10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2010
Commission File Number 001-12215
Quest Diagnostics Incorporated
3 Giralda Farms
Madison, New Jersey 07940
(973) 520-2700
Delaware
(State of Incorporation)
16-1387862
(I.R.S. Employer Identification Number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value per share	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o (do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

As of June 30, 2010, the aggregate market value of the approximately 146 million shares of voting and non-voting common equity held by non-affiliates of the registrant was approximately $7.3 billion, based on the closing price on such date of the registrant’s Common Stock on the New York Stock Exchange.

As of January 31, 2011, there were outstanding 171,164,282 shares of Common Stock, $.01 par value per share.

Documents Incorporated by Reference

Document	Part of Form 10-K into which incorporated
Portions of the registrant’s Proxy Statement to be filed by April 28, 2011	Part III

Such Proxy Statement, except for the portions thereof which have been specifically incorporated by reference, shall not be deemed “filed” as part of this report on Form 10-K.

TABLE OF CONTENTS

		Item	Page
Item 1.	Business		1
	Our Strategy and Strengths		1
	Business Operations		3
	The United States Clinical Testing Market		9
	General		11
	Billing and Reimbursement		14
	Regulation		15
	Available Information		18
	Executive Officers of the Company		18
Item 1A.	Risk Factors		19
	Cautionary Factors That May Affect Future Results		28
Item 1B.	Unresolved Staff Comments		29
Item 2.	Properties		30
Item 3.	Legal Proceedings		30
Item 4.	Removed and Reserved		32
Item 5.	Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities		32
Item 6.	Selected Financial Data		35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		35
Item 8.	Financial Statements and Supplementary Data		35
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		35
Item 9A.	Controls and Procedures		35
Item 9B.	Other Information		35
Item 10.	Directors, Executive Officers and Corporate Governance		35
Item 11.	Executive Compensation		35
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders’ Matters		36
Item 13.	Certain Relationships and Related Transactions, and Director Independence		37
Item 14.	Principal Accounting Fees and Services		37
Item 15.	Exhibits, Financial Statement Schedules		38
Selected Historical Financial Data of Our Company			40
Management’s Discussion and Analysis of Financial Condition and Results of Operations			42
Report of Management on Internal Control Over Financial Reporting			61
Report of Independent Registered Public Accounting Firm			F-1
Consolidated Financial Statements and Related Notes			F-2
Supplementary Data: Quarterly Operating Results (unaudited)			F-45
Schedule II – Valuation Accounts and Reserves			F-47

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Item 1. Business

          Quest Diagnostics Incorporated is the world’s leading provider of diagnostic testing, information and services. We provide insights that enable patients, physicians and others to make better healthcare decisions.

          Quest Diagnostics was incorporated in Delaware in 1990; its predecessor companies date back to 1967. We conduct business through our headquarters in Madison, New Jersey, and our laboratories, patient service centers, offices and other facilities around the United States and in selected locations outside the United States. Unless the context otherwise requires, the terms “Quest Diagnostics,” the “Company,” “we” and “our” mean Quest Diagnostics Incorporated and its consolidated subsidiaries.

          During 2010, we generated net revenues of $7.4 billion and processed approximately 146 million test requisitions. Additional financial information concerning Quest Diagnostics, including our consolidated subsidiaries and business segments, for each of the years ended December 31, 2010, December 31, 2009 and December 31, 2008 is included in the consolidated financial statements and notes thereto in “Financial Statements and Supplementary Data” in Part II, Item 8.

OUR STRATEGY AND STRENGTHS

          Our mission is to be the undisputed world leader in diagnostic testing, information and services. We are dedicated to improving the health of patients through unsurpassed diagnostic insights and innovation and we focus on patients, growth and people to help achieve our goals.

          We offer high value diagnostic testing services and products attractive to patients, physicians, payers, and others and have become the provider of choice in key areas of the diagnostic testing market. We believe that successful execution of our strategy will drive continued growth of our business. Additionally, we believe that, over the long term, we will be able to grow at a rate above the U.S. clinical laboratory industry growth rate, to expand margins and to increase international revenues to 10% of consolidated revenues. The elements of our growth strategy are described below.

•	Leverage our unparalleled assets and capabilities. We are the world leader in the clinical testing business and the leading cancer diagnostic testing provider. We offer the broadest test menu, with more than 3,000 tests, and are the leading provider in the United States of gene-based and esoteric testing. We have the most extensive clinical testing network in the United States, offering national access to testing services. We operate a nationwide network of over 2,000 of our own patient service centers where we collect patient specimens, and laboratories in most major metropolitan areas. We provide anatomic pathology services, including inpatient anatomic pathology and medical director services at hospitals, throughout the United States. We have a medical and scientific staff of approximately 900 M.D.s and Ph.D.s, primarily located in the United States, many of whom are recognized leaders in their field. We serve approximately half of the physicians and half of the hospitals in the United States. We also operate approximately 75 locations in the United States and Canada where we coordinate the provision of paramedical examinations related to life insurance applications. We have strong logistics capabilities, including approximately 3,200 courier vehicles and over 25 aircraft that collectively make approximately 80,000 stops daily. We have approximately 8,900 phlebotomists and a network of approximately 5,275 contracted paramedical examiners. We plan to continue to enhance our test menu and service capabilities. We believe that customers and payers prefer providers that offer a comprehensive and innovative range of tests and services and the most convenient access to those services and that, by offering such services, we will be able to profitably enhance our market position.
•	Continue to lead in medical innovation and information technology solutions. We are a leading innovator in the clinical testing market with unmatched medical and technical expertise. We have the most comprehensive test menu and leading medical and scientific experts available for consultation. We collaborate with leading academic centers and maintain relationships with advisors and consultants that are leaders in key fields, such as cardiology, oncology and infectious disease. In connection with our research and development efforts, our medical and scientific experts publish in peer-reviewed journals research that demonstrates the clinical value and importance of diagnostic testing. In 2010, we published over thirty articles that support advancements and the latest thinking in laboratory testing and disease diagnosis. Over the past several years, we have expanded our business in more complex and faster-growing testing areas, including gene-based and esoteric testing, anatomic pathology services and point-of-care testing.
	We see significant opportunity to use diagnostics for personalized medicine. For example, our clinical trials business has biomarker capabilities that advance our efforts to develop companion diagnostics for new therapies that will foster personalized patient treatment.

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	We remain a leading innovator in the clinical testing industry by continuing to introduce new tests, technology and services, including in personalized and targeted medicine. For example, in 2010, we introduced our XSense ® Fragile X with Reflex test. This test, which bypasses the need to perform the Southern Blot DNA analysis method in 99% of cases, enables patients to get their results more quickly than other tests and is a good example of our strength in new laboratory analysis techniques. In addition, as an industry leader with the largest and broadest U.S. network and expanding presence outside the United States, we believe we are the channel of choice for developers of new tests to introduce their products to the marketplace. Through our relationships with the academic medical community and pharmaceutical and biotechnology firms, we believe that we are a leader in bringing technical innovation to the market.
	We empower healthcare organizations and clinicians with information technology solutions that can help improve patient care and medical practice, through our Care360TM suite of products, our Centergy Data Exchange and the ChartMaxx® electronic document management system for hospitals. We provide interoperable technologies that help healthcare organizations and physicians enter, share and access clinical information without costly IT implementation or significant workflow disruption. These solutions offer access to a large national healthcare provider network, including approximately 160,000 networked physicians using Quest Diagnostics’ Care360 connectivity products. The Care360 products, including our Care360 Labs and Meds, enable physicians electronically to order diagnostic tests and review test results from Quest Diagnostics and electronically to prescribe medication. Our Care360 EHR product allows physicians to generate a complete record of a clinical patient encounter, automates and streamlines the clinician’s workflow, and allows for rapid deployment and implementation with minimal workflow disruption. We believe that these products enhance the value we provide to our customers and result in increased customer loyalty by providing more convenient ordering and reporting of clinical tests, greater convenience in electronically prescribing medication and better access to clinical information.
	In December 2010, the Care360 EHR solution received ONC-ATCB 2011/12 certification as a Complete EHR from the Certification Commission for Health Information Technology. The 2011/2012 criteria support the Stage 1 Meaningful Use measures required to qualify eligible providers and hospitals for funding under the American Recovery and Reinvestment Act, which included laws designed to expedite the implementation of electronic health records and build a national electronic health infrastructure in the United States. We believe that we are well positioned to enable physicians to participate in this government stimulus program.
•	Deliver a superior patient experience. The patient is at the center of everything we do. Increasingly, patients have a choice when it comes to selecting a healthcare provider and we strive to give patients compelling reasons to put their trust in us. We have made significant investments in training our employees to provide a superior patient experience. We believe that this will drive patient and physician loyalty. We are a leader in providing patients with advanced tools to manage their healthcare and medical information. Our automated patient appointment scheduling enables patients to schedule appointments, including via mobile devices, at times that are convenient for them while essentially eliminating their waiting time. We believe that we are the only national clinical test provider that offers this service in almost all of its patient service centers. We also offer TestMinderTM, which sends email reminders to patients that require frequent testing. In 2010, we introduced GazelleTM, a secure mobile health platform that allows users to receive their Quest Diagnostics laboratory results and manage their personal health information directly from their smartphone. We also collaborate with KeasTM, Microsoft® HealthVaultTM and Google HealthTM in connection with their personal health records offerings.
•	Continuously drive Six Sigma quality. We strive to provide the highest quality in all that we do, including: phlebotomy and specimen transport services; analytical testing processes in our laboratories; accurate and timely lab reports; and accurate and timely billing. We use Six Sigma and Lean processes to continuously reduce defects, enhance quality and further increase the efficiency of our operations. Six Sigma is a management approach that utilizes a thorough understanding of customer needs and requirements, root cause analysis, process improvements and rigorous tracking and measuring to enhance quality. Lean is a management approach that seeks to streamline processes and eliminate waste. We also use Six Sigma and Lean principles to help standardize operations and processes across our Company and identify and adopt company best practices. We believe our focus on continuously using Six Sigma and Lean in all aspects of our business results in superior service to our customers and drives customer loyalty.
•	Expand our diagnostic scope. Technology advances are enabling testing to move closer to the patient and point-of-care, or near patient, tests are becoming increasingly available and reliable. This enables more timely and effective decisions, with the opportunity to improve patient care and reduce medical costs. We

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have three businesses that offer point-of-care testing: HemoCue, Focus Diagnostics and Enterix. We intend to expand our product menus, develop novel technology platforms and systems to meet the needs of our clients and pursue potential additional acquisitions to supplement our offering. Test results from our point-of-care products can be entered into our Care360 system, enabling the integration of tests performed in a near patient setting with those performed in our laboratories. We are well positioned to offer choice and integrated solutions to physicians, hospitals, clinics and retail customers for the testing methods that are most appropriate for each patient and practice.

•

Expand our geographic reach. In addition to growth opportunities in the United States, we see opportunities to expand our presence in India, Ireland, Mexico, Puerto Rico and the U.K. and to bring our experience and expertise in diagnostic testing to other international markets, particularly to developing countries where the testing markets are highly fragmented and less mature.

          To support our strategy, we expect to continue to selectively evaluate acquisitions in the United States and in select international markets. We anticipate that acquisitions will enable us to expand our capabilities, further leverage our assets and differentiate our Company from our competition, diversify our revenues and accelerate our growth.

BUSINESS OPERATIONS

          Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make better healthcare decisions. We offer U.S. patients and physicians the broadest access to diagnostic testing services through our nationwide network of laboratories and Company-owned patient service centers. We provide interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s, primarily located in the United States, many of whom are recognized leaders in their field. We are the leading provider of clinical testing, including gene-based and esoteric testing, anatomic pathology services and testing for drugs-of-abuse, and the leading provider of risk assessment services for the life insurance industry. We also are a leading provider of testing for clinical trials. Our diagnostics products business manufactures and markets FDA cleared or approved diagnostic test kits and specialized point-of-care testing. We empower healthcare organizations and clinicians with robust information technology solutions. Our activities are described below.

          Patients are at the center of everything that we do. We are leveraging our diagnostic testing capabilities and our assets to serve multiple customer bases. Most of our services are provided in the United States; for each of the years ended December 31, 2008, 2009 and 2010, we derived approximately 3% of our revenues from foreign operations and held approximately 7% of our long-lived assets outside the United States. The following chart shows the percentage of our 2010 net revenues generated by the activities identified.

Activity	Approximate Percentage of 2010 Net Revenues
Clinical testing	91	%
Routine clinical testing	52	%
Anatomic pathology testing	14	%
Gene-based and esoteric testing	22	%
Drugs of abuse testing (employer services)	3	%
Healthcare information technology, clinical trials testing, life insurer services and diagnostic products	9	%

          Clinical Testing. We are the world’s largest commercial clinical testing company. Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. We offer customers the broadest access to the most extensive test menu of clinical laboratory and anatomic pathology tests in the United States. Clinical laboratory testing generally is performed on whole blood, serum, plasma and other body fluids, such as urine, and specimens such as microbiology samples. Clinical laboratory tests which can be performed by most clinical laboratories are considered routine. Esoteric tests are clinical laboratory tests that are not routine, require highly skilled personnel and generally require more sophisticated equipment. Anatomic pathology services are performed on tissues, such as biopsies, and

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other samples, such as human cells. As tests increasingly become more complex, we believe that providing sound medical and scientific consultation regarding our tests and test results will help spur the integration of new tests into clinical practice, and help physicians best utilize these tests to improve patient outcomes and enhance patient satisfaction. To this end, our in-house experts, including medical directors, scientific directors, genetic counselors and board certified geneticists are available for consultation with our customers regarding testing that we perform.

          Routine clinical testing. We are the leading provider of routine clinical testing, including testing for drugs-of-abuse. We perform routine testing through our network of major laboratories and rapid response laboratories. Rapid response laboratories are smaller facilities where we can quickly perform an abbreviated menu of routine tests for customers that require rapid turnaround times. We also perform routine testing at hospital laboratories that we manage. We operate laboratories 24 hours a day, 365 days a year, performing and reporting most routine tests within 24 hours. The majority of test results are delivered electronically.

          Routine tests measure various important bodily health parameters such as the functions of the kidney, heart, liver, thyroid and other organs. Commonly ordered tests include:

• blood chemistries, including cholesterol levels;

• complete blood cell counts;

• urinalyses;

• pregnancy and other prenatal tests;

• routine microbiology testing;

• prescription drug monitoring;

• alcohol and other substance-abuse tests; and

• allergy tests such as the ImmunoCap^® test.

          Anatomic pathology testing. We are the leading provider of anatomic pathology services in the United States, through our AmeriPath^TM, Dermpath Diagnostics^TM and Quest Diagnostics brands. Anatomic pathology involves the diagnosis of cancer and other diseases and medical conditions through examination of tissue and cell samples taken from patients. We provide inpatient anatomic pathology and medical director services at hospitals throughout the country, and through our major laboratories.

          We provide a full range of services to all anatomic pathology subspecialties. We have approximately 725 medical doctors, including luminaries in their field, with a passion for providing the highest quality service to patients. Among them are approximately 700 pathologists. We provide integrated, comprehensive reports that include both anatomic pathology and clinical pathology tests, enabling our pathologists to offer patients and physicians a complete analysis. Our approach fosters personalized patient care.

          We have a strong history of leadership and innovation in cancer diagnostics. We introduced the Leumeta^® family of tests for leukemia and lymphoma. These proprietary plasma-based molecular tests may some day eliminate the need for painful bone marrow biopsies. As discussed below under the heading “Scientific Innovation,” recently we introduced our Lung Cancer Mutation Panel, designed to aid treatment selection for lung cancer patients. This panel detects mutations in the EFGR, ALK and KRAS genes. This panel, together with our numerous individual tests for lung cancer mutations, provides the most comprehensive lung cancer test offerings available from a commercial laboratory.

          Gene-Based and Esoteric Testing. We are the leading provider in the United States of gene-based and esoteric testing. Gene-based and esoteric tests increasingly are ordered by physicians to assist them in the diagnostic process, to establish a prognosis and to choose or monitor a therapeutic regimen. Esoteric tests include procedures in the areas of molecular diagnostics, protein chemistry, cellular immunology and advanced microbiology. Commonly ordered esoteric tests include viral and bacterial detection tests, drug therapy monitoring tests, autoimmune panels and complex cancer evaluations. Esoteric tests typically require professional “hands-on” attention from highly-skilled technical personnel, generally require more sophisticated technology, equipment or materials and may be performed less frequently than routine tests. Consequently, esoteric tests are generally reimbursed at higher levels than routine tests. It is not practical, from a cost-effectiveness or infrastructure perspective, for most hospitals, commercial laboratories or physician office laboratories to develop and perform a broad menu of esoteric tests, or to perform low-volume esoteric testing in-house. Such tests generally are outsourced to an esoteric clinical testing laboratory, which specializes in performing these complex tests. We conduct complex and specialized testing, including molecular diagnostics, in our world renowned Quest Diagnostics Nichols Institute laboratory facilities, and in a number of other locations, including Focus

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Diagnostics.

          Our esoteric laboratories provide reference testing services to physicians, large academic medical centers, hospitals and other commercial laboratories. Our esoteric testing laboratories perform hundreds of complex tests that are not routinely performed by our regional laboratories, including but not limited to the following fields:

• endocrinology and metabolism (the study of glands, their hormone secretions and their effects on body growth and metabolism);

• genetics (the study of chromosomes, genes and their protein products and effects);

• hematology (the study of blood and bone marrow cells) and coagulation (the process of blood clotting);

• immunogenetics and human leukocyte antigens (solid organ and bone marrow transplantation; eligibility for vaccines; selection of pharmacotherapeutic agents and immunotherapy);

• immunology (the study of the immune system, including antibodies, cytokines, immune system cells and their effect, receptor systems and autoimmune diseases);

• microbiology and infectious diseases (the study of microscopic forms of life, including parasites, bacteria, viruses, fungi and other infectious agents);

• oncology (the study of abnormal cell growth, including benign tumors and cancer);

• serology (a science dealing with body fluids and their analysis, including antibodies, proteins and other characteristics); and

• toxicology (the study of chemicals and drugs and their adverse effects on the body).

          We also offer gene-based tests for the predisposition, diagnosis, treatment and monitoring of cancers. We believe that offering a full range of gene-based and other esoteric tests strengthens our market offering and market position and enhances our reputation as the nation’s leading test provider.

          Scientific Innovation. We are a leading innovator in the clinical testing industry, with capabilities ranging from early discovery to validation of clinical tests. We develop tests at our laboratories, such as Quest Diagnostics Nichols Institute; we also develop innovative techniques in anatomic pathology. We collaborate with leading academic centers and maintain relationships with advisors and consultants that are leaders in key fields, such as cardiology, oncology and infectious disease. In connection with our research and development efforts, our medical and scientific experts publish in peer-reviewed journals research that demonstrates the clinical value and importance of diagnostic testing. In 2010, they published more than 30 articles that provided fundamental insights into the biology of diseases or introduced novel diagnostic testing approaches benefitting patients. They also help to shape the latest thinking as the authors of textbooks, or chapters therein, used by academic institutions to train healthcare providers. We successfully transfer technical innovations to the market through our relationships with technology developers, including the academic community and pharmaceutical and biotechnology firms, our in-house expertise and our collaborations with emerging medical technology companies that develop and commercialize novel diagnostics, pharmaceutical and device technologies. We search for new opportunities and continue to build a robust pipeline of new tests in predisposition, screening, diagnosis, prognosis and treatment choice, which assists physicians in early detection of diseases and may reduce healthcare costs. Through our strengths in assay development and the commercialization of test services, we believe that we are the partner of choice for developers of new technologies and tests to introduce their products to the marketplace.

          We focus our resources on key disease states and technologies that help doctors care for their patients through better predisposition, screening, monitoring, diagnosis, prognosis and treatment choices. We also look for tests that are less invasive than currently available options, to increase the choices that physicians and patients have for the collection of diagnostic samples. With these priorities in mind, we recently introduced a number of new or enhanced tests, including those discussed below.

• Cancer.

- In 2010, we introduced our Lung Cancer Mutation assays, designed to aid treatment selection for lung cancer patients. These assays detect mutations in the EFGR, ALK and KRAS genes. These assays, together with our numerous other tests for lung cancer mutations, are designed to provide the most comprehensive lung cancer test offerings available from a commercial laboratory.

