative agent ("ADMINISTRATIVE AGENT"); Wachovia Bank, N.A. ("WACHOVIA"),
as co-documentation agent; The Bank of New York, as co-documentation agent (in
such capacity, together with Wachovia as co-documentation agent, the
"CO-DOCUMENTATION AGENTS"); and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as syndication agent (in such capacity, together
with its successors in such capacity, the "SYNDICATION AGENT"). Capitalized
terms not otherwise defined in this Amendment No. 1 have the same meaning
assigned to such terms in the Credit Agreement.

                              W I T N E S S E T H :

                  WHEREAS, pursuant to Section 12.04 of the Credit Agreement,
the Obligors and the Majority Lenders hereby agree to amend or waive certain
provisions of the Credit Agreement as set forth herein;

                  NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

                  SECTION ONE - AMENDMENT. The Lenders and Agents amend,
effective as of the date hereof and subject to the satisfaction of the
conditions in Section Two hereof the following:

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                                      -2-

           (a) Section 9.08(A)(c) is amended by inserting "(i)" after
"Indebtedness and Contingent Obligations of" at the beginning of this subsection
and by adding the following immediately after the end of this subsection before
the semicolon:

                  "and (ii) any Company to any Receivables Co. in connection
                  with any Permitted Receivables Transaction; PROVIDED, HOWEVER,
                  that such Indebtedness and Contingent Obligations shall be
                  subordinated to the Obligations and on terms and conditions
                  acceptable to Joint Lead Arrangers"

             (b) Section 9.08(A)(i) is amended by adding the following
immediately prior to the proviso thereto:

                  "(and, notwithstanding any provision of any Security Document
                  to the contrary, any Indebtedness incurred under this Section
                  9.08(A)(i)(ii) need not be pledged to the Creditors nor do the
                  Creditors have any security interest therein pursuant to the
                  Credit Documents)"

             (c) Section 9.21 is amended by adding the following at the end
thereof as a new paragraph:

                  "Notwithstanding any provision to the contrary, this Section
                  9.21 does not apply to any Indebtedness incurred pursuant to
                  Section 9.08(A)(c) or Section 9.08(A)(i)(ii)"

                  SECTION TWO - CONDITIONS TO EFFECTIVENESS.  This Amendment No.
1 shall become effective as of the date first above written when, and only when,
Administrative Agent shall have received counterparts of this Amendment No. 1
executed by each Obligor and the Majority Lenders or, as to any of the Lenders,
advice satisfactory to Administrative Agent that such Lender has executed this
Amendment No. 1.

                  SECTION THREE - REPRESENTATIONS AND WARRANTIES. In order to
induce the Lenders and Agents to enter into this

<PAGE>

                                      -3-

Amendment No. 1, each Obligor represents and warrants to each of the Lenders and
Agents that after giving effect to this Amendment No. 1, (i) no Default or Event
of Default has occurred and is continuing; and (ii) all of the representations
and warranties of Borrower and the other Obligors in the Credit Agreement, after
giving effect to this Amendment No. 1, are true and complete in all material
respects on and as of the date hereof as if made on the date hereof (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

                  SECTION FOUR - REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT
AND THE SECURITY AGREEMENT. On and after the effectiveness of this Amendment No.
1, each reference in the Credit Agreement or the Security Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Credit Agreement or the Security Agreement, respectively, and each reference in
each of the other Credit Documents to "the Credit Agreement", "the Security
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement or the Security Agreement, shall mean and be a reference to the
Credit Agreement or the Security Agreement, respectively, as amended by this
Amendment No. 1. The Credit Agreement, the Security Agreement, and each of the
other Credit Documents, as specifically amended by this Amendment No. 1, are and
shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed. Without limiting the generality of the foregoing, the
Security Documents and all of the Collateral described therein do and shall
continue to secure the payment of all Obligations of the Obligors under the
Credit Documents, in each case as amended by this Amendment No. 1. The
execution, delivery and effectiveness of this Amendment No. 1 shall not, except
as expressly provided herein, operate as a waiver of any right, power or remedy
of any Lender or any Agent under any of the Credit Documents, nor constitute a
waiver of any provision of any of the Credit Documents.

                  SECTION FIVE - COSTS, EXPENSES AND TAXES. The Obligors agree
to pay all reasonable costs and expenses of Administrative Agent in connection
with the preparation, execution and delivery of this Amendment No. 1 and the
other instruments and documents to be delivered hereunder, if any (including,
without limitation, the reasonable fees and expenses of Cahill Gordon & Reindel)
in accordance with the terms of Section 12.03 of the Credit Agreement.

<PAGE>

                                      -4-

                  SECTION SIX - EXECUTION IN COUNTERPARTS.  This Amendment No. 1
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment No. 1 by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment No. 1.

                  SECTION SEVEN - GOVERNING LAW.  This Amendment No. 1 shall be
governed by, and construed in accordance with, the laws of the State of New York
(without giving effect to any provisions thereof relating to conflicts of law).

                  [Remainder of Page Intentionally Left Blank]

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                                       S-1

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                       QUEST DIAGNOSTICS INCORPORATED

                                       By:
                                          ---------------------------------
                                           Name:
                                           Title:

                                       GUARANTORS:

                                         SBCL, Inc. (DE)
                                         SmithKline Beecham Clinical
                                           Laboratories, Inc. (DE)
                                         Quest Diagnostics Incorporated (CA)
                                         Quest Holdings Incorporated (MD)
                                         Quest Diagnostics Incorporated (MD)
                                         Quest Holdings Incorporated (MI)
                                         Quest Diagnostics LLC (IL)
                                         Quest Diagnostics Incorporated (MI)
                                         Quest Diagnostics
                                         Incorporated (CT)
                                         Quest Diagnostics Incorporated (MA)
                                         Quest Diagnostics of Pennsylvania Inc.
                                           (DE)
                                         Quest Diagnostics Incorporated (OH)
                                         MetWest Inc. (DE)
                                         Nichols Institute Diagnostics (CA)
                                         DPD Holdings, Inc. (DE)
                                         Diagnostics Reference Services Inc.
                                           (MD)
                                         Laboratory Holding Incorporated (MA)
                                         Quest MRL Inc. (DE)

                                         Each as a Guarantor and Pledgor

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

<PAGE>

                                       S-2

                                        QUEST DIAGNOSTICS INVESTMENTS
                                        INCORPORATED

                                        QUEST DIAGNOSTICS FINANCE
                                        INCORPORATED

                                        Each as a Guarantor and Pledgor

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                        PATHOLOGY BUILDING PARTNERSHIP, by
                                            Quest Diagnostics Incorporated
                                            (MD), as General Partner

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

<PAGE>

                                      S-3

                                        AGENTS:

                                          MERRILL LYNCH & CO.
                                          MERRILL LYNCH, PIERCE, FENNER &
                                            SMITH INCORPORATED,
                                          as Joint Lead Arranger and
                                          Syndication Agent

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                        BANC OF AMERICA SECURITIES LLC,
                                        as Joint Lead Arranger

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                        BANK OF AMERICA, N.A.,
                                        as Administrative Agent

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                         WACHOVIA BANK, N.A.,
                                         as Co-Documentation Agent

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                        THE BANK OF NEW YORK,
                                        as Co-Documentation Agent

<PAGE>

                                      S-4

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:

                                            ---------------------------------,
                                              as a Lender (please type)

                                        By:
                                            ---------------------------------
                                            Name:
                                            Title:<PAGE>
                                                                   Exhibit 10.22

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                               KENNETH W. FREEMAN

                                        &

                         QUEST DIAGNOSTICS INCORPORATED

         This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
date of execution (the "Effective Date"), between QUEST DIAGNOSTICS INCORPORATED
(the "Company"), a Delaware corporation having its principal place of business
at One Malcolm Avenue, Teterboro, NJ 07608, and KENNETH W. FREEMAN (the
"Executive").

         WHEREAS, Executive has been employed by the Company as Chairman of
the Board and Chief Executive Officer; and

         WHEREAS, the Company considers the services of the Executive to be
unique and essential to the success of the Company's business; and

         WHEREAS the Company and the Executive had previously entered into an
employment agreement dated December 18, 1996, the term of which originally is to
expire as of December 31, 1999, and the parties desire that the Executive
continue as President and Chief Executive Officer of the Company; and

         WHEREAS, the Company and the Executive now wish to enter into an
omnibus amendment of the current agreement of employment on the terms and
conditions set forth herein, and which shall constitute the sole and exclusive
agreement relating to the employment of Executive by the Company.

         NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, terms and conditions set forth herein, and other valuable
consideration, the receipt and sufficiency

                                      -1-
<PAGE>

of which are hereby acknowledged, it is hereby agreed between the Company and
the Executive that his existing agreement shall be amended and modified in its
entirety as follows:

1.       EMPLOYMENT. The Company shall continue to employ the Executive in a
         full-time capacity in the position set forth in this paragraph, and the
         Executive shall continue to accept such employment upon the terms and
         conditions set forth herein. Such employment shall be in the capacity
         of Chief Executive Officer of the Company, and as a Director and
         Chairman of the Board of Directors of the Company (the "Board")
         reporting directly to the Board. The Company shall nominate the
         Executive as a Director of the Company and shall use its best efforts
         to have the Executive elected and re-elected to the Board for the
         duration of the "Employment Term" (as hereinafter defined).

2.       EMPLOYMENT TERM. Unless earlier terminated pursuant to Section (10)
         hereof, the term of Executive's employment under this Agreement shall
         commence as of the Effective Date of this Agreement and continue until
         December 31, 2002 (the "Employment Term"). On or before June 1, 2002,
         the Company and Executive agree to use their good faith efforts to
         negotiate a renewal of this Agreement (the "Renewal Agreement"), on
         mutually satisfactory terms and conditions. Subject to continued
         service by the Executive through December 31, 2002 (absent any
         termination by the Company without Cause, or termination by the
         Executive for Good Reason, or as a result of the death or permanent
         disability of the Executive, in each case giving rise to payments
         pursuant to Section 11 hereof) (each individually a "Section 11
         Event"), then upon the expiration of this Agreement on December 31,
         2002 (a "Non-Renewal Event"), the Executive shall be entitled to the
         severance benefit provided in Section 11.

                                      -2-
<PAGE>

3.       DUTIES. During the Employment Term, the Executive shall, subject to the
         supervising powers of the Board, have those powers and duties
         consistent with his position as Chief Executive Officer and Chairman,
         which powers shall in all cases include, without limitation, the power
         of supervision and control over, and responsibility for, the general
         management and operations of the Company. Executive agrees to devote
         substantially all his working time and attention to the business of the
         Company. The Executive shall not, without the prior written consent of
         the Company's Board of Directors, be directly or indirectly engaged in
         any other trade, business or occupation for compensation requiring his
         personal services during the Employment Term. Nothing in this agreement
         shall preclude the Executive from (i) engaging in charitable and
         community activities or from managing his personal investments, or (ii)
         serving as a member of the board of directors of an unaffiliated
         company not in competition with the Company, subject however, in each
         such case of board membership, to approval by the Company's Board of
         Directors (not to be unreasonably withheld).

4.       PLACE OF PERFORMANCE. The principal place of employment of the
         Executive shall be at the Company's principal executive offices in
         Teterboro, New Jersey, or such other location either currently under
         consideration by the Company/Executive or proposed by the Executive for
         the new corporate headquarters as may be agreed to by the Board and
         Executive.

5.       CASH COMPENSATION. Executive shall be compensated for services rendered
         during the Employment Term as follows:

         (a)      BASE SALARY. Executive shall be compensated at an annual base
                  salary of no less than $750,000 (the base salary, at the rate
                  in effect from time to time, is hereinafter referred to as the
                  "Base Salary"). The Company's Board of Directors shall review
                  and

                                      -3-
<PAGE>

                  may, if appropriate, at its discretion, increase this annual
                  Base Salary during the Employment Term. Base Salary shall be
                  reviewed annually and be adjusted to reflect (among other
                  factors) increases generally granted to other senior
                  executives of the Company and CEO performance consistent with
                  Company pay practices. The Base Salary shall be payable in
                  equal bi-weekly installments.

         (b)      ANNUAL BONUS. In addition to the Base Salary provided for in
                  Section 5 (a) above, the Company will provide annual bonus
                  awards to Executive under its Management Incentive Plan (MIP)
                  in accordance with the plan and any financial performance
                  targets thereunder. During the Employment Term, Executive's
                  target incentive opportunity under the Company's MIP will be
                  no less than 140% of Base Salary as in effect at the time such
                  target incentive opportunity is established.

                  (i)      60% of the annual bonus award shall be delivered in
                           cash (at the same time other MIP awards are paid).

                  (ii)     40% of the annual bonus award shall be delivered in
                           shares of common stock of the Company at the same
                           time other MIP awards are paid that will be 100%
                           vested but will be restricted ("Restricted Shares")
                           in that they may not be sold, assigned, pledged,
                           transferred, hypothecated or otherwise be disposed of
                           or encumbered, voluntarily or involuntarily, by
                           operation of law or otherwise, except as may be
                           permitted, in writing, by the Board. The Board may,
                           in its sole discretion, permit Restricted Shares to
                           be exchanged in such transaction for property subject
                           to restrictions and conditions substantially similar
                           to those applicable to the Restricted Shares
                           exchanged. In the event of any purported sale,
                           transfer or other disposition to the

                                      -4-
<PAGE>

                           Restricted Shares in contravention of the foregoing
                           provisions, such purported sale, transfer or other
                           disposition shall, to the fullest extent permitted by
                           law, be null, void and of no effect. The foregoing
                           restrictions shall be lifted as to one-third of the
                           Restricted Shares on each of the first, second and
                           third anniversaries of the cash award payment date,
                           subject to accelerated lifting of restrictions as
                           provided for in Section 11.

                  (c)      DEFERRAL. The Executive may elect to defer from
                           payments of Base Salary and Annual Bonus and any
                           other eligible compensation as defined by the terms
                           of the plan such amounts as provided for under the
                           terms of the Company's Supplemental Deferred
                           Compensation Plan ("SDCP").

                  (d)      INCENTIVE AWARD MODIFICATIONS. Any equity and option
                           awards made to the Executive as of the date of this
                           Agreement and any equity and option awards which
                           shall be made to the Executive during the Employment
                           Term shall be subject to, and shall benefit from, any
                           favorable amendments or revisions to the terms and
                           conditions of any of the Company's Incentive
                           Compensation Programs (including, without limitation,
                           any action resulting in extended exercise periods)
                           that may be implemented on or after the date hereof.

6.       EQUITY AWARD. Executive may be awarded additional compensation (such as
         stock options, shares of incentive stock, or shares of restricted
         stock) pursuant to the present or any future incentive compensation or
         long-term compensation program established for the senior officers of
         the Company (collectively the "Incentive Compensation Programs"), in an
         appropriate manner for the position occupied by Executive and his
         performance therein relative to other Company senior executives and
         consistent with Company pay practices.

                                      -5-
<PAGE>

         Compensation granted under such plans will be subject to the actual
         provisions and conditions applicable to such plans.

7.       EMPLOYEE BENEFITS.

         (a)      GENERAL PROVISIONS. Except as expressly provided in this
                  Agreement, Executive shall be eligible to participate in all
                  employee benefit and welfare plans offered by the Company
                  (e.g., Life Insurance, Medical & Dental Insurance, Travel,
                  Accident, STD & LTD, Flexible Spending Accounts, Regular and
                  Supplemental AD&D, Optional/Supplemental Life Insurance,
                  Profit Sharing [the 401(k) Plan], Employee Stock Purchase Plan
                  and other personal benefit plans of the Company, collectively
                  referred to as the "Benefit Plans") on a basis which is no
                  less favorable to the Executive than that made available to
                  other senior officers of the Company; provided that Executive
                  shall be reimbursed for the costs of his annual participation
                  in a comprehensive executive health assessment at a leading
                  medical institution of his choice (grossed up for tax purposes
                  at the present rate of 48%).

         (b)      TRANSFERRED EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN.

                  (i)      Executive will be eligible to participate in the
                           "Transferred Executive Supplemental Retirement Plan"
                           (the "SRP") established by the Company for certain
                           executives of the Company, effective upon the
                           Effective Date. Under the terms of such plan,
                           Executive will be entitled to receive a nonqualified
                           retirement benefit in accordance with the terms and
                           provisions of the plan, as administered by the
                           Company's Board of Directors, subject to the terms of
                           this Agreement.

                                      -6-
<PAGE>

                  (ii)     Notwithstanding any terms of the SRP to the contrary,
                           Executive shall be entitled to receive a retirement
                           pension benefit under this Agreement (the "Company
                           Non-Qualified Benefit") as provided for below. The
                           Company Non-Qualified Benefit shall be an annuity
                           commencing on the later of (i) his date of
                           termination or (ii) the Executive's 57th birthday
                           (the "SRP Commencement Date") and shall be (1) fully
                           equivalent in value to the pension benefits Executive
                           would have received under the Corning nonqualified
                           and qualified pension plans as in effect on December
                           18, 1996 (including all across-the-board plan
                           improvements or benefit decreases and/or successor
                           plans, in each case adopted after 12/18/96) and
                           applicable to the class of executives of which the
                           Executive was a part while employed by Corning, (2)
                           based on Executive's combined years of service with
                           the Company and Corning (but in any case not less
                           than 34 years of service), (3) computed on an
                           unreduced basis as if Executive were a retiree,
                           rather than on a deferred vested basis, and (4) based
                           on all compensation earned by Executive from Corning
                           and Company through to the SRP Commencement Date
                           (provided that for purposes of such computation,
                           Executive's benefit eligible compensation shall be
                           his 1999 Base Salary and Bonus including any deferred
                           Base Salary and bonus in the Company's Supplemental
                           Deferred Compensation Plan and such amount increased
                           at 5% per annum for subsequent years); PROVIDED THAT
                           if the Executive terminates his employment under this
                           Agreement without Good Reason or the Company
                           terminates the Executive's employment under this
                           Agreement with Cause, then the pension

                                      -7-
<PAGE>

                           benefits payable to the Executive under the SRP shall
                           be determined based only on actual years of service
                           and compensation through to the Termination Date.

                  (iii)    Upon execution of this Agreement, the Company shall
                           deliver to Executive a standby letter of credit in
                           the amount of $5.4 million, in form acceptable to
                           Executive and his counsel and with an evergreen term
                           of no less than eighteen (18) months, to ensure that
                           the Company's obligation under the SRP and the
                           Company Non-Qualified Benefit are fully funded and
                           secured on an after-tax basis to the Executive (the
                           "SRP LC"). As of the first day of any calendar year
                           thereafter (the "Adjustment Date") as of which the
                           Company's pension liability (on an after-tax basis)
                           to Executive as computed hereunder, as determined by
                           an actuary acceptable to Executive on or before
                           November I of the preceding calendar year, has a
                           present value that exceeds by more than $250,000 the
                           SRP LC (on an after-tax basis), the Company shall,
                           within 60 days of the Adjustment Date, increase the
                           amount of the SRP LC or secure and deliver to the
                           Executive an additional letter of credit in form
                           acceptable to the Executive and his counsel so that,
                           in the aggregate, the letter(s) of credit then in
                           place are not less than the present value of such
                           liability (on an after-tax basis).

                  (iv)     Immediately upon (x) the termination of Executive's
                           employment with the Company for any reason (including
                           the non-renewal of this Agreement), other than a
                           termination of Executive's employment by the Company
                           for Cause or by the Executive without Good Reason;
                           (y) failure of the Company

                                      -8-
<PAGE>

                           to renew the SRP LC or increase the amount of the SRP
                           LC or secure an additional letter of credit, as
                           provided herein (in each case, without the consent of
                           the Executive not to do so); or (z) upon the
                           Executive's retirement, the Executive may draw on the
                           SRP LC.

                  (v)      Amounts payable to the Executive in satisfaction of
                           the Company NonQualified Benefit shall be reduced by
                           (i) any qualified plan benefits actually received by
                           Executive under Corning's qualified plan ("Qualified
                           Corning Benefits") and (ii) any non-qualified
                           benefits to the extent funded pursuant to Section III
                           (c) of the Transition Agreement, dated as of December
                           18, 1996 between Corning and the Executive, and
                           actually received by the Executive ("Section III (c)
                           Benefits"), and any amounts realized by the Executive
                           upon drawing upon the SRP LC (or any supplemental
                           letter of credit) shall be adjusted to take into
                           account such Qualified Corning Benefits and Section
                           III (c) Benefits.

         (c)      Executive shall be eligible to participate in the Supplemental
                  Deferred Compensation Plan on a basis which is no less
                  favorable than other senior officers participating in the
                  Transferred Executive Supplemental Retirement Plan.

         (d)      VACATION AND SICK LEAVE. Executive shall be entitled to
                  vacation and sick leave in accordance with the vacation and
                  sick leave policies adopted by the Company from time to time,
                  provided that the Executive shall be entitled to no less than
                  five (5) weeks of paid vacation each calendar year. Any
                  vacation shall be at such time and for such periods as shall
                  be mutually agreed upon between the Executive and the

                                      -9-
<PAGE>

                  Company. The Executive shall be entitled to all public
                  holidays observed by the Company.

         (e)      RELOCATION. The Company acknowledges that it has provided to
                  the Executive an interest-free housing loan in the amount of
                  $400,000, which it has also agreed shall be forgiven in five
                  (5) annual installments at each annual anniversary of the
                  effective date of the original employment agreement executed
                  between the Company and the Executive, dated December 18,
                  1996. The Company acknowledges and agrees that it shall
                  continue to forgive the remaining annual installments of such
                  loan and that any compensation income to Executive resulting
                  from the loan forgiveness or interest-free features of the
                  loan will be grossed up for tax purposes at the present rate
                  of 48%.

8.       APPLICABLE TAXES. There shall be deducted from any compensation
         payments made under this Agreement any federal, state, and local taxes
         or other amounts required to be withheld by any entity having
         jurisdiction over the matter.

9.       MISCELLANEOUS BENEFITS. During the Employment Tenn, the Company shall
         provide the Executive with the following additional benefits:

         (a)      BUSINESS TRAVEL AND EXPENSES. Executive shall be reimbursed by
                  the Company for reasonable and other business expenses, as
                  approved by the Company, which are incurred and accounted for
                  in accordance with the Company's normal practices and
                  procedures for reimbursement of expenses.

         (b)      LEGAL FEES. The Company shall reimburse Executive for
                  reasonable legal fees and disbursements incurred in connection
                  with the negotiation, preparation,

                                      -10-
<PAGE>

                  implementation and execution of this Agreement (grossed up for
                  tax purposes at present rate of 48%).

         (c)      CLUBS AND MEMBERSHIPS. The Company will reimburse Executive
                  for annual and one-time costs associated with memberships for
                  the Executive and his family in a country club and city club
                  (grossed-up for tax purposes at the present rate of 48%).

         (d)      EXECUTIVE DRIVER. In order to ensure the accessibility and
                  safety of the -Executive during the Employment Term, the
                  Company will reimburse Executive for the costs of an executive
                  driver comparable to the costs presently incurred on behalf of
                  the Executive, subject to annual COLA adjustments (grossed up
                  for tax purposes at the present rate of 48%).

         (e)      USE OF AIRCRAFT. In order to ensure the accessibility and
                  safety of the Executive during the Employment Term, the
                  Company shall reimburse Executive for all costs associated
                  with the Executive's use of aircraft in accordance with the
                  Company's policies, whether for business purposes or for
                  personal reasons, whether the aircraft is being chartered or
                  is Company-owned. Any payments under this provision which are
                  to be treated as taxable compensation to the Executive (in
                  accordance with IRS rules and regulations) shall be grossed-up
                  for tax purposes at the present rate of 48%.

         (f)      FINANCIAL COUNSELING AND LEGAL SERVICES. The Company shall
                  reimburse the Executive annually for all reasonable financial
                  counseling (not including asset management fees), tax
                  preparation and legal services associated with tax, financial
                  and estate planning (grossed-up for tax purposes at the
                  present rate of 48%). The Company shall continue to pay the
                  fees paid to John Ullman and Associates ("Ullman") consistent
                  with Ullman's services under the prior contract.

                                      -11-
<PAGE>

         (g)      NON-EXCLUSIVITY. Nothing in this Agreement shall prevent the
                  Executive from being entitled to receive any additional
                  compensation or benefits as approved by the Company's Board of
                  Directors.

10.      TERMINATION OF EMPLOYMENT. Notwithstanding any other provisions of this
         Agreement to the contrary, the employment of the Executive pursuant to
         this Agreement may be terminated as follows:

         (a)      TERMINATION BY THE COMPANY FOR CAUSE. Executive may be
                  terminated for "Cause" by the Company as provided below. As
                  used herein, the term "Cause" shall mean (i) conviction of the
                  Executive for a felony; or (ii) the commission by the
                  Executive of fraud or theft against, or embezzlement from, the
                  Company. For purposes of this section, no act or failure to
                  act on Executive's part shall be considered to be reason for
                  termination for Cause if done, or omitted to be done, by
                  Executive in good faith and with the reasonable belief that
                  the action or omission was in the best interests of the
                  Company. Cause shall not exist unless and until there shall
                  have been delivered to the Executive a copy of a resolution,
                  duly adopted by the affirmative vote of not less than two
                  thirds of the entire membership of the Board at a meeting of
                  the Board held for the purpose (after ten (10) days' prior
                  written notice to the Executive of such meeting and the
                  purpose thereof and an opportunity for him, together with his
                  counsel, to be heard before the Board at such meeting), of
                  finding that in the good faith opinion of the Board, the
                  Executive was guilty of the conduct set forth above in this
                  Section 10(a) and specifying the particulars thereof in
                  detail. As set forth more fully in Section 10(f) hereof, the
                  "Date of Termination" (which shall be no earlier than 30 days
                  after delivery of the written notice to the Executive) shall
                  be the

                                      -12-
<PAGE>

                  date specified in the "Notice of Termination;" provided,
                  however, that in the case of a termination for Cause under
                  clauses 10(a)(i) and 10(a)(ii) above, the Date of Termination
                  shall be the date of delivery of the Notice of Termination.
                  Anything herein to the contrary notwithstanding, if, following
                  a termination of the Executive's employment by the Company for
                  Cause based upon the conviction of the Executive for a felony,
                  such conviction is overturned in a final determination on
                  appeal, the Executive shall be entitled to the payments and
                  the economic equivalent of the benefits the Executive would
                  have received if his employment had been terminated by the
                  Company without Cause.

         (b)      TERMINATION BY THE COMPANY FOR EXCESSIVE ABSENTEEISM. At the
                  sole discretion of the Company's Board of Directors, Executive
                  may be terminated if the Executive shall have been absent from
                  his duties with the Company on a full-time basis for one
                  hundred and twenty (120) consecutive days, and if within
                  thirty (30) days after written Notice of Termination is given
                  by the Company to the Executive, the Executive shall not have
                  resumed the performance of his duties hereunder on a full-time
                  basis. In this event, the Date of Termination shall be thirty
                  (30) days after Notice of Termination is given by the Company
                  (provided that the Executive shall not have returned to the
                  full-time performance of his duties).

         (c)      DEATH. The Executive's employment shall terminate upon his
                  death, and the date of his death shall be the Date of
                  Termination for purposes of this Agreement.

         (d)      TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
                  may terminate his employment hereunder for "Good Reason,"
                  provided that the Executive shall have delivered a Notice of
                  Termination within ninety (90) days after the occurrence of
                  the

                                      -13-
<PAGE>

                  event of Good Reason giving rise to such termination. For
                  purposes of this Agreement, "Good Reason" shall mean the
                  occurrence of one or more of the following circumstances,
                  without the Executive's express written consent, which are not
                  remedied by the Company within thirty (30) days of receipt of
                  the Executive's Notice of Termination except in the event of a
                  Change in Control:

                  (i)      an assignment to the Executive of any duties
                           materially inconsistent with his position, duties,
                           responsibilities, and status with the Company, or any
                           material limitation of the powers of the Executive
                           not consistent with the powers of the Executive
                           contemplated by Section (3) hereof;

                  (ii)     any removal of the Executive from, or any failure to
                           re-elect the Executive to the positions specified in
                           Section (1) of this Agreement;

                  (iii)    the change of the Executive's title as specified by
                           Section (1) of this Agreement;

                  (iv)     the Company's requiring the Executive without his
                           written consent to be based at any office or location
                           more than 75 miles commuting distance from the
                           locations referred to in Section (4) of this
                           Agreement;

                  (v)      a reduction in the Executive's Base Salary or Annual
                           Bonus target incentive opportunity as in effect from
                           time to time, without his written consent;

                  (vi)     the failure of the Company to continue in effect any
                           Benefit Plan that was in effect on the date hereof or
                           provide the Executive with equivalent benefits,
                           without his written consent;

                                      -14-
<PAGE>

                  (vii)    the failure of the Company to maintain the Executive
                           as a member of its Board of Directors at all times
                           thereafter, for so long as he shall serve as Chief
                           Executive Officer of the Company;

                  (viii)   any other material breach by the Company of this
                           Agreement;

                  (ix)     "Change in Control" as defined in Section 11(f)
                           of this Agreement.

                  (x)      a failure of the Company to secure a written
                           assumption by any successor company as provided
                           for in Section 15(g) hereof, or

                  (xi)     the failure of the Company to secure, maintain,
                           renew, or supplement the SRP LC (and any supplemental
                           letter of credit) as provided for in Section
                           7(b)(iii) hereof.

                  In the event of a termination for Good Reason, the Date of
                  Termination shall be the date specified in the Notice of
                  Termination, and shall be more than thirty (30) days after the
                  Notice of Termination. In the event of a termination for Good
                  Reason pursuant to Section 10(d)(xi) hereof, the Executive
                  shall retain the right to draw on the SRP LC (and any
                  supplemental letter of credit) as provided for in Section 7(b)
                  hereof.

         (e)      OTHER TERMINATIONS. Notwithstanding the foregoing, the
                  Executive may terminate his employment at any time, subject to
                  the provisions of Section 10(f) hereof. If the Executive's
                  employment is terminated hereunder for any reason other than
                  as set forth in Sections 10(a) through 10(d) hereof, the date
                  on which a Notice of Termination is given or any later date
                  (within 30 days) set forth in such Notice of Termination shall
                  be the Date of Termination.

                                      -15-
<PAGE>

         (f)      NOTICE OF TERMINATION. Any termination of the Executive's
                  employment hereunder by the Company or by the Executive shall
                  be communicated by written Notice of Termination to the other
                  party hereto. For purposes of this Agreement, a "Notice of
                  Termination" shall mean a notice which shall indicate the
                  specific termination provision in this Agreement relied upon
                  and shall set forth in reasonable detail the facts and
                  circumstances claimed to provide a basis for termination of
                  the Executive's employment under the provisions so indicated
                  and a date of termination.

11.      COMPENSATION UPON TERMINATION OR DURING DISABILITY

         (a)      DISABILITY PERIOD. During any period during the Employment
                  Term that the Executive fails to perform his duties hereunder
                  as a result of incapacity due to physical or mental illness
                  ("Disability Period"), the Executive shall continue to (i)
                  receive his full Base Salary and bonus otherwise payable for
                  that period of the Employment Term including the Disability
                  Period and (ii) participate in the Benefit Plans. Such
                  payments made to the Executive during the Disability Period
                  shall be reduced by the sum of the amounts, if any, payable to
                  the Executive at or prior to the time of any such payment
                  under disability benefit plans of the Company or under the
                  Social Security disability insurance program, where such
                  amounts were not previously applied to reduce any such
                  payment.

         (b)      DEATH. If the Executive's employment hereunder is terminated
                  as a result of his death, then: (i) the Company shall pay the
                  Executive's estate or designated beneficiary, as soon as
                  practicable after the Date of Termination, a lump sum payment
                  equal to (1) any Base Salary installments due in the month of
                  death and any reimbursable expenses accrued or owing the
                  Executive hereunder as of the Date of

                                      -16-
<PAGE>

                  Termination, (2) a PRO RATA portion of any bonus owed to the
                  Executive for that portion of the Employment Term through to
                  the Date of Termination and any earned and unpaid bonus
                  relating to services performed by the Executive in the year
                  preceding his death, and (3) the severance benefits set forth
                  in Section 11(e), and (ii) all outstanding stock options,
                  earned shares of incentive stock, and other awards granted to
                  the Executive under the Incentive Compensation Programs shall
                  immediately become fully vested as of the Date of Termination
                  and all transfer restrictions shall lapse but continue to be
                  subject to such exercise periods as shall be provided for
                  under the terms of each grant.

         (c)      ABSENCE FROM WORK. If the Executive's employment hereunder is
                  terminated for excessive absenteeism as defined in Section
                  10(b), then (i) the Company shall pay the Executive, as soon
                  as practicable after the Date of Termination (1) any Base
                  Salary and any reimbursable expenses accrued or owing the
                  Executive hereunder as of the Date of Termination, (2) a PRO
                  RATA portion of any bonus owed to the Executive for that
                  portion of the Employment Term through to the Date of
                  Termination and any earned and unpaid bonus relating to
                  service performed by the Executive in the year preceding his
                  Date of Termination for excessive absenteeism, and (3) the
                  severance benefits set forth in Section 11(e); and (ii) all
                  outstanding stock option and Incentive Stock awards granted to
                  the Executive shall immediately become fully vested as of the
                  Date of Termination and all transfer restrictions shall lapse
                  but continue to be subject to such exercise periods as shall
                  be provided for under the terms of each grant.

                                      -17-
<PAGE>

         (d)      TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR GOOD
                  REASON. If the Executive's employment hereunder is terminated
                  by the Company for Cause or by the Executive (other than for
                  Good Reason), then (i) the Company shall pay the Executive, as
                  soon as practicable after Date of Termination, any Base Salary
                  and any reimbursable expenses accrued or owing the Executive
                  hereunder for services as of the Date of Termination; and (ii)
                  the Executive shall immediately forfeit any unvested career
                  shares and earned but unvested incentive stock shares. In the
                  event of termination by the Company for Cause, the Executive
                  shall have the right to exercise the vested unexercised
                  portion of all outstanding stock option and stock awards prior
                  to the Date of Termination, and the unexercised portion of any
                  such award shall be forfeited thereafter and any restricted
                  stock shall remain subject to the terms of each grant. In the
                  event of termination by the Executive other than for Good
                  Reason but subject to the provisions of Section 12, the
                  Executive shall have the right to exercise the vested
                  unexercised portion of all outstanding stock options and stock
                  awards then held by the Executive for such period following
                  the Date of Termination as shall be provided for under the
                  terms of each grant, and the unexercised portion of any such
                  awards shall be forfeited thereafter and any restricted stock
                  shall remain subject to the terms of each grant.

         (e)      ALL OTHER TERMINATIONS. Executive's employment may be
                  terminated without Cause by the Company's Board of Director's
                  or by the Executive for Good Reason or upon a Non-Renewal
                  Event, provided that in such event:

                  (i)      Executive shall be entitled to receive three (3)
                           years Base Salary (at the Executive's effective
                           annual rate on the date of termination) to be paid in
                           a

                                      -18-
<PAGE>

                           lump-sum (net of appropriate withholdings) within
                           sixty (60) days of the Date of Termination;

                  (ii)     Executive shall be entitled to receive three (3)
                           times his average Annual Bonus Award (including the
                           stock and cash components) earned during the
                           employment term of this Contract and any earned and
                           unpaid bonus relating to (A) services performed by
                           the Executive in the year preceding his termination
                           by the Company without Cause or his termination for
                           Good Reason, and (B) services performed by the
                           Executive for calendar year 2002 in the event of a
                           Non-Renewal Event to be paid in a lump sum (net of
                           appropriate withholding) within sixty (60) days of
                           the Date of Termination provided that the bonus
                           payment pursuant to Section 11(e)(ii) shall not
                           duplicate any bonus payments previously paid to the
                           Executive;

                  (iii)    Executive and his eligible dependents shall be
                           entitled to continue participation in the Company's
                           Benefit Plans at the same cost as other Company
                           senior executives (to the extent allowable in
                           accordance with the administrative provisions of
                           those plans and applicable federal and state law) for
                           a period of up to three (3) years or until Executive
                           and his eligible dependents are eligible to be
                           covered by a successor employer's comparable benefit
                           plans, whichever is sooner;

                  (iv)     Any stock or stock option granted to the Executive
                           subject to vesting restrictions shall become vested
                           and fully exercisable as of the Date of Termination
                           but subject to the provisions of Section 12. In
                           addition, any

                                      -19-
<PAGE>

                           restrictions on sale, transfer or disposition of
                           restricted stock will be lifted; and

                  (v)      In the event that the Executive receives any payment
                           or benefit (including but not limited to the payments
                           or benefits pursuant to Section 11 of this Agreement
                           (a "Payment") that is subject to the excise tax (the
                           "Excise Tax") under Section 4999 of the Internal
                           Revenue Code of 1986, as amended (the "Code"), the
                           Company shall pay to the Executive, as soon
                           thereafter as practicable, an additional amount (a
                           "Gross-Up Payment") such that the net amount retained
                           by the Executive, after deduction of any Excise Tax
                           imposed upon the Payment and any federal, state, and
                           local income tax and Excise Tax imposed upon the
                           Gross-Up Payment, shall be equal to the Payment. The
                           determination of whether an Excise Tax is due in
                           respect to any payment or benefit, the amount of the
                           Excise Tax and the amount of the Gross-Up Payment
                           shall be made by an independent auditor (the
                           "Auditor") jointly selected by the Company and the
                           Executive and paid by the Company. If the Executive
                           and the Company cannot agree on the firm to serve as
                           the Auditor, then the Executive and the Company shall
                           each select one nationally recognized accounting firm
                           and those two firms shall jointly select one
                           nationally recognized accounting firm to serve as the
                           Auditor. Notwithstanding the Payment, (i) any other
                           payments or benefits received or to be received by
                           the Executive in connection with a Change in Control
                           or the Executive's termination of employment (whether
                           pursuant to the terms of this Agreement or any other
                           plan, arrangement, or agreement with the Company,

                                      -20-
<PAGE>

                           any person whose actions result in a Change in
                           Control or any person affiliated with the Company or
                           such person) shall be treated as "parachute payments"
                           within the meaning of Section 280G(b)(2) of the Code,
                           and all "excess parachute payments" within the
                           meaning of Section 280G of the Code shall be treated
                           as subject to the Excise Tax, unless in the opinion
                           of the tax counsel selected by the Auditor, such
                           other payments or benefits (in whole or in part) do
                           not constitute parachute payments, or are otherwise
                           not subject to the Excise Tax, and (ii) the Executive
                           shall be deemed to pay federal income tax at the
                           highest marginal rate applicable in the calendar year
                           in which the Gross-Up Payment is made, and state and
                           local income taxes at the highest marginal rate of
                           taxation in the state and locality of the Executive's
                           residence on the Date of Termination, net of the
                           maximum reduction in federal income tax which could
                           be obtained from deduction of such state and local
                           taxes. In the event the actual Excise Tax or such
                           income tax is more or less than the amount used to
                           calculate the Gross-Up Payment, the Executive or the
                           Company, as the case may be, shall pay to the other
                           an amount reflecting the actual Excise Tax or such
                           income tax.

         (f)      CHANGE IN CONTROL. For purposes of this Agreement, "Change in
                  Control" shall mean:

                  (i)      The Company's shareholders approve a merger (pursuant
                           to which the Company is not the surviving entity),
                           consolidation (pursuant to which the voting
                           shareholders of the Company cease to hold in excess
                           of fifty (50%) percent of the voting stock of the
                           consolidated entity), sale or disposition of all or
                           substantially all of the Company's assets or a plan
                           of partial or

                                      -21-
<PAGE>

                           complete liquidation and such transaction is
                           completed substantially in accordance with the terms
                           approved by the shareholders; PROVIDED THAT
                           notwithstanding anything to the contrary, in this
                           subsection (f)(i), no such merger, consolidation or
                           sale shall be deemed to constitute a "Change in
                           Control" if such transaction or series of
                           transactions required the Executive to be identified
                           in any United States securities law filing as a
                           person or a member of any group acquiring, holding or
                           disposing of beneficial ownership of the Company's
                           securities and/or assets and effecting a "Change in
                           Control" as defined in this subclause (f)(i);

                  (ii)     The majority of the Board consists of individuals
                           other than Incumbent Directors (a "Hostile Board"),
                           which term "Incumbent Directors" means the members of
                           the Board as of the Effective Date of this Agreement
                           and any other Director elected to the Board with the
                           consent of the Executive, PROVIDED THAT any person
                           becoming a director subsequent to such date whose
                           election or nomination for election was supported by
                           two-thirds of the directors who then comprised the
                           Incumbent Directors shall be considered to be an
                           Incumbent Director; PROVIDED FURTHER that the
                           occurrence of a Share Acquisition (as defined below)
                           without the prior approval of the two-thirds of the
                           Incumbent Directors shall be deemed to result in a
                           Hostile Board for all purposes hereunder; or

                  (iii)    the acquisition by any third-party of stock
                           constituting at least 51% of all outstanding shares
                           of stock of the Company (a "Share Acquisition") and
                           subsequent to such acquisition either (i) the Company
                           no longer is a public

                                      -22-
<PAGE>

                           company for U.S. securities law purposes, or (ii)
                           there is a material diminution of the Executive's
                           position or any other breach of this Agreement by the
                           Company or event giving rise to a Good Reason
                           termination by the Executive.

                                      -23-
<PAGE>

12.      NONSOLICITATION AND NONCOMPETITION

         (a)      During his employment with the Company and for a period of (1)
                  one year from the date of the Executive's termination of
                  employment for any reason, the Executive will not provide
                  services, in any capacity, whether as an employee, consultant,
                  independent contractor, or otherwise, to any person or entity
                  that provides products or services that compete with the
                  Business of the Company, including but not limited to:
                  Laboratory Corporation of America Holdings, Inc.; Mayo
                  Laboratory; ARUP Laboratory; LabOne; Dianon; Specialty Labs
                  Inc.; DynaCare; Unilab Corporation; American Medical
                  Laboratory; Microbiology Reference Laboratory; Physicians
                  Clinical Laboratory Inc.; Endocare Services Inc.; Nu-Tech
                  Bio-Med, Inc.; Chi Systems, Inc.; Enzon, Inc.; IMPATH Inc.;
                  TRIPATH, Inc. (NEOPATH); or their successors or assigns,
                  except that after the termination of Executive's employment
                  this restriction shall only apply to North America. If so
                  requested in writing by Executive, the Company shall advise
                  the Executive promptly in writing in advance (but in no case
                  later than 30 calendar days) as to whether, in the exercise of
                  its reasonable judgment, the Company views any proposed
                  activity contemplated by the Executive as constituting a
                  competing "Business," PROVIDED THAT nothing herein shall
                  prevent the Executive from, after the termination of his
                  employment, being a passive owner of not more than 5% of the
                  outstanding stock of any class of a corporation that is
                  publicly traded and that may acquire any corporation or
                  business that competes with the Company.

                                      -24-
<PAGE>

         (b)      For a period of one (1) year following the termination of the
                  Executive's employment for any reason, the Executive will not
                  directly or indirectly solicit the Business of any customer of
                  the Company during the one (1) year period prior to the
                  termination of the employment relationship with the Company
                  for any purpose other than to obtain, maintain and/or service
                  the customer's Business for the Company.

         (c)      For a period of one (1) year following the termination of the
                  Executive's employment for any reason, the Executive agrees
                  not to, directly or indirectly, recruit or solicit any
                  employees of the Company to work for the Executive or any
                  other person or entity.

         (d)      As used in this Section, the following terms shall have their
                  respective definitions:

                  (i)      "Business" shall include (A) clinical laboratory,
                           pathology, toxicology, pharmaceutical testing,
                           clinical trials, (B) Clinical Laboratory Medical
                           Information Services, (C) clinical laboratory testing
                           kits; and (D) any other product or service which the
                           Company planned, provided or discussed during the (1)
                           one year period prior to the termination of
                           Executive's employment.

                  (ii)     "Clinical Laboratory Medical Information Services"
                           shall mean medical information services which contain
                           a substantial clinical laboratory data component.

                  (iii)    "Indirectly solicit" shall include, but are not to be
                           limited to, providing Company's proprietary
                           information to another individual, or entity,
                           allowing the use of Executive's name by any company
                           (or any employees of any other company) other than
                           the Company, in the solicitation of the Business of
                           Company's customers.

                                      -25-
<PAGE>

         (e)      In the event there is a dispute under this Section, the
                  parties agree to hold an expedited hearing before an
                  arbitrator under American Arbitration Association Rules.

         (f)      EXCLUSIVE PROPERTY. Executive confirms that all confidential
                  information is and shall remain the exclusive property of the
                  Company. All business records, papers and documents kept or
                  made by Executive relating to the business of the Company, its
                  affiliates and subsidiaries (other than his personal records)
                  shall be and remain the property of the Company. Upon the
                  termination of his employment with the Company or upon the
                  request of the Company at any time, Executive shall promptly
                  deliver to the Company, and shall not without the consent of
                  the Board retain copies of, any written materials not
                  previously made available to the public, or records and
                  documents made by Executive in his possession concerning the
                  business or affairs of the Company or any of its affiliates or
                  subsidiaries (other than his personal records); provided,
                  however, that subsequent to any such termination, the Company
                  shall provide Executive with copies (the cost of which shall
                  be borne by Executive) of any documents which are requested by
                  Executive and which Executive has determined in good faith are
                  (i) required to establish a defense to a claim that Executive
                  has not complied with his duties hereunder or (ii) necessary
                  to Executive in order to comply with applicable law.

         (g)      REMEDIES.

                  (i)      INJUNCTIVE RELIEF. Without intending to limit the
                           remedies available to the Company, Executive
                           acknowledges that a breach of any of the covenants
                           contained in this Section 12 may result in material
                           irreparable injury to the Company or its affiliates
                           or subsidiaries for which there is no adequate

                                      -26-
<PAGE>

                           remedy at law, that it will not be possible to
                           measure damages for such injuries precisely and that,
                           in the event of such a breach or threat thereof, the
                           Company shall be entitled to obtain a temporary
                           restraining order and/or a preliminary or permanent
                           injunction restraining Executive from engaging in
                           activities prohibited by this Section 12 or such
                           other relief as may be required to specifically
                           enforce any of the covenants in this Section 12.
                           Without intending to limit the remedies available to
                           Executive, Executive shall be entitled to seek
                           specific performance of the Company's obligations
                           under this Agreement.

                  (ii)     ADDITIONAL REMEDY. In the event of an arbitrator's
                           determination that Executive has breached any of the
                           covenants contained in this Section 12 during his
                           employment or within one year after termination
                           thereof for any reason, then (1) all of Executive's
                           outstanding stock options shall immediately terminate
                           as of the date of the breach and (2) any gains
                           realized by Executive from exercising all or a
                           portion of any stock options within three months
                           prior to his termination of employment or anytime
                           after his termination of employment, shall be paid by
                           Executive to the Company. The amount of the realized
                           gains shall be the difference between the exercise
                           price and the fair market value of the stock on the
                           day each option is exercised and the Executive agrees
                           to pay immediately said amounts to the Company. The
                           Company shall cooperate with the Executive in filing
                           amended tax returns required as a result of the
                           exercise by the Company of its rights pursuant to
                           this subclause (ii). Executive agrees to pay
                           immediately

                                      -27-
<PAGE>

                           the unpaid balance to the Company. Executive may be
                           released from his obligations hereunder only if the
                           Board (or its duly appointed agent) determines in its
                           sole discretion that such action is in the best
                           interests of the Company.

13.      ARBITRATION. In the event of any difference of opinion or dispute
         between the Executive and the Company with respect to the construction
         or interpretation of this Agreement or the alleged breach thereof,
         which cannot be settled amicably by agreement of the parties, then such
         dispute shall be submitted to and determined by arbitration by a single
         arbiter in the city of New York, New York in accordance with the rules
         then in effect of the Commercial Arbitration Panel of the American
         Arbitration Association (the "AAA"), and judgment upon the award
         rendered shall be final, binding and conclusive upon the parties and
         may be entered in the highest court, state or federal, having
         jurisdiction. The costs of the arbitration shall be borne as determined
         by the arbitrator; PROVIDED, HOWEVER, that if the Company's position is
         not substantially upheld, as determined by the arbitrator, the expenses
         of the Executive (including, without limitation, fees and expenses
         payable to the AAA and the arbitrator, fees and expenses payable to
         witnesses, including expert witnesses, fees and expenses payable to
         attorneys and other professionals, expenses of the Executive in
         attending the hearing, costs in connection with obtaining and
         presenting evidence and costs of the transcription of the proceedings),
         as determined by the arbitrator, shall be reimbursed to him by the
         Company.

14.      CONFIDENTIALITY. During the Employment Term, and except as otherwise
         required by law, the Executive shall not disclose or make accessible to
         any business, person or entity, or make use of (other than in the
         course of the business of the Company) any trade secrets, proprietary

                                      -28-
<PAGE>

         knowledge or confidential information, which he shall have obtained
         during his employment by the Company and which shall not be generally
         known to or recognized by the general public. All information regarding
         or relating to any aspect of either the Company's business, including
         but not limited to that relating to existing or contemplated business
         plans, activities or procedures, current or prospective clients,
         current or prospective contracts or other business arrangements,
         current or prospective products, facilities and methods, manuals,
         intellectual property, price lists, financial information (including
         the revenues, costs, or profits associated with any of the Company's
         products or services), or any other information acquired because of the
         Executive's employment by the Company, shall be conclusively presumed
         to be confidential; PROVIDED, HOWEVER, that Confidential Information
         shall not include any information known generally to the public (other
         than as a result of unauthorized disclosure by the Executive) or any
         specific information or type of information generally not considered
         information disclosed by the Company or any officer thereof to a third
         party without restrictions on the disclosure of such information. The
         Executive's obligations under this Section 14 shall be in addition to
         any other confidentiality or nondisclosure obligations of the Executive
         of the Company at law or under any other agreements.

15.      OTHER MATTERS.

         (a)      ENTIRE AGREEMENT. This Agreement constitutes the entire
                  agreement between the Company and the Executive relating to
                  the subject matter hereof, and supersedes any previous
                  agreements, commitments and understandings, written or oral,
                  with respect to the matters provided herein other than with
                  respect to the letter from the Company dated December 30,
                  1999. As used in this Agreement, terms such as "herein,"
                  "hereof," "hereto" and similar language shall be construed to
                  refer to this entire

                                      -29-
<PAGE>

                  instrument and not merely the paragraph or sentence in which
                  they appear, unless so limited by express language.

         (b)      ASSIGNMENT. Except as set forth below, this Agreement and the
                  rights and obligations contained herein shall not be
                  assignable or otherwise transferable by either party to this
                  Agreement without the prior written consent of the other party
                  to this Agreement. Notwithstanding the foregoing, any amounts
                  owing to the Executive upon his death shall inure to the
                  benefit of his heirs, legatees, personal representatives,
                  executor or administrator.

         (c)      NOTICES. Any and all notices provided for under this Agreement
                  shall be in writing and hand delivered or sent by first class
                  registered or certified mail, postage prepaid, return receipt
                  requested, addressed to the Executive at his residence or to
                  the Company at its usual place of business, and all such
                  notices shall be deemed effective at the time of delivery or
                  at the time delivery is refused by the addressee upon
                  presentation.

         (d)      AMENDMENT/WAIVER. No provision of this Agreement may be
                  amended, waived, modified, extended or discharged unless such
                  amendment, waiver, extension or discharge is agreed to in
                  writing signed by both the Company and the Executive.

         (e)      APPLICABLE LAW. This Agreement and the rights and obligations
                  of the parties hereunder shall be construed, interpreted, and
                  enforced in accordance with the laws of the State of New York
                  (applicable to contracts to be performed wholly within such
                  State).

         (f)      SEVERABILITY. The Executive hereby expressly agrees that all
                  of the covenants in this Agreement are reasonable and
                  necessary in order to protect the Company and its

                                      -30-
<PAGE>

                  business. If any provision or any part of any provision of
                  this Agreement shall be invalid or unenforceable under
                  applicable law, such part shall be ineffective only to the
                  extent of such invalidity or unenforceability and shall not
                  affect in any way the validity or enforceability of the
                  remaining provisions of this Agreement, or the remaining parts
                  of such provision.

         (g)      SUCCESSOR OF INTERESTS. In the event the Company merges or
                  consolidates with or into any other corporation or
                  corporations, or sells or otherwise transfers substantially
                  all of its assets to another corporation, the provisions of
                  this Agreement shall be binding upon and inure to the benefit
                  of the corporation surviving or resulting from the merger or
                  consolidation or to which the assets are sold or transferred
                  and, prior to the consummation of any such event, the Company
                  shall obtain the express written assumption of this Agreement
                  by the other corporation (other than in the case of a merger
                  after which the Company is the surviving entity). All
                  references herein to the Company refer with equal force and
                  effect to any corporate or other successor of the corporation
                  that acquires directly or indirectly by merger, consolidation,
                  purchase or otherwise, all or substantially all of the assets
                  of the Company.

         (h)      NO MITIGATION. The Executive shall not be required to mitigate
                  amounts payable pursuant to Section (11) hereof by seeking
                  other employment or otherwise.

16.      INDEMNIFICATION. The Company shall indemnify the Executive to the full
         extent permitted by law and the By-laws of the Company for all
         expenses, costs, liabilities and legal fees which the Executive may
         incur in the discharge of all his duties hereunder, including, without
         limitation, the right to be paid in advance by the Company for his
         expenses in defending a civil or criminal action, proceeding or
         investigation prior to the final disposition

                                      -31-
<PAGE>

         thereof. The Executive shall be insured under the Company's Directors'
         and Officers' Liability Insurance Policy as in effect from time to
         time. Notwithstanding any other provision of this Agreement to the
         contrary, any termination of the Executive's employment or of this
         Agreement shall have no effect on the continuing operations of this
         Section (16).

17.      AUTHORITY. The execution, delivery and performance of this Agreement
         has been duly authorized by the Company and this Agreement represents
         the valid, legal and binding obligation of the Company, enforceable
         against the Company according to its terms.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
own behalf and has caused its corporate seal to be affixed, and the Executive
has executed this Agreement on his own behalf intending to be legally bound, as
of the date first written above.

                                            QUEST DIAGNOSTICS INCORPORATED

                                            BY:_________________________________

ATTEST:
Secretary

                                            EXECUTIVE:

                                            ---------------------------------
                                            Kenneth W. Freeman

Dated:______________________________

                                      -32-

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