Document:

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                                                                    Exhibit 10.1

                           WARRANT PURCHASE AGREEMENT

                                     BETWEEN

                              TRIPATH IMAGING, INC.

                                       AND

                         QUEST DIAGNOSTICS INCORPORATED

                             Dated as of May 1, 2004

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                           WARRANT PURCHASE AGREEMENT

         This WARRANT PURCHASE AGREEMENT dated as of May 1, 2004 (the
"Agreement"), is between TriPath Imaging, Inc., a Delaware corporation
("TriPath"), and Quest Diagnostics Incorporated, a Delaware corporation ("Quest
Diagnostics").

                                   WITNESSETH:

         WHEREAS, TriPath and Quest Diagnostics are parties to a Collaboration
Agreement effective as of March 1, 2003 (the "Original Collaboration
Agreement"), as amended by Amendment #1 to Collaboration Agreement of even date
herewith (the "Amendment" and, together with the Original Collaboration
Agreement, the "Collaboration Agreement"), pursuant to which TriPath and Quest
Diagnostics are entering into an Agreement for the Purchase of Products and
Lease of Equipment (the "Product Purchase Agreement") and into this Agreement
(terms used and not defined herein shall have the meaning ascribed to them in
the Collaboration Agreement).

         WHEREAS, in addition to certain other consideration provided for in the
Collaboration Agreement, TriPath has agreed to issue to Quest Diagnostics
warrants to purchase shares of TriPath Common Stock, par value $0.01 per share
(the "TriPath Stock"), in the amounts and on the terms and conditions contained
herein and in such warrants as partial consideration for the commitments made by
Quest Diagnostics under the Collaboration Agreement and under the Product
Purchase Agreement;

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

                                    ARTICLE 1

                         ISSUANCE OF WARRANTS; CLOSINGS

         1.1      Issuance of Warrants; Exercisability. Upon the terms and
subject to the conditions contained in this Agreement, and in reliance on the
representations and warranties of Quest Diagnostics set forth herein, in
fulfillment of its obligations to issue such warrants under Section 8 of the
Amendment, TriPath hereby agrees to issue to Quest Diagnostics on the Closing
Date (as defined in Section 1.2) warrants (each a "Warrant" and collectively the
"Warrants") to purchase an aggregate of up to 4,000,000 shares of TriPath Stock.
Each Warrant shall be exercisable for the number of shares of TriPath Stock, at
the times and at the exercise price as follows:

                  1.1.1    The Warrant in the form attached hereto as Exhibit
A-1 shall be exercisable at any time from and after the Closing Date through the
third anniversary of the Closing Date as more specifically set forth in such
Warrant for an aggregate of up to 800,000 shares of TriPath Stock at an exercise
price of $9.25 per share (as each such figure may be adjusted pursuant to such
Warrant).

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                  1.1.2    The Warrant in the form attached hereto as Exhibit
A-2 shall be exercisable at any time from and after the First Milestone Date (as
defined in Exhibit C attached to the Amendment) through the third anniversary of
the Closing Date, as more specifically set forth in such Warrant, for an
aggregate of up to 200,000 shares of TriPath Stock at an exercise price of
$10.18 per share (as each such figure may be adjusted pursuant to such Warrant).

                  1.1.3    The Warrant in the form attached hereto as Exhibit
A-3 shall be exercisable at any time from and after the Second Milestone Date
(as defined in Exhibit C attached to the Amendment) through the third
anniversary of the Closing Date, as more specifically set forth in such Warrant,
for an aggregate of up to 500,000 shares of TriPath Stock at an exercise price
of $10.64 per share (as each such figure may be adjusted pursuant to such
Warrant).

                  1.1.4    The Warrant in the form attached hereto as Exhibit
A-4 shall be exercisable at any time from and after the Third Milestone Date (as
defined in Exhibit C attached to the Amendment) through the fourth anniversary
of the Closing Date, as more specifically set forth in such Warrant, for an
aggregate of up to 1,000,000 shares of TriPath Stock at an exercise price of
$11.56 per share (as each such figure may be adjusted pursuant to such Warrant).

                  1.1.5    The Warrant in the form attached hereto as Exhibit
A-5 shall be exercisable at any time from and after the Fourth Milestone Date
(as defined in Exhibit C attached to the Amendment) through the fourth
anniversary of the Closing Date, as more specifically set forth in such Warrant,
for an aggregate of up to 1,500,000 shares of TriPath Stock at an exercise price
of $12.03 per share (as each such figure may be adjusted pursuant to such
Warrant).

It shall be a condition to TriPath's obligation to issue any Warrant Shares upon
exercise or conversion of any of the Warrants that any required filing of a
Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements
Act, as amended (the "HSR Act"), shall have been made and the waiting period
(and any extension thereof) applicable to such exercise or conversion under the
HSR Act (if any) shall have been terminated or shall have expired. Quest
Diagnostics shall notify TriPath whether any such filing would be required as
the result of Quest Diagnostics' acquisition of any Warrant Shares upon exercise
or conversion; if so required, the parties shall: (a) cooperate in good faith to
each file with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "DOJ") any
such Notification and Report Form under the HSR Act, (b) promptly supply the
other with any information that may be required to make such filing and (c)
supply any additional information that may be requested by the FTC or the DOJ
and which the parties reasonably deem appropriate. Each Warrant also shall be
subject to the other terms and conditions set forth in this Agreement and in the
respective form of each Warrant attached hereto as Exhibit A-1, A-2, A-3, A-4
and A-5.

         1.2      The Closing. The closing of the issuance of the Warrants (the
"Closing") will be held at the offices of Palmer & Dodge LLP, 111 Huntington
Avenue, Boston, Massachusetts 02199, at 11:00 a.m. on the date on which the
execution of the Amendment and the Product Purchase Agreement occurs, or at such
other time or place, or both, as may be designated by the parties (the "Closing
Date").

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         1.3      Deliveries at Closing. To effect the issuance of the Warrants
pursuant to this Agreement, TriPath will deliver to Quest Diagnostics an
executed counterpart of this Agreement together with the Warrants in the forms
attached hereto as Exhibits A-1, A-2, A-3, A-4 and A-5, respectively, signed by
an authorized officer of TriPath, and Quest Diagnostics will deliver to TriPath
an executed counterpart of this Agreement.

                                   ARTICLE 2

                    REPRESENTATIONS AND WARRANTIES OF TRIPATH

         TriPath represents and warrants as of the date hereof to Quest
Diagnostics as follows:

         2.1      Organization. TriPath is a corporation validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its assets and to carry on its business
as now being and as heretofore conducted.

         2.2      Authorization and Issuance of Warrants. TriPath has taken all
necessary corporate action to authorize the issuance and delivery of the
Warrants under this Agreement and to reserve for issuance and delivery the
shares of TriPath Stock issuable upon exercise or conversion of the Warrants
(the "Warrant Shares"). Upon issuance in accordance with the terms of each
Warrant, including payment of the respective exercise price, the Warrant Shares
shall be duly and validly issued, fully paid and nonassessable, free and clear
of all pledges, liens and encumbrances.

         2.3      Authorization and Binding Effect. TriPath has the corporate
power and authority to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of TriPath. This
Agreement has been duly executed and delivered by TriPath and constitutes its
legal, valid and binding obligation, enforceable against TriPath in accordance
with its terms.

         2.4      No Breach. Except for (a) filings with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (b) any required filing of a Notification and
Report Form under the HSR Act, the execution, delivery and performance of this
Agreement by TriPath and consummation by it of the transactions contemplated
hereby will not (i) violate any provision of the Certificate of Incorporation or
by-laws of TriPath, each as amended to date, (ii) violate, conflict with or
result in the breach of any of the terms or conditions of, result in
modification of, or otherwise give any other contracting party the right to
terminate or accelerate obligations under, or constitute (or with notice or
lapse of time or both constitute) a default under, any material instrument,
contract or other agreement to which TriPath is party or to which it or any of
its assets or properties is bound or subject, (iii) violate any law, ordinance
or regulation or any order, judgment, injunction, decree or requirement of any
court, arbitrator or governmental or regulatory body applicable to TriPath or by
which any of its assets or properties is bound or subject or (iv) require any
filing with, notice to, or permit, consent or approval of, any governmental or
regulatory body, except, with respect to the foregoing clauses (ii) through
(iv), any exception thereto that

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would not have a material adverse effect on TriPath's ability to consummate the
transactions contemplated hereby.

         2.5      Brokers; Expenses. TriPath has not utilized the services of
any broker, finder, agent or similar intermediary in connection with the
transactions contemplated hereby and there are no brokerage commissions,
finders' fees or similar fees or commissions payable based on any agreement,
arrangement or understanding with TriPath or any action taken by it.

         2.6      Authorized Capital. The authorized capital stock of TriPath
consists of (i) 98,000,000 shares of TriPath Stock and(ii) 1,000,000 shares of
preferred stock, par value $.01 per share ("TriPath Preferred Stock"). As of the
close of business on May 3, 2004, 37,985,616 shares TriPath Stock were issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, (ii) 6,223,510 shares of TriPath Stock were reserved for
future issuance pursuant to outstanding options and warrants and (iii) no shares
of TriPath Preferred Stock were issued and outstanding.

         2.7      Nasdaq Listing. TriPath has filed with Nasdaq a Notification
Form for Listing of Additional Shares covering the Warrant Shares.

                                   ARTICLE 3

               REPRESENTATIONS AND WARRANTIES OF QUEST DIAGNOSTICS

         Quest Diagnostics hereby represents and warrants as of the date hereof
to TriPath as follows:

         3.1      Organization. Quest Diagnostics is a corporation validly
existing and in good standing under the laws of the State of Delaware. Quest
Diagnostics has the corporate power and authority to own and hold the Warrants
and the Warrant Shares.

         3.2      Authorization and Binding Effect. Quest Diagnostics has the
corporate power and authority to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on behalf of Quest
Diagnostics. This Agreement has been duly executed and delivered by Quest
Diagnostics and constitutes its legal, valid and binding obligation, enforceable
against Quest Diagnostics in accordance with its terms.

         3.3      No Breach. Except for any required filing of a Notification
and Report Form under the HSR Act, the execution, delivery and performance of
this Agreement by Quest Diagnostics and consummation by its of the transactions
contemplated hereby will not (i) violate any provision of the charter or by-laws
of Quest Diagnostics, (ii) violate, conflict with or result in the breach of any
of the terms or conditions of, result in modification of, or otherwise give any
other contracting party the right to terminate or accelerate obligations under,
or constitute (or with notice or lapse of time or both constitute) a default
under, any material instrument, contract or other agreement to which Quest
Diagnostics is party or to which it or any of its assets or properties is bound
or subject, (iii) violate any law, ordinance or regulation or any order,

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judgment, injunction, decree or requirement of any court, arbitrator or
governmental or regulatory body applicable to Quest Diagnostics or by which any
of its assets or properties is bound or subject or (iv) require any filing with,
notice to, or permit, consent or approval of, any governmental or regulatory
body, except, with respect to the foregoing clauses (ii) through (iv), any
exception thereto that would not have a material adverse effect on Quest
Diagnostics' ability to consummate the transactions contemplated hereby.

         3.4      Brokers; Expenses. Quest Diagnostics has not utilized the
services of any broker, finder, agent or similar intermediary in connection with
the transactions contemplated hereby and there are no brokerage commissions,
finders' fees or similar fees or commissions payable based on any agreement,
arrangement or understanding with Quest Diagnostics or any action taken by it.

         3.5      Investment Representations.

                  3.5.1    Quest Diagnostics has received and reviewed and is
familiar with TriPath's Annual Report on Form 10-K filed with the SEC for
TriPath's fiscal year ending December 31, 2003 and all of TriPath's Quarterly
Reports on Form 10-Q and Current Reports on 8-K filed with the SEC since that
date.

                  3.5.2    Quest Diagnostics and Quest Diagnostics'
representatives have been given the opportunity to examine all documents and to
ask questions of, and to receive answers from, TriPath and its representatives
concerning the terms and conditions of the acquisition of the Warrants and the
Warrant Shares hereunder and the assets, business and prospects of TriPath and
to obtain any additional information that Quest Diagnostics or Quest
Diagnostics' representatives deem necessary to verify the accuracy of the
information that has been provided to Quest Diagnostics for Quest Diagnostics to
evaluate the merits and risk of its investment in the Warrants and the Warrant
Shares.

                  3.5.3    Quest Diagnostics is not relying on any
representations, warranties, or statements, express or implied, of TriPath or
any of its respective "affiliates" (as defined in Section 4.3.2 below),
directors, officers, employees, agents or representatives, except those
expressly set forth in Article 2 of this Agreement. Quest Diagnostics has such
knowledge and experience in financial and business matters that it is capable of
evaluating the relative risks of the Warrants and the Warrant Shares. Quest
Diagnostics and Quest Diagnostics' representatives, including Quest Diagnostics'
financial, tax, legal and other advisers, have carefully reviewed all documents
furnished to them in connection with Quest Diagnostics' investment in the
Warrants and the Warrant Shares, and Quest Diagnostics understands the risks
related to such investment.

                  3.5.4    Quest Diagnostics understands that (a) the issuance
of the Warrants and of the Warrant Shares upon exercise or conversion of the
Warrants, have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption for private offerings, (b)
TriPath is under no obligation to register the issuance of Warrants or, except
as set forth in Section 4.1 below, the Warrant Shares, and (b) Quest Diagnostics
is acquiring the Warrants and the Warrant Shares without being furnished any
offering literature or prospectus.

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                  3.5.5    The Warrants and the Warrant Shares are being or will
be acquired solely for Quest Diagnostics' own account, for investment and not
with a view to or for the resale, distribution, subdivision, or
fractionalization thereof in violation of the Securities Act. Quest Diagnostics
has no current plans to enter into any contract, undertaking, agreement, or
arrangement relating with respect to the Warrants or the Warrant Shares.

                  3.5.6    Quest Diagnostics acknowledges and is aware that (a)
the Warrants and the Warrant Shares are characterized as "restricted securities"
for purposes of the Securities Act and, as such, cannot be sold, pledged,
transferred or otherwise disposed of unless such transaction is registered under
the Securities Act and any applicable securities law of any state or other
jurisdiction, or an exemption from registration is available, (b) any
certificate evidencing the Warrants or the Warrant Shares will bear an
appropriate legend to the foregoing effect (as well as to the effect of the
additional restrictions set forth in Section 4.2 below) and (c) unless any
resale of the Warrants or the Warrant Shares is so registered or an exemption
from registration is available there will be no public market for the Warrants
or the Warrant Shares.

                                    ARTICLE 4

                                    COVENANTS

         4.1      Registration of Warrant Shares.

                  4.1.1    Demand Registration. At any time following the second
anniversary of the Closing Date, if Quest Diagnostics shall notify TriPath in
writing that it intends to offer or cause to be offered any Warrant Shares for
public sales in accordance with Section 4.2 hereof, TriPath shall, promptly
following such notice, use its commercially reasonable efforts to effect the
registration of such Warrant Shares on a Registration Statement (as defined in
Section 4.1.10 below) on Form S-1 or, if TriPath then meets the eligibility
requirements for the use of Form S-3 for the registration of securities in a
transaction involving secondary offerings, Form S-3 (or any successor form of
Registration Statement promulgated by the SEC that would cover the resale of the
Warrant Shares), covering the resale of the Warrant Shares proposed to be
offered by Quest Diagnostics; provided, however, that, the reasonably
anticipated aggregate price to the public for all Warrant Shares proposed to be
sold in such public offering would exceed $1,000,000; and provided further,
however, that TriPath shall not be required to effect more than one registration
pursuant to this Section 4.1.1 in any twelve (12) month period. If at the time
of any request to register Warrant Shares pursuant to this Section 4.1.1,
TriPath is engaged or has fixed plans to engage within thirty (30) days of the
time of the request in a registered public offering as to which Quest
Diagnostics may include Warrant Shares pursuant to Section 4.1.2 or is engaged
in any other activity which, in the good faith determination of TriPath's Board
of Directors, would be adversely affected by the requested registration to the
material detriment of TriPath, then TriPath may at its option direct that such
request be delayed for a period not in excess of six (6) months from the
effective date of such offering or the date of commencement of such other
material activity, as the case may be, such right to delay a request to be
exercised by TriPath not more than once in any one (1) year period. Any
notification by Quest Diagnostics under this Section 4.1.1 is hereinafter
referred to as a "Demand Request."

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                  4.1.2    Incidental Registration.

                                    (i)      At any time following the second
anniversary of the Closing Date, if TriPath proposes to file a Registration
Statement with the SEC for a public offering and sale of the securities of
TriPath either for its own account or the account of a security holder or
holders pursuant to demand registration rights (a "Requesting Security Holder"),
it will, prior to such filing, give written notice to Quest Diagnostics of its
intention to do so and, upon the written request of Quest Diagnostics given
within ten (10) trading days after TriPath provides such notice (which request
shall state the intended method of disposition of the Warrant Shares and include
only such number of Warrant Shares that TriPath may then sell in accordance with
Section 4.2 hereof), TriPath shall use its commercially reasonable efforts to
cause all Warrant Shares that TriPath has been requested by Quest Diagnostics to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of Quest Diagnostics; provided,
however, that notwithstanding the specified method of distribution, in no
circumstance will TriPath be required to effect or participate in any
distribution by means of an underwriting and shall do so only in its sole
discretion; and provided further, however, that TriPath shall have the right to
postpone or withdraw any registration effected pursuant to this Section 4.1.2 at
any time before it becomes effective or withdraw, postpone or terminate the
offering after it becomes effective without regard to whether Quest Diagnostics
has requested TriPath to include Warrant Shares in such registration and without
any further obligation to Quest Diagnostics.

                                    (ii)     In connection with any offering
under this Section 4.1.2 involving an underwriting, TriPath shall not be
required to include any Warrant Shares in such underwriting unless Quest
Diagnostics accepts the terms of the underwriting as agreed upon between TriPath
and the underwriters selected by it. If in the opinion of the managing
underwriter of an underwritten offering the inclusion in such underwritten
distribution of all, or part of, the Warrant Shares would materially and
adversely affect such public offering, then TriPath will include in such
registration, to the extent of the number that TriPath is so advised can be sold
in such offering, (A) first, securities TriPath proposes to sell for its own
account, (B) second, securities a Requesting Security Holder proposes to sell
(whether through the exercise of demand or incidental registration rights), (C)
third, up to the full number of Warrant Shares that TriPath has been requested
to register, and (D) fourth, any other securities of TriPath included in such
registration by the holders thereof.

                  4.1.3    Registration Procedures. If and whenever TriPath is
required by the provisions of this Section 4.1 to use its commercially
reasonable efforts to effect the registration of any of the Warrant Shares under
the Securities Act, TriPath shall:

                                    (i)      prepare and file with the SEC a
Registration Statement with respect to such Warrant Shares and use its
commercially reasonable efforts to cause that Registration Statement to become
and remain effective;

                                    (ii)     prepare and file with the SEC any
amendments and supplements to the Registration Statement and the Prospectus (as
defined in Section 4.1.10 below) as may be necessary to keep the Registration
Statement effective for a period of not less

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than ninety (90) days from the effective date (excluding for purposes of
calculating the ninety (90) day period any period during which Quest Diagnostics
is required to discontinue disposition of the Warrant Shares under Section
4.1.4); cause the Prospectus used in connection therewith to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the period referred to above in accordance with
the intended method or methods of distribution by Quest Diagnostics set forth in
such Registration Statement as amended or supplement to the Prospectus used in
connection therewith;

                                    (iii)    furnish to Quest Diagnostics and
each managing underwriter, if any, without charge, at least one signed copy of
the Registration Statement and every post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference, and all exhibits (including those incorporated by reference); and
furnish such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto as Quest Diagnostics may
reasonably request in order to facilitate the public sale or other disposition
of the Warrant Shares being sold by Quest Diagnostics;

                                    (iv)     register or qualify the Warrant
Shares covered by the Registration Statement under such securities or "blue sky"
laws, if any, as may be applicable of such states of the United States in which
TriPath proposes to sell the securities of TriPath; provided, however, that
TriPath shall not be required in connection with this paragraph (iv) to qualify
as a foreign corporation in any jurisdiction;

                                    (v)      give notice to Quest Diagnostics
(i) when the Prospectus or any Prospectus supplement or post-effective amendment
has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any state securities authority with jurisdiction
for amendments and supplements to the Registration Statement and Prospectus or
for additional information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iv) of the issuance by any
state securities commission or other regulatory authority with jurisdiction of
any order suspending the qualification or exemption from qualification of any of
the Warrant Shares under any applicable state securities or "blue sky" laws and
(v) of the happening of any event that makes any statement made in the
Registration Statement or related Prospectus untrue or that requires the making
of any changes in the Registration Statement or Prospectus so that they will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

                                    (vi)     upon the occurrence of any event
contemplated by Section 4.1.3(v), prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Warrant Shares, the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;

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                                    (vii)    use its best efforts to obtain the
withdrawal at the earliest possible time of any order suspending or preventing
the use of any Prospectus or suspending the effectiveness of the Registration
Statement or any amendment or supplement thereto or suspending the qualification
of any Shares included in such Registration Statement for sale in any
jurisdiction;

                                    (viii)   cooperate with Quest Diagnostics
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Warrant Shares to be sold and not bearing
any restrictive legends; enable such Warrant Shares to be in such denominations
and registered in such names as Quest Diagnostics or the managing underwriters
may request at least two (2) trading days prior to any sale of Warrant Shares to
the underwriters; and

                                    (ix)     in connection with any offering
under this Section 4.1 involving an underwriting, enter into an underwriting
agreement in customary form.

                  4.1.4    Suspension Period. Upon receipt of a notice under
clauses (ii) through (v) of Section 4.1.3(v), Quest Diagnostics will forthwith
discontinue disposition of the Warrant Shares pursuant to the Registration
Statement until Quest Diagnostics' receipt of copies of the supplemented or
amended Prospectus, if any, or until Quest Diagnostics is advised in writing by
TriPath that the use of the Prospectus may be resumed and has received copies of
any additional or supplemental filings that are incorporated by reference in the
Prospectus, and, if so directed by TriPath, Quest Diagnostics will deliver to
TriPath all copies, other than permanent file copies then in Quest Diagnostics'
possession, of the Prospectus covering the Warrant Shares current at the time of
receipt of such notice.

                  4.1.5    Registration Expenses. TriPath will bear all expenses
incurred in connection with the registration of the Warrant Shares pursuant to
this Section 4.1, including without limitation all printing, legal and
accounting expenses incurred by TriPath and all registration and filing fees
imposed by the SEC, any state securities commission or the Nasdaq Stock Market
or, if the common stock of TriPath is not then listed on such market, the
principal national securities exchange or national market system on which
TriPath Stock is then traded or quoted. Quest Diagnostics will be responsible
for any brokerage commissions, underwriter's discounts or commissions and taxes
of any kind (including, without limitation, transfer taxes) with respect to any
disposition, sale or transfer of the Warrant Shares and for any legal,
accounting and other expenses incurred by Quest Diagnostics.

                  4.1.6    Indemnification.

                                    (i)      Indemnification by TriPath. TriPath
agrees to indemnify and hold harmless, to the full extent permitted by law,
Quest Diagnostics and each person who controls Quest Diagnostics within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (collectively, the "Controlling Persons"), from and against all losses,
claims, damages, liabilities and expenses (collectively, the "Damages"),
incurred by Quest Diagnostics and any such Controlling Person arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
a Registration Statement (or any amendment thereto), or any omission or alleged
omission to state therein a material fact

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necessary to make the statements therein in light of the circumstances under
which they were made not misleading, or any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if TriPath shall have furnished any amendments or supplements
thereto), or any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except insofar as such Damages arise out of
or are based upon any such untrue statement or omission based upon information
relating to Quest Diagnostics furnished in writing to TriPath by Quest
Diagnostics for use therein; provided, however, that TriPath shall not be liable
to Quest Diagnostics under this Section 4.1.6(i) to the extent that any such
Damages were caused by the fact that Quest Diagnostics sold the Warrant Shares
to a person as to whom it shall be established that there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the Prospectus
as then amended or supplemented if, and only if (A) TriPath has previously
furnished copies of such amended or supplemented Prospectus to Quest Diagnostics
and (B) such Damages were caused by any untrue statement or omission or alleged
untrue statement or omission contained in the Prospectus so delivered that was
corrected in such amended or supplemented Prospectus.

                                    (ii)     Indemnification by Quest
Diagnostics. Quest Diagnostics agrees to indemnify and hold harmless, to the
full extent permitted by law, TriPath, its directors and officers and each
person, if any, who controls TriPath within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from TriPath to Quest Diagnostics, but only with reference
to information relating to Quest Diagnostics furnished in writing to TriPath by
Quest Diagnostics for use in the Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto); and Quest
Diagnostics shall reimburse TriPath for reasonable legal or other expenses
incurred by TriPath in connection with investigating or defending any loss,
claim, damage, liability or action giving rise to the Damages incurred by
TriPath.

                                    (iii)    Procedure. Each party entitled to
indemnification under this Section 4.1 (the "Indemnified Party") shall give
prompt notice of any claim as to which indemnification may be sought to the
party required to provide indemnification (the "Indemnifying Party"), provided
that failure to give such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent of actual prejudice. The Indemnifying
Party shall be entitled to assume the defense of any such claim with counsel
reasonably satisfactory to the Indemnified Party. The Indemnified Party may
participate in such defense at its own expense, provided that the Indemnifying
Party will pay such expense if representation of the Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party
shall, except with the consent of the Indemnified Party, agree to any settlement
that does not include a release of the Indemnified Party from all liability in
respect of such claim, and the Indemnified Party shall not settle such claim
without the prior written consent of the Indemnifying Party.

                  4.1.7    "Stand-Off" Agreement. Quest Diagnostics, if
requested by TriPath and an underwriter of common stock or other securities of
TriPath, shall agree not to, directly or indirectly, (i) sell, offer, contract
to sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to

                                      -10-
<PAGE>

purchase or otherwise transfer or dispose of any of the Warrants, the Warrant
Shares or any other securities of TriPath held by Quest Diagnostics or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences or ownership of any of the Warrants, the Warrant
Shares or any other securities of TriPath held by Quest Diagnostics, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of TriPath Stock or other securities, in cash or otherwise
(collectively, "Transfer"), during the period commencing ten (10) days prior to
and expiring one hundred twenty (120) days following the effective date of a
registration statement not covering the Warrant Shares. Such agreement shall be
in writing in a form containing reasonable and customary provisions satisfactory
to TriPath and such underwriter and reasonably satisfactory to Quest
Diagnostics. TriPath may impose stop transfer instructions with respect to the
Warrant Shares or other securities subject to the foregoing restriction until
the end of the stand-off period. Quest Diagnostics' obligations under this
Section 4.1.7 shall terminate at such time as all Warrant Shares (a) have been
disposed of or sold either in accordance with a Registration Statement covering
Warrant Shares, pursuant to Rule 144 under the Securities Act, and/or in any
manner to a person or entity that is not entitled to the rights under this
Section 4.1 and/or (b) all Warrant Shares not disposed of or sold in accordance
with the preceding clause (a) may be sold (1) in any three (3) month period
pursuant to Rule 144 under the Securities Act or (2) pursuant to Rule 144(k)
under the Securities Act and, in either case under this clause (b) Quest
Diagnostics shall have acknowledged in writing that TriPath's obligations under
this Section 4.1 shall have terminated.

                  4.1.8    Information by Quest Diagnostics. Quest Diagnostics
shall furnish to TriPath such information regarding Quest Diagnostics and the
distribution proposed by Quest Diagnostics as TriPath may request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to in this Section 4.1.

                  4.1.9    Termination. TriPath's obligations under this Section
4.1 shall terminate with respect to any Warrant Shares, at such time as such
Warrant Shares (a) have been disposed of in accordance with a Registration
Statement covering such Warrant Shares, (b) have been sold pursuant to Rule 144
under the Securities Act or (c) have been sold in any manner to a person or
entity that is not entitled to the rights under this Section 4.1. TriPath's
obligations under this Section 4.1 shall be suspended during any period during
which the Warrant Shares (a) may be sold in any three (3) month period pursuant
to Rule 144 under the Securities Act or (b) may be sold pursuant to Rule 144(k)
under the Securities Act.

                  4.1.10   Certain Definitions. As used in this Section 4.1, the
following terms have the following meanings:

                                    (i)      "Prospectus" means the prospectus
included in any Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A under
the Securities Act), as amended or supplemented by any prospectus supplement,
and by all other amendments and supplements to the prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.

                                      -11-
<PAGE>

                                    (ii)     "Registration Statement" means any
registration statement of TriPath (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation) that covers the Warrant Shares pursuant to the provisions
of this Section 4.1 and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.

         4.2      Lock-Up of Warrants and Warrant Shares. Quest Diagnostics
hereby agrees that it will not directly or indirectly, (i) sell, offer, contract
to sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any of the Warrants or the Warrant
Shares or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of any of the Warrants
or the Warrant Shares, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of TriPath Stock or other securities, in
cash or otherwise (collectively, "Transfer"); provided, however, that Quest
Diagnostics may Transfer up to fifty percent (50%) of the Warrant Shares then
issuable upon exercise or conversion of exercisable or convertible Warrants
after the second anniversary of the Closing Date; and provided further, however,
that Quest Diagnostics may, in any event, Transfer any then outstanding Warrant
Shares after the third anniversary of the Closing Date. Quest Diagnostics
acknowledges and agrees that any certificate evidencing the Warrants or the
Warrant Shares shall bear an appropriate legend identifying the foregoing
restrictions (as well as the Securities Act legend contemplated by Section 3.5.6
above).

         4.3      Standstill.

                  4.3.1    Quest Diagnostics agrees that, for a period of four
(4) years from the Closing Date, unless specifically invited in writing to do so
by the Board of Directors of TriPath, neither Quest Diagnostics nor any its
affiliates will, directly or indirectly:

                                    (i)      acquire, offer, seek, propose or
agree to acquire by purchase or otherwise, individually or by joining a
partnership, limited partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act) (any such act, to "acquire"), any
(i) assets or businesses of TriPath or (ii) securities of TriPath entitled to
vote, or securities convertible into or exercisable or exchangeable or
redeemable for such securities (collectively, "Voting Securities");

                                    (ii)     form, join, participate in or
encourage the formation of a partnership, limited partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of assets or
businesses of TriPath or Voting Securities;

                                    (iii)    make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A under the Exchange Act) or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to TriPath, or initiate,
propose or otherwise solicit stockholders of TriPath for the approval of one or
more stockholder proposals

                                      -12-
<PAGE>

with respect to TriPath or induce or attempt to induce any other person to
initiate any stockholder proposal;

                                    (iv)     act, directly or indirectly, alone
or in concert with others, to seek to control the management, Board of
Directors, policies or affairs of TriPath, or solicit, propose, seek to effect
or negotiate with any other person with respect to any form of business
combination transaction involving, directly or indirectly, TriPath or any of its
subsidiaries, or any restructuring, recapitalization or similar transaction with
respect to TriPath, or announce or disclose an intent, purpose, plan or proposal
with respect to TriPath or any Voting Securities inconsistent with the
provisions of this Section 4.3;

                                    (v)      encourage any person, or directly
or indirectly participate, aid and abet or otherwise induce any person or engage
in any of the actions prohibited by this Section 4.3 or to engage in any actions
consistent with such prohibitions;

                                    (vi)     enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing;

                                    (vii)    other than pursuant to the
Collaboration Agreement or the Product Purchase Agreement or Section 4.1 of this
Agreement, take any actions reasonably likely to require TriPath to make public
disclosure regarding such matters;

                                    (viii)   make any request to amend or waive
any provision of this Section 4.3; or

                                    (ix)     disclose any intention, plan or
arrangement inconsistent with the foregoing.

                  4.3.2    For purposes of this Section 4.3, the invitation of
TriPath's Board of Directors shall be with the approval of a majority of those
individuals who are either: (a) members of TriPath's Board of Directors as of
the date hereof (the "Current Directors"); or (b) new members elected after the
date hereof by a majority of the Current Directors and any new members
previously elected pursuant to this clause (b). The term "affiliate" as used in
this Agreement shall have the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act, but shall not include directors or officers of Quest
Diagnostics acting in their individual capacities.

                                   ARTICLE 5

                                  MISCELLANEOUS

         5.1      Assignment. This Agreement may not be assigned or otherwise
transferred by either TriPath or Quest Diagnostics without the prior written
consent of the other party; provided, however, that each of the parties may,
without such consent, assign this Agreement (together with the Warrants) and its
rights and obligations hereunder (and under the Warrants) to an affiliate or in
connection with the transfer or sale of all or substantially all of its
business, or in the event of its merger or consolidation or change in control or
similar transaction. Any

                                      -13-
<PAGE>

purported assignment in violation of the preceding sentences shall be void. Any
permitted assignee shall assume in writing all obligations of its assignor under
this Agreement in writing.

         5.2      Severability. Should one or more provisions of this Agreement
be or become invalid, the parties hereto shall substitute, by mutual consent,
valid provisions for such invalid provisions, which such valid provisions in
their economic effect are sufficiently similar to the invalid provisions so that
it can be reasonably assumed the parties would have entered into this Agreement
with such valid provisions. In case such valid provisions cannot be agreed upon,
the invalidity of one or several provisions of this Agreement shall not affect
the validity of this Agreement as a whole, unless the invalid provisions are of
such essential importance to this Agreement that it is to be reasonably assumed
that the parties would not have entered into this Agreement without the invalid
provisions.

         5.3      Notices. Any notice or other communication required or
permitted to be given or made under this Agreement by one of the parties hereto
to the other shall be in writing, delivered personally or by facsimile (and
promptly confirmed by personal delivery or courier) or by next business day
delivery service of a nationally recognized overnight courier service (signature
required), addressed to such other party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor in accordance with this Section 5.3 and shall be effective upon
receipt by the addressee.

      If to Quest Diagnostics:      Quest Diagnostics Incorporated
                                    One Malcom Avenue
                                    Teterboro, New Jersey  07608
                                    Attention:  General Counsel
                                    Telephone (201) 393-5000
                                    Facsimile: (210) 393-5289

      with a copy to:               Quest Diagnostics Incorporated
                                    1290 Wall Street
                                    Lyndhurst, New Jersey  07071
                                    Attention: Vice President Anatomic Pathology
                                    Telephone:  (201) 729-8493
                                    Facsimile: (201) 729-8923

      If to TriPath:                TriPath Imaging, Inc.
                                    780 Plantation Drive
                                    Burlington, North Carolina  27218
                                    Attention:  General Counsel
                                    Telephone:  (800) 426-2176
                                    Facsimile:  (336) 290-8740

                                      -14-

<PAGE>

      with a copy to:               Palmer & Dodge LLP
                                    111 Huntington Avenue
                                    Boston, Massachusetts  02199
                                    Attention:  James T. Barrett, Esq.
                                    Telephone:  (617) 239-0385
                                    Facsimile:  (617) 227-4420

         5.4      Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to any choice of law principle that would dictate the application of the laws of
another jurisdiction.

         5.5      Entire Agreement; Amendments. This Agreement and Exhibits A-1,
A-2, A-3, A-4, and A-5 hereto, together with the Collaboration Agreement and the
Exhibits thereto, contains the entire understanding of the parties with respect
to the subject matter hereof and supersedes and terminates all prior and
contemporaneous agreements and understandings between the parties, whether oral
or in writing. All express or implied agreements and understandings, either oral
or written, heretofore made are expressly merged in and made a part of this
Agreement. This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by the parties hereto.

         5.6      Rules of Construction The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or ruling of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

         5.7      Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.

         5.8      Waiver. The waiver by either party hereto of any right
hereunder or of the failure to perform or of a breach by the other party shall
not be deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.

         5.9      Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
exchanged by facsimile if mutually agreed by the parties.

                            [SIGNATURE PAGE FOLLOWS]

                                      -15-
<PAGE>

         IN WITNESS WHEREOF, Quest Diagnostics and TriPath have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, as of the day and year first above written.

                         TRIPATH IMAGING, INC.

                         By:               /s/   Paul R. Sohmer
                            --------------------------------------------------
                                   Name:  Paul R. Sohmer, M.D.
                                   Title:  Chairman, President & CEO

                         QUEST DIAGNOSTICS INCORPORATED.

                         By:               /s/   Leo C. Farrenkopf
                            -----------------------------------------
                                   Name:  Leo C. Farrenkopf, Jr.
                                   Title:  Vice President

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                       PAGE
<S>                                                                                                                    <C>
ARTICLE 1             ISSUANCE OF WARRANTS; CLOSINGS............................................................         1

         1.1      Issuance of Warrants; Exercisability..........................................................         1

         1.2      The Closing...................................................................................         2

         1.3      Deliveries at Closing.........................................................................         3

ARTICLE 2             REPRESENTATIONS AND WARRANTIES OF TRIPATH.................................................         3

         2.1      Organization..................................................................................         3

         2.2      Authorization and Issuance of Warrants........................................................         3

         2.3      Authorization and Binding Effect..............................................................         3

         2.4      No Breach.....................................................................................         3

         2.5      Brokers; Expenses.............................................................................         4

         2.6      Authorized Capital............................................................................         4

         2.7      Nasdaq Listing................................................................................         4

ARTICLE 3             REPRESENTATIONS AND WARRANTIES OF QUEST DIAGNOSTICS.......................................         4

         3.1      Organization..................................................................................         4

         3.2      Authorization and Binding Effect..............................................................         4

         3.3      No Breach.....................................................................................         4

         3.4      Brokers; Expenses.............................................................................         5

         3.5      Investment Representations....................................................................         5

ARTICLE 4             COVENANTS.................................................................................         6

         4.1      Registration of Warrant Shares................................................................         6

         4.2      Lock-Up of Warrants and Warrant Shares........................................................        12

         4.3      Standstill....................................................................................        12

ARTICLE 5             MISCELLANEOUS.............................................................................        13

         5.1      Assignment....................................................................................        13

         5.2      Severability..................................................................................        14

         5.3      Notices.......................................................................................        14

         5.4      Applicable Law................................................................................        15

         5.5      Entire Agreement; Amendments..................................................................        15
</TABLE>

                                      -i-

<PAGE>

                                TABLE OF CONTENTS

                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
5.6      Rules of Construction.........................................................................        15

5.7      Headings......................................................................................        15

5.8      Waiver........................................................................................        15

5.9      Counterparts..................................................................................        15
</TABLE>

                                      -ii-

<PAGE>

                                                                     EXHIBIT A-1

THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).

                              TRIPATH IMAGING, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         This certifies that, for value received, TriPath Imaging, Inc., a
Delaware corporation (the "Holder"), is entitled to subscribe for and purchase
800,000 shares (subject to adjustment from time to time pursuant to the
provisions of Section 3 hereof) of Common Stock of Quest Diagnostics
Incorporated, Inc., a Delaware corporation (the "Company"), at the initial
exercise price of $9.25 per share, subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof (the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.

         As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.

         This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.

         The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."

         1.       Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the date hereof and ending at 5:00 p.m. Burlington, North
Carolina time on the third anniversary of the date hereof.

                                                                           A-1-1
<PAGE>

         2.       Exercise or Conversion of Warrant.

         2.1.     Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 780 Plantation Drive, Burlington, North Carolina (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.

         2.2.     Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:

         X = Y (A - B)
             --------
                 A

         where  X  =     the number of shares of Common Stock to be issued to
                         the holder;
                Y  =     the number of shares of Common Stock subject to this
                         Warrant being surrendered for conversion;
                A  =     the fair market value of one share of Common Stock; and
                B  =     the Warrant Price

         As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares of Common Stock sold by the Company, as determined in
good faith by the Board of Directors of the Company, unless the Company shall
become subject to a merger acquisition or other consolidation pursuant to which
the Company will not be the surviving party, in which case the current fair
market value of a share of Common Stock shall be deemed to be the value received
by the holders of the Company's Common Stock for each share of Common Stock
pursuant to such transaction.

         2.3.     Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue

                                                                           A-1-2
<PAGE>

and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise or conversion, registered in the name of the Holder
or its designee. The Holder will be deemed for all purposes to be the Holder of
the shares of Warrant Shares so purchased as of the first trading day following
the date of such exercise. If this Warrant should be exercised or converted in
part only, the Company shall, upon surrender of the certificate evidencing this
Warrant for cancellation, execute and deliver a new Warrant certificate
evidencing the right of the Holder to purchase the balance of the Warrant Shares
(or portions thereof) subject to purchase hereunder.

         2.4.     Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         2.5.     Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.

         3.       Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:

         3.1.     Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this Warrant immediately before such time and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.

         3.2.     Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.

                                                                           A-1-3
<PAGE>

         3.3.     Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.

         3.4.     Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.

         4.       Reorganizations; Reclassifications.

         4.1.     Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise or conversion of this
Warrant. Any such adjustment shall be made by and set forth in a supplemental
agreement between the Company, or any successor thereto, and the Holder and
shall for all purposes hereof conclusively be deemed to be an appropriate
adjustment. The Company will not effect any Reorganization involving another
person unless, upon or prior to the consummation thereof, the successor person
or the other person involved in the Reorganization will assume by written
instrument the obligation to deliver to the Holder such shares of stock,
securities, cash or property as in accordance with the foregoing provisions the
Holder will be entitled to receive.

                                                                           A-1-4
<PAGE>

         4.2.     Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.

         5.       Restriction on Transfer of Warrant; Warrant Agent; Legends.

         5.1.     Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).

         5.2.     Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.

         5.3.     Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
         FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
         ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
         REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
         EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
         RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
         THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"

                                                                           A-1-5
<PAGE>

         6.       Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.

         7.       Miscellaneous.

         7.1.     Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.

         7.2.     No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.

         7.3.     Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.

         7.4.     Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.

         7.5.     Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:

                  (a)      the date on which a record is to be taken for the
                           purpose of any dividend, distribution or grant of
                           rights, or, if a record is not to be taken, the date
                           as of which the shareholders of Common Stock of
                           record to be entitled to such dividend, distribution
                           or grant of rights are to be determined;

                                                                           A-1-6
<PAGE>

                  (b)      the date on which a record is to be taken for the
                           purpose of determining shareholders of Common Stock
                           entitled to vote on any reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up or
                           purchase, retirement or redemption; and

                  (c)      the date, if any, as of which holders of record of
                           the Common Stock will be entitled to exchange their
                           Common Stock for securities or other property
                           deliverable upon such reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up,
                           purchase, retirement or redemption.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.

TRIPATH IMAGING, INC.

By:_______________________________
Name:_____________________________
Title:____________________________

                                                                           A-1-7
<PAGE>

                              FORM OF SUBSCRIPTION

            (To be signed only on exercise or conversion of Warrant)

TO:      TRIPATH IMAGING, INC.

1.       Check Box that Applies:

         []       The undersigned hereby elects to purchase ______ shares of
                  Common Stock pursuant to the terms of the attached Warrant,
                  and tenders herewith cash payment of the purchase price of
                  such shares in full.

         []       The undersigned hereby elects to convert ______ shares subject
                  to the attached Warrant into shares of shares of Common Stock
                  pursuant to the terms of the attached Warrant.

2.       Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

Dated: __________

                   ________________________________________________
                   (Signature must conform to the name of holder as
                    specified on the face of
                    the Warrant)

                   ________________________________________________
                   ________________________________________________
                   (Address)

<PAGE>

                                                                     EXHIBIT A-2

THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).

                              TRIPATH IMAGING, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         This certifies that, for value received, TriPath Imaging, Inc., a
Delaware corporation (the "Holder"), is entitled to subscribe for and purchase
200,000 shares (subject to adjustment from time to time pursuant to the
provisions of Section 3 hereof) of Common Stock of Quest Diagnostics
Incorporated, Inc., a Delaware corporation (the "Company"), at the initial
exercise price of $10.18 per share, subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof (the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.

         As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.

         This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.

         The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."

         8.       Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the First Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the third anniversary of the date hereof;
provided, however, if the calculation as to the First Milestone Date shall be
delivered on or after such third anniversary, then the purchase or conversion
right represented by this Warrant shall

                                                                         A-2 - 1
<PAGE>

remain exercisable until 5:00 p.m. Burlington, North Carolina time on the tenth
day after delivery of such calculation as to the First Milestone Date; and
provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.

         9.       Exercise or Conversion of Warrant.

         9.1.     Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 780 Plantation Drive, Burlington, North Carolina (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.

         9.2.     Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:

         X  =  Y (A - B)
                  -----
                    A

         where             X  =     the number of shares of Common Stock
                                    to be issued to the holder;
                           Y  =     the number of shares of Common Stock
                                    subject to this Warrant
                                    being surrendered for conversion;
                           A  =     the fair market value of one share of
                                    Common Stock; and
                           B  =     the Warrant Price

         As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares

                                                                           A-2-2
<PAGE>

of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.

         9.3.     Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.

         9.4.     Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         9.5.     Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.

         10.      Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:

         10.1.    Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this

                                                                           A-2-3
<PAGE>

Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.

         10.2.    Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.

         10.3.    Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.

         10.4.    Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.

         11.      Reorganizations; Reclassifications.

         11.1.    Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property

                                                                           A-2-4
<PAGE>

thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.

         11.2.    Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.

         12.      Restriction on Transfer of Warrant; Warrant Agent; Legends.

         12.1.    Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).

         12.2.    Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.

         12.3.    Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST

                                                                           A-2-5
<PAGE>

         FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
         ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
         REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
         EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
         RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
         THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"

         13.      Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.

         14.      Miscellaneous.

         14.1.    Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.

         14.2.    No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.

         14.3.    Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.

         14.4.    Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.

                                                                           A-2-6
<PAGE>

         14.5.    Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:

                  (a)      the date on which a record is to be taken for the
                           purpose of any dividend, distribution or grant of
                           rights, or, if a record is not to be taken, the date
                           as of which the shareholders of Common Stock of
                           record to be entitled to such dividend, distribution
                           or grant of rights are to be determined;

                  (b)      the date on which a record is to be taken for the
                           purpose of determining shareholders of Common Stock
                           entitled to vote on any reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up or
                           purchase, retirement or redemption; and

                  (c)      the date, if any, as of which holders of record of
                           the Common Stock will be entitled to exchange their
                           Common Stock for securities or other property
                           deliverable upon such reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up,
                           purchase, retirement or redemption.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.

TRIPATH IMAGING, INC.

By: _____________________________________
Name: ___________________________________
Title:___________________________________

                                                                           A-2-7
<PAGE>

                              FORM OF SUBSCRIPTION

            (To be signed only on exercise or conversion of Warrant)

TO:      TRIPATH IMAGING, INC.

1.       Check Box that Applies:

         []       The undersigned hereby elects to purchase ______ shares of
                  Common Stock pursuant to the terms of the attached Warrant,
                  and tenders herewith cash payment of the purchase price of
                  such shares in full.

         []       The undersigned hereby elects to convert ______ shares subject
                  to the attached Warrant into shares of shares of Common Stock
                  pursuant to the terms of the attached Warrant.

2.       Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

Dated: __________

                    _____________________________________
                    (Signature must conform to the name of holder as specified
                     on the face of the Warrant)

                    _____________________________________
                    _____________________________________
                    (Address)

<PAGE>

                                                                     EXHIBIT A-3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).

                              TRIPATH IMAGING, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         This certifies that, for value received, TriPath Imaging, Inc., a
Delaware corporation (the "Holder"), is entitled to subscribe for and purchase
500,000 shares (subject to adjustment from time to time pursuant to the
provisions of Section 3 hereof) of Common Stock of Quest Diagnostics
Incorporated, Inc., a Delaware corporation (the "Company"), at the initial
exercise price of $10.64 per share, subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof (the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.

         As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.

         This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.

         The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."

         15.      Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Second Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the third anniversary of the date hereof;
provided, however, if the calculation as to the Second Milestone Date shall be
delivered on or after such third anniversary, then the purchase or conversion
right represented by this Warrant

                                                                         A-3 - 1

<PAGE>

shall remain exercisable until 5:00 p.m. Burlington, North Carolina time on the
tenth day after delivery of such calculation as to the Second Milestone Date;
and provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.

         16.      Exercise or Conversion of Warrant.

         16.1.    Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 780 Plantation Drive, Burlington, North Carolina (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.

         16.2.    Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:

         X  =  Y (A - B)
               --------
                   A

         where    X  =     the number of shares of Common Stock to be issued to
                           the holder;
                  Y  =     the number of shares of Common Stock subject to this
                           Warrant being surrendered for conversion;
                  A  =     the fair market value of one share of Common Stock;
                           and
                  B  =     the Warrant Price

         As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares

                                                                         A-3 - 2

<PAGE>

of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.

         16.3.    Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.

         16.4.    Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         16.5.    Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.

         17.      Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:

         17.1.    Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this

                                                                         A-3 - 3

<PAGE>

Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.

         17.2.    Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.

         17.3.    Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.

         17.4.    Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.

         18.      Reorganizations; Reclassifications.

         18.1.    Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property

                                                                         A-3 - 4

<PAGE>

thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.

         18.2.    Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.

         19.      Restriction on Transfer of Warrant; Warrant Agent; Legends.

         19.1.    Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).

         19.2.    Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.

         19.3.    Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST

                                                                         A-3 - 5

<PAGE>

         FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
         ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
         REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
         EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
         RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
         THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"

         20.      Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.

         21.      Miscellaneous.

         21.1.    Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.

         21.2.    No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.

         21.3.    Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.

         21.4.    Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.

                                                                         A-3 - 6

<PAGE>

         21.5.    Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:

                  (a)      the date on which a record is to be taken for the
                           purpose of any dividend, distribution or grant of
                           rights, or, if a record is not to be taken, the date
                           as of which the shareholders of Common Stock of
                           record to be entitled to such dividend, distribution
                           or grant of rights are to be determined;

                  (b)      the date on which a record is to be taken for the
                           purpose of determining shareholders of Common Stock
                           entitled to vote on any reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up or
                           purchase, retirement or redemption; and

                  (c)      the date, if any, as of which holders of record of
                           the Common Stock will be entitled to exchange their
                           Common Stock for securities or other property
                           deliverable upon such reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up,
                           purchase, retirement or redemption.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.

TRIPATH IMAGING, INC.

By: ___________________________________
Name: _________________________________
Title: ________________________________

                                                                         A-3 - 7

<PAGE>

                              FORM OF SUBSCRIPTION

            (To be signed only on exercise or conversion of Warrant)

TO:      TRIPATH IMAGING, INC.

1.       Check Box that Applies:

         []       The undersigned hereby elects to purchase ______ shares of
                  Common Stock pursuant to the terms of the attached Warrant,
                  and tenders herewith cash payment of the purchase price of
                  such shares in full.

         []       The undersigned hereby elects to convert ______ shares subject
                  to the attached Warrant into shares of shares of Common Stock
                  pursuant to the terms of the attached Warrant.

2.       Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

Dated: __________
                     ____________________________________
                     (Signature must conform to the name of holder as
                      specified on the face of the Warrant)

                     ____________________________________
                     ____________________________________
                     (Address)

<PAGE>

                                                                     EXHIBIT A-4

THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).

                              TRIPATH IMAGING, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         This certifies that, for value received, TriPath Imaging, Inc., a
Delaware corporation (the "Holder"), is entitled to subscribe for and purchase
1,000,000 shares (subject to adjustment from time to time pursuant to the
provisions of Section 3 hereof) of Common Stock of Quest Diagnostics
Incorporated, Inc., a Delaware corporation (the "Company"), at the initial
exercise price of $11.56 per share, subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof (the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.

         As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.

         This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.

         The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."

         22.      Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Third Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the fourth anniversary of the date hereof;
provided, however, if the calculation as to the Third Milestone Date shall be
delivered on or after such fourth anniversary, then the purchase or conversion
right represented by this Warrant shall

                                                                         A-4 - 1

<PAGE>

remain exercisable until 5:00 p.m. Burlington, North Carolina time on the tenth
day after delivery of such calculation as to the Third Milestone Date; and
provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.

         23.      Exercise or Conversion of Warrant.

         23.1.    Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 780 Plantation Drive, Burlington, North Carolina (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.

         23.2.    Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:

         X  =  Y (A - B)
               --------
                   A

         where  X  =     the number of shares of Common Stock to be issued to
                         the holder;
                Y  =     the number of shares of Common Stock subject to this
                         Warrant being surrendered for conversion;
                A  =     the fair market value of one share of Common Stock; and
                B  =     the Warrant Price

         As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares

                                                                         A-4 - 2

<PAGE>

of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.

         23.3.    Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.

         23.4.    Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         23.5.    Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.

         24.      Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:

         24.1.    Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this

                                                                         A-4 - 3

<PAGE>

Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.

         24.2.    Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.

         24.3.    Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.

         24.4.    Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.

         25.      Reorganizations; Reclassifications.

         25.1.    Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property

                                                                         A-4 - 4
<PAGE>

thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.

         25.2.    Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.

         26.      Restriction on Transfer of Warrant; Warrant Agent; Legends.

         26.1.    Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).

         26.2.    Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.

         26.3.    Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST

                                                                         A-4 - 5

<PAGE>

         FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
         ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
         REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
         EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
         RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
         THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"

         27.      Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.

         28.      Miscellaneous.

         28.1.    Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.

         28.2.    No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.

         28.3.    Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.

         28.4.    Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.

                                                                         A-4 - 6

<PAGE>

         28.5.    Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:

                  (a)      the date on which a record is to be taken for the
                           purpose of any dividend, distribution or grant of
                           rights, or, if a record is not to be taken, the date
                           as of which the shareholders of Common Stock of
                           record to be entitled to such dividend, distribution
                           or grant of rights are to be determined;

                  (b)      the date on which a record is to be taken for the
                           purpose of determining shareholders of Common Stock
                           entitled to vote on any reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up or
                           purchase, retirement or redemption; and

                  (c)      the date, if any, as of which holders of record of
                           the Common Stock will be entitled to exchange their
                           Common Stock for securities or other property
                           deliverable upon such reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up,
                           purchase, retirement or redemption.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.

TRIPATH IMAGING, INC.

By:  __________________________________
Name:__________________________________
Title:_________________________________

                                                                         A-4 - 7

<PAGE>

                              FORM OF SUBSCRIPTION

            (To be signed only on exercise or conversion of Warrant)

TO:      TRIPATH IMAGING, INC.

1.       Check Box that Applies:

         []       The undersigned hereby elects to purchase ______ shares of
                  Common Stock pursuant to the terms of the attached Warrant,
                  and tenders herewith cash payment of the purchase price of
                  such shares in full.

         []       The undersigned hereby elects to convert ______ shares subject
                  to the attached Warrant into shares of shares of Common Stock
                  pursuant to the terms of the attached Warrant.

2.       Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

Dated: __________

                   ________________________________________
                   (Signature must conform to the name of holder as
                    specified on the face of the Warrant)

                   ________________________________________
                   ________________________________________
                    (Address)

<PAGE>

                                                                     EXHIBIT A-5

THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).

                              TRIPATH IMAGING, INC.

                        WARRANT TO PURCHASE COMMON STOCK

         This certifies that, for value received, TriPath Imaging, Inc., a
Delaware corporation (the "Holder"), is entitled to subscribe for and purchase
1,500,000 shares (subject to adjustment from time to time pursuant to the
provisions of Section 3 hereof) of Common Stock of Quest Diagnostics
Incorporated, Inc., a Delaware corporation (the "Company"), at the initial
exercise price of $12.03 per share, subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof (the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.

         As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.

         This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.

         The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."

         29.      Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Fourth Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the fourth anniversary of the date hereof;
provided, however, if the calculation as to the Fourth Milestone Date shall be
delivered on or after such fourth anniversary, then the purchase or conversion
right represented by this Warrant

                                                                         A-5 - 1

<PAGE>

shall remain exercisable until 5:00 p.m. Burlington, North Carolina time on the
tenth day after delivery of such calculation as to the Fourth Milestone Date;
and provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.

         30.      Exercise or Conversion of Warrant.

         30.1.    Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 780 Plantation Drive, Burlington, North Carolina (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.

         30.2.    Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:

         X  =  Y (A - B)
               --------
                   A

         where             X  =     the number of shares of Common Stock to be
                                    issued to the holder;
                           Y  =     the number of shares of Common Stock subject
                                    to this Warrant being surrendered for
                                    conversion;
                           A  =     the fair market value of one share of Common
                                    Stock; and
                           B  =     the Warrant Price

         As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares

                                                                         A-5 - 2

<PAGE>

of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.

         30.3.    Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.

         30.4.    Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         30.5.    Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.

         31.      Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:

         31.1.    Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this

                                                                         A-5 - 3

<PAGE>

Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.

         31.2.    Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.

         31.3.    Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.

         31.4.    Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.

         32.      Reorganizations; Reclassifications.

         32.1.    Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property

                                                                         A-5 - 4

<PAGE>

thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.

         32.2.    Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.

         33.      Restriction on Transfer of Warrant; Warrant Agent; Legends.

         33.1.    Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).

         33.2.    Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.

         33.3.    Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
         SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST

                                                                         A-5 - 5

<PAGE>

         FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
         ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
         REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
         EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
         RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
         THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
         CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"

         34.      Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.

         35.      Miscellaneous.

         35.1.    Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.

         35.2.    No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.

         35.3.    Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.

         35.4.    Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.

                                                                         A-5 - 6

<PAGE>

         35.5.    Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:

                  (a)      the date on which a record is to be taken for the
                           purpose of any dividend, distribution or grant of
                           rights, or, if a record is not to be taken, the date
                           as of which the shareholders of Common Stock of
                           record to be entitled to such dividend, distribution
                           or grant of rights are to be determined;

                  (b)      the date on which a record is to be taken for the
                           purpose of determining shareholders of Common Stock
                           entitled to vote on any reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up or
                           purchase, retirement or redemption; and

                  (c)      the date, if any, as of which holders of record of
                           the Common Stock will be entitled to exchange their
                           Common Stock for securities or other property
                           deliverable upon such reclassification,
                           reorganization, consolidation, merger, sale,
                           transfer, dissolution, liquidation, winding up,
                           purchase, retirement or redemption.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.

TRIPATH IMAGING, INC.

By:  ___________________________________
Name:___________________________________
Title:__________________________________

                                                                         A-5 - 7

<PAGE>

                              FORM OF SUBSCRIPTION

            (To be signed only on exercise or conversion of Warrant)

TO:      TRIPATH IMAGING, INC.

1.       Check Box that Applies:

         []       The undersigned hereby elects to purchase ______ shares of
                  Common Stock pursuant to the terms of the attached Warrant,
                  and tenders herewith cash payment of the purchase price of
                  such shares in full.

         []       The undersigned hereby elects to convert ______ shares subject
                  to the attached Warrant into shares of shares of Common Stock
                  pursuant to the terms of the attached Warrant.

2.       Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.

Dated: __________
                    ________________________________________
                    (Signature must conform to the name of holder as
                     specified on the face of the Warrant)

                    ________________________________________
                    ________________________________________
                     (Address)EX-10.1  2004 INCENTIVE PLAN

 

Exhibit 10.1

TBC CORPORATION

2004 INCENTIVE PLAN

	Effective on Approval By the Board of Directors on March 26, 2004;
Approved By Stockholders on April 28, 2004

 

Table of Contents

	 	 	 	 	 
	Section
	 	Page

	1.  Purpose
	 	 	1	 
	2.  Definitions
	 	 	1	 
	3.  Maximum Incentive Awards; Adjustments
	 	 	3	 
	4.  Administration
	 	 	4	 
	5.  Eligibility and Incentive Awards
	 	 	5	 
	6.  Options
	 	 	6	 
	7.  Performance Awards
	 	 	9	 
	8.  Additional Provisions Applicable to Section 162(m) Performance Awards
	 	 	12	 
	9.  Non-Assignability
	 	 	13	 
	10. Amendment and Termination of Plan
	 	 	14	 
	11. Notices
	 	 	14	 
	12. Benefits of Plan
	 	 	14	 
	13. Stockholder Approval and Term of Plan
	 	 	15	 

 

TBC CORPORATION

2004 INCENTIVE PLAN

Section 1. Purpose.

     The purposes of this 2004 Incentive Plan (the “Plan”) are (i) to establish
a means for providing incentives to key employees of the Company (as
hereinafter defined) upon whose judgment, initiative, and efforts the long-term
growth and success of the Company are largely dependent; (ii) to assist the
Company in attracting and retaining key employees of proven ability; and (iii)
to increase the identity of interests of the Company’s key employees with those
of its stockholders by providing such employees with the opportunity to acquire
stock of the Company.

Section 2. Definitions.

     “Annual Performance Award” means a right to receive cash contingent upon
the attainment of Performance Objectives determined by the Committee as more
fully set forth in Section 7 hereof.

     “Base Salary” means the base salary earned by a Participant from
employment with the Company at the beginning of the applicable Year or Cycle,
including amounts which a Participant has elected to defer or to contribute to
a flexible benefit, savings, or retirement plan established by the Company.

     “Board” means the Board of Directors of the Company.

     “Change of Control” means any change in control of the Company of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”); provided that, without limitation, a Change of
Control shall be deemed to have occurred if (i) any “person” (as defined in
Sections 13(d) and 14(d)(2) of the Exchange Act), other than any entity then
controlled by the Company, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company’s then outstanding securities; (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company’s stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the Company merges or consolidates with another
corporation or entity and the Company or an entity controlled by the Company
immediately prior to the merger or consolidation is not the surviving entity;
or (iv) a sale, lease, exchange or other disposition of all or substantially
all of the assets of the Company takes place.

     “Code” means the Internal Revenue Code of 1986, as now or hereafter
amended.

     “Committee” means the Compensation Committee of the Board of Directors of
the Company.

     “Company” means TBC Corporation and, when used with reference to
employment of a Participant, includes any Subsidiary.

-1-

 

     “Cycle” means a period of two or more calendar years beginning on January
1 of the first year and ending on December 31 of the last year. Multiple
Cycles may be established and in effect at any given time under the Plan.

     “Employee” means any key employee of the Company or any Subsidiary.

     “Fair Market Value” means the closing price of a Share on the NASDAQ
National Market System on the date the value of a Share is to be determined or,
in the event the Shares are listed on any exchange, the closing price on such
exchange on the date the value of a Share is to be determined. If there are no
sales on any determination date, the Fair Market Value of a Share shall equal
the mean between the bid and asked prices for a Share on such date on the
NASDAQ National Market System or such exchange.

     “Incentive Award” means an Option, Annual Performance Award, or Long-Term
Performance Award granted under the Plan.

     “Incentive Stock Option” means an Option that is an Incentive Stock
Option, as defined in Section 422 of the Code.

     “Long-Term Performance Award” means a right to receive cash contingent
upon the attainment of Performance Objectives determined by the Committee as
more fully set forth in Section 7 hereof.

     “Maximum Annual Performance Award” for each Participant means 200% of that
Participant’s Targeted Annual Performance Award.

     “Maximum Performance Objective” for each Performance Measure upon which
any Annual Performance Award is based means the Performance at which 200% of
the Annual Performance Award attributable to that Performance Measure will be
earned by a Participant. No additional Annual Performance Award will be
payable under the Plan to any Participant for Performance above an applicable
Maximum Performance Objective.

     “Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.

     “Option” means a right to purchase Shares at a specified price; “Optionee”
means the holder of an Option.

     “Participant” means an Employee selected to receive an Incentive Award.

     “Performance” means the extent to which a Performance Measure is achieved
during an applicable Year or Cycle.

     “Performance Award” means, individually, an Annual Performance Award or a
Long-Term Performance Award and, collectively, Annual Performance Awards and
Long-Term Performance Awards.

-2-

 

     “Performance Measure” means one of the criteria by which the eligibility
of a Participant for an Annual Performance Award or Long-Term Performance
Award, in respect of an applicable Year or Cycle, is to be determined pursuant
to Section 8(b), except that if the underlying Performance Award is not
intended to be “performance-based” within the meaning of Code Section
162(m)(4)(C), the Committee has the discretion to select for use as Performance
Measures any criteria, whether or not listed in Section 8(b).

     “Performance Objectives” for each Performance Measure mean, collectively,
the Threshold Performance Objective, the Target Performance Objective, and with
respect to Annual Performance Awards, the Maximum Performance Objective, for
that Performance Measure.

     “Shares” means the shares of Common Stock of the Company.

     “Subsidiary” means any entity more than 50% of the voting control of which
is held, directly or indirectly, by the Company.

     “Targeted Annual Performance Award” for each Participant means the amount,
stated as a percentage of Base Salary, which a Participant is expected to earn
as an Annual Performance Award if Targeted Performance Objectives for all
Performance Measures applicable to that Participant are met.

     “Targeted Long-Term Performance Award” for each Participant means the
amount, stated as a percentage of Base Salary, which a Participant is expected
to earn as a Long-Term Performance Award if Targeted Performance Objectives for
all Performance Measures applicable to that Participant are met.

     “Targeted Performance Objective” for each Performance Measure means the
Performance at which 100% of the applicable Annual Performance Award or
Long-Term Performance Award attributable to that Performance Measure will be
earned by a Participant.

     “Tax Date” means the date as of which the amount of any withholding tax
payment with respect to the exercise of an Option is calculated.

     “Threshold Performance Objective” for each Performance Measure means the
Performance that must be exceeded before a Participant is eligible for any
Annual Performance Award or Long-Term Performance Award, as applicable,
attributable to that Performance Measure. No Annual Performance Award or
Long-Term Performance Award will be payable under the Plan to any Participant
for Performance at or below the applicable Threshold Performance Objective for
a Performance Measure.

     “Year” means a calendar year.

Section 3. Maximum Incentive Awards; Adjustments.

     (a) Options. All grants of Options under the Plan shall be subject to
the following limitations:

-3-

 

     (i) Maximum Number - Aggregate. Subject to the remaining provisions
of this Section 3(a), the maximum number of Shares that may be issued
pursuant to Options granted under the Plan shall be 2,000,000. Any Shares
so issued may be authorized and unissued Shares or Shares held in the
Company’s treasury.

     (ii) Terminated or Forfeited Options. If any Option granted under
the Plan is terminated or forfeited prior to its exercise in full, the
Shares that would otherwise have been issued upon the exercise of the
Option shall not be charged against the maximum number of Shares available
for issuance pursuant to Section 3(a)(i) and may be used for new Option
grants.

     (iii) Certain Reductions. Unless prohibited by applicable Treasury
Income Tax Regulations, if any Shares are tendered or withheld (by
attestation as set forth in Section 6(d) or otherwise) in payment of all
or part of the Option price of Shares issuable upon the exercise of any
Option granted under the Plan or in satisfaction of withholding tax
obligations with respect to the exercise of any Option granted under the
Plan, the number of Shares that shall be charged against the maximum
number of Shares available for issuance pursuant to Section 3(a)(i) shall
be reduced by the number of Shares so tendered in payment or withheld.

     (iv) Maximum Number - Per Employee. Subject to Section 3(b), no
Employee shall be granted Options for more than 100,000 Shares in the
aggregate in any Year.

     (b) Recapitalization Adjustment. In the event of any change affecting
the Shares by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, combination or exchange of stock or other corporate
change, or any distribution to a holder of Shares other than ordinary cash
dividends, the Committee shall make such adjustment, if any, as it may deem
appropriate to avoid dilution in the number and kind of shares authorized for
issuance under the Plan, the number and kind of shares subject to Options, and
the Option price.

     (c) Performance Award Limitations. All awards of Annual Performance
Awards and Long-Term Performance Awards shall be subject to the following
limitations:

     (i) Annual Performance Award Limitation. The Maximum Annual
Performance Award that an Employee may be eligible to receive with respect
to each Year shall not exceed $1,000,000.

     (ii) Long-Term Performance Award Limitation. The Targeted Long-Term
Performance Award that an Employee may be eligible to receive with respect
to each Cycle shall not exceed $1,000,000.

Section 4. Administration.

     (a) Committee. The Plan shall be administered by the Committee. Each
director serving on the Committee shall be a “non-employee director” within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 and
an “outside director” within the meaning of Code Section 162(m).

-4-

 

     (b) Authority. The Committee shall have and exercise all the power and
authority granted to it under the Plan. Subject to Section 8 and the other
provisions of the Plan, the Committee shall have authority in its sole
discretion from time to time (i) to designate the Employees who shall be
granted Incentive Awards; (ii) to prescribe such limitations, restrictions and
conditions upon any Incentive Award as the Committee shall deem appropriate;
(iii) to interpret the Plan and to adopt, amend and rescind rules and
regulations relating to the Plan; (iv) to revise the Performance Measures
applicable to Performance Awards; and (v) to make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan.

     (c) Committee Actions. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at a meeting at which
a quorum is present, or acts reduced to or approved in writing by all members
of the Committee, shall be acts of the Committee. All such actions shall be
final, conclusive, and binding. No member of the Committee shall be liable for
any action taken or decision made in good faith relating to the Plan or any
Incentive Award granted hereunder. In the performance of their duties, the
members of the Committee shall be fully protected in relying in good faith upon
information provided by the Company’s officers or auditors.

     (d) Interpretation and Construction. Any provision of this Plan to the
contrary notwithstanding, (i) Options and designated Performance Awards under
this Plan are intended to qualify as performance-based compensation within the
meaning of Code Section 162(m)(4)(C); and (ii) any provision of this Plan that
would prevent an Option or designated Performance Award from so qualifying
shall be administered, interpreted and construed to carry out such intention
and any provision that cannot be so administered, interpreted and construed
shall to that extent be disregarded.

     (e) No Repricing. Notwithstanding anything to the contrary set forth
elsewhere in the Plan, the Committee shall have no authority to reprice any
Option granted under the Plan if such repricing has not been approved by the
stockholders of the Company.

Section 5. Eligibility and Incentive Awards.

     (a) Eligible Employees. The Committee may grant Incentive Awards to any
Employee.

     (b) Incentive Awards. Incentive Awards may be granted in any one or more
combinations of (i) Incentive Stock Options; (ii) Nonqualified Stock Options;
(iii) Annual Performance Awards; and (iv) Long-Term Performance Awards. All
Incentive Awards shall be subject to such other terms and conditions as may be
established by the Committee. Determinations by the Committee with respect to
matters relating to the Plan, including without limitation, designation of
Participants, the form, amount and timing of granting of Incentive Awards, the
terms and provisions of Incentive Awards, and the written documents evidencing
Incentive Awards, need not be uniform and may be made selectively among
Employees who receive, or are eligible to receive, Incentive Awards, whether or
not such Employees are similarly situated.

     (c) Employment. The Plan and the Incentive Awards granted hereunder
shall not confer upon any Employee the right to continued employment with the
Company or affect in any way the right of the Company to terminate the
employment of any Employee at any time and for any reason.

-5-

 

Section 6. Options.

     The Committee may grant Incentive Stock Options and Nonqualified Stock
Options and such Options shall be subject to the following terms and conditions
and such other terms and conditions as the Committee may prescribe.

     (a) Provisions Applicable to All Options. All Options granted under the
Plan shall be subject to the following terms and conditions:

     (i) Written Form. The terms and conditions of each Option granted
under the Plan shall be set forth in writing in a form which shall be
approved by the Committee.

     (ii) Option Price. The Option price per Share with respect to each
Option shall be determined by the Committee but shall not be less than the
Fair Market Value per Share on the date the Option is granted.

     (iii) Term and Exercise of Options. Subject to Section 6(b)(i), the
term of each Option shall be not more than ten years after the date of
grant. At the time an Option is granted, the Committee may provide that
the Option may be exercised in full or in part only after the passage of a
specified period or periods of time following the date of grant or only if
specified conditions have been satisfied. Except as set forth in Section
6(a)(vi), an Option may be exercised only if the Optionee has been
continuously employed by the Company since the date of grant.

     (iv) Other Terms. At the time an Option is granted, the Committee
may specify such other terms, restrictions or limitations as it may deem
appropriate in addition to those set forth herein, including without
limitation, restrictions on the transferability of the Shares issuable
upon the exercise of the Option.

     (v) Procedure for Exercise of Options and Payment. The holder of an
Option granted under the Plan may exercise the Option in full or in part
(but for full Shares only) by giving written notice of exercise to the
Committee. At the time such notice is given, the Option price for the
Shares purchased must be paid in full either in cash or by delivery of
Shares owned by the Optionee or any combination of cash and already-owned
Shares. In any case in which payment of the Option price is to be made by
delivery of already-owned Shares, the attestation procedure set forth in
Section 6(d) may be used, subject to the limitations described therein. An
Option shall be deemed exercised on the date the Committee receives
written notice of the exercise, together with full payment for the Shares
purchased. In the event already-owned Shares are used to pay all or a
portion of the Option price, such Shares must have been held by the Option
holder for at least six months prior to their delivery to the Company.
The amount credited to payment of the Option price shall be the Fair
Market Value of the already-owned Shares on the date the Option is
exercised.

     (vi) Certain Events Impacting Outstanding Options.

     (A) Leaves of Absence. Whether authorized leave of absence or
absence for military or governmental service constitutes a
termination of employment for purposes

-6-

 

of any Option shall be determined by the Committee, after
consideration of any applicable regulations issued under the Code.

     (B) Termination of Employment. Subject to the limitation set
forth in Section 6(a)(vi)(D), at the time an Option is granted, or
at such other time as the Committee may determine, with respect to
all or any portion of any Option as the Committee may determine, the
Committee may provide that if the Optionee ceases to be employed by
the Company for any reason (including retirement or disability)
other than death, then the Option will continue to vest or the
vesting of the Option will be accelerated and/or the Option will
continue to be exercisable by the Optionee for such additional
period (not to exceed the remaining term of such Option) after
termination of employment as the Committee may provide.

     (C) Death. At the time an Option is granted or at such other
time as the Committee may determine, the Committee may provide that
if the Optionee dies while employed by the Company or while entitled
to the benefits of any additional exercise period established by the
Committee with respect to such Option in accordance with Section
6(a)(vi)(B), then the Option will continue to be exercisable by the
person or persons (including the holder’s estate) to whom the
holder’s rights with respect to such Option have passed by will or
by the laws of descent and distribution or the holder’s designated
beneficiary, for such additional period after death (not to exceed
the remaining term of such Option) as the Committee may provide.

     (D) Limitation on Exercise. Except in the case of death,
disability or retirement, or under such other circumstances as the
Committee may from time to time determine, no Option shall be
exercisable prior to the first anniversary of its date of grant.

     (b) Additional Provisions Applicable to Incentive Stock Options. The
following additional terms and provisions shall apply to all Incentive Stock
Options granted under the Plan, notwithstanding any other provisions of this
Section 6 to the contrary:

     (i) Certain Optionees. No Incentive Stock Option shall be granted
to any Employee who possesses, directly or indirectly (as provided in
Section 424(d) of the Code), at the time of grant, more than 10% of the
combined voting power of all classes of stock of the Company, any
Subsidiary or any parent corporation (as defined in the Code), unless (A)
the option price is at least 110% of the Fair Market Value of the Shares
subject to the Option on the date such Option is granted, and (B) such
Option is not exercisable after the expiration of five years from the date
of grant.

     (ii) $100,000 Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of Shares with respect
to which Incentive Stock Options granted under the Plan and all other
plans of the Company, any Subsidiary, and any parent corporation are
exercisable for the first time by any individual in any calendar year
shall not exceed $100,000, or such other maximum amount then permitted by
the Code.

-7-

 

     (iii) No Grants After Ten Years. No Incentive Stock Option may be
granted on or after the tenth anniversary of the adoption of the Plan by
the Board.

     (c) Fractional Shares. No fractional Shares shall be issued pursuant to
the exercise of an Option, nor shall any cash payment be made in lieu of
fractional Shares.

     (d) Attestation Procedure. If a holder desires to pay the Option price by
delivery of already-owned Shares, the holder may either physically deliver
already-owned Shares or follow the attestation procedure set forth in this
Section 6(d). To attest to the ownership of already-owned Shares, the holder
shall submit to the Company a signed statement at the time of exercise of an
Option that (i) sets forth the number of Shares already-owned by the holder
that are to be used in payment of the Option price (the “Payment Shares”), (ii)
confirms that the holder is the owner of the Payment Shares, and (iii) if the
Payment Shares are registered in the holder’s name, sets forth the certificate
number(s) of the Payment Shares. The Payment Shares shall be treated as having
been delivered to the Company by the holder on the date of exercise, and the
Company shall issue to the holder a certificate for the number of Shares being
purchased, less the number of Payment Shares. The Committee shall have the
authority to amend the foregoing procedure from time to time or to limit its
use in such manner as the Committee may in its discretion determine.

     (e) Change of Control. In order to maintain a Participant’s rights with
respect to any Option in the event of a Change of Control, the Committee may,
in its sole discretion, take any one or more of the following actions, either
at the time that the Option is granted or at any time thereafter: (i) provide
for the acceleration of any time periods relating to the exercise of any
Option, so that such Option may be exercised in full on or before a date fixed
by the Committee, (ii) provide for the purchase of any Option by the Company
for an amount of cash equal to the amount that could have been attained upon
the exercise of such Option had such Option been currently exercisable or
payable, (iii) make such adjustment to any Option as the Committee deems
appropriate to reflect a Change of Control, or (iv) cause any Option to be
assumed, or new rights substituted therefor, by the acquiring or surviving
corporation, if any, in connection with a Change of Control.

     (f) Withholding for Taxes. The Company shall be entitled, if necessary
or desirable, to withhold from any cash compensation otherwise payable to the
holder of any Option, the amount of any required federal, state and local
withholding tax attributable to the Shares to be issued upon exercise of the
Option, or the Company may defer issuing any Shares upon exercise of any Option
if any such tax, charge, or assessment is pending until the Company is
indemnified to the Committee’s satisfaction.

     (g) Use of Shares to Pay Withholding Taxes. The holder of a Nonqualified
Stock Option may elect to have the Company retain from the Shares to be issued
upon the exercise of the Option Shares having a Fair Market Value on the Tax
Date equal to the required federal, state and local withholding tax payments to
be made by the holder with respect thereto, in lieu of making such payments in
cash. The Committee may from time to time establish rules or limitations with
respect to the right of a holder to elect to have the Company retain Shares in
satisfaction of withholding payments.

     (h) Deferral of Receipt of Shares. The Committee may establish
procedures to enable the holder of any outstanding Option to defer receipt of
the Shares issuable upon exercise of such Option.

-8-

 

     (i) Compliance with Laws and Exchange Requirements. No Option shall be
granted and no Shares shall be issued in connection with any Option unless the
grant of the Option and the issuance and delivery of Shares pursuant thereto
shall comply with all relevant provisions of state and federal law, including
without limitation, the Securities Act of 1933, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of the NASDAQ National
Market System or any stock exchange upon which the Shares may then be listed.

Section 7. Performance Awards.

     The Committee may grant to Employees, Annual Performance Awards for any
Year beginning after December 31, 2004, and Long-Term Performance Awards for
any Cycle beginning after December 31, 2004. Performance Awards shall be
subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe:

     (a) Performance Award Amounts and Performance Goals. The amount which a
Participant selected to receive a Performance Award has an opportunity to earn
is based upon (i) the specified percentage of the Participant’s Base Salary
represented by that Participant’s Targeted Annual Performance Award or Targeted
Long-Term Performance Award, as the case may be; (ii) the Performance of the
Performance Measures applicable to that Participant; (iii) the respective
weightings of those Performance Measures; and (iv) the Performance Objectives
for each applicable Performance Measure.

     (b) Procedure for Implementation.

     (i) CEO Recommendations. As promptly as possible after January 1 of
each applicable Year or of the first year of each Cycle, the Chief
Executive Officer of the Company shall submit his recommendations to the
Committee as to Employees (other than the Chief Executive Officer) (A) who
should be Participants with respect to Annual Performance Awards for the
then current Year and the Targeted Annual Performance Award for each
recommended Participant; and (B) who should be Participants with respect
to Long-Term Performance Awards for the applicable Cycle and the Targeted
Long-Term Performance Award for each recommended Participant. With these
recommendations, the Chief Executive Officer shall also submit his
recommendations as to the Performance Measures applicable to each
recommended Participant and their respective weightings, and the Threshold
Performance Objective, Targeted Performance Objective, and for Annual
Performance Awards, the Maximum Performance Objective, for each
Performance Measure, together with such explanations as the Chief
Executive Officer may deem appropriate or the Committee shall request.

     (ii) Committee Action. The Committee shall act promptly upon the
recommendations of the Chief Executive Officer of the Company as to the
matters listed in Section 7(b)(i), with such changes in the
recommendations of the Chief Executive Officer as the Committee may adopt,
and shall at that time also approve the Performance Measures and the
Performance Objectives for each Performance Measure which shall be
applicable to the Chief Executive Officer for the then current Year or
applicable Cycle, as well as the respective weightings of each Performance
Measure.

-9-

 

     (iii) Furnishing of Information to Participants. Action by the
Committee in accordance with Section 7(b)(ii) shall constitute direction
to the Chief Executive Officer of the Company to furnish to Participants
for the then current Year or applicable Cycle, as promptly as reasonably
possible, information with respect to their respective Targeted Annual
Performance Award and/or Targeted Long-Term Performance Award, Performance
Measures, weighting, Performance Objectives and with respect to Annual
Performance Awards, Maximum Performance Objectives, for that Year or
Cycle.

     (iv) Reduction of Targeted Performance Award Percentages. The
percentage of a Participant’s Base Salary represented by that
Participant’s Targeted Annual Performance Award or Targeted Long-Term
Performance Award shall not be reduced for any Year or Cycle after the
information described in Section 7(b)(iii) has been furnished to that
Participant.

     (c) Performance Award Formula; Calculation. Performance Awards shall be
calculated as follows:

     (i) General Rules. As to each Performance Measure applicable to a
Participant, (A) if the Threshold Performance Objective is not exceeded,
no Performance Award shall be made with respect to such Performance
Measure; (B) in the case of a Long-Term Award, if the Targeted
Performance Objective is met or exceeded, the amount used in calculating
the Long-Term Performance Award attributable to that Performance Measure
shall be the Targeted Performance Objective for that Performance Measure;
and (C) in the case of an Annual Performance Award, if the Maximum
Performance Objective is met or exceeded, the amount used in calculating
the Annual Performance Award attributable to that Performance Measure
shall be the Maximum Performance Objective for that Performance Measure.

     (ii) Performance Between Threshold and Targeted Performance
Objectives. For each Performance Measure for which the Performance
exceeds the Threshold Performance Objective for that Performance Measure,
but is less than or equal to the Targeted Performance Objective for that
Performance Measure, the amount of the Performance Award payable to a
Participant shall be equal to the Participant’s Base Salary, multiplied
by the Targeted Annual Performance Award or Targeted Long-Term
Performance Award, as the case may be, percentage applicable to that
Participant, multiplied by the percentage weighting of that Performance
Measure, multiplied by a fraction (computed to the nearest hundredth of
one percent), the numerator of which is an amount equal to the
Performance of that Performance Measure less the Threshold Performance
Objective for that Performance Measure, and the denominator of which is
an amount equal to the Targeted Performance Objective for that
Performance Measure less the Threshold Performance Objective for that
Performance Measure.

     (iii) Certain Annual Performance Award Calculations. In the case
of an Annual Performance Award only, for each Performance Measure for
which the Performance exceeds the Targeted Performance Objective for that
Performance Measure, the amount of the Annual Performance Award payable
to a Participant shall be equal to the Participant’s Base Salary,
multiplied by the Targeted Annual Performance Award percentage applicable
to that

-10-

 

Participant, multiplied by the percentage weighting of that Performance
Measure, multiplied by the sum of 1.0 plus a fraction (computed to
the nearest hundredth of one percent), the numerator of which is an
amount equal to the Performance of that Performance Measure (not to
exceed the Maximum Performance Objective for that Performance
Measure) less the Targeted Performance Objective for that Performance
Measure, and the denominator of which is an amount equal to the
Maximum Performance Objective for that Performance Measure less the
Targeted Performance Objective for that Performance Measure.

     (d) Determinations and Adjustments.

     (i) Basis for Determinations. To the extent practicable,
determination of Performance Measures, Performance Objectives, and
Performance shall be based upon the books and records of the Company kept
in the ordinary course of business, including its audited financial
statements and results of operations and such official and industry data
as is generally available and relied upon by the Company and its
competitors and suppliers in the industry. Any questions or disputes
regarding the correctness, adequacy, definition, or otherwise of books,
records, and data relied upon for determinations under the Plan shall, for
all purposes of the Plan, be finally decided by the Committee, acting upon
the recommendation of the Chief Executive Officer of the Company and such
other sources as the Committee shall deem prudent.

     (ii) Certain Adjustments. Subject to Section 8, the Committee shall
have the right to adjust Performance Objectives for any Year or Cycle as
it deems appropriate due to the occurrence of extraordinary items during
that Year or Cycle (such as, by way of example and not in limitation, the
acquisition or sale of a business unit or the Company’s decision to incur
additional indebtedness or to make optional debt prepayments).

     (e) Pro-Ration of Awards; Change of Control. A Participant’s Annual
Performance Award for any Year or Long-Term Performance Award for any Cycle
shall be pro-rated in the event that the Participant’s employment is terminated
prior to the last day of that Year or of the applicable Cycle (i) by reason of
retirement in accordance with the retirement policies of the Company, death,
disability, or other circumstances approved by the Committee; or (ii) with
respect to Annual Performance Awards, following a Change in Control of the
Company occurring during that Year. Any such pro-ration shall be based upon
the number of days in the Current Year or applicable Cycle during which the
individual was a Participant. Upon the occurrence of a Change of Control of
the Company, Long-Term Performance Awards for each Cycle which includes the
year in which such Change of Control occurs shall be deemed fully earned on the
date of the Change of Control, as if the date of the Change of Control was the
last day of the Cycle and as if the Targeted Performance Objective for each
Performance Measure applicable to Participants for that Cycle was met and
exceeded. Payment of the Awards for any such Cycle shall be made on the date
of the Change of Control. In all other cases, to receive an Annual Performance
Award for any Year or a Long-Term Performance Award for any Cycle, a
Participant must be an employee of the Company on the last day of that Year or
of the applicable Cycle, as the case may be.

     (f) Promotion; Employment for Less than Full Year. A Participant’s
Annual Performance Award for any Year shall be pro-rated in the event that the
Participant is employed on the last day of that Year but has been a Participant
in the Plan for less than all of the Year, or a Participant who was

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a Participant on January 1 of a Year is promoted and the Committee decides
to increase the Targeted Annual Performance Award for that Participant because
of the promotion. Any such pro-ration shall be based upon the number of days
in the Year during which the individual was a Participant or a Participant at
different Targeted Annual Performance Awards.

     (g) Conduct Detrimental to Company. Notwithstanding any other provision
of this Plan to the contrary, the Committee shall have the right to reduce or
cancel, prior to the last day of any Year or applicable Cycle, any
Participant’s Annual Performance Award for that Year or Long-Term Performance
Award for that Cycle on the basis of the Participant’s individual performance
or in the event of conduct by the Participant which the Committee determines is
detrimental to the Company or any Subsidiary.

     (h) Payment.

     (i) Report and Certification. Promptly after receipt of the report
of the Company’s independent public accountants with respect to the
consolidated financial statements of the Company for each Year, the Chief
Executive Officer of the Company shall provide a report to the Committee
setting forth the Annual Performance Award and Long-Term Performance Award
calculations for each Participant for that Year or the Cycle then
completed. The Committee shall consider and act upon the Chief Executive
Officer’s report and recommendations and shall certify as to whether and
to the extent that the Performance Objectives and other material terms
have been satisfied for all Performance Awards, so as to permit payment of
Performance Awards promptly thereafter and, in any event, prior to March
15 of the year following the end of the Year or Cycle for which the
Performance Awards are being paid.

     (ii) Method of Payment. Payment of Performance Awards shall be made
by check or direct deposit to the account of each Participant, in
accordance with the regular payroll practices of the Company. The Company
shall withhold from the gross amount of any Performance Award all required
amounts necessary to satisfy all applicable federal, state, and local
withholding requirements.

     (i) Deferral. Notwithstanding any provision of Section 8, to the extent
that the Committee, in its sole discretion, determines that the payment of any
portion of any Performance Award earned by any Participant is not deductible by
the Company or any of its Subsidiaries by reason of Code Section 162(m), the
Company or the applicable Subsidiary shall delay the payment of such portion of
such Award. The Company shall remain obligated to pay in full the portion of
the Performance Award which is unpaid by reason of this Section 7(i) and shall
thereafter promptly pay such part thereof as the Committee, in its sole
discretion, shall from time to time determine is then deductible in accordance
with Code Section 162(m). Until paid in full, the portion of any Performance
Award which is unpaid by reason of this Section 7(i) shall, unless a different
rate of return has been selected from time to time by the Committee, bear
interest, compounded daily and computed at an annual rate which is equal to the
average yield for BBB Industrial Bonds, as published in Standard & Poor’s
Corporate and Government Bond Yield Index (or such similar index as the
Committee shall select) for the month last preceding the beginning of the
then-current calendar quarter.

Section 8. Additional Provisions Applicable to Section 162(m) Performance Awards.

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     The following provisions apply to all Annual Performance Awards and
Long-Term Performance Awards that are intended to qualify as
“performance-based” within the meaning of Code Section 162(m)(4)(C):

     (a) Authority of the Committee. The Committee shall, no later than 90
days after the commencement of each applicable Year or Cycle (or such earlier
or later date as may be the applicable deadline for compensation payable
hereunder to qualify as “performance-based” within the meaning of Code Section
162(m)(4)(C)), select and establish in writing (i) the Employees who will be
Participants with respect to such Performance Awards; (ii) the applicable
Performance Measures (which shall be selected from among the Performance
Measures set forth in Section 8(b) below), their weighting, and the Performance
Objectives relating to each such Performance Measure; and (iii) designate the
Annual Performance Awards and Long-Term Performance Awards that are to qualify
as “performance-based” within the meaning of Code Section 162(m)(4)(C).

     (b) Determination of Performance Measures. Performance Measures for
Performance Awards designated to qualify as “performance-based” within the
meaning of Code Section 162(m)(4)(C) shall be based on any of the following
performance criteria, either alone or in any combination, on either a
consolidated or business unit or divisional level, and including or excluding
discontinued operations and acquisition expenses as the Committee may
determine: level of sales; unit tire sales; gross profit; earnings per share;
share price; earnings before interest, taxes, depreciation, and amortization;
income before taxes; net income; return on assets; return on equity; return on
capital; total stockholder return; market valuation; cash flow; cash from
operating activities; and completion of acquisitions. The foregoing criteria
shall be determined as set forth in Section 7(d) and shall have any reasonable
definitions, which may include or exclude any or all of the following items, as
the Committee may specify within the period described in Section 8(a):
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities; expenses for
restructuring or productivity initiatives; non-operating items; acquisition
expenses; and effects of divestitures.

     (c) Discretion of the Committee. The Committee has no discretion to
increase the amount of the Performance Award due upon attainment of the
applicable Performance Measures. No provision of the Plan shall preclude the
Committee from exercising negative discretion with respect to any Performance
Award (i.e., to reduce or eliminate the Award payable) within the meaning of
Treasury Income Tax Regulation Section 1.162-27(e)(2)(iii)(A).

Section 9. Non-Assignability.

     (a) General Rule. Except as provided in Section 9(b) with respect to
Nonqualified Stock Options, no Incentive Award granted under the Plan shall be
sold, assigned, transferred, pledged, or otherwise encumbered by the
Participant, or be made subject to execution, attachment or similar process,
otherwise than by will, by the laws of descent and distribution, or by the
Participant’s designation, in a writing delivered to the Company before the
Participant’s death, of a beneficiary or beneficiaries to whom the
Participant’s rights in the Incentive Award will be transferred upon the
Participant’s death. Except as provided in Section 9(b) with respect to
Nonqualified Stock Options, each Option shall be exercisable during the
Participant’s lifetime only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.

-13-

 

     (b) Special Provisions Applicable to Nonqualified Stock Options. Any
Option granted as a Nonqualified Stock Option and such other Options as the
Committee may determine and any rights thereunder may be assigned or
transferred pursuant to a qualified domestic relations order (as defined in the
Code or the Employee Retirement Income Security Act of 1974). In addition, the
Committee may permit any Optionee holding an Option granted as a Nonqualified
Stock Option and such other Options as the Committee may determine, either
before or after the date of grant, to transfer the Option during the Optionee’s
lifetime to one or more members of the Optionee’s family, to one or more trusts
for the benefit of one or more members of the Optionee’s family, or to a
partnership or partnerships of members of the Optionee’s family, if no
consideration is paid for the transfer and such transfer would not result in
the loss of any exemption under Rule 16b-3 for any Option granted under any
plan of the Company. The transferee of an Option shall be subject to all
restrictions, terms and conditions applicable to the Option prior to its
transfer. The Committee may impose on any transferable Option and on the
Shares to be issued upon the exercise thereof such limitations and conditions
as the Committee deems appropriate.

Section 10. Amendment and Termination of Plan.

     (a) Amendment. The Board may from time to time amend the Plan, or any
provision thereof, in such respects as the Board may deem advisable except that
it may not amend the Plan without stockholder approval so as to: increase the
maximum number of Shares that may be issued under the Plan except in accordance
with Section 3(b); permit the granting of Options with exercise prices lower
than that specified in Section 6(a)(ii); materially modify the requirements as
to eligibility for participation in the Plan; or reprice any outstanding
Options granted pursuant to the Plan.

     (b) Termination. The Board may terminate the Plan at any time.

     (c) Effect of Amendment or Termination. Any amendment or the termination
of the Plan shall not adversely affect any Incentive Award previously granted
nor disqualify an Incentive Award from being treated as “performance based”
within the meaning of Code Section 162(m)(4)(C). Incentive Awards outstanding
at the time the Plan is terminated shall remain in full force and effect as if
the Plan had not been terminated.

Section 11. Notices.

     Each notice relating to the Plan shall be in writing and delivered in

person or by mail to the proper address. Each notice to the Committee shall be
addressed as follows: TBC Corporation, 7111 Fairway Drive, Palm Beach Gardens,
Florida 33418, Attention: Compensation Committee. Each notice to a Participant
shall be addressed to the Participant at the address of the Participant
maintained by the Company on its books and records or to such other address as
the Participant may designate by written notice to the Company to that effect.

Section 12. Benefits of Plan.

     The Plan shall inure to the benefit of and be binding upon each successor
of the Company. All rights and obligations imposed upon a Participant and all
rights granted to the Company under the Plan shall be binding upon the
Participant’s heirs, legal representatives and successors.

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Section 13. Stockholder Approval and Term of Plan.

     (a) Adoption and Approval. The Plan shall become effective upon its
adoption by the Board; provided, however, that if the Plan is not approved by
the affirmative vote of the holders of a majority of the outstanding Shares
present, in person or by proxy, and entitled to vote at the 2004 Annual Meeting
of the Stockholders of the Company, the Plan shall terminate automatically on
the date of such Annual Meeting.

     (b) Term. If approved by the stockholders of the Company as provided in
Section 13(a), the Plan shall continue in effect until terminated pursuant to
Section 10.

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