- We enhanced our Colorectal Cancer Mutation assay offering, which helps identify genetic mutations in the KRAS, PIK3CA, NRAS and BRAF genes that inhibit anti-epidermal growth factor receptor

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		therapy response in metastatic colorectal cancer patients.
	-	We introduced our ColoVantageTM test, a blood test designed to aid in the detection of colorectal cancer, based on DNA methylation of the Septin 9 gene. We were the first commercial laboratory in the U.S. to offer a laboratory developed test based on the Septin 9 biomarker.
	-	After closely collaborating with Vermillion, Inc. on the commericialization of its FDA-cleared OVA1TM ovarian cancer test, we launched the test in the first quarter of 2010. This multi-analyte test, which uses a proprietary algorithm, provides a new option for helping physicians assess if a woman’s ovarian mass is benign or malignant prior to a planned surgery. This information is expected to help physicians determine whether to refer a woman with high risk of cancer to a gynecological oncologist versus a general surgeon or gynecologist.
•	Infectious Disease.
	-	We launched the SureSwabTM Vaginosis/Vaginitis Plus test. This assay supports differential diagnosis and can aid in appropriate therapy selection. While the test provides physicians with results for several organisms, we also offer the individual assays for the components of the SureSwab panel for situations when a physician wishes to focus diagnosis on a particular organism. Differential diagnosis of vaginitis is important for the successful treatment of the patient, and, in some cases, the evaluation of her sexual partner.
•	Genetics and Personalized Medicine. Increasingly, tests will be introduced that determine a patient’s genotype or gene expression profile relative to a particular disease. These tests can help physicians to determine a patient’s susceptibility to disease or to tailor medical care to an individual’s needs – such as determining if a medication might be more or less effective for a particular person, or which type of medication might work better, or tailoring the right dosage once the proper medicine is prescribed. A few examples are set forth below:
	-	In 2010, we introduced AccuTypeTM CP, a gene-based test that uses a blood or saliva sample to aid the identification of the CYP2C19 gene to help physicians predict the metabolism of clopidogrel in patients. Since its introduction, we have enhanced the test with additional allele detection.
	-	Our XSense® Fragile X with Reflex test was approved by the State of New York. The test is the first for Fragile X Syndrome to be approved by New York to employ a new laboratory analysis technique that bypasses the need to perform the Southern Blot DNA analysis method in 99% of cases.
	-	We introduced AccuTypeTM Metformin to identify a patient’s response to metformin to optimize therapeutic intervention. Approximately 40 million Americans have pre-diabetes and, after intensive life-style modification, metformin is considered a first-line therapy for prevention and treatment of diabetes. More than 30% of individuals have mutations that result in changing efficacy of metformin therapy.
	-	In 2010, we expanded our drug testing menu to include specific profiles for prescription pain medication monitoring for patients being treated for chronic pain. Medications tested include prescription medications and drugs of abuse. The results include a specialized medMATCH™ Report, which interprets the test results based on the prescribed medication.
•	Cardiovascular Disease.
	-	In 2010, we launched AccuType pharmacogenomic tests for clopidogrel and metformin, two of the most commonly prescribed medications for patients that have had a cardiovascular event or that have diabetes, respectively.
	-	We also introduced LpPLA2 for cardiovascular risk assessment and deepened and advanced our investment and pipeline in testing for cardiovascular disease.

          Healthcare Information Technology. We empower healthcare organizations and clinicians with information technology solutions that can help improve patient care and medical practice, through our Care360^TM suite of products, Centergy Data Exchange and the ChartMaxx^® electronic document management system for hospitals. We provide interoperable technologies that help healthcare organizations and physicians enter, share and access clinical information without costly IT implementation or significant workflow disruption. These solutions offer access to a large national healthcare provider network, including approximately 160,000 networked physicians using Quest Diagnostics’ Care360 connectivity products. We believe that these products enhance the value we provide to our customers and result in increased customer loyalty by providing more convenient ordering and reporting of clinical tests, greater convenience in

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electronically prescribing medication and providing better access to clinical information.

          The Care360 products, including our Care360 Labs and Meds, enable physicians electronically to order diagnostic tests and review test results from Quest Diagnostics and electronically to prescribe medication. Since December 2009, the number of medications written through Care360 ePrescribing has grown to an annualized rate of approximately 22 million. Our Care360 EHR product allows physicians to generate a complete record of a clinical patient encounter, automates and streamlines the clinician’s workflow, and allows for rapid deployment and implementation with minimal workflow disruption. The solution allows doctors to electronically create, manage and distribute patient encounter notes, including vital signs and progress notes. It captures lab and radiology results, provides clinical decision support tools and allows doctors to send secure messages and clinical information to other practitioners and secure, Web-based laboratory results to their patients’ personal health records. Physicians also take advantage of our new Care360 Mobile application that lets them review results and order medications using their Apple^® iPhone^® or iPad^®.

          In December 2010, the Care360 EHR solution received ONC-ATCB 2011/12 certification as a Complete EHR from the Certification Commission for Health Information Technology. The 2011/2012 criteria support the Stage 1 Meaningful Use measures required to qualify eligible providers and hospitals for funding under the American Recovery and Reinvestment Act, which included laws designed to expedite the implementation of electronic health records and build a national electronic health infrastructure in the United States. We believe that we are well positioned to enable physicians to participate in this government stimulus program.

          In 2010, for the seventh time in the past nine years, ChartMaxx was awarded the #1 in KLAS award for the document management and imaging category. It is being used by over 400,000 clinical and administrative users in hospitals and other clinical locations. Our Centergy^® Data Exchange is the delivery mechanism for clinical transactions, including bi-directional transmission of orders and results involving the acute care and ambulatory settings.

          We are a leader in providing patients with advanced tools to manage their health. We collaborate with Keas, Microsoft and Google in connection with their personal health records offerings. Using our Care360 connectivity products, physicians can securely provide diagnostic and other data to a patient’s account. In 2010, we introduced Gazelle^TM, a secure mobile health platform that allows users to receive their Quest Diagnostics laboratory results and manage their personal health information directly from their smartphone. With Gazelle, users can see, store and share their vital health information with ease and security on a mobile basis. Gazelle also features a mobile appointment scheduling application and allows patients to find a Quest Diagnostics location.

          We believe that our healthcare information technology capabilities, and our collaboration with others regarding healthcare information technology initiatives, differentiate us from the competition.

          Clinical Trials Testing. We believe that we are the second largest provider of central laboratory testing performed in connection with clinical research trials on new drugs, vaccines and certain medical devices. Clinical research trials are required by the FDA and other international regulatory authorities to assess the safety and efficacy of new drugs and vaccines. We see opportunities to develop pharmacogenetic and pharmacogenomic tests to help speed drug approval processes for our clinical trials customers and, capitalizing on the trend to personalized medicine, to better focus patient therapy based on a patient’s genetic markers. We have biomarker capabilities that advance our efforts to develop these tests.

          We have clinical trials testing centers in the United States and the United Kingdom, and we provide clinical trials testing in Argentina, Australia, Brazil, China and Singapore through affiliated laboratories. While we serve most of the major pharmaceutical companies, approximately 32% of our net revenues from clinical trials testing in 2010 represented testing for GlaxoSmithKline plc (“GSK”). We are the primary provider of central laboratory testing to support GSK’s clinical trials testing requirements worldwide.

          Life Insurer Services. We are the largest provider of risk assessment services to the life insurance industry in North America. We also provide risk assessment services for insurance companies doing business in many countries outside the United States.

          Our risk assessment services comprise underwriting support services to the life insurance industry, including clinical testing, teleunderwriting, specimen collection and paramedical examinations, medical record retrieval, case management, motor vehicle reports, telephone inspections, prescription histories and credit checks. The clinical tests that we perform and data we gather are designed to assist insurance companies to objectively evaluate the mortality risks of policy applicants. The majority of the testing is performed on specimens of life insurance applicants, but also includes specimens of applicants for other types of insurance. Factors such as the number of applications for underwritten life insurance policies can affect the utilization of clinical testing and other services we provide to our

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insurance customers. Most of our specimen collections and paramedical examinations are performed by our network of approximately 5,275 contracted paramedical examiners at the applicant’s home or workplace. We also offer paramedical examinations through approximately 500 of our patient service centers, and operate approximately 75 locations other than patient service centers in the United States and Canada where we provide paramedical examinations, bringing to approximately 575 the total number of sites where we can provide these examinations. We also contract with third parties at over an additional 120 locations across the United States and Canada to coordinate providing these exams.

          We seek to grow our insurance revenues by increasing our market share and by offering new and innovative clinical tests, data collection and analytics and other services. Our life insurance customers have been consolidating, which has resulted in increased individual customer purchasing power. We expect that this trend will continue. We charge our life insurance customers on a fee-for-service basis, typically under multi-year agreements.

          Employer Services. We believe that we are the leading provider of clinical testing to employers for the detection of employee use of drugs-of-abuse. Our Quest Diagnostics Drug Testing Index^TM, which is an annual report of our aggregate drug testing results, is used by employers, the federal government and the media to help identify and quantify drug abuse among the nation’s workforce.

          As healthcare costs have increased, so has the value of preventative care. Employers grappling with increased healthcare costs use wellness testing as a key tool to reduce their healthcare costs and the healthcare risks of their employees. We provide wellness testing and analytic services to employers to enable them and their employees to take an active role in improving their health and empower employers with aggregated health information. Our Blueprint for Wellness^® program offers employers actionable data to power their health improvement and cost containment programs. We are leveraging our patient service centers and paramedical network to deliver wellness screening nationwide. We also offer Blueprint for Wellness^® directly to individuals.

          Diagnostic Products, Including Point-of-care, or Near Patient, Testing. Technology advances are enabling testing to move closer to the patient and are becoming increasingly available, accurate and cost effective. Over time, some testing that is now done in clinical laboratories will cease to be performed in clinical laboratories and will be performed closer to the patient. We believe that our point-of-care testing strategy will strengthen our relationship with our customers by enabling us to offer more solutions that improve the effectiveness of our customers and the care of their patients by enabling faster diagnosis and treatment. We are well positioned to offer options and integrated solutions to physicians, hospitals and clinics for the testing methods that are most appropriate for each patient and practice.

          We develop and manufacture products that enable healthcare professionals to make healthcare diagnoses, including products for point-of-care, or near patient, testing for the professional market. We have several companies, including Focus Diagnostics, Enterix, and HemoCue, that enhance our offerings and better enable us to serve these markets. We will consider additional acquisitions or licenses of selective products to complement the products and services we provide. The results of several of our point-of-care tests can be entered into our Care360^TM system and hospital laboratory information systems so that they are available in electronic medical records. We intend to offer additional data links in the future. This will differentiate our point-of-care test products from other products that are not integrated into an electronic repository.

          Focus Diagnostics is a leading provider of infectious disease testing that has established a reputation for being first to introduce new tests to the market, including diagnostic tests for Lyme disease, West Nile Virus, SARS and, most recently, H1N1. Focus Diagnostics develops, manufactures and markets diagnostic products, such as HerpeSelect^® ELISA tests that detect patient antibodies to specific types of herpes simplex virus, which can be performed on a variety of instrument platforms. Focus Diagnostics sells its diagnostic products to large academic medical centers, hospitals and commercial laboratories globally. Focus has an agreement with 3M Corporation for global human diagnostic rights to a compact integrated bench-top instrument for use with real time polymerase chain reaction (“PCR”) assays. These tests are sold under the Simplexa^TM brand name. In 2010, Focus received FDA 510(k) clearance for the bench-top instrument, the Simplexa^TM H1N1 Influenza test and the Simplexa^TM Flu A/B and RSV test for the instrument. Each test also has received the CE mark for sale in Europe. We intend to develop and pursue FDA clearance and CE marking for additional Simplexa^TM tests.

          HemoCue manufactures and distributes point-of-care testing products. HemoCue is the leading global provider in point-of-care testing for hemoglobin, with a growing market share for glucose, microalbumin and white blood cell testing. In 2010, HemoCue added a room temperature version of its high sensitivity glucose test in the EU; HemoCue is seeking FDA 510(k) clearance for this test in the U.S. HemoCue also began to market and deliver its White Blood Cell Analyzer, a whole-blood test performed on finger-stick samples, in both single (worldwide) and differential (in Europe) counts. We are seeking 510(k) clearance and waived status under the Clinical Laboratory Improvement Amendments (“CLIA”) for this product which, if granted, would permit physicians to use these products in a much larger segment of

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physician offices. The HemoCue handheld systems are used in physician’s offices, blood banks, hospitals, diabetes clinics and public health clinics. Approximately one-half of HemoCue products are sold outside the United States. We believe that HemoCue has a strong product development pipeline, based on its pioneering use of its patented microfluidic systems.

          Enterix, an Australia-based company, manufactures the InSure^® fecal immunochemical test (FIT^TM) for screening for colorectal cancer.

          International. We have laboratory facilities in Gurgaon, India; Heston, England; Mexico City, Mexico; and San Juan, Puerto Rico. These laboratories support clinical testing in their local markets, and also may support our clinical trials business. We have an office in Ireland that supports our activities in that country, and also have sales representatives dedicated to offering our point-of-care test products in countries outside the United States. We see opportunities to bring our experience and expertise in diagnostic testing and point-of-care products to international markets, particularly developing countries where the testing markets are highly fragmented and less mature, including by leveraging existing facilities to serve new markets.

THE UNITED STATES CLINICAL TESTING MARKET

          Most clinical tests are performed by one of three types of laboratories: hospital-affiliated laboratories; commercial clinical laboratories; or physician-office laboratories. We believe that hospital-affiliated laboratories account for approximately 60% of the market, commercial clinical laboratories approximately one-third and physician-office laboratories the balance.

          Key Trends. There are a number of key trends that we expect to have a significant impact on the clinical testing business in the United States and on our business. These trends present both opportunities and risks. However, because clinical testing is an essential healthcare service and because of the key trends discussed below, we believe that the industry will continue to grow over the long term and that we are well positioned to benefit from the long-term growth expected in the industry.

          Demographics. The growing and aging population is increasing the demand for clinical testing.

          Prevention and wellness. We believe that the value of detection, prevention, wellness and personalized care is recognized more now than ever before. Consumers, employers, health plans and government agencies increasingly are focusing on helping the healthy stay healthy, detecting symptoms among those at risk and providing preventative care that helps avoid disease. Physicians increasingly are relying on diagnostic testing to help identify risk for a disease, to detect the symptoms of disease earlier, to aid in the choice of therapeutic regimen, to monitor patient compliance and to evaluate treatment results. Physicians, consumers and payers increasingly recognize the value of diagnostic testing as a means to improve health and reduce the overall cost of healthcare through early detection, prevention and treatment. Federal healthcare reform legislation adopted in 2010 contained provisions eliminating patient cost-sharing for preventative services, and additional provisions that we believe will increase the number of patients that have health insurance and thus better access to diagnostic testing.

          Science and technology advances. Medical advances allow for more accurate and earlier diagnosis and treatment of diseases. Continuing research and development in the area of genomics is expected to yield new, more sophisticated and specialized diagnostic tests. These advances also are spurring interest in and demand for personalized or tailored medicine, which relies on diagnostic and prognostic testing. Pharmacogenomic testing increasingly is used as a parameter to help speed drug approval processes and to better focus therapy based on patient and tumor-specific genetic markers. Demand also is growing toward comprehensive care management solutions that serve patients, payers and practitioners by improving access to patient data, increasing patient participation in care management, reducing medical errors and improving clinical outcomes. There is an increasing focus on interconnectivity, and electronic medical records and patient health records continue to grow.

          Customers and payers. Our customers and payers, including physicians, health insurance plans, employers, pharmaceutical companies and others, have been consolidating. We expect that this trend will continue. Consolidation is increasing bargaining power, enhancing purchasing sophistication and encouraging internalization of testing. In addition, federal healthcare reform legislation adopted in 2010 encourages the formation of “accountable care organizations” and requires implementation of health insurance exchanges, which may result in changes in the way that some healthcare services are purchased and delivered in the United States.

          Competition. The clinical testing industry remains fragmented, is highly competitive and is subject to new competition. Competition is growing from non-traditional competitors. Increased hospital acquisitions of physician practices enhance physician ties to hospital-affiliated laboratories and may strengthen their competitive position. New market entrants with extensive resources may make acquisitions or expand into our traditional areas of operations. We also are expanding into new diagnostic testing areas that are highly competitive.

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          Legislative, regulatory and policy environment. Government oversight of and attention to the healthcare industry in the United States is significant and increasing. The 2009 American Recovery and Reinvestment Act included laws designed to expedite the implementation of electronic health records and build a national electronic health infrastructure in the United States. During 2010, the FDA publicly announced that it has decided to exercise regulatory authority over laboratory developed tests, and that it plans to issue guidance to the industry regarding its regulatory approach. Federal healthcare reform legislation adopted in 2010 has created significant uncertainty as healthcare markets react to potential and impending changes.

          Globalization. There is a growing demand for healthcare services in emerging market countries. Opportunities are arising to participate in the restructuring or growth of the healthcare systems in these countries. Additionally, our customers are establishing positions outside the United States. Demographic changes globally may also create opportunities.

          Customers and Payers. We provide testing services to a broad range of customers, with orders for clinical testing generally generated by physicians, hospitals and employers. In most cases, the customer that orders the testing is not responsible for the payments for services. Depending on the billing arrangement and applicable law, the payer may be (1) a third party responsible for providing health insurance coverage to patients, such as a health insurance plan, self-insured employer benefit fund, or the traditional Medicare or Medicaid program, (2) the patient or (3) the physician or other party (such as a hospital, another laboratory or an employer) who referred the testing to us.

          Health Plans. Health plans, including managed care organizations and other health insurance providers, typically reimburse us as a contracted provider on behalf of their members for clinical testing services performed. Reimbursement from our two largest health plans totaled approximately 13% of our consolidated net revenues in 2010. Our largest health plan accounted for approximately 9% of our consolidated net revenues in 2010.

          Health plans typically negotiate directly or indirectly with a number of clinical laboratories, and represent approximately one-half of our total clinical testing volumes and one-half of our net revenues from clinical testing. The trend of consolidation among health plans has continued. In certain markets, such as California, health plans may delegate to independent physician associations (“IPAs”) the ability to negotiate for clinical testing services on behalf of certain members.

          Health plans and IPAs often require that clinical test service providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services through capitated payment arrangements and discounted fee-for-service arrangements. Under capitated payment arrangements, we provide services at a predetermined monthly reimbursement rate for each covered member, generally regardless of the number or cost of services provided by us. Average reimbursement rates under capitated payment arrangements are typically lower than our overall average reimbursement rate. Health plans continue to offer preferred provider organization (“PPO”) plans, point-of-service (“POS”) plans, consumer driven health plans (“CDHPs”) and limited benefit coverage programs. Reimbursement under these programs is typically negotiated on a fee-for-service basis, which generally results in higher revenue per requisition than under capitation arrangements. We do not expect that the design of these plans will pose a significant barrier to accessing clinical testing services. To the extent that plans and programs require greater levels of patient cost-sharing, this could negatively impact patient collection experience.

          Most of our agreements with major health plans are non-exclusive arrangements. Certain health plans, however, have limited their laboratory network to only a single national laboratory, seeking to obtain improved pricing. Although non-contracted providers historically generally were reimbursed at “reasonable and customary” rates, health plans today are employing several approaches, including “reasonable and customary” rates, to reimburse non-contracted providers. Contracted rates generally are lower than “reasonable and customary” rates.

          We also sometimes are a member of a “complementary network.” A complementary network is generally a set of contractual arrangements that a third party will maintain with various providers that provide discounted fees for the benefit of its customers. A member of a health plan may choose to access a non-contracted provider that is a member of a complementary network; if so, the provider will be reimbursed at a rate negotiated by the complementary network.

          We attempt to strengthen our relationships with health plans and increase the volume of testing services by offering health plans services and programs that leverage our Company’s expertise and resources, including our superior access, extensive test menu, medical staff and data, and in such areas as wellness and disease management.

          Physicians. Physicians, including both primary care physicians and specialists, requiring testing for patients are the primary referral source of our clinical testing volume. Physicians determine which laboratory to recommend or use based on a variety of factors, including: service; patient access and convenience, including participation in a health plan network; price; and depth and breadth of test and service offering. Physicians also purchase and utilize our point-of-care tests.

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          Hospitals. Hospitals generally maintain an on-site laboratory to perform the significant majority of clinical testing for their patients and refer less frequently needed and highly specialized procedures to outside laboratories, which typically charge the hospitals on a negotiated fee-for-service basis. Fee schedules for hospital reference testing typically are negotiated on behalf of hospitals by group purchasing organizations. We provide services to hospitals throughout the United States, including esoteric testing, in some cases helping manage their laboratories and serving as the medical directors of the hospital’s histology or clinical laboratory. We believe that we are the industry’s market leader in servicing hospitals. Hospitals generally continue to look for ways to fully utilize their existing laboratory capacity: they perform tests their patients need and may compete with commercial laboratories for outreach (non-hospital patients) testing. Continuing to obtain referrals from hospitals depends on our ability to provide high quality services that are more cost-effective than if the hospitals were to perform the services themselves. We believe that our combination of full-service, bi-coastal esoteric testing capabilities, medical and scientific professionals available for consultation, innovative connectivity products, point-of-care testing products, focus on Six Sigma quality and dedicated sales and service professionals has positioned us to be an attractive partner for hospitals.

          Most physicians have admitting privileges or other relationships with hospitals as part of their medical practice. Many hospitals seek to leverage their relationships with community physicians by encouraging the physicians to send their outreach testing to the hospital’s laboratory. In addition, hospitals that own physician practices generally require the practices to refer tests to the hospital’s affiliated laboratory. Hospitals can have greater leverage with health insurers than do commercial clinical laboratories, particularly hospitals that have a significant market share; hospitals thus are frequently able to negotiate higher reimbursement rates with health insurance plans than commercial clinical laboratories for comparable clinical testing services.

          We also have joint venture arrangements with leading integrated healthcare delivery networks in several metropolitan areas. These joint venture arrangements, which provide testing for affiliated hospitals as well as for unaffiliated physicians and other local healthcare providers, serve as our principal laboratory facilities in their service areas. Typically, we have either a majority ownership interest in, or day-to-day management responsibilities for, our hospital joint venture relationships.

          Employers. Employers use clinical tests for drugs-of-abuse to determine an individual’s employability and his or her “fitness for duty.” Companies with high employee turnover, safety conscious environments or regulatory testing requirements provide the highest volumes of testing. Factors such as the general economy and job market can impact the utilization of drugs-of-abuse testing. We seek to grow our employer volumes through offering new and innovative programs to help companies with their goal of maintaining a safe and productive workplace. We also offer employers our Blueprint for Wellness program, providing wellness screening and analytic services to employers, to help employers and their employees manage increasing healthcare costs and to capitalize on trends in personalized health.

          Other Laboratories and Other Customers. We also provide testing services to federal, state and local governmental agencies and perform esoteric testing services for commercial clinical laboratories that do not have a full range of testing capabilities. These customers are charged on a fee-for-service basis.

GENERAL

          Competition. While there has been significant consolidation in the clinical testing industry in recent years, our industry remains fragmented and highly competitive. We primarily compete with three types of clinical testing providers: hospital-affiliated laboratories, other commercial clinical laboratories and physician-office laboratories. Our largest commercial clinical laboratory competitor is Laboratory Corporation of America Holdings, Inc. In addition, we compete with many smaller regional and local commercial clinical laboratories, specialized esoteric laboratories and laboratories owned by physicians and hospitals. In anatomic pathology, additional competitors include anatomic pathology practices, including those in academic institutions. In addition, there has been a trend among specialty physician practices to establish their own histology laboratory capabilities and/or bring pathologists into their practices, thereby reducing referrals from these practices.

          We believe that healthcare providers traditionally consider a number of factors when selecting a testing provider, including:

• service capability and quality;

• accuracy, timeliness and consistency in reporting test results;

• patient insurance coverage;

• number and type of tests performed;

• pricing;

• number, convenience and geographic coverage of patient service centers;

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• reputation in the medical community;

• healthcare information technology solutions;

• qualifications of its staff; and

• ability to develop new and useful tests.

          We believe that we are an effective competitor in each of these areas. We also believe that offering the most comprehensive test menu in the industry, innovative test and information technology offerings, a superior patient experience, Six Sigma quality and unparalleled access and distribution, provides us with a competitive advantage.

          We believe that large commercial clinical laboratories may be able to increase their share of the overall clinical testing market due to their large service networks and lower cost structures. These advantages should enable larger clinical laboratories to more effectively serve customers, including members of large healthcare plans. In addition, we believe that consolidation in the clinical testing industry will continue. However, a significant portion of clinical testing is likely to continue to be performed by hospitals, which generally have affiliations with community physicians that refer testing to us. As a result of these affiliations, we compete against hospital-affiliated laboratories primarily on the basis of service capability and quality as well as other non-pricing factors. In addition, recent market activity may increase the competitive environment. For example, health plan actions to exclude large national clinical laboratories from contracts may enhance the relative competitive position of regional laboratories, and increased hospital acquisitions of physician practices enhance the ties of the physicians to hospital-affiliated laboratories.

          The diagnostic testing industry is faced with changing technology and new product introductions. Advances in technology may lead to the development of more cost-effective tests that can be performed outside of a commercial clinical laboratory such as (1) point-of-care tests that can be performed by physicians in their offices; (2) complex tests that can be performed by hospitals in their own laboratories; and (3) home testing that can be carried out without requiring the services of clinical laboratories. Development of such technology and its use by our customers and patients would reduce the demand for our laboratory testing services and negatively impact our revenues. With our point-of-care test strategy, we are positioning ourselves to service this growing market for physicians and hospitals. We also believe that our overall point-of-care test strategy will strengthen our relationship with our customers by enabling us to offer more solutions that improve their effectiveness and the care of their patients by enabling faster diagnosis and treatment.

          The diagnostic product, life insurance services, clinical trials and healthcare information technology markets are highly competitive. We have many competitors, some of which have much more extensive experience in these markets and some of which have greater resources. We compete in the diagnostic products market by attempting to find and exploit unique differentiated products, including products that take advantage of our healthcare information technology solutions. We compete in the life insurance services business by seeking to provide a superior applicant experience, faster services completion and a wider array of highest quality, integrated services than our competitors. We compete in the clinical trials business by leveraging our strengths as the world’s leading diagnostic testing company, including the depth and breadth of our testing menu, our superior scientific expertise, our ability to support complex global clinical trials and our lab management and information technology solutions. We compete in the healthcare information technology market by offering solutions that foster better patient care and improve performance for healthcare institutions, patients and physician practices, particularly smaller and medium sized physician practices.

          Sales and Marketing. Our sales force is organized to focus on customer groups and service types. The majority of representatives focus on marketing clinical laboratory testing, anatomic pathology and related services to physicians, including physician specialists. Supporting our physician sales teams are genomics and esoteric testing specialists, who are specially trained and focused on educating our clients on new and more complex tests. In the insurance market, we have a sales force that focuses on regional and national insurance organizations, as well as a sales team that sells risk assessment services to life insurance companies. We also have a hospital sales organization that focuses on meeting the unique clinical testing needs of hospitals. A smaller portion of our sales force focuses on selling drugs-of-abuse and wellness testing to employers. We also have a sales force that focuses on selling risk assessment testing services to local insurance agents and brokers. In addition, we have a sales organization that focuses on selling diagnostic products and instruments to hospitals, commercial clinical laboratories, physician office laboratories, blood banks and clinics, and a sales force that sells our point-of-care tests to customers globally. Given the highly specialized requirements of drug developers, we also have a dedicated sales force that sells our clinical trials services. In addition, we have an active customer management process to evaluate the growth potential and profitability of all accounts.

          Information Technology. We use information systems extensively in virtually all aspects of our business, including clinical laboratory testing, test reporting, billing, customer service, logistics and management of medical data. We believe that our healthcare information technology systems help differentiate us favorably. We endeavor to establish systems that create value and efficiencies for our Company, patients and customers. The successful delivery of our

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services depends, in part, on the continued and uninterrupted performance of our information technology systems.

          Some of our historic growth has come through acquisitions and we continue to use non-standardized billing, laboratory or other core information systems. We have standardized some of our systems and are implementing standard laboratory information and billing systems across our operations, including those from our most recent acquisitions. We expect implementation will take several more years to complete, and will result in significantly more centralized systems, improved operating efficiency, more timely and comprehensive information for management and enhanced control over our operational environment.

          Quality Assurance. In our clinical testing business, our goal is to continually improve the processes for collection, handling, storage and transportation of patient specimens, as well as the precision and accuracy of analysis and result reporting. Our quality assurance efforts focus on pre-analytic, analytic and post-analytic processes, including positive patient identification of specimens, report accuracy, proficiency testing, reference range relevance, process audits, statistical process control and personnel training for all of our laboratories and patient service centers. We also focus on the licensing, credentialing, training and competence of our professional and technical staff. We have implemented an enhanced specimen tracking system, with global positioning system capabilities, that enables us to better track specimens. We continue to implement our Six Sigma and standardization initiatives to help achieve our goal of becoming recognized as the undisputed quality leader in the healthcare services industry. In addition, some of our laboratories have achieved International Organization for Standardization, or ISO, certification. These certifications are international standards for quality management systems. In 2010, we took a number of steps to further enhance our quality assurance program, including actions to reduce errors, to measure and monitor performance and to drive process discipline.

          As part of our comprehensive quality assurance program, we utilize internal proficiency testing, extensive quality control and rigorous process audits for our clinical laboratory operations. For most clinical laboratory tests, quality control samples are processed in parallel with the analysis of patient specimens. The results of tests on these quality control samples are monitored to identify trends, biases or imprecision in our analytical processes.

          We participate in external proficiency testing and have accreditation or licenses for our clinical laboratory operations from various regulatory agencies or accrediting organizations, such as the Centers for Medicare and Medicaid Services (“CMS”), the College of American Pathologists (“CAP”) and certain states. All of our laboratories participate in various external quality surveillance programs. They include, but are not limited to, proficiency testing programs administered by CAP, as well as some state agencies. CAP is an independent, non-governmental organization of board-certified pathologists approved by CMS to inspect clinical laboratories to determine compliance with the standards required by CLIA. CAP offers an accreditation program to which laboratories may voluntarily subscribe. All of our major regional and esoteric laboratories, including our facility in India, and most of our rapid response laboratories, are accredited by CAP. Accreditation includes on-site inspections and participation in the CAP (or equivalent) proficiency testing program. Also, all of our cytotechnologists and pathologists participate in an individual proficiency testing program.

          Our diagnostic products businesses maintain extensive quality assurance programs focused on ensuring that our products are safe and effective and that we comply with applicable regulatory requirements in the United States, Europe and Australia. They are regulated by the FDA and are required to be in compliance with the Quality Systems Regulations, 21 CFR part 820, and with applicable standards outside the U.S. In addition, our manufacturing sites are certified in accordance with, or audited by the deemed authority for, ISO 13485: 2003 standards. We endeavor to design and manufacture our diagnostics products in compliance with Quality Systems Regulations. In addition, the diagnostics products businesses maintain procedures designed to ensure that products we purchase conform to their specifications.

          Intellectual Property Rights. We own significant intellectual property, including patents, patent applications, technology, trade secrets, know-how, copyrights and trademarks in the United States and other countries. From time to time, we also license U.S. and non-U.S. patents, patent applications, technology, trade secrets, know-how, copyrights or trademarks owned by others. In the aggregate, these intellectual property assets and licenses are of material importance to our business. We believe, however, that no single patent, technology, trademark, intellectual property asset or license is material to our business as a whole.

          Our approach is to manage our intellectual property assets to safeguard them and to maximize their value to our enterprise. We generally actively defend our intellectual property assets and pursue protection of our products, processes and other intellectual property where possible.

          Our success in remaining a leading innovator in the diagnostic testing industry by continuing to introduce new tests, technology and services will depend, in part, on our ability to license new and improved technologies on favorable terms. Other companies or individuals, including our competitors, may obtain patents or other property rights on tests or processes that we may be performing, particularly in such emerging areas as gene-based testing and other specialty

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testing, that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business.

          Employees. At December 31, 2010, we employed approximately 42,000 people. This total excludes employees of the joint ventures where we do not have a majority interest. We have no collective bargaining agreements with any unions covering any employees in the United States, and we believe that our overall relations with our employees are good.

BILLING AND REIMBURSEMENT

          Billing. We generally bill for clinical testing services on a fee-for-service basis under one of two types of fee schedules. These fees may be negotiated or discounted. The types of fee schedules are:

• “Client” fees charged to physicians, hospitals, and institutions for which a clinical laboratory performs testing services on a wholesale basis and which are billed on a monthly basis.

• “Patient” fees charged to individual patients and certain third-party payers on a claim-by-claim basis.

          Billing for clinical testing services is very complicated, and we maintain compliance policies and procedures for our billing. Patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups all have different billing requirements. Some billing arrangements require us to bill multiple payers, and there are several other factors that complicate billing (e.g., disparity in coverage and information requirements among various payers; incomplete or inaccurate billing information provided by ordering physicians). We incur additional costs as a result of our participation in Medicare and Medicaid programs because clinical laboratory testing and anatomic pathology services are subject to complex, stringent and frequently ambiguous federal and state laws and regulations, including those relating to coverage, billing and reimbursement. Changes in laws and regulations could further complicate our billing and increase our billing expense. CMS establishes procedures and continuously evaluates and implements changes to the reimbursement process and requirements for coverage.

          As an integral part of our billing compliance program, we investigate reported failures or suspected failures to comply with federal and state healthcare reimbursement requirements. Any Medicare or Medicaid overpayments resulting from non-compliance are reimbursed by us. As a result of these efforts, we have periodically identified and reported overpayments, reimbursed the payers for overpayments and taken appropriate corrective action.

          In 2010, our bad debt expense was 4% of our net revenues. We believe that most of our bad debt expense is primarily the result of missing or incorrect billing information on requisitions and Advance Beneficiary Notices received from healthcare providers and the failure of patients to pay the portion of the receivable that is their responsibility, rather than credit related issues. Deteriorating economic conditions may adversely impact our bad debt expense. In general, we perform the requested tests and report test results regardless of whether the billing information is correct or complete. We subsequently attempt to contact the healthcare provider or patient to obtain any missing information and to rectify incorrect billing information. Missing or incorrect information on requisitions complicates and slows down the billing process, creates backlogs of unbilled requisitions and generally increases the aging of accounts receivable and bad debt expense. The increased use of electronic ordering reduces the incidence of missing or incorrect information.

          Government Coverage and Reimbursements. Government payers, such as Medicare and Medicaid, have taken steps and can be expected to continue to take steps to control the cost, utilization and delivery of healthcare services, including clinical test services. For example, Medicare carriers have adopted policies under which they do not pay for many commonly ordered clinical tests unless the ordering physician has provided an appropriate diagnosis code supporting the medical necessity of the test. Physicians are required by law to provide diagnostic information when they order clinical tests for Medicare and Medicaid patients. In addition, the final 2011 Physician Fee Schedule rule includes a requirement that all laboratory requisitions, with the exception of electronic orders, contain the ordering physician’s signature in order to be billable to Medicare. CMS had postponed this requirement until the beginning of the second quarter of 2011. Recent published reports indicate that CMS plans to rescind this requirement; however, CMS has not officially announced its decision.

          The healthcare industry has experienced significant changes in reimbursement practices during the past several years. Historically, many different local carriers administered Medicare Part B, which covers services provided by commercial clinical laboratories. They often had inconsistent policies, increasing the complexity of the billing process for clinical laboratories. They are being replaced with contractors who will administer Part B benefits for beneficiaries in larger regional areas. It is expected that the revised system will reduce the administrative complexity of billing for services provided to Medicare beneficiaries.

          With regard to the clinical test services performed on behalf of Medicare beneficiaries, we must bill the Medicare program directly and must accept the carrier’s fee schedule amount for covered services as payment in full. In

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addition, state Medicaid programs are prohibited from paying more (and in most instances, pay significantly less) than Medicare. Currently, Medicare does not require the beneficiary to pay a co-payment for clinical laboratory testing. Certain Medicaid programs require Medicaid recipients to pay co-payment amounts for clinical laboratory testing. Medicare patients generally are required to make co-payments for anatomic pathology services.

          Part B of the Medicare program contains fee schedule payment methodologies for clinical testing services, and for pathology and other physician services, performed for covered patients, including a national ceiling on the amount that carriers could pay under their local Medicare clinical testing fee schedules. The Medicare national fee schedule for clinical testing services for 2011 is reduced by 1.75% from 2010 levels as a result of the 2010 federal healthcare reform legislation. This reduction is the first of a series of such annual reductions effective from 2011 to 2015. In December 2010, Congress delayed by one year a potential 30% decrease in the physician fee schedule that otherwise would have become effective January 1, 2011. The following table sets forth the percentage of our consolidated net revenues reimbursed under Medicare attributable to the clinical testing and physician fee schedules in 2010.

Medicare Part B Reimbursements	% of our 2010 Consolidated Net Revenues
Clinical Laboratory Fee Schedule	12	%
Physician Fee Schedule	3	%

          Penalties for violations of laws relating to billing government healthcare programs and for violations of federal and state fraud and abuse laws include: (1) exclusion from participation in Medicare/Medicaid programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business. Civil monetary penalties for a wide range of violations may be assessed on a per violation basis. A parallel civil remedy under the federal False Claims Act provides for penalties on a per violation basis, plus damages of up to three times the amount claimed.

          Historically, most Medicare and Medicaid beneficiaries were covered under the traditional Medicare and Medicaid programs administered by the federal government. Over the last several years, the federal government has continued to expand its contracts with private health insurance plans for Medicare beneficiaries and has encouraged such beneficiaries to switch from the traditional programs to the private programs, called “Medicare Advantage” programs. There has been continued growth of health insurance plans offering Medicare Advantage programs and of beneficiary enrollment in these plans. In recent years, in an effort to control costs, states also have increasingly mandated that Medicaid beneficiaries enroll in private managed care arrangements. The 2010 federal healthcare reform legislation is intended to control the growth of Medicare Advantage programs, encourage beneficiaries to switch back to traditional Medicare programs and expand the eligibility for traditional Medicaid programs.

REGULATION

          Our businesses are subject to or impacted by extensive and frequently changing laws and regulations in the United States (at both the federal and state levels), and the other jurisdictions in which we conduct business. These laws and regulations include regulations over aspects of our business, and laws and regulations relating to conducting our business generally (e.g., export controls laws, U.S. Foreign Corrupt Practices Act and similar laws of other jurisdictions), including in the United States and in the other jurisdictions in which we conduct business. We also are subject to inspections and audits by governmental agencies. Set forth below are highlights of the key regulatory areas applicable to our businesses.

          CLIA and State Clinical Laboratory Licensing Regulations. All of our laboratories and, where applicable, patient service centers, are licensed and accredited as required by the appropriate federal and state agencies. CLIA regulates virtually all clinical laboratories by requiring that they be certified by the federal government and comply with various technical, operational, personnel and quality requirements intended to ensure that the services provided are accurate, reliable and timely. The cost of compliance with CLIA makes it cost prohibitive for many physicians to operate clinical laboratories in their offices. However, manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care test equipment to physicians and by selling to both physicians and patients test kits approved by the FDA for home use. Diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories with minimal regulatory oversight under CLIA as well as by patients in their homes.

          CLIA does not preempt state laws that are more stringent than federal law. State laws may require additional personnel qualifications, quality control, record maintenance and/or proficiency testing. State laws also may require detailed review of our scientific validations and technical procedures for tests.

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          Fraud and Abuse Rules. Federal anti-kickback laws and regulations prohibit making payments or furnishing other benefits to influence the referral of tests billed to Medicare, Medicaid or certain other federal or state healthcare programs. The penalties for violation of these laws and regulations may include monetary fines, criminal and civil penalties and/or suspension or exclusion from participation in Medicare, Medicaid and other federal healthcare programs. Several states have similar laws.

          In addition, federal and state anti-self-referral laws generally prohibit Medicare and Medicaid payments for clinical tests referred by physicians who have a personal investment in, or a compensation arrangement with, the testing laboratory. Some states also have similar laws that are not limited to Medicare and Medicaid referrals and could also affect investment and compensation arrangements with physicians.

          FDA. The FDA has regulatory responsibility over, among other areas, instruments, test kits, reagents and other devices used by clinical laboratories to perform diagnostic testing in the United States. The FDA also regulates clinical trials (and, therefore, testing that we perform for sponsors of those trials), drugs-of-abuse testing for employers, testing for blood bank purposes and testing of donors of human cells for purposes such as in vitro fertilization. A number of esoteric tests we develop internally are first offered as laboratory-developed tests (“LDTs”). The FDA has claimed regulatory authority over all LDTs, but has exercised enforcement discretion with regard to most LDTs performed by high complexity CLIA-certified laboratories. During 2010, the FDA publicly announced that it has decided to exercise regulatory authority over LDTs, and that it plans to issue guidance to the industry regarding its regulatory approach. The FDA has indicated that it will use a risk-based approach to regulation and will direct more resources to tests with wider distribution and with the highest risk of injury, but that it will be sensitive to the need to not adversely impact patient care or innovation. The FDA has not announced a framework or timetable for implementing its new regulatory approach. The regulatory approach adopted by the FDA may lead to an increased regulatory burden on our Company, including additional costs and delays in introducing new tests.

          Laboratories use analyte specific reagents (“ASRs”) in some LDTs. Under current FDA guidance, manufacturers of certain products previously marketed as ASRs must file for FDA clearance of these products in order to market them in the United States. In addition, the FDA recently has increased its scrutiny of reagents and kits labeled Research Use Only (“RUO”) or Investigational Use Only (“IUO”) and has announced that it plans to issue guidance on RUO and IUO labeled products. The regulation of ASR, RUO or IUO products could result in increased product cost, a delay in obtaining them or, if a manufacturer withdraws its products from the market, an inability to obtain the product. These factors may hinder our ability to develop and market new products or services or cause an increase in the cost of our products or services.

          Our diagnostic product business is subject to regulation by the FDA, as well as by foreign governmental agencies, including countries within the European Union who have adopted the Directive on In Vitro Diagnostic Medical Devices (“IVDD”). These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing, distribution and post-market surveillance of diagnostic products. Prior to commercially marketing or selling most diagnostic products in the U.S., we are required to secure clearance or approval from the FDA. Similarly, we may need to obtain a license or certification such as a CE mark in order to sell diagnostic products outside of the U.S. Compliance with the IVDD allows us to market in Europe once we obtain a CE mark (obtainable where the manufacturer certifies that the device conforms to the regulatory and quality requirements for the device). Following the introduction of a diagnostic product into the market, the FDA and non-U.S. agencies engage in periodic inspections and reviews of the manufacturing processes and product performance. Compliance with these regulatory controls can affect the time and cost associated with the development, introduction and continued availability of new products. These agencies possess the authority to take various administrative and legal actions against us for non-compliance, such as fines, product suspensions, submission of warning letters, recalls, product seizures, injunctions and other civil and criminal sanctions. Where appropriate, voluntary compliance actions, such as voluntary recalls, may be undertaken.

          Environmental, Health and Safety. We are subject to laws and regulations related to the protection of the environment, the health and safety of employees and the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials. For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the U.S. This includes requirements to develop and implement multi-faceted programs to protect workers from exposure to blood-borne pathogens, such as HIV and hepatitis B and C, including preventing or minimizing any exposure through needle stick injuries. For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the following agencies: the U.S. Department of Transportation, the U.S. Public Health Service, the United States Postal Service and the International Air Transport Association. We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with applicable laws and regulations.

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          Physicians. Many of our pathologists enter into an employment agreement. These agreements have varying terms, but generally can be terminated at any time, upon advance notice. Most of the agreements contain covenants generally limiting the activities of the pathologist within a defined geographic area for a limited period of time after termination of employment. The agreements may be subject to limitations under state law that may limit the enforceability of these covenants.

          Our pathologists are required to hold a valid license to practice medicine in the jurisdiction in which they practice. If they provide inpatient services, they must become a member of the medical staff at the relevant hospital, with privileges in pathology.

          Several states, including some in which our businesses are located, prohibit business corporations from engaging in the practice of medicine. In certain states, business corporations are prohibited from employing licensed healthcare professionals to provide services on behalf of the corporation; these laws vary from state to state. The manner in which licensed physicians can be organized to perform medical services may be governed by the laws of the state in which medical services are provided and by the medical boards or other entities authorized by these states to oversee the practice of medicine. In some states, anatomic pathology services are delivered through physician-owned entities that employ the practicing pathologists.

          Privacy and Security of Health and Personal Information. We are required to comply with laws and regulations in the United States (at the federal and state levels) and jurisdictions outside the United States in which we conduct business, including the European Union, regarding protecting the security and privacy of certain healthcare and personal information. These privacy and security laws include the federal Health Insurance Portability and Accountability Act, as amended, and the regulations thereunder (collectively, “HIPAA”). The HIPAA security regulations establish requirements for safeguarding electronic protected health information. The HIPAA privacy regulations establish comprehensive federal standards regarding the uses and disclosures of protected health information. Together, these laws and regulations establish a complex regulatory framework on a variety of subjects, provide for penalties for non-compliance, and may require a healthcare provider to notify patients or the government if the provider discovers certain breaches of unsecured personal or a patient’s protected health information. We have implemented practices to meet applicable requirements.

          Drug Testing; Controlled Substances. All U.S. laboratories that perform drug testing for public sector employees and employees of certain federally regulated businesses are required to be certified as meeting the detailed performance and quality standards of the Substance Abuse and Mental Health Services Administration. To obtain access to controlled substances used to perform drugs-of-abuse testing in the United States, laboratories must be licensed by the Drug Enforcement Administration. All of our laboratories that perform such testing or that utilize controlled substances are so certified or so licensed, respectively.

          Compliance. We seek to conduct our business in compliance with all applicable laws and regulations. Many of the laws and regulations applicable to us, however, including many of those relating to billing, reimbursement of tests and relationships with physicians and hospitals, are vague or indefinite or have not been interpreted by the courts. They may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. The applicability or interpretation of laws and regulations also may not be clear in light of emerging changes in clinical testing science and healthcare technology. Such occurrences, regardless of their outcome, could, among other things:

• increase our operating costs including, but not limited to, those costs associated with performing clinical or anatomic pathology tests or manufacturing or distributing products, and administrative requirements related to billing;

• decrease the amount of reimbursement related to testing services performed;

• damage our reputation; and/or

• adversely affect important business relationships with third parties.

          If we fail to comply with applicable laws and regulations, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third party claims, all of which could have a material adverse effect on our business. Certain federal and state statutes, regulations and other laws, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government payers, private payers and/or patients alleging inappropriate billing practices.

          The federal or state governments may bring claims based on theories as to our current practices that we believe

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are lawful. The federal and state governments have substantial leverage in negotiating settlements since the amount of potential damages far exceeds the rates at which we are reimbursed, and the government has the remedy of excluding a non-compliant provider from participation in the Medicare and Medicaid programs. Reimbursement from traditional Medicare and Medicaid programs represented approximately 18% of our net revenues during 2010. We believe that, based on our experience with settlements and public announcements by various government officials, the federal and state governments continue to strengthen their enforcement efforts against healthcare fraud. In addition, legislative provisions relating to healthcare fraud and abuse provide government enforcement personnel substantially increased funding, powers and remedies to pursue suspected cases of fraud and abuse.

          We have a long-standing and well-established compliance program. The Quality, Safety & Compliance Committee of our Board of Directors oversees our compliance program and requires periodic management reports regarding our compliance program. Our program includes detailed policies and procedures and training programs intended to ensure the strict implementation and observance of all applicable laws, regulations and Company policies. Further, we conduct in-depth reviews of procedures and facilities to assure regulatory compliance throughout our operations. We conduct annual training of our employees on these compliance policies and procedures.

AVAILABLE INFORMATION

          We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document that we file with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for information regarding the public reference room. The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that issuers (including Quest Diagnostics) file electronically with the SEC. Our electronic SEC filings are available to the public at the SEC’s internet site, www.sec.gov.

          Our internet site is www.QuestDiagnostics.com. You can access Quest Diagnostics’ Investor Relations webpage at www.QuestDiagnostics.com/investor. The information on our website is not incorporated by reference into this Report. We make available free of charge, on or through our Investor Relations webpage, our proxy statements, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practical after such material is filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act.

          We have a corporate governance webpage. You can access information regarding our corporate governance at www.QuestDiagnostics.com/governance. We post the following on our corporate governance webpage:

• Directors

• Management

• Code of Business Ethics

• Integrity Commitment

• Values

• Corporate Governance Guidelines

• Charters for the following committees of our Board of Directors: Audit and Finance; Compensation; Executive; Governance; and Quality, Safety and Compliance

• Certificate of Incorporation

• Bylaws

EXECUTIVE OFFICERS OF THE COMPANY

The following persons serve as executive officers of the Company.

          Surya N. Mohapatra, Ph.D. (61) is Chairman of the Board, President and Chief Executive Officer. Prior to joining the Company in February 1999 as Senior Vice President and Chief Operating Officer, he was Senior Vice President of Picker International, a worldwide leader in advanced medical imaging technologies. Dr. Mohapatra was appointed President and Chief Operating Officer in June 1999, Chief Executive Officer in May 2004 and Chairman of the Board in December 2004. He is a director of ITT Corporation, a trustee of The Rockefeller University and a member

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of the Corporate Advisory Board of Johns Hopkins Carey Business School. Dr. Mohapatra has been a director of the Company since 2002.

          Jon R. Cohen, M.D. (56) is Senior Vice President and Chief Medical Officer. Dr. Cohen joined the company in March 2009. He served as the Senior Advisor to New York Governor David Patterson from 2008 to 2009, where he was responsible for all policy and strategic planning. From 2007 to 2008, Dr. Cohen was a managing director, health industries advisory services at PricewaterhouseCoopers LLP. Prior to that, he spent 21 years with North Shore-Long Island Jewish Health System, one of the nation’s largest not-for-profit health systems, including serving as its Chief Medical Officer from 2000 to 2006.

          Robert A. Hagemann (54) is Senior Vice President and Chief Financial Officer. He joined Corning Life Sciences, Inc. in 1992, where he held a variety of senior financial positions before being named Vice President and Corporate Controller of the Company in 1996. Mr. Hagemann has served as Chief Financial Officer since August 1998. He is a director of Zimmer Holdings, Inc.

          Joan E. Miller, Ph.D. (56) is Senior Vice President – Pathology and Hospital Services. Dr. Miller joined Corning Life Sciences, Inc. in 1992 and since has held positions of increasing responsibility. Dr. Miller was named Senior Managing Director, Nichols Institute in 2002 and Vice President, Hospital Business in 2003. Since June 2007, Dr. Miller has overseen the Company’s hospital testing services, including its esoteric testing facilities, and its anatomic pathology testing services.

          Michael E. Prevoznik (49) is Senior Vice President and General Counsel. Mr. Prevoznik joined the Company as Vice President and General Counsel in August 1999. In 2003, he assumed responsibility for governmental affairs. Prior to joining the Company, Mr. Prevoznik served in positions of increasing responsibility within the compliance organization at SmithKline Beecham, most recently as Vice President, Compliance, with responsibility for coordinating all SmithKline Beecham compliance activities worldwide.

          Wayne R. Simmons (55) is Vice President – Operations. Since July 2007, he has overseen the Company’s U.S. clinical testing operations. Mr. Simmons joined the Company in February 2004 as Vice President for our central region. Prior to joining the Company, Mr. Simmons served in positions of increasing responsibility with Philips Medical Systems, including, since 2002, as Vice President of Supply Chain, in which position he was responsible for operations at Philips Medical Systems CT Operations facilities globally.

Item 1A. Risk Factors

          You should carefully consider all of the information set forth in this Report, including the following risk factors, before deciding to invest in any of our securities. The risks below are not the only ones that we face. Additional risks not presently known to us, or that we presently deem immaterial, may also negatively impact us. Our business, financial condition, results of operations or cash flows could be materially impacted by any of these factors.

          This Report also includes forward-looking statements that involve risks or uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face described below and elsewhere. See “Cautionary Factors that May Affect Future Results” on page 28.

Continued weakness in U.S., global, or regional economic conditions could have an adverse effect on our businesses.

          The economies of the United States and other regions of the world in which we do business continue to experience significant weakness which, in the case of the U.S., has resulted in significant unemployment and reduced economic activity. Continued weakness or a further decline in economic conditions may adversely affect demand for our services and products, thus reducing our revenue. These conditions also could impair the ability of those with whom we do business to satisfy their obligations to us.

The clinical testing business is highly competitive, and if we fail to provide an appropriately priced level of service or otherwise fail to compete effectively it could have a material adverse effect on our revenues and profitability.

          While there has been significant consolidation in recent years in the clinical testing business, it remains a fragmented and highly competitive industry.

          We primarily compete with three types of clinical test providers: hospital-affiliated laboratories, other commercial clinical laboratories and physician-office laboratories. We also compete with anatomic pathology practices and large physician group practices. Hospitals generally maintain on-site laboratories to perform testing on their patients (inpatient or outpatient). In addition, many hospitals compete with commercial clinical laboratories for outreach (non-hospital patients) testing. Most physicians have admitting privileges or other relationships with hospitals as part of their

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medical practice and hospitals may seek to leverage their relationships with community physicians and encourage the physicians to send their outreach testing to the hospital’s laboratory. In addition, hospitals that own physician practices generally require the practices to refer tests to the hospital’s laboratory. As a result of this affiliation between hospitals and community physicians, we compete against hospital-affiliated laboratories primarily based on quality and scope of service. Increased hospital acquisitions of physician practices enhance physician ties to hospital-affiliated laboratories and may strengthen their competitive position. Our failure to provide a broad test menu or service superior to hospital-affiliated laboratories and other laboratories could have a material adverse effect on our business.

          If we fail to compete effectively, our business could be adversely affected and our revenues and profitability could be damaged.

U.S. healthcare reform legislation may result in significant changes, and our business could be adversely impacted if we fail to adapt.

          Government oversight of and attention to the healthcare industry in the United States is significant and increasing. In March 2010, U.S. federal legislation was enacted to reform healthcare. The legislation provides for reductions in the Medicare clinical laboratory fee schedule of 1.75% for five years beginning in 2011 and also includes a productivity adjustment that reduces the CPI market basket update beginning in 2011. The legislation imposes an excise tax on the seller for the sale of certain medical devices in the United States, including those purchased and used by laboratories, beginning in 2013. The legislation establishes the Independent Payment Advisory Board, which will be responsible, beginning in 2014, annually to submit proposals aimed at reducing Medicare cost growth while preserving quality. These proposals automatically will be implemented unless Congress enacts alternative proposals that achieve the same savings targets. Further, the legislation calls for a Center for Medicare and Medicaid Innovation that will examine alternative payment methodologies and conduct demonstration programs. The legislation provides for extensive health insurance reforms, including the elimination of pre-existing condition exclusions and other limitations on coverage, fixed percentages on medical loss ratios, expansion in Medicaid and other programs, employer mandates, individual mandates, creation of state and regional health insurance exchanges, and tax subsidies for individuals to help cover the cost of individual insurance coverage. The legislation also permits the establishment of accountable care organizations, a new healthcare delivery model. While the ultimate impact of the legislation on the healthcare industry is unknown, it is likely to be extensive and may result in significant change. Our failure to adapt to these changes could have a material adverse effect on our business.

FDA regulation of LDTs and clinical laboratories may result in significant change, and our business could be adversely impacted if we fail to adapt.

          During 2010, the FDA publicly announced that it has decided to exercise regulatory authority over LDTs, and that it plans to issue guidance to the industry regarding its regulatory approach. The FDA has indicated that it will use a risk-based approach to regulation and will direct more resources to tests with wider distribution and with the highest risk of injury, but that it will be sensitive to the need to not adversely impact patient care or innovation. The FDA has not announced a framework or timetable for implementing its new regulatory approach. The regulatory approach adopted by the FDA may lead to an increased regulatory burden, including additional costs and delays in introducing new tests. While the ultimate impact of the FDA’s approach is unknown, it may be extensive and may result in significant change. Our failure to adapt to these changes could have a material adverse effect on our business.

Government payers, such as Medicare and Medicaid, have taken steps to control the utilization and reimbursement of healthcare services, including clinical test services.

          We face efforts by government payers to reduce utilization and reimbursement for clinical testing services.

          From time to time, Congress has legislated reductions in, or frozen updates to, the Medicare Clinical Laboratory Fee Schedule. In addition, CMS has adopted policies limiting or excluding coverage for clinical tests that we perform. We also provide physician services which are reimbursed by Medicare under a physician fee schedule, which is subject to adjustment on an annual basis. CMS changes add to our costs by increasing complexity and administrative requirements for billing. Medicaid reimbursement varies by state and is subject to administrative and billing requirements and budget pressures. The 2010 federal healthcare reform legislation includes further provisions that are designed to control utilization and payment levels.

          In addition, over the last several years, the federal government has continued to expand its contracts with private health insurance plans for Medicare beneficiaries, called “Medicare Advantage” programs, and has encouraged such beneficiaries to switch from the traditional programs to the private programs. There has been continued growth of health insurance plans offering Medicare Advantage programs, and of beneficiary enrollment in these programs. Also in recent years, states have increasingly mandated that Medicaid beneficiaries enroll in private managed care arrangements. The 2010 federal healthcare reform legislation is intended to control the growth of Medicare Advantage programs, encourage beneficiaries to switch back to traditional Medicare programs and expand the eligibility for

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traditional Medicaid programs. Recently, state budget pressures have encouraged states to consider several courses that may impact our business, such as delaying payments, reducing reimbursement, restricting coverage eligibility, service coverage restrictions and imposing taxes on our services.

          From time to time, the federal government has considered whether competitive bidding can be used to provide clinical testing services for Medicare beneficiaries at attractive rates while maintaining quality and access to care. If competitive bidding were implemented on a regional or national basis for clinical testing, it could materially adversely affect us.

          We expect efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services will continue. These efforts, including changes in law or regulations, may have a material adverse impact on our business.

Healthcare plans have taken steps to control the utilization and reimbursement of healthcare services, including clinical test services.

          We also face efforts by non-governmental third party payers, including healthcare plans, to reduce utilization and reimbursement for clinical testing services.

          The healthcare industry has experienced a trend of consolidation among healthcare insurance plans, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical testing providers. These healthcare plans, and independent physician associations, may demand that clinical testing providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capitated payment arrangements. In addition, some healthcare plans have been willing to limit the PPO or POS laboratory network to only a single national laboratory to obtain improved fee-for-service pricing. There are also an increasing number of patients enrolling in consumer driven products and high deductible plans that involve greater patient cost-sharing.

          The increased consolidation among healthcare plans also has increased the potential adverse impact of ceasing to be a contracted provider with any such insurer. The 2010 federal healthcare reform legislation includes provisions, including ones regarding the creation of healthcare exchanges, that may encourage healthcare insurance plans to increase exclusive contracting.

          We expect continuing efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services. These efforts, including future changes in third-party payer rules, practices and policies, or ceasing to be a contracted provider to a healthcare plan, may have a material adverse effect on our business.

Business development activities are inherently risky, and integrating our operations with businesses we acquire may be difficult and, if unsuccessfully executed, may have a material adverse effect on our business.

          We plan selectively to enhance our business from time to time through business development activities, such as strategic acquisitions, licensing, investments and alliances. However, these plans are subject to the availability of appropriate opportunities and competition from other companies seeking similar opportunities. Moreover, the success of any such effort may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity, and to integrate it into our business. The success of our strategic alliances depends not only on our contributions and capabilities, but also on the property, resources, efforts and skills contributed by our strategic partners. Further, disputes may arise with strategic partners, due to conflicting priorities or conflicts of interests.

          Each acquisition involves the integration of a separate company that was previously operated independently and has different systems, processes, policies and cultures. Integration of acquisitions involves a number of risks including the diversion of management’s attention to the assimilation of the operations of businesses we have acquired, difficulties in the integration of operations and systems and the realization of potential operating synergies, the assimilation and retention of the personnel of the acquired companies, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results. The process of combining companies may be disruptive to our businesses and may cause an interruption of, or a loss of momentum in, such businesses as a result of the following difficulties, among others:

• loss of key customers or employees;

• difficulty in standardizing information and other systems;

• difficulty in consolidating facilities and infrastructure;

• failure to maintain the quality or timeliness of services that our Company has historically provided;

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• diversion of management’s attention from the day-to-day business of our Company as a result of the need to deal with the foregoing disruptions and difficulties; and

• the added costs of dealing with such disruptions.

          If we are unable successfully to integrate strategic acquisitions in a timely manner, our business and our growth strategies could be negatively affected. Even if we are able to successfully complete the integration of the operations of other companies or businesses we may acquire in the future, we may not be able to realize all or any of the benefits that we expect to result from such integration, either in monetary terms or in a timely manner.

Our business could be negatively affected if we are unable to continue to improve our efficiency.

          As noted above, government payers and healthcare insurers have taken steps to control the utilization and reimbursement of healthcare services, including clinical testing services; such steps may continue. If we are unable to continue to improve our efficiency to enable us to mitigate the impact on our profitability of these activities, our business could be negatively affected.

We are subject to numerous legal and regulatory requirements governing our activities, and we may face substantial fines and penalties, and our business activities may be impacted, if we fail to comply.

          Our business is subject to or impacted by extensive and frequently changing laws and regulations in the United States (including at both the federal and state levels), and the other jurisdictions in which we engage in business. While we seek to conduct our business in compliance with all applicable laws, many of the laws and regulations applicable to us are vague or indefinite and have not been interpreted by the courts, including many of those relating to:

• billing and reimbursement of clinical tests;

• certification or licensure of clinical laboratories;

• the anti-self-referral and anti-kickback laws and regulations;

• the laws and regulations administered by the U.S. Food and Drug Administration;

• the corporate practice of medicine;

• operational, personnel and quality requirements intended to ensure that clinical testing services are accurate, reliable and timely;

• physician fee splitting;

• relationships with physicians and hospitals;

• safety and health of laboratory employees; and

• handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials.

          These laws and regulations may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. We may not be able to maintain, renew or secure required permits, licenses or any other regulatory approvals needed to operate our business or commercialize our products. If we fail to comply with applicable laws and regulations, or if we fail to maintain, renew or obtain necessary permits, licenses and approvals, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third party claims. If any of the foregoing were to occur, our reputation could be damaged, important business relationships with third parties could be adversely affected and it could have a material adverse effect on our business.

          We regularly receive requests for information, and occasionally subpoenas, from governmental authorities. We also are subject from time to time to qui tam claims brought by former employees or other “whistleblowers.” The federal and state governments continue to strengthen their position and scrutiny over healthcare fraud. In addition, legislative provisions relating to healthcare fraud and abuse provide federal and state enforcement personnel substantially increased funding, powers and remedies to pursue suspected fraud and abuse. The government has substantial leverage in negotiating settlements since the amount of potential damages far exceeds the rates at which we are reimbursed for our products and services, and the government has the remedy of excluding a non-compliant provider from participation in the Medicare and Medicaid programs. Regardless of merit or eventual outcome, these types of investigations and related litigation can result in:

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• diversion of management time and attention;

• expenditure of large amounts of cash on legal fees, costs and payment of damages;

• limitations on our ability to continue some of our operations;

• enforcement actions, fines and penalties or the assertion of private litigation claims and damages;

• decreased demand for our services and products; and/or

• injury to our reputation.

          Although we believe that we are in compliance, in all material respects, with applicable laws and regulations, there can be no assurance that a regulatory agency or tribunal would not reach a different conclusion. Any noncompliance by us with applicable laws and regulations could have a material adverse effect on our results of operations. Moreover, even when an investigation is resolved favorably, the process may be time-consuming and the legal costs and diversion of management focus may be extensive.

          Changes in applicable laws and regulations may result in existing practices becoming more restricted, or subject our existing or proposed services and products to additional costs, delay, modification, withdrawal or reconsideration. Such changes could require us to modify our business objectives and could have a material adverse effect on our business.

Failure to timely or accurately bill for our services could have a material adverse effect on our business.

          Billing for clinical testing services is extremely complicated and is subject to extensive and non-uniform rules and administrative requirements. Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups. Changes in laws and regulations could increase the complexity and cost of our billing process. Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further cost and complexity to the billing process. Further, our billing systems require significant technology investment and, as a result of marketplace demands, we need to continually invest in our billing systems.

          Missing or incorrect information on requisitions adds complexity to and slows the billing process, creates backlogs of unbilled requisitions, and generally increases the aging of accounts receivable and bad debt expense. We believe that much of our bad debt expense in recent years is attributable to the lack of, or inaccurate, billing information. Failure to timely or correctly bill may lead to our not being reimbursed for our services or an increase in the aging of our accounts receivable, which could adversely affect our results of operations and cash flows. Failure to comply with applicable laws relating to billing government healthcare programs could lead to various penalties, including: (1) exclusion from participation in Medicare/Medicaid programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business, any of which could have a material adverse effect on our results of operations or cash flows.

Failure in our information technology systems, including failures resulting from our systems conversions, could disrupt our operations and cause the loss of customers or business opportunities.

          Information technology (“IT”) systems are used extensively in virtually all aspects of our business, including clinical testing, test reporting, billing, customer service, logistics and management of medical data. Our success depends, in part, on the continued and uninterrupted performance of our IT systems. IT systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, human acts and natural disasters. Moreover, despite the security measures we have implemented, our IT systems may be subject to physical or electronic break-ins, computer viruses and similar disruptive problems. We also have taken precautionary measures to prevent unanticipated problems that could affect our IT systems. Nevertheless, we may experience damages to our systems, and system failures and interruptions.

          In addition, we are in the process of implementing standard laboratory information and billing systems, which we expect will take several years to complete. Failure to properly implement this standardization process could materially adversely affect our business. During system conversions of this type, workflow is re-engineered to take advantage of best practices and enhanced system capabilities, which may cause temporary disruptions in service. In addition, the implementation process, including the transfer of databases and master files to new data centers, presents significant conversion risks that need to be managed carefully.

          If we experience systems problems, including with our implementation of standard laboratory or billing systems, they may interrupt our ability to operate. For example, the problems may impact our ability to process test orders, deliver test results or perform or bill for tests in a timely manner. If our operations are interrupted, it could

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adversely affect our reputation and result in a loss of customers and revenues.

Failure to develop, or acquire licenses for, new tests, technology and services, could negatively impact our testing volume and revenues.

          The diagnostics testing industry is faced with changing technology and new product introductions. Other companies or individuals, including our competitors, may obtain patents or other property rights that would prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business or increase our costs. In addition, they could introduce new tests that may result in a decrease in the demand for our tests or cause us to reduce the prices of our tests. Our success in continuing to introduce new tests, technology and services will depend, in part, on our ability to license new and improved technologies on favorable terms. We may be unable to develop or introduce new tests. We also may be unable to continue to negotiate acceptable licensing arrangements, and arrangements that we do conclude may not yield commercially successful diagnostic tests. If we are unable to license these testing methods at competitive rates, our research and development costs may increase as a result. In addition, if we are unable to develop and introduce, or license, new tests, technology and services to expand our esoteric testing business, our testing methods may become outdated when compared with our competition and our testing volume and revenue may be materially and adversely affected.

We may be unable to obtain, maintain or enforce our intellectual property rights and may be subject to intellectual property litigation that could adversely impact our business.

          We may be unable to obtain or maintain adequate patent or other proprietary rights for our products and services or to successfully enforce our proprietary rights. In addition, we may be subject to intellectual property litigation and we may be found to infringe on the proprietary rights of others, which could force us to do one or more of the following:

• cease developing, performing or selling products or services that incorporate the challenged intellectual property;

• obtain and pay for licenses from the holder of the infringed intellectual property right;

• redesign or reengineer our tests;

• change our business processes; or

• pay substantial damages, court costs and attorneys’ fees, including potentially increased damages for any infringement held to be willful.

The development of new, more cost-effective tests that can be performed by our customers or by patients, or the internalization of testing by hospitals or physicians, could negatively impact our testing volume and revenues.

          Advances in technology may lead to the development of more cost-effective tests that can be performed outside of a commercial clinical laboratory such as (1) point-of-care tests that can be performed by physicians in their offices, (2) esoteric tests that can be performed by hospitals in their own laboratories or (3) home testing that can be performed by patients in their homes or by physicians in their offices. Although CLIA compliance costs make it cost prohibitive for many physicians to operate clinical laboratories in their offices, manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care test equipment to physicians. Diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories with minimal regulatory oversight under CLIA as well as by patients in their homes. Test kit manufacturers could seek to increase sales to both physicians and patients of test kits approved by the FDA for point-of-care testing or home use. Development of such technology and its use by our customers would reduce the demand for our laboratory-based testing services and negatively impact our revenues.

          Some of our customers, such as hospitals and physicians, are internalizing tests that we currently perform, including anatomic pathology tests. If our customers continue to internalize tests that we currently perform and we do not develop new or alternative tests attractive to our customers, the demand for our testing services may be reduced and our revenues may be materially adversely impacted.

Our outstanding debt may impair our financial and operating flexibility.

          As of December 31, 2010, we had approximately $3.0 billion of debt outstanding. Except for operating leases, we do not have any off-balance sheet financing arrangements in place or available. Our debt agreements contain various restrictive covenants. These restrictions could limit our ability to use operating cash flow in other areas of our business because we must use a portion of these funds to make principal and interest payments on our debt. We have obtained ratings on our debt from Standard and Poor’s, Moody’s Investor Services and Fitch Ratings. There can be no

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assurance that any rating so assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if in that rating agency’s judgment future circumstances relating to the basis of the rating, such as adverse changes in our Company or our industry, so warrant. If such ratings are lowered, the borrowing costs on our senior unsecured revolving credit facility, secured receivables facility and term loan could increase. Changes in our credit ratings, however, do not require repayment or acceleration of any of our debt.

          We or our subsidiaries may incur additional indebtedness in the future. Our ability to make principal and interest payments will depend on our ability to generate cash in the future. If we incur additional debt, a greater portion of our cash flows may be needed to satisfy our debt service obligations and if we do not generate sufficient cash to meet our debt service requirements, we may need to seek additional financing. In that case, it may be more difficult, or we may be unable, to obtain financing on terms that are acceptable to us. As a result, we would be more vulnerable to general adverse economic, industry and capital markets conditions as well as the other risks associated with indebtedness.

Our ability to attract and retain qualified employees is critical to the success of our business and the failure to do so may materially adversely affect our performance.

          Our people are a critical resource. The supply of qualified personnel may be limited and competition for qualified employees is strong. If we were to lose, or to fail to attract and retain, key management personnel or qualified skilled technical or professional employees at our clinical laboratories, research centers or manufacturing facilities, our earnings and revenues could be adversely affected. In addition, if we were to lose, or to fail to attract and retain, skilled pathologists, particularly those with subspecialties, with positive relationships with their respective local medical communities, our earnings and revenues could be adversely affected.

Failure to establish, and perform to, appropriate quality standards to assure that the highest level of quality is observed in the performance of our testing services and in the design, manufacture and marketing of our products could adversely affect the results of our operations and adversely impact our reputation.

          The provision of clinical testing services, including anatomic pathology services, and related services, and the design, manufacture and marketing of diagnostic products involve certain inherent risks. The services that we provide and the products that we design, manufacture and market are intended to provide information for healthcare providers in providing patient care. Therefore, users of our services and products may have a greater sensitivity to errors than the users of services or products that are intended for other purposes.

          Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of the products can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or required by governmental authorities) and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs as well as negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals.

          Similarly, negligence in performing our services can lead to injury or other adverse events. We may be sued under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and hospital employees who are under the supervision of our hospital-based pathologists. We are subject to the attendant risk of substantial damages awards and risk to our reputation.

The failure of our IT systems to keep pace with technological advances may significantly reduce our revenues or increase our expenses.

          Public and private initiatives to create healthcare information technology (“HCIT”) standards and to mandate standardized clinical coding systems for the electronic exchange of clinical information, including test orders and test results, could require costly modifications to our existing HCIT systems. While we do not expect HCIT standards to be adopted or implemented without adequate time to comply, if we fail to adopt or delay in implementing HCIT standards, we could lose customers and business opportunities.

Our operations and reputation may be impaired if we do not comply with privacy laws or information security policies.

          In our business, we generate or maintain sensitive information, such as patient data or personal information. If we do not adequately safeguard that information and it were to become available to persons or entities that should not have access to it, our business could be impaired, our reputation could suffer and we could be subject to fines, penalties and litigation.

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We are subject to numerous political, legal, operational and other risks as a result of our international operations which could impact our business in many ways.

          Although we conduct most of our business in the United States, our expanding international operations increase our exposure to the inherent risks of doing business in international markets. Depending on the market, these risks include, without limitation:

• changes in the local economic environment;

• political instability;

• social changes;

• intellectual property legal protections and remedies;

• trade regulations;

• procedures and actions affecting approval, production, pricing, reimbursement and marketing of products and services;

• exchange controls;

• export controls;

• weak legal systems which may affect our ability to enforce contractual rights;

• changes in local laws or regulations; and

• potentially longer payment and collection cycles.

          International operations also require us to devote significant management resources to implement our controls and systems in new markets, to comply with the U.S. Foreign Corrupt Practices Act and similar laws in local jurisdictions and to overcome challenges based on differing languages and cultures.

          We expect to expand further our international operations, through acquisition or otherwise, which would increase these risks. As a result of these risks, our financial condition or results of operations could be materially adversely affected.

Our medical diagnostic products business is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant diagnostics products.

          Our medical diagnostic products are subject to extensive regulation by numerous governmental authorities in the United States, including the FDA, and by regulatory authorities outside the United States, including the European Commission. The process of obtaining regulatory clearance or approval to market a medical diagnostic product can be costly and time-consuming, and clearance or approval for future products is never certain. Securing regulatory clearance or approval of additional indications or uses of existing products is not predictable. Delays in the receipt of, or failure to obtain clearance or approval for, future products, or new indications or uses, could result in delayed realization of product revenues and in substantial additional costs.

          In addition, no assurance can be given that we will remain in compliance with applicable regulations once clearance or approval has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling and advertising and postmarket reporting, including adverse event reports and field alerts due to manufacturing quality concerns. Our diagnostic product facilities and procedures and those of our suppliers are subject to ongoing regulation, including periodic inspection by the FDA and other regulatory authorities. Failure to comply with applicable rules could result in, among other things, substantial modifications to our business practices and operations; refunds, recalls or seizures of our products; a total or partial shutdown of production in one or more of our facilities while we or our suppliers remedy the alleged violation; the inability timely to obtain future pre-market clearances or approvals; and withdrawals or suspensions of current products from the market. Any of these events could disrupt our business and have a material adverse effect on our reputation, revenues, profitability or financial condition.

Our efforts to develop commercially successful medical diagnostic products may not succeed.

          We may commit substantial efforts, funds and other resources to developing commercially successful medical diagnostic products. A high rate of failure is inherent in the development of new medical diagnostic products. There is no assurance that our efforts to develop these products will be commercially successful. Failure can occur at any point

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in the development process, including after significant funds have been invested.

          Promising new product candidates may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, failure to achieve market adoption, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or the infringement of intellectual property rights of others. Even if we successfully develop new products or enhancements or new generations of our existing products, they may be quickly rendered obsolete by newer products, changing customer preferences or changing industry standards. Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third party reimbursement. We cannot state with certainty when or whether any of our medical diagnostic products under development will be launched, whether we will be able to develop, license or otherwise acquire products, or whether any diagnostic products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete.

Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and earthquakes, health pandemics, hostilities or acts of terrorism and other criminal activities.

          Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and earthquakes, health pandemics, hostilities or acts of terrorism or other criminal activities. Such events may result in a temporary decline in the number of patients who seek clinical testing services or in our employees’ ability to perform their job duties. In addition, such events may temporarily interrupt our ability to transport specimens, to receive materials from our suppliers or otherwise to provide our services.

Our business could be adversely impacted by CMS’ adoption of the new coding set for diagnoses.

          CMS has adopted a new coding set for diagnosis, commonly known as ICD-10, which significantly expands the coding set for diagnoses. The new coding set is currently required to be implemented by October 1, 2013. We may be required to incur significant expense in implementing the new coding set, and if we do not adequately implement it, our business could be adversely impacted. In addition, if as a result of the new coding set physicians fail to provide appropriate codes for desired tests, we may not be reimbursed for such tests.

Our business could be adversely impacted by CMS’ adoption of new coding for molecular genetic tests.

          In October 2010, the American Medical Association CPT Editorial Panel approved 27 new analyte specific codes (and will consider additional codes in 2011) to describe several molecular genetic tests that currently require multiple CPT codes for billing purposes. The new codes could replace the current codes for payers, including Medicare, beginning January 1, 2012. Reimbursement levels for the new codes have yet to be determined. If reimbursement levels for the new codes do not recognize the value of the molecular genetic tests, our revenues and earnings could be adversely impacted.

Adverse results in material litigation could have an adverse financial impact and an adverse impact on our client base and reputation.

          We are involved in various legal proceedings arising in the ordinary course of business including, among other things, disputes as to intellectual property, professional liability and employee-related matters, as well as inquiries from governmental agencies and Medicare or Medicaid carriers regarding billing issues. Some of the proceedings against us involve claims that are substantial in amount and could divert management’s attention from operations. The proceedings also may result in substantial monetary damages, as well as damage to our reputation, and decrease the demand for our services and products, all of which could have a material adverse effect on our business. We do not have insurance or are substantially self-insured for a significant portion of any liability with respect to such claims. The ultimate outcome of the various proceedings or claims could have a material adverse effect on our financial condition, results of operations or cash flows in the period in which the impact of such matters is determined or paid.

If we fail to comply with the requirements of our Corporate Integrity Agreement, we could be subject to suspension or termination from participation in federal healthcare programs and substantial monetary penalties.

          As part of a settlement with the U.S. Department of Justice and other federal government agencies, in April 2009 we entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. If we fail to comply with our obligations under the Corporate Integrity Agreement, we could be suspended or terminated from participating in certain federal healthcare programs and subject to substantial monetary penalties.

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CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

          Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this document. The following important factors could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements:

(a)	Heightened competition from commercial clinical testing companies, and from hospitals with respect to testing for non-patients and from physicians.
(b)	Increased pricing pressure from customers and payers.
(c)	A continued weakness in economic conditions.
(d)	Impact of changes in payer mix, including any shift from fee-for-service to discounted or capitated fee arrangements.
(e)	Adverse actions by government or other third-party payers, including healthcare reform that focuses on reducing healthcare costs but does not recognize the value and importance to healthcare of diagnostic testing, unilateral reduction of fee schedules payable to us, competitive bidding, and an increase in the practice of negotiating for exclusive arrangements that involve aggressively priced capitated or fee-for-service payments by health insurers or other payers.
(f)	The impact upon our testing volume and collected revenue or general or administrative expenses resulting from our compliance with Medicare and Medicaid administrative policies and requirements of third party payers. These include:
	(1)	the requirements of Medicare carriers to provide diagnosis codes for many commonly ordered tests (and the transition to a new coding set) and the possibility that third party payers will increasingly adopt similar requirements;
	(2)	continued inconsistent practices among the different local carriers administering Medicare;
	(3)	inability to obtain from patients a valid advance beneficiary notice form for tests that cannot be billed without prior receipt of the form;
	(4)	increased challenges in operating as a non-contracted provider with respect to health plans;
	(5)	the impact of additional or expanded limited coverage policies and limits on the allowable number of test units;
	(6)	the impact of increased prior authorization programs for clinical testing; and
	(7)	new rules regarding laboratory requisitions.
(g)	Adverse results from pending or future government investigations, lawsuits or private actions. These include, in particular, monetary damages, loss or suspension of licenses, and/or suspension or exclusion from the Medicare and Medicaid programs and/or criminal penalties.
(h)	Failure to efficiently integrate acquired businesses and to manage the costs related to any such integration, or to retain key technical, professional or management personnel.
(i)	Denial, suspension or revocation of CLIA certification or other licenses for any of our clinical laboratories under the CLIA standards, revocation or suspension of the right to bill the Medicare and Medicaid programs or other adverse regulatory actions by federal, state and local agencies.
(j)	Changes in federal, state or local laws or regulations, including changes that result in new or increased federal or state regulation of commercial clinical laboratories or tests developed by commercial clinical laboratories, including regulation of laboratory services by the FDA.
(k)	Inability to achieve expected benefits from our acquisitions of other businesses.

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(l)	Inability to achieve additional benefits from our Six Sigma and efficiency initiatives.
(m)	Adverse publicity and news coverage about the clinical testing industry or us.
(n)	Computer or other IT system failures that affect our ability to perform tests, report test results or properly bill customers, including potential failures resulting from the standardization of our IT systems and other system conversions, telecommunications failures, malicious human acts (such as electronic break-ins or computer viruses) or natural disasters.
(o)	Development of technologies that substantially alter the practice of clinical test medicine, including technology changes that lead to the development of more cost-effective tests such as (1) point-of-care tests that can be performed by physicians in their offices, (2) esoteric tests that can be performed by hospitals in their own laboratories or (3) home testing that can be carried out without requiring the services of clinical laboratories.
(p)	Negative developments regarding intellectual property and other property rights that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business. These include:
	(1)	Issuance of patents or other property rights to our competitors or others; and
	(2)	Inability to obtain or maintain adequate patent or other proprietary rights for our products and services or to successfully enforce our proprietary rights.
(q)	Development of tests by our competitors or others which we may not be able to license, or usage of our technology or similar technologies or our trade secrets by competitors, any of which could negatively affect our competitive position.
(r)	Regulatory delay or inability to commercialize newly developed or licensed products, tests or technologies or to obtain appropriate reimbursements for such tests.
(s)	Impact of any national healthcare information network or the adoption of standards for health information technology interoperability that are incompatible with existing software and hardware infrastructure requiring widespread replacement of systems and/or software.
(t)	Inability to promptly or properly bill for our services or to obtain appropriate payments for services that we do bill.
(u)	Changes in interest rates and changes in our credit ratings from Standard & Poor’s, Moody’s Investor Services or Fitch Ratings causing an unfavorable impact on our cost of and access to capital.
(v)	Inability to hire and retain qualified personnel or the loss of the services of one or more of our key senior management personnel.
(w)	Terrorist and other criminal activities, hurricanes, earthquakes or other natural disasters, and health pandemics, which could affect our customers, transportation or systems, or our facilities, and for which insurance may not adequately reimburse us.
(x)	Difficulties and uncertainties in the discovery, development, regulatory environment and/or marketing of new products or new uses of existing products.
(y)	Failure to comply with the requirements of our Corporate Integrity Agreement that could subject us to suspension or termination from participation in federal healthcare programs and substantial monetary penalties.
(z)	Failure to adapt to changes in the healthcare system and healthcare delivery stemming from the 2010 federal healthcare reform legislation.

Item 1B. Unresolved Staff Comments

          There are no unresolved SEC comments that require disclosure.

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Item 2. Properties

          Our executive offices are located in Madison, New Jersey. We maintain clinical testing laboratories in major metropolitan areas and elsewhere throughout the continental United States; in several instances a joint venture of which we are a partner maintains the laboratory. We also maintain offices, data centers, billing centers, call centers, an assembly center, distribution centers, patient service centers and a clinical trials testing laboratory at locations throughout the United States. In addition, we maintain offices, manufacturing facilities, patient service centers and clinical laboratories in locations outside the United States, including in Sweden, Puerto Rico, Mexico, the United Kingdom, India, Ireland and Australia. Our properties that are not owned are leased on terms and for durations that are reflective of commercial standards in the communities where these properties are located. We believe that, in general, our facilities are suitable and adequate for our current and anticipated future levels of operation and are adequately maintained. We believe that if we were unable to renew a lease on any of our facilities, we could find alternative space at competitive market rates and relocate our operations to such new location without material disruption to our business. Several of our principal facilities are highlighted below.

Location	Leased or Owned
Cypress, California (laboratory)	Leased
West Hills, California (laboratory)	Leased
San Juan Capistrano, California (laboratory)	Owned
Tampa, Florida (laboratory)	Owned
Atlanta, Georgia (laboratory)	Owned
Chicago, Illinois (2) (laboratories)	One owned, one leased
Baltimore, Maryland (laboratory)	Owned
Teterboro, New Jersey (laboratory)	Owned
Philadelphia, Pennsylvania (laboratory)	Leased
Norristown, Pennsylvania (offices)	Leased
Dallas, Texas (laboratory)	Leased
Chantilly, Virginia (laboratory)	Leased

Item 3. Legal Proceedings

          In addition to the matters described below, in the normal course of business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a provider of diagnostic testing, information and services. These legal actions may include lawsuits alleging negligence or other similar legal claims. These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on our client base and reputation.

          We are also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding our business, including, among other matters, operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The number of these reviews, investigations and proceedings has increased in recent years with regard to many firms in the healthcare services industry, including our Company.

          We maintain various liability insurance coverages for claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. Our insurance coverage limits our maximum exposure on individual claims; however, we are essentially self-insured for a significant portion of these claims.

          We contest liability or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations or proceedings are in the early stages, we cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they ultimately will be resolved, or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, we believe, based on current knowledge, that the outcome of pending matters will not have a material adverse effect on our consolidated financial condition, although the outcome of such matters could be material to our results of operations and cash flows in the period that such matters are determined or paid.

          In 2006 and 2008, the Company and several of its subsidiaries received subpoenas from the California Attorney General’s Office seeking documents relating to the Company’s billings to MediCal, the California Medicaid program. The Company cooperated with the government’s requests. Subsequently, the State of California intervened as plaintiff in a civil lawsuit, California ex rel. Hunter Laboratories, LLC v. Quest Diagnostics Incorporated, et al. (the

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“California Lawsuit”), filed in California Superior Court against a number of clinical laboratories, including the Company and several of its subsidiaries. The complaint was originally filed by a competitor laboratory in California under the whistleblower provisions of the California False Claims Act. The complaint was unsealed on March 20, 2009.

          The complaint alleges that, among other things, the Company overcharged MediCal for testing services and violated the California False Claims Act. Violations of this statute and related regulations could lead to an injunction, fines or penalties, and exclusion from MediCal, as well as claims by third parties.

          In the third quarter of 2010, the California Department of Health Care Services (the “Department”) conducted an audit of the Company’s billing to MediCal. The Department contends that the Company’s billings are not consistent with applicable California regulations, as currently interpreted by the Department. While the Company believes it is in compliance in all material respects with California requirements applicable to billing for clinical laboratory testing, the Company entered into an interim agreement under which it has agreed to temporarily suspend billing MediCal for a period of up to six months through March 1, 2011, during which it continues to provide services. If the California Lawsuit is not resolved by March 1, 2011, the Company and the Department have agreed to negotiate in good faith the terms of a further agreement. The Company has continued to recognize revenue from MediCal for services provided in accordance with its interpretation of California regulations related to billing for clinical laboratory testing. An unfavorable outcome of the California Lawsuit could, among other consequences noted above, result in reduced reimbursement from the MediCal program. Revenue from the MediCal program in 2010 was approximately $66 million. At December 31, 2010, amounts due from MediCal totaled approximately $25 million, including those amounts related to services performed during the temporary suspension of billing under the interim agreement described above.

          The Company has been engaged in discussions in an attempt to resolve the matters described above. During the fourth quarter of 2010, the Company reached an understanding, which was highly conditioned, to settle these matters pursuant to which the Company would pay $241 million. Conditions included, but were not limited to, reaching an agreement regarding the manner in which the Company’s future billings would be treated by the Department. However, as of this date, the Company has been unable to reach an agreement to settle these matters, and no assurance can be given that an agreement will be reached. If the Company cannot resolve these matters through these discussions, it will continue to vigorously defend itself, and will pursue any available collateral actions to enforce its rights, if necessary. Based on the current facts and circumstances, a liability, if any, is not determinable at this time. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company’s financial condition, the outcome may be material to the Company’s results of operations or cash flows in the period in which the impact of such matters is determined or paid.

          In 2005, the Company received a subpoena from the U.S. Department of Health and Human Services, Office of Inspector General, seeking business records including records regarding the Company’s relationship with health maintenance organizations, independent physician associations, group purchasing organizations, and preferred provider organizations relating back to 1995. The Company has cooperated with the investigation. Subsequently, in November 2009, the U.S. District Court for the Southern District of New York partially unsealed a civil complaint, U.S. ex rel. Fair Laboratory Practices Associates v. Quest Diagnostics Incorporated, filed against the Company under the whistleblower provisions of the federal False Claims Act. The complaint alleges, among other things, violations of the federal Anti-Kickback Statute and the federal False Claims Act in connection with the Company’s pricing of laboratory services. The complaint seeks damages for alleged false claims associated with laboratory tests reimbursed by government payors, treble damages and civil penalties.

          In June 2009, a shareholder plaintiff filed a purported derivative action in the Superior Court of New Jersey, Morris County, on behalf of the Company against certain present and former directors and officers of the Company based on, among other things, their alleged breaches of fiduciary duties in connection with the manufacture, marketing, sale and billing related to certain test kits manufactured by NID. The complaint includes claims for, among other things, breach of fiduciary duty and waste of corporate assets and seeks, among other things, damages and remission of compensation received by the individual defendants. The Company filed a motion to dismiss the complaint on June 30, 2010. The motion was granted, and the time for an appeal has expired.

          In April 2010, a putative class action was filed against the Company and NID in the U.S. District Court for the Eastern District of New York on behalf of entities that allegedly purchased or paid for certain of NID’s test kits. The complaint alleges that certain of NID’s test kits were defective and that defendants, among other things, violated RICO and state consumer protection laws. The complaint alleges an unspecified amount of damages.

          In August 2010, a shareholder derivative action was filed in the Superior Court of New Jersey, Morris County,

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on behalf of the Company against the directors and certain present officers of the Company. The complaint alleges that the defendants breached their fiduciary duties in connection with, among other things, alleged overcharges by the Company to MediCal for testing services, and seeks unspecified compensatory damages and equitable relief.

          In November 2010, a putative class action was filed against the Company and certain present and former officers of the Company in the Superior Court of New Jersey, Essex County, on behalf of the Company’s sales people nationwide who were over forty years old and who either resigned or were terminated after being placed on a performance improvement plan. The complaint alleges that the defendants’ conduct violates the New Jersey Law Against Discrimination, and seeks, among other things, unspecified damages. The defendants removed the complaint to the United States District Court for the District of New Jersey.

          In addition, the Company and certain of its subsidiaries have received subpoenas from state agencies in five states and from the Office of Inspector General of the U.S. Department of Health and Human Services which seek documents relating to the Company’s billing practices. The Company is cooperating with the requests.

          The federal or state governments may bring claims based on new theories as to the Company’s practices which management believes to be in compliance with law. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of certain pending individual or class action lawsuits, and has received several subpoenas, related to billing practices filed under the qui tam provisions of the Civil False Claims Act and/or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other “whistleblowers” as to which the Company cannot determine the extent of any potential liability.

          Several of these matters are in their early stages of development and involve responding to and cooperating with various government investigations and related subpoenas. While the Company believes that at least a reasonable possibility exists that losses may have been incurred, based on the nature and status of the investigations, the losses are either currently not probable or a range of loss cannot be reasonably estimated.

Item 4. Removed and Reserved

PART II

Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities

          Our common stock is listed and traded on the New York Stock Exchange under the symbol “DGX.” As of February 1, 2011, we had approximately 4,600 record holders of our common stock; we believe that the number of beneficial holders of our common stock exceeds the number of record holders. The following table sets forth, for the periods indicated, the high and low sales price per share as reported on the New York Stock Exchange Consolidated Tape and dividend information.

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	Common Stock Market Price
	High		Low		Dividends Declared
2009
First Quarter	$	52.98	$	42.36	$	0.10
Second Quarter		56.82		46.17		0.10
Third Quarter		57.19		50.24		0.10
Fourth Quarter		62.83		51.20		0.10
2010
First Quarter	$	61.72	$	54.63	$	0.10
Second Quarter		60.28		40.80		0.10
Third Quarter		51.11		43.38		0.10
Fourth Quarter		54.93		46.75		0.10

          We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.

          The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the fourth quarter of 2010.

ISSUER PURCHASES OF EQUITY SECURITIES

	Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
October 1, 2010 – October 31, 2010
Share Repurchase Program (A)			—	$	—		—	$	250,050
Employee Transactions (B)			2,428	$	49.70		N/A		N/A
November 1, 2010 – November 30, 2010
Share Repurchase Program (A)			—	$	—		—	$	250,050
Employee Transactions (B)			149	$	50.86		N/A		N/A
December 1, 2010 – December 31, 2010
Share Repurchase Program (A)			—	$	—		—	$	250,050	(C)
Employee Transactions (B)			1,086	$	52.47		N/A		N/A
Total
Share Repurchase Program (A)			—	$	—		—	$	250,050	(C)
Employee Transactions (B)			3,663	$	50.57		N/A		N/A

(A)

Since the share repurchase program’s inception in May 2003, our Board of Directors has authorized $3.8 billion of share repurchases of our common stock through December 31, 2010.

(B)

Includes: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options (granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Director Long-Term Incentive Plan, collectively the “Stock Compensation Plans”) who exercised options; (2) restricted common shares withheld (under the terms of grants

33

under the Stock Compensation Plans) to offset tax withholding obligations that occur upon vesting and release of the restricted common shares; and (3) shares withheld (under the terms of grants under the Stock Compensation Plans) to offset tax withholding obligations that occur upon the delivery of outstanding common shares underlying restricted stock units and performance share units.

(C)	In January 2011, our Board of Directors authorized the Company to repurchase an additional $750 million of the Company’s common stock, bringing the total amount that the Company was authorized to repurchase to $1.0 billion. The share repurchase authorization has no set expiration or termination date.
	On January 31, 2011, the Company agreed to repurchase 15.4 million shares of its common stock from SB Holdings Capital Inc., an affiliate of GlaxoSmithKline plc, at a purchase price of $54.30 per share for $835 million (the “Repurchase”). Subsequent to the Repurchase, which closed on February 4, 2011, the Company’s remaining share repurchase authorization totaled $165 million.

Performance Graph

          Set forth below is a line graph comparing the cumulative total shareholder return on Quest Diagnostics’ common stock since December 31, 2005, based on the market price of the Company’s common stock and assuming reinvestment of dividends, with the cumulative total shareholder return of companies on the Standard & Poor’s 500 Stock Index and the S&P 500 Healthcare Equipment & Services Index.

	Closing DGX Price		Total Shareholder Return									Performance Graph Values
Date			DGX			S&P 500			S&P 500 H.C.			DGX		S&P 500		S&P 500 H.C.
12/31/2006	$	53.00		3.71	%		15.79	%		0.25	%	$	112.53	$	121.48	$	118.10
12/31/2007	$	52.90		0.58	%		5.49	%		13.37	%	$	113.17	$	128.16	$	133.89
12/31/2008	$	51.91		(1.08	)%		(37.00	)%		(37.27	)%	$	111.95	$	80.74	$	83.99
12/31/2009	$	60.38		17.22	%		26.46	%		32.65	%	$	131.23	$	102.11	$	114.11
12/31/2010	$	53.97		(9.93	)%		15.06	%		4.31	%	$	108.93	$	111.99	$	98.65

For information regarding our equity compensation plans, see Item 12, page 36.

34

Item 6. Selected Financial Data

          See page 40.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

          See page 42.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

          See Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 8. Financial Statements and Supplementary Data

          See Item 15(a)1 and Item 15(a)2.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

          None.

Item 9A. Controls and Procedures

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

          Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

          See page 61.

Changes in Internal Control

          During the fourth quarter of 2010, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

          None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

          Our Code of Business Ethics applies to all employees, executive officers and directors, including our Chief Executive Officer, Chief Financial Officer and Corporate Controller. You can find our Code of Business Ethics on our corporate governance website, www.QuestDiagnostics.com/governance. We will post any amendments to the Code of Business Ethics, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on our website.

          Information regarding the Company’s executive officers is contained in Part I, Item 1 of this Report under “Executive Officers of the Company.” Information regarding the directors and executive officers of the Company appearing in our Proxy Statement to be filed by April 28, 2011 (“Proxy Statement”) under the captions “Matter to be Considered at the Meeting – Proposal No. 1 - Election of Directors,” “Information about our Corporate Governance – Director Independence,” “Information about our Corporate Governance – Board Committees,” and “Information about our Corporate Governance – Audit and Finance Committee” is incorporated by reference herein.

Item 11. Executive Compensation

          Information appearing in our Proxy Statement under the captions “2010 Director Compensation Table,” “Compensation Discussion and Analysis,” “Additional Information Regarding Executive Compensation” and “Report of the Compensation Committee” is incorporated by reference herein.

35

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders’ Matters

Equity Compensation Plan Information

          The following table provides information as of December 31, 2010 about our common stock that may be issued upon the exercise of options, warrants and rights under the Company’s existing equity compensation plans:

	Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options, warrants and rights ($) (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) (c)
Equity compensation plans approved by security holders
Employee Long Term Incentive Plan (1)			14,544,824	(5)	$	47.53		9,074,379	(6)
Long-term Incentive Plan for Non-Employee Directors (2)			948,249		$	46.07		334,259
Employee Stock Purchase Plan			—			N/A		2,950,627	(7)
Equity compensation plans not approved by security holders (3)			—			N/A		—
Total (4)			15,493,073		$	47.42		12,359,265

(1)	Awards under this plan may consist of stock options, performance shares to be settled by the delivery of shares of common stock (or the value thereof), stock appreciation rights, restricted shares and restricted share units to be settled by the delivery of shares of common stock (or the value thereof).
(2)	Awards under this plan may consist of stock options or stock awards (which may consist of shares or the right to receive shares, or the value thereof, in the future).
(3)	The table does not include 30,036 shares of common stock that were issued to the trust for the Company’s Supplemental Deferred Compensation Plan (“SDCP”) prior to May 2004 that may be distributed to participants under the SDCP. While the SDCP does not provide a stock fund as a current notional investment option, the plan includes a stock investment fund option that was frozen effective April 1, 2004. In addition, prior to January 1, 2003, Company matching credits under the SDCP were credited to participant accounts in the form of shares of common stock. Participants are no longer allowed to notionally invest in additional shares of common stock under the SDCP.
(4)	Does not include options to purchase an aggregate of 176,844 shares, at a weighted average exercise price of $16.73, granted under a plan assumed in connection with the Company’s acquisition of AmeriPath Group Holdings, Inc. Also does not include options to purchase an aggregate of 19,072 shares, at a weighted average exercise price of $27.52, granted under a plan assumed in connection with the Company’s acquisition of Unilab Corporation. No additional options may be granted under either plan.
(5)	Includes 877,635 restricted shares and restricted share units and 2,371,320 performance shares (performance shares for performance periods ending on or subsequent to December 31, 2010 are based on the assumption that awards are earned at maximum rather than target levels).
(6)	A maximum of 2,682,354 shares were available under the plan for future awards of performance shares, restricted shares or restricted share units (assuming that outstanding performance share awards for performance periods ending on or subsequent to December 31, 2010 are earned based on maximum rather than target levels).
(7)	After giving effect to shares issued in January 2011 for the December 2010 payroll under the Employee Stock Purchase Plan.

          Information regarding security ownership of certain beneficial owners and management appearing in our Proxy Statement under the caption “Stock Ownership Information” is incorporated by reference herein.

36

Item 13. Certain Relationships and Related Transactions, and Director Independence

          Information regarding certain relationships and related transactions appearing in our Proxy Statement under the captions “Information about our Corporate Governance – Related Person Transactions” and “Information about our Corporate Governance – Director Independence” is incorporated by reference herein.

Item 14. Principal Accounting Fees and Services

          Information regarding principal accountant fees and services appearing in our Proxy Statement under the caption “Proposal No. 2 – Ratification of Appointment of the Company’s Independent Registered Public Accounting Firm” (excluding the information under the subheading “Report of the Audit and Finance Committee”) is incorporated by reference herein.

37

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)	Documents filed as part of this Report.
	1.	Index to financial statements and supplementary data filed as part of this Report.

	Item	Page
Financial Statements
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations		F-3
Consolidated Statements of Cash Flows		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Notes to Consolidated Financial Statements		F-6
Supplementary Data: Quarterly Operating Results (unaudited)		F-45

2. Financial Statement Schedule.

	Item	Page
Schedule II – Valuation Accounts and Reserves		F-47

3.	Exhibits
	An exhibit index has been filed as part of this Report beginning on page E-1 and is incorporated herein by reference.

(b)	Exhibits filed as part of this Report.
	An exhibit index has been filed as part of this Report beginning on page E-1 and is incorporated herein by reference.
(c)	None.

38

Signatures

          Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 16, 2011.

QUEST DIAGNOSTICS INCORPORATED (Registrant)
By:	/s/ Surya N. Mohapatra, Ph.D.
	Surya N. Mohapatra, Ph.D.
	Chairman of the Board,
	President and Chief Executive Officer

          Each individual whose signature appears below constitutes and appoints Michael E. Prevoznik and William J. O’Shaughnessy, Jr., and each of them singly, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on February 16, 2011.

	Signature	Capacity
/s/ Surya N. Mohapatra, Ph.D.		Chairman of the Board,
		President and Chief Executive Officer
	Surya N. Mohapatra, Ph.D.	(Principal Executive Officer)
/s/ Robert A. Hagemann		Senior Vice President and
		Chief Financial Officer
	Robert A. Hagemann	(Principal Financial Officer)
/s/ Thomas F. Bongiorno		Vice President, Corporate Controller
		and Chief Accounting Officer
	Thomas F. Bongiorno	(Principal Accounting Officer)
/s/ John C. Baldwin, M.D.		Director
	John C. Baldwin, M.D.
/s/ Jenne K. Britell, Ph.D.		Director
	Jenne K. Britell, Ph.D.
/s/ William F. Buehler		Director
	William F. Buehler
/s/ Rosanne Haggerty		Director
	Rosanne Haggerty
/s/ Gary M. Pfeiffer		Director
	Gary M. Pfeiffer
/s/ Daniel C. Stanzione, Ph.D.		Director
	Daniel C. Stanzione, Ph.D.
/s/ Gail R. Wilensky, Ph.D.		Director
	Gail R. Wilensky, Ph.D.
/s/ John B. Ziegler		Director
	John B. Ziegler

39

SELECTED HISTORICAL FINANCIAL DATA OF OUR COMPANY

          The following table summarizes selected historical financial data of our Company and our subsidiaries at the dates and for each of the periods presented. We derived the selected historical financial data for the years 2006 through 2010 from the audited consolidated financial statements of our Company. During the third quarter of 2006, the Company completed its wind down of NID, a test kit manufacturing subsidiary, and classified the operations of NID as discontinued operations. The selected historical financial data is only a summary and should be read together with the audited consolidated financial statements and related notes of our Company and management’s discussion and analysis of financial condition and results of operations included elsewhere in this Annual Report on Form 10-K.

	Year Ended December 31,
	2010			2009			2008			2007 (a)			2006
	(in thousands, except per share data)
Operations Data:
Net revenues	$	7,368,925		$	7,455,243		$	7,249,447		$	6,704,907		$	6,268,659
Operating income		1,295,535	(b)		1,359,111	(c)		1,222,376	(d)		1,091,336	(e)		1,128,077	(f)
Income from continuing operations		758,804	(g)		767,458	(h)		663,889	(i) (j)		580,338			649,592	(k)
Loss from discontinued operations, net of taxes		(1,787	)		(1,236	)		(50,694	) (l)		(213,889	) (m)		(39,271	) (n)
Net income		757,017			766,222			613,195			366,449			610,321
Less: Net income attributable to noncontrolling interests		36,123			37,111			31,705			26,510			23,900
Net income attributable to Quest Diagnostics		720,894			729,111			581,490			339,939			586,421
Amounts attributable to Quest Diagnostics’ stockholders:
Income from continuing operations		722,681			730,347			632,184			553,828			625,692
Loss from discontinued operations, net of taxes		(1,787	)		(1,236	)		(50,694	)		(213,889	)		(39,271	)
Net income		720,894			729,111			581,490			339,939			586,421
Earnings per share attributable to Quest Diagnostics’ common stockholders – basic:
Income from continuing operations	$	4.09		$	3.92		$	3.25		$	2.87		$	3.18
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)		(1.11	)		(0.20	)
Net income	$	4.08		$	3.91		$	2.99		$	1.76		$	2.98
Earnings per share attributable to Quest Diagnostics’ common stockholders – diluted:
Income from continuing operations	$	4.06		$	3.88		$	3.22		$	2.84		$	3.14
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)		(1.10	)		(0.20	)
Net income	$	4.05		$	3.87		$	2.96		$	1.74		$	2.94
Dividends per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40
Balance Sheet Data (at end of year):
Cash and cash equivalents	$	449,301		$	534,256		$	253,946		$	167,594		$	149,640
Accounts receivable, net		845,299			827,343			832,873			881,967			774,414
Goodwill		5,101,938			5,083,944			5,054,926			5,220,104			3,391,046
Total assets		8,527,630			8,563,643			8,403,830			8,565,693			5,661,482
Long-term debt		2,641,160			2,936,792			3,078,089			3,377,212			1,239,105
Total debt		2,990,156			3,107,299			3,083,231			3,540,793			1,555,979
Total Quest Diagnostics stockholders’ equity		4,033,480			3,989,639			3,604,896			3,324,242			3,019,171
Noncontrolling interests		20,645			21,825			20,238			21,464			19,632
Total stockholders’ equity		4,054,125			4,011,464			3,625,134			3,345,706			3,038,803
Other Data:
Net cash provided by operating activities	$	1,118,047		$	997,418	(o)	$	1,063,049		$	926,924		$	951,896
Net cash used in investing activities		(216,510	)		(195,904	)		(198,883	)		(1,759,193	)		(414,402	)
Net cash (used in) provided by financing activities		(986,492	)		(521,204	)		(777,814	)		850,223			(479,984	)
Provision for doubtful accounts		291,737			320,974			326,228			300,226			243,443
Rent expense		195,573			188,813			190,706			170,788			153,185
Capital expenditures		205,400			166,928			212,681			219,101			193,422
Depreciation and amortization		253,964			256,687			264,593			237,879			197,398

40

(a)	On January 31, 2007, we completed the acquisition of POCT Holding AB, (“HemoCue”). On May 31, 2007, we completed the acquisition of AmeriPath Group Holdings, Inc., (“AmeriPath”). Consolidated operating results for 2007 include the results of operations of HemoCue and AmeriPath subsequent to the closing of the applicable acquisition.
(b)	Operating income includes $27.0 million of costs principally associated with workforce reductions and $9.6 million of costs associated with the settlement of employee litigation.
(c)	Operating income includes a $15.5 million gain associated with an insurance settlement for storm-related losses.
(d)	Operating income includes $16.2 million of costs, primarily associated with workforce reductions.
(e)	Operating income includes $10.7 million of costs associated with workforce reductions in response to reduced volume levels.
(f)	Operating income includes $27 million of special charges, primarily associated with integration activities.
(g)	Includes income tax benefits of $22.1 million, primarily associated with favorable resolutions of certain tax contingencies.
(h)	Includes $20.4 million of pre-tax charges related to the early extinguishment of debt, primarily related to the June 2009 and November 2009 Debt Tender Offers (see Note 10 to the Consolidated Financial Statements) and a $7.0 million pre-tax charge related to the write-off of an investment. Also includes $7.0 million of income tax benefits, primarily associated with certain discrete tax benefits.
(i)	Includes an $8.9 million pre-tax charge associated with the write-down of an equity investment.
(j)	Includes income tax benefits of $16.5 million, primarily associated with favorable resolutions of certain tax contingencies.
(k)	Includes net pre-tax charges of $10 million related to net investment losses.
(l)	Includes pre-tax charges of $75 million related to the government investigation of NID. See Note 16 to the Consolidated Financial Statements.
(m)	Includes pre-tax charges of $241 million related to the government investigation of NID. See Note 16 to the Consolidated Financial Statements.
(n)	Includes $32 million in pre-tax charges related to the wind down of NID’s operations.
(o)	Includes payments primarily made in the second quarter of 2009 totaling $314 million in connection with the NID settlement (see Note 16 to the Consolidated Financial Statements), or $208 million net of an associated reduction in estimated tax payments.

41

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

          Our Company

          Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make better healthcare decisions. Quest Diagnostics, with a leading position in most of its domestic geographic markets and service offerings, is well positioned to benefit from the long-term growth expected in the industry. Over 90% of our revenues are derived from clinical testing with the balance derived from insurer services, clinical trials testing, diagnostic products and healthcare information technology. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is generally performed on whole blood, serum, plasma and other body fluids, such as urine, and specimens such as microbiology samples. Anatomic pathology services are principally for the detection of cancer and are performed on tissues, such as biopsies, and other samples, such as human cells. We are the leading cancer diagnostics testing provider focused on anatomic pathology and molecular diagnostics, and provide interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s, primarily located in the United States. In addition, we are the leading provider of gene-based and esoteric testing, and testing for drugs-of-abuse in the United States, and the leading provider of risk assessment services for the life insurance industry in North America. We are also a leading provider of testing for clinical trials. Our diagnostics products business manufactures and markets diagnostic test kits and specialized point-of-care testing. We also empower healthcare organizations and clinicians with robust information technology solutions that can improve patient care and medical practice.

          The Clinical Testing Industry

          Clinical testing is an essential element in the delivery of healthcare services. Physicians use laboratory tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions.

          Most laboratory tests are performed by one of three types of laboratories: commercial clinical laboratories; hospital-affiliated laboratories; or physician-office laboratories. In 2010, we estimate that hospital-affiliated laboratories accounted for approximately 60% of the market, commercial clinical laboratories approximately one-third and physician-office laboratories the balance.

          Orders for laboratory testing are generated from physician offices, hospitals and employers and can be affected by a number of factors. For example, changes in the United States economy can affect the number of unemployed and uninsured, and design changes in healthcare plans can affect the number of physician office and hospital visits, and can impact the utilization of laboratory testing.

          While the economic slow down in the United States has temporarily reduced industry growth rates, we believe the clinical testing industry will continue to grow over the long term because clinical testing is an essential healthcare service and because of the following key trends:

• the growing and aging population;

• continuing research and development in the areas of genomics (the study of DNA, genes and chromosomes) and proteomics (the analysis of individual proteins and collections of proteins), which is expected to yield new, more sophisticated and specialized diagnostic tests;

• increasing recognition by consumers and payers of the value of laboratory testing as a means to improve health and reduce the overall cost of healthcare through early detection and prevention;

• increasing affordability of, and access to, tests due to advances in technology and cost efficiencies; and

• the growing demand for healthcare services in emerging markets and global demographic changes.

          The diagnostic testing industry is subject to seasonal fluctuations in operating results and cash flows. Typically, testing volume declines during the summer months, year-end holiday periods and other major holidays, reducing net revenues and operating cash flows below annual averages. Testing volume is also subject to declines due to severe weather or other events, which can deter patients from having testing performed and which can vary in duration and severity from year to year.

42

          Healthcare Reform

          In March 2010, U.S. federal legislation was enacted which is likely to have a significant impact on, among other things, access to and the cost of healthcare in the United States. The legislation provides for extensive health insurance reforms and expands coverage for approximately 32 million previously uninsured Americans, which will result in expanded access to healthcare. In addition, the legislation eliminates patient cost-sharing for certain prevention and wellness benefits for health insurance plans that are not “grandfathered.” We believe these changes will benefit our industry by leading to increased utilization of our services.

          These benefits are expected to be partially offset by provisions of the legislation aimed at reducing the overall cost of healthcare. Impacting laboratories specifically, the legislation provides for annual reductions in the Medicare clinical laboratory fee schedule of 1.75% for five years beginning in 2011 and includes a productivity adjustment which reduces the CPI market basket update beginning in 2011. In 2010, approximately 12% of our consolidated revenues were reimbursed by Medicare under the clinical laboratory fee schedule. The legislation also imposes an excise tax on the seller for the sale of certain medical devices in the United States, including those purchased and used by laboratories, beginning in 2013.

          In addition, the legislation is focused on reducing the growth of healthcare costs. The legislation establishes the Independent Payment Advisory Board, which will be responsible, beginning in 2014, annually to submit proposals aimed at reducing Medicare cost growth while preserving quality. These proposals automatically will be implemented unless Congress enacts alternative proposals that achieve the same savings targets. Further, the legislation calls for a Center for Medicare and Medicaid Innovation that will examine alternative payment methodologies and conduct demonstration programs.

          We believe that the legislation will be a net positive for our industry over the long term due to expanded coverage and the elimination of patient cost-sharing for certain prevention and wellness benefits, and that we are well positioned to respond to the evolving healthcare environment and related market forces; however, our failure to adapt to these changes could be detrimental to our business.

          Reimbursement for Services

          Payments for clinical testing services are made by physicians, hospitals, employers, healthcare insurers, patients and the government. Physicians, hospitals and employers are typically billed on a fee-for-service basis based on negotiated fee schedules. Fees billed to healthcare insurers and patients are based on the laboratory’s patient fee schedule, subject to any limitations on fees negotiated with the healthcare insurers or with physicians on behalf of their patients. Medicare and Medicaid reimbursements are based on fee schedules set by governmental authorities.

          Government payers, such as Medicare and Medicaid, as well as healthcare insurers and larger employers, have taken steps and may continue to take steps to control the cost, utilization and delivery of healthcare services, including clinical testing services. In December 2010, Congress delayed by one year a potential 30% decrease in the Medicare fee schedule for pathology and other physician services performed for patients and billed under Part B of the Medicare program. In 2010, approximately 3% of our consolidated revenues were reimbursed based on this fee schedule.

          Healthcare insurers, which typically negotiate directly or indirectly on behalf of their members, represent approximately one-half of our clinical testing volumes and one-half of our net revenues from our clinical testing business. Larger healthcare insurers typically contract with large commercial clinical laboratories because they can provide services to their members on a national or regional basis. In addition, larger commercial clinical laboratories are better able to achieve the low-cost structures necessary to profitably service the members of large healthcare insurers and can provide test utilization data across various products in a consistent format. In certain markets, such as California, healthcare insurers may delegate their covered members to independent physician associations, which in turn negotiate with laboratories for clinical testing services on behalf of their members.

          The trend of consolidation among physicians, hospitals, employers, healthcare insurers and other intermediaries has continued, resulting in fewer but larger customers and payers with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical laboratories. Healthcare insurers often require that clinical testing service providers accept discounted fee structures or assume all or a portion of the utilization risk associated with providing testing services to their members enrolled in highly-restricted plans through capitated payment arrangements. Under these capitated payment arrangements, we and the healthcare insurers agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us. Our cost to perform testing services reimbursed under capitated payment arrangements is not materially different from our cost to perform testing services reimbursed under other arrangements with healthcare insurers. Since average reimbursement rates under capitated payment arrangements are typically less

43

than our overall average reimbursement rate, the testing services reimbursed under capitated payment arrangements are generally less profitable. In 2010, we derived approximately 13% of our testing volume and 4% of our clinical testing net revenues from capitated payment arrangements.

          Most healthcare insurers also offer programs such as preferred provider organizations (“PPOs”) and consumer driven health plans that offer a greater choice of healthcare providers. Pricing for these programs is typically negotiated on a fee-for-service basis, which generally results in higher revenue per requisition than under capitation arrangements. Most of our agreements with major healthcare insurers are non-exclusive arrangements. As a result, under these non-exclusive arrangements, physicians and patients have more freedom of choice in selecting laboratories, and laboratories are likely to compete more on the basis of service and quality than they may otherwise. It is increasingly important for healthcare providers to differentiate themselves based on quality, service, convenience and unique test offerings to avoid competing on price alone.

          Despite the general trend of increased choice for patients in selecting a healthcare provider, some healthcare insurers may actively seek to limit the choice of patients and physicians if they feel it will give them increased leverage to negotiate lower fees, by consolidating services with a single or limited network of contracted providers. Historically, healthcare insurers, which had limited their network of laboratory service providers, encouraged their members, and sometimes offered incentives, to utilize only contracted providers. Patients who use a non-contracted provider may have a higher co-insurance responsibility, which may result in physicians referring testing to contracted providers to minimize the expense to their patients. In cases where members choose to use a non-contracted provider, the non-contracted provider would be reimbursed at rates considered “reasonable and customary.” Contracted rates are generally lower than “reasonable and customary” rates.

          We also may be a member of a “complementary network.” A complementary network is generally a set of contractual arrangements that a third party will maintain with various providers which provide discounted fees for the benefit of its customers. A member of a health plan may choose to access a non-contracted provider that is a member of a complementary network; if so, the provider will be reimbursed at a rate negotiated by the complementary network.

          We expect that reimbursements for the diagnostic testing industry will continue to remain under pressure. Today, the federal and many state governments face serious budget deficits and healthcare spending is subject to reductions, and efforts to reduce reimbursements and stringent cost controls by government and other payers for existing tests may continue. However, we believe that as new tests are developed which either improve on the effectiveness of existing tests or provide new diagnostic capabilities, the government and other payers will add these tests as covered services, because of the importance of laboratory testing in assessing and managing the health of patients. We continue to emphasize the importance and the high value of laboratory testing with healthcare insurers and government payers at the federal and state level.

          Six Sigma as a Means to Improve Quality and Operating Efficiency

          The diagnostic testing industry is labor intensive. Employee compensation and benefits constitute approximately one-half of our total costs and expenses. Cost of services consists principally of costs for obtaining, transporting and testing specimens. Selling, general and administrative expenses consist principally of the costs associated with our sales and marketing efforts, billing operations (including bad debt expense), and general management and administrative support. In addition, performing diagnostic testing involves significant fixed costs for facilities and other infrastructure required to obtain, transport and test specimens. Therefore, relatively small changes in volume can have a significant impact on profitability in the short-term.

          We intend to become recognized as the quality leader in the healthcare services industry through utilizing the Six Sigma approach and Lean Six Sigma principles. Six Sigma is a management approach that enhances quality and requires a thorough understanding of customer needs and experience, root cause analysis, process improvements and rigorous tracking and measuring of key metrics. Lean Six Sigma streamlines processes and eliminates waste. We utilize the Six Sigma approach and Lean Six Sigma principles to improve the quality and efficiency of our operations. We use Six Sigma to deploy best practices and implement initiatives designed to reduce the cost of our operations and to provide a better customer experience. We expect to continue deploying best practices and developing additional initiatives designed to further improve quality and the efficiency of our operations.

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Growth Through Acquisition

          The clinical testing industry in the United States remains fragmented and highly competitive. We expect to grow through a combination of organic and acquired growth. We expect to continue to selectively evaluate potential acquisitions of domestic clinical laboratories, both routine and esoteric, that can be integrated into our existing laboratories, thereby increasing access for patients and enabling us to reduce costs and improve efficiencies. While over the long term we believe positive industry factors in the United States diagnostic testing industry and the differentiated services we offer to our customers will enable us to grow organically, we believe there will continue to be opportunities to grow beyond our current principal business of offering clinical testing in the United States. Technology is enabling testing to be performed closer to the patient, whether in the physician’s office or at the hospital bedside, in the form of point-of-care testing. Given that physicians and hospitals are primary sources for both point-of-care testing and laboratory performed tests, we believe providing both forms of testing will strengthen our relationships with customers and accelerate our growth.

          Additionally, diagnostic testing in international markets, particularly developing countries, is highly fragmented and less mature. Continued expansion into point-of-care testing and international markets will diversify our revenue base, and provide increased access to fast growing markets.

Critical Accounting Policies

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions and select accounting policies that affect our reported financial results and the disclosure of contingent assets and liabilities.

          While many operational aspects of our business are subject to complex federal, state and local regulations, the accounting for most of our business is generally straightforward with net revenues primarily recognized upon completion of the testing process. Our revenues are primarily comprised of a high volume of relatively low dollar transactions, and about one-half of our total costs and expenses consist of employee compensation and benefits. Due to the nature of our business, several of our accounting policies involve significant estimates and judgments:

•	revenues and accounts receivable associated with clinical testing;
•	reserves for general and professional liability claims;
•	reserves for other legal proceedings;
•	accounting for and recoverability of goodwill; and
•	accounting for stock-based compensation expense.
Revenues and accounts receivable associated with clinical testing

          The process for estimating the ultimate collection of receivables associated with our clinical testing business involves significant assumptions and judgments. Billings for services reimbursed by third-party payers, including Medicare and Medicaid, are generally recorded as revenues net of allowances for differences between amounts billed and the estimated receipts from such payers. Adjustments to the allowances, based on actual receipts from the third-party payers, are recorded upon settlement as an adjustment to net revenues.

          We have a standardized approach to estimate and review the collectibility of our receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to revenues and allowances for doubtful accounts. In addition, we regularly assess the state of our billing operations in order to identify issues, which may impact the collectibility of receivables or allowance estimates. We believe that the collectibility of our receivables is directly linked to the quality of our billing processes, most notably those related to obtaining the correct information in order to bill effectively for the services we provide. As such, we have implemented “best practices” to reduce the number of requisitions that we receive from healthcare providers with missing or incorrect billing information. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. We believe that our collection and allowance estimation processes, along with our close monitoring of our billing operations, help to reduce the risk associated with material revisions to reserve estimates. Less than 5% of our net accounts receivable as of December 31, 2010 were outstanding more than 150 days.

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          The following table shows current estimates of the percentage of our total volume of requisitions and net revenues associated with our clinical testing business during 2010 applicable to each payer group:

	Requisition Volume as % of Total			Net Revenues as % of Total Clinical Laboratory Testing Net
	Volume			Revenues
Healthcare Insurers		46% - 51	%		46% - 51	%
Traditional Medicare and Medicaid Programs		15% - 20	%		15% - 20	%
Physicians, Hospitals, Employers and Other Monthly-Billed Clients		30% - 35	%		20% - 25	%
Patients		2% - 5	%		4% - 10	%

           Healthcare insurers

           Reimbursements from healthcare insurers represent approximately one-half of our clinical testing net revenues. Reimbursements from healthcare insurers are based on negotiated fee-for-service schedules and on capitated payment rates.

          Receivables due from healthcare insurers represent approximately 27% of our clinical testing net accounts receivable. Substantially all of the accounts receivable due from healthcare insurers represent amounts billed under negotiated fee-for-service arrangements. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increases. Our approach also considers historical collection experience and other factors. Collection of such receivables is normally a function of providing complete and correct billing information to the healthcare insurers within the various filing deadlines. For healthcare insurers, collection typically occurs within 30 to 60 days of billing. Provided we have billed healthcare plans accurately with complete information prior to the established filing deadline, there has historically been little to no collection risk. If there has been a delay in billing, we determine if the amounts in question will likely go past the filing deadline, and if so, we will reserve accordingly for the billing.

          Approximately 4% of our clinical testing net revenues are reimbursed under capitated payment arrangements, in which case the healthcare insurers typically reimburse us in the same month services are performed, essentially giving rise to no outstanding accounts receivable at month-end. If any capitated payments are not received on a timely basis, we determine the cause and make a separate determination as to whether or not the collection of the amount from the healthcare insurer is at risk and if so, would reserve accordingly.

          Government payers

          Payments for clinical testing services made by the government are based on fee schedules set by governmental authorities. Receivables due from government payers under the Medicare and Medicaid programs represent approximately 18% of our clinical testing net accounts receivable. Collection of such receivables is normally a function of providing the complete and correct billing information within the various filing deadlines. Collection typically occurs within 30 days of billing. Our processes for billing, collecting and estimating uncollectible amounts for receivables due from government payers, as well as the risk of non-collection, are similar to those noted above for healthcare insurers under negotiated fee-for-service arrangements. See Note 15 to the Consolidated Financial Statements for a discussion regarding amounts due from MediCal.

          Client payers

          Client payers include physicians, hospitals, employers and other commercial laboratories, and are billed based on a negotiated fee schedule. Receivables due from client payers represent approximately 33% of our clinical testing net accounts receivable. Credit risk and ability to pay are more of a consideration for these payers than healthcare insurers and government payers. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increase. Our approach also considers specific account reviews, historical collection experience and other factors.

          Patient receivables

          Patients are billed based on established patient fee schedules, subject to any limitations on fees negotiated with healthcare insurers or physicians on behalf of their patients. Receivables due from patients represent approximately 22%

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of our clinical testing net accounts receivable. Collection of receivables due from patients is subject to credit risk and ability of the patients to pay. We utilize a standard approach to establish allowances for doubtful accounts for such receivables, which considers the aging of the receivables and results in increased allowance requirements as the aging of the related receivables increases. Our approach also considers historical collection experience and other factors. Patient receivables are generally fully reserved for when the related billing reaches 210 days outstanding. Balances are automatically written off when they are sent to collection agencies. Reserves are adjusted for estimated recoveries of amounts sent to collection agencies based on historical collection experience, which is regularly monitored.

          Reserves for general and professional liability claims

          As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on our client base and reputation. We maintain various liability insurance coverages for claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. Our insurance coverage limits our maximum exposure on individual claims; however, we are essentially self-insured for a significant portion of these claims. While the basis for claims reserves considers actuarially determined losses based upon our historical and projected loss experience, the process of analyzing, assessing and establishing reserve estimates relative to these types of claims involves a high degree of judgment. Changes in the facts and circumstances associated with claims could have a material impact on our results of operations, principally costs of services, and cash flows in the period that reserve estimates are revised or paid. Although we believe that our present reserves and insurance coverage are sufficient to cover currently estimated exposures, it is possible that we may incur liabilities in excess of our recorded reserves or insurance coverage.

          Reserves for other legal proceedings

          Our businesses are subject to or impacted by extensive and frequently changing laws and regulations, including inspections and audits by governmental agencies, in the United States (at both the federal and state levels), and the other jurisdictions in which we conduct business. Although we believe that we are in compliance, in all material respects, with applicable laws and regulations, there can be no assurance that a regulatory agency would not reach a different conclusion. Any noncompliance by us with applicable laws and regulations could have a material adverse effect on our results of operations. In addition, these laws and regulations may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. We have, in the past, entered into several settlement agreements with various government and private payers relating to industry-wide billing and marketing practices that had been substantially discontinued. The federal or state governments may bring additional claims based on new theories as to our practices which management believes to be in compliance with law. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers alleging inappropriate billing practices. We are aware of certain pending lawsuits including class action lawsuits, and have received several subpoenas related to billing practices. See Notes 15 and 16 to the Consolidated Financial Statements for a discussion of the various legal proceedings that involve the Company.

          We have a comprehensive compliance program that is intended to ensure the strict implementation and observance of all applicable laws, regulations and Company policies. Management regularly reports to the Quality, Safety & Compliance Committee of our Board of Directors regarding compliance operations. As an integral part of our compliance program, we investigate all reported or suspected failures to comply with federal and state healthcare reimbursement requirements. Any non-compliance that results in Medicare or Medicaid overpayments is reported to the government and reimbursed by us. As a result of these efforts, we have periodically identified and reported overpayments. Upon becoming aware of potential overpayments, we consider all available facts and circumstances to estimate and record the amounts to be reimbursed. While we have reimbursed these overpayments and have taken corrective action where appropriate, the government may not in each instance accept these actions as sufficient.

          The process of analyzing, assessing and establishing reserve estimates relative to legal proceedings involves a high degree of judgment. Management has established reserves for legal proceedings in accordance with generally accepted accounting principles. Changes in facts and circumstances related to such proceedings could lead to significant revisions to reserve estimates for such matters and could have a material impact on our results of operations, cash flows and financial condition in the period that reserve estimates are revised or paid.

          Accounting for and recoverability of goodwill

          We evaluate the recoverability and measure the potential impairment of our goodwill annually. The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Our estimate of

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fair value considers publicly available information regarding the market capitalization of our Company, as well as (i) the financial projections and future prospects of our business, including its growth opportunities and likely operational improvements, and (ii) comparable sales prices, if available. As part of the first step to assess potential impairment, we compare our estimate of fair value for the reporting unit to the book value of the reporting unit. We determine the fair value of the reporting units based on the income approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. If the book value is greater than our estimate of fair value, we would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. We believe our estimation methods are reasonable and reflect common valuation practices.

          On a quarterly basis, we perform a review of our business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, we would perform an impairment test of goodwill as of the end of the quarter, consistent with the annual impairment test performed at the end of our fiscal year on December 31st, and record any noted impairment loss.

          Accounting for stock-based compensation expense

          We record stock-based compensation as a charge to earnings, net of the estimated impact of forfeited awards. As such, we recognize stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The process of estimating the fair value of stock-based compensation awards and recognizing stock-based compensation cost over their requisite service periods involves significant assumptions and judgments.

          We estimate the fair value of stock option awards on the date of grant using a lattice-based option-valuation model which requires management to make certain assumptions regarding: (i) the expected volatility in the market price of the Company’s common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercise (referred to as the expected holding period). The expected volatility under the lattice-based option-valuation model is based on the current and historical implied volatilities from traded options of our common stock. The dividend yield is based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to ten years. The expected holding period of the awards granted is estimated using the historical exercise behavior of employees. In addition, we estimate the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest. We use historical experience to estimate projected forfeitures. If actual forfeiture rates are materially different from our estimates, stock-based compensation expense could be significantly different from what we have recorded in the current period. We periodically review actual forfeiture experience and revise our estimates, as considered necessary. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision.

          The terms of our performance share unit grants allow the recipients of such awards to earn a variable number of shares based on the achievement of the performance goals specified in the awards. For performance share unit awards, the actual amount of any stock award earned is based on the compound annual growth rate of the Company’s earnings per share from continuing operations over a three-year period as measured in accordance with the provisions of the Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan. Stock-based compensation expense associated with performance share units is recognized based on management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned. If the actual number of performance share units earned is different from our estimates, stock-based compensation could be significantly different from what we have recorded in the current period. The cumulative effect on current and prior periods of a change in the estimated number of performance share units expected to be earned is recognized as compensation cost in earnings in the period of the revision. While the assumptions used to calculate and account for stock-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if revisions are made to our assumptions and estimates, our stock-based compensation expense could vary significantly from period to period. In addition, the number of awards made under our equity compensation plans, changes in the design of those plans, the price of our shares and the performance of our Company can all cause stock-based compensation expense to vary from period to period.

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Results of Operations

          Our clinical testing business currently represents our one reportable business segment. The clinical testing business for each of the three years in the period ended December 31, 2010 accounted for more than 90% of net revenues from continuing operations. Our other operating segments consist of our risk assessment services, clinical trials testing, healthcare information technology and diagnostic products businesses. On April 19, 2006, we decided to discontinue the operations of a test kit manufacturing subsidiary, NID. During the third quarter of 2006, we completed the wind down of NID. Therefore, the operations of NID are classified as discontinued operations for all periods presented. Our business segment information is disclosed in Note 17 to the Consolidated Financial Statements.

          Year Ended December 31, 2010 Compared with Year Ended December 31, 2009

          Continuing Operations

	2010		2009		% Change Increase (decrease)
	(dollars in millions, except per share data)
Net revenues	$	7,368.9	$	7,455.2		(1.2	)%
Income from continuing operations		722.7		730.3		(1.0	)%
Earnings per diluted share	$	4.06	$	3.88		4.6	%

          Results for the year ended December 31, 2010 reflect lower revenues, compared to the prior year, which has served to reduce income from continuing operations below the prior year level. Actions we have taken to adjust our cost structure, reduced costs for performance-based compensation, improved experience associated with professional liability claims and continued progress in reducing bad debt expense have served to partially mitigate the impact to earnings from lower revenues. Lower outstanding share counts, resulting from share repurchases, contributed $0.23 to the earnings per share improvement.

          Results for the year ended December 31, 2010 include $27.0 million of pre-tax charges, or $0.09 per share, principally associated with workforce reductions in the first and fourth quarters. Of these costs, $6.4 million and $20.6 million, respectively, were included in cost of services and selling, general and administrative expenses. Results for the year ended December 31, 2010 also include a $9.6 million fourth quarter pre-tax charge, or $0.03 per share, associated with the settlement of employee litigation and a benefit of $0.12 per share, primarily associated with the favorable resolution of certain tax contingencies. In addition, we estimate that the impact of severe weather in the first quarter of 2010 adversely affected the full year comparison of operating income to the prior year by $14.3 million, or $0.05 per share.

          Results for the year ended December 31, 2009 include pre-tax charges of $20.4 million, or $0.07 per share, associated with the early extinguishment of debt and $7.0 million, or $0.02 per share, associated with the write-down of an investment. These charges were offset by a $15.5 million gain, or $0.05 per share, associated with an insurance settlement for storm-related losses and a benefit of $0.04 per share resulting from certain discrete tax benefits.

          Net Revenues

          The decrease in net revenues from the prior year was principally related to lower revenues from our clinical testing business. For the year ended December 31, 2010, revenues from our clinical testing business, which accounts for over 90% of our net revenues, were 1.3% below the prior year level.

          Clinical testing volume, measured by the number of requisitions, decreased 1.0%. We believe that clinical testing volume was adversely affected by a general slowdown in physician office visits compared to the prior year, and severe weather in the first quarter of 2010. Published survey data estimates that physician office visits declined approximately 5% in 2010 compared to 2009.

          Revenue per requisition decreased 0.2% for the year ended December 31, 2010. Revenue per requisition benefitted from an increased mix of gene-based and esoteric testing and an increase in the number of tests ordered per requisition. Offsetting these benefits were a 1.9% Medicare fee schedule decrease, which went into effect on January 1, 2010 and served to reduce revenue per requisition by 0.4%; business and payer mix changes, including an increase in lower priced drugs-of-abuse testing and a decrease in higher priced anatomic pathology testing; and pricing changes in connection with several large contract extensions entered into in 2009 and in the first half of 2010.

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          Our businesses other than clinical laboratory testing accounted for approximately 9% of our net revenues in 2010 and 2009. These businesses contain most of our international operations and include our risk assessment services, clinical trials testing, healthcare information technology, and diagnostic products businesses. For the year ended December 31, 2010, aggregate revenues for these businesses approximated the prior year level.

          Operating Costs and Expenses

	2010					2009						Change Increase (decrease)
	$		% Net Revenues			$			% Net Revenues			$			% Net Revenues
	(dollars in millions)
Cost of services	$	4,317.2		58.6	%	$	4,321.5			58.0	%	$	(4.3	)		0.6	%
Selling, general and administrative expenses (SG&A)		1,707.7		23.2	%		1,747.6			23.4	%		(39.9	)		(0.2	)%
Amortization of intangible assets		39.2		0.5	%		37.0			0.5	%		2.2			—
Other operating expense (income), net		9.3		0.1	%		(10.0	)		(0.1	)%		19.3			0.2	%
Total operating costs and expenses	$	6,073.4		82.4	%	$	6,096.1			81.8	%	$	(22.7	)		0.6	%
Bad debt expense (included in SG&A)	$	291.7		4.0	%	$	321.0			4.3	%	$	(29.3	)		(0.3	)%

          Total Operating Costs and Expenses

          Lower revenues in our clinical testing business, including the impact of severe weather in the first quarter of 2010, and charges associated with actions we have taken to adjust our cost structure, partially offset by reduced costs for performance-based compensation, improved experience associated with professional liability claims and continued progress in reducing bad debt expense, served to increase total operating costs as a percentage of net revenues for the year ended December 31, 2010. During the year ended December 31, 2010, we recorded $27.0 million of pre-tax charges, principally associated with workforce reductions, of which $6.4 million was recorded in cost of services and $20.6 million was recorded in selling, general and administrative expenses. Operating costs for the year ended December 31, 2010 also included a $9.6 million fourth quarter charge associated with the settlement of employee litigation.

          Operating costs for the year ended December 31, 2009 included a $15.5 million gain related to an insurance settlement for storm related losses, which served to decrease total operating costs as a percentage of net revenues for the year ended December 31, 2009.

          Also, year-over-year comparisons for the year ended December 31, 2010 were favorably impacted by $2.7 million associated with gains and losses on investments in our supplemental deferred compensation plans. The impact can fluctuate significantly from year to year based on investment performance. Under our supplemental deferred compensation plans, employee compensation deferrals, together with Company matching contributions, are invested in a variety of investments held in trusts. Gains and losses associated with the investments are recorded in earnings within other income (expense), net. A corresponding and offsetting adjustment is also recorded to the deferred compensation obligation to reflect investment gains and losses earned by employees. Such adjustments to the deferred compensation obligation are recorded in earnings, principally within selling, general and administrative expenses, and offset the amount of investment gains and losses recorded in other income (expense), net. Results for the years ended December 31, 2010 and 2009 included increases in operating costs of $5.7 and $8.4 million, respectively, representing increases in the deferred compensation obligation to reflect investment gains earned by employees participating in our deferred compensation plans.

          Cost of Services

          Cost of services includes the costs of obtaining, transporting and testing specimens. For the year ended December 31, 2010, cost of services increased, as a percentage of revenue, primarily as a result of lower revenues in our clinical testing business, including the impact of severe weather in the first quarter of 2010, and charges associated with workforce reductions in response to lower testing volume, partially offset by actions taken to reduce our cost structure, reduced performance-based compensation and improved experience associated with professional liability claims.

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          Selling, General and Administrative Expenses

          Selling, general and administrative expenses include the costs of the sales force, billing operations, bad debt expense, and general management and administrative support. For the year ended December 31, 2010, selling, general and administrative expenses decreased as a percentage of revenue from prior year primarily as a result of reduced bad debt expense. In addition, activities in 2010 to adjust our cost structure in response to lower testing volume and reduced performance-based compensation, partially offset by charges principally associated with workforce reductions, reduced selling, general and administrative expenses as a percentage of revenues. Continued progress in our billing and collection processes has resulted in improvements in bad debt and the cost of our billing operation.

          Other Operating Expense (Income), net

          Other operating expense (income), net represents miscellaneous income and expense items related to operating activities and for the years ended December 31, 2010 and 2009, consisted of the following:

	2010			2009			Change
	(dollars in millions)
Insurance settlement for storm-related losses	$	—		$	(15.5	)	$	15.5
Settlement of employee litigation		9.6			—			9.6
Foreign currency transaction losses, net		1.9			2.1			(0.2	)
Other operating (income) expense items, net		(2.2	)		3.4			(5.6	)
Total other operating expense (income), net	$	9.3		$	(10.0	)	$	19.3

          Operating Income

	2010				2009				Change Increase (decrease)
	$		% Net Revenues		$		% Net Revenues		$			% Net Revenues
	(dollars in millions)
Operating income	$	1,295.5	17.6	%	$	1,359.1	18.2	%	$	(63.6	)	(0.6	)%

          Operating income for the year ended December 31, 2010 decreased as a percentage of net revenues from the prior year, primarily as a result of the impact of lower revenues in our clinical testing business, including the estimated impact of severe weather in the first quarter of 2010, charges associated with workforce reductions and employee litigation, partially offset by actions taken to adjust our cost structure, reduced cost of performance-based compensation, improved experience associated with professional liability claims and lower bad debt expense. The estimated impact of severe weather in the first quarter of 2010, combined with charges associated with actions we have taken to adjust our cost structure, and the settlement of employee litigation adversely impacted the year-over-year change in operating income as a percentage of net revenues by 0.7% compared to the prior year. In addition, the year-over-year change in operating income as a percentage of net revenues was also adversely impacted by 0.2% associated with a $15.5 million gain recorded in 2009 related to an insurance settlement for storm-related losses.

          Interest Expense, net

	2010		2009		Change Increase (decrease)
	(dollars in millions)
Interest expense, net	$	146.1	$	144.1	$	2.0

          Interest expense, net for the year ended December 31, 2010 increased from the prior year primarily due to higher average outstanding debt in 2010 compared to the prior year.

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          Other Income (Expense), net

          Other income (expense), net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets, and losses on the early extinguishment of debt. For the years ended December 31, 2010 and 2009, other income (expense), net consisted of the following:

	2010			2009			Change
	(dollars in millions)
Investment gains associated with investments in our supplemental deferred compensation plans	$	5.7		$	8.4		$	(2.7	)
Write-down of an investment		—			(7.0	)		7.0
Loss on early extinguishment of debt		—			(20.4	)		20.4
Other expense items, net		(0.4	)		(1.3	)		0.9
Total other income (expense), net	$	5.3		$	(20.3	)	$	25.6

          Income Tax Expense

	2010			2009			Change
	(dollars in millions)
Income tax expense	$	425.5		$	460.5		$	(35.0	)
Effective income tax rate		35.9	%		37.5	%		(1.6	)%

          The decrease in income tax expense for the year ended December 31, 2010 compared to the prior year was primarily due to a reduction in income from continuing operations before income taxes of $43.6 million and a decrease in the effective income tax rate. The effective income tax rate for the year ended December 31, 2010 decreased compared to the prior year primarily due to the favorable resolution of certain tax contingencies. Results for the year ended December 31, 2010 included $22.1 million of income tax benefits, primarily associated with the favorable resolution of certain tax contingencies. Results for the year ended December 31, 2009 included $7.0 million of income tax benefits, primarily associated with certain discrete tax benefits.

          Discontinued Operations

          Loss from discontinued operations, net of taxes, for the year ended December 31, 2010 was $1.8 million, or $0.01 per diluted share, compared to $1.2 million, or $0.01 per diluted share, in 2009. On April 15, 2009, the Company entered into a final settlement agreement with the federal government and paid $308 million, which had been previously reserved in connection with the final settlement. See Note 16 to the Consolidated Financial Statements for further details.

          Year Ended December 31, 2009 Compared with Year Ended December 31, 2008

          Continuing Operations

	2009		2008		% Change Increase (decrease)
	(dollars in millions, except per share data)
Net revenues	$	7,455.2	$	7,249.4		2.8	%
Income from continuing operations		730.3		632.2		15.5	%
Earnings per diluted share	$	3.88	$	3.22		20.5	%

          The increase in income from continuing operations for the year ended December 31, 2009 from the prior year was principally driven by improved operating performance and lower interest expense. Results for the year ended December 31, 2009 include pre-tax charges of $20.4 million, or $0.07 per share, associated with the early extinguishment of debt and $7.0 million, or $0.02 per share, associated with the write-down of an investment. These charges were offset by a $15.5 million gain, or $0.05 per share, associated with an insurance settlement for storm-

52

related losses and a benefit of $0.04 per share resulting from certain discrete tax benefits.

          Results for the year ended December 31, 2008 include a third quarter charge of $8.9 million, or $0.03 per share, associated with the write-down of an equity investment and pre-tax charges of $16.2 million, or $0.05 per share, primarily associated with workforce reductions. These charges were offset by favorable resolutions of various tax contingencies in 2008, which increased earnings per share by $0.08. In addition, we estimate the impact of hurricanes in the third quarter of 2008 adversely impacted operating income for the year ended December 31, 2008 by approximately $8 million or $0.02 per share.

          Net Revenues

          Net revenues for the year ended December 31, 2009 grew by 2.8% over the prior year level to $7.5 billion. Changes in foreign exchange rates reduced revenue growth for the year ended December 31, 2009 by 0.4%.

          For 2009, revenues of our clinical testing business, which accounts for over 90% of our net revenues, grew 3.2% above the prior year level. Declines in pre-employment drug testing, which is part of our clinical testing business, reduced consolidated revenues by 0.7%.

          Clinical testing volume, measured by the number of requisitions, decreased 0.7% for the year ended December 31, 2009. Pre-employment drug testing volume, which accounted for approximately 5% of our total clinical testing volume in 2009, declined approximately 22% and reduced consolidated volume by 1.5%. We believe the volume decrease in pre-employment drug testing continued to be principally due to reduced hiring by employers served by this business. Our decision to exit certain laboratory management agreements that did not meet our profitability thresholds also reduced volume by 0.4%.

          Revenue per requisition increased 3.9% for the year ended December 31, 2009, with the increase primarily driven by a positive test mix and a 4.5% increase in the Medicare laboratory fee schedule which went into effect January 1, 2009 and contributed approximately a one-half percent increase in revenue per requisition.

          Our businesses other than clinical testing accounted for approximately 8% of our net revenues in 2009. These businesses include our risk assessment services, clinical trials testing, healthcare information technology and diagnostic products businesses. These businesses contain most of our international operations and, in the aggregate, reported revenues for 2009 were comparable to the prior year level, despite the impact of foreign exchange which reduced the combined revenues of these businesses by approximately 4%.

          Operating Costs and Expenses

	2009					2008					Change Increase (decrease)
	$			% Net Revenues		$			% Net Revenues		$			% Net Revenues
	(dollars in millions)
Cost of services	$	4,321.5		58.0	%	$	4,256.2		58.7	%	$	65.3		(0.7	)%
Selling, general and administrative expenses (SG&A)		1,747.6		23.4	%		1,736.9		24.0	%		10.7		(0.6	)%
Amortization of intangible assets		37.0		0.5	%		37.3		0.5	%		(0.3	)	—
Other operating expense (income), net		(10.0	)	(0.1	)%		(3.3	)	(0.1	)%		(6.7	)	—
Total operating costs and expenses	$	6,096.1		81.8	%	$	6,027.1		83.1	%	$	69.0		(1.3	)%
Bad debt expense (included in SG&A)	$	321.0		4.3	%	$	326.2		4.5	%	$	(5.2	)	(0.2	)%

          Total Operating Costs and Expenses

          Total operating costs and expenses for the year ended December 31, 2009 increased from the prior year and decreased as a percentage of net revenues due to actions we have taken to improve our operating efficiency and reduce the size of our workforce, along with discrete cost containment actions taken during 2009 which have enabled us to realize modest cost increases on increased net revenues. These efforts, coupled with higher revenue per requisition, served to reduce operating costs and expenses as a percentage of net revenues. In addition, results for the year ended December 31, 2009 include a $15.5 million second quarter gain related to an insurance settlement for storm-related losses while results for the year ended December 31, 2008 include fourth quarter charges of $16.2 million, primarily associated with workforce reductions ($7.7 million included in cost of services and $8.5 million included in selling,

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general and administrative).

          Also, year-over-year comparisons were adversely impacted by approximately $18 million associated with gains and losses on investments in our supplemental deferred compensation plans. The impact can fluctuate significantly from year to year based on investment performance. Under our supplemental deferred compensation plans, employee compensation deferrals, together with Company matching contributions, are invested in a variety of participant-directed investments held in trusts. Gains and losses associated with the investments are recorded in earnings within other income (expense), net. A corresponding and offsetting adjustment is also recorded to the deferred compensation obligation to reflect investment gains and losses earned by employees. Such adjustments to the deferred compensation obligation are recorded in earnings, principally within selling, general and administrative expenses, and offset the amount of investment gains and losses recorded in other income (expense), net. Results for 2009 included an increase in operating costs of $8.4 million, representing an increase in the deferred compensation obligation to reflect investment gains earned by employees participating in our deferred compensation plans. Results for 2008 included a reduction in operating costs of $9.9 million, representing a decrease in the deferred compensation obligation to reflect investment losses incurred by employees participating in our deferred compensation plans.

          Cost of Services

          Cost of services decreased as a percentage of net revenues for the year ended December 31, 2009 compared to the prior year due to actions taken to reduce our cost structure and higher revenue per requisition.

          Selling, General and Administrative Expenses

          Selling, general and administrative expenses decreased as a percentage of net revenues for the year ended December 31, 2009 compared to prior year primarily due to actions taken to reduce our cost structure and higher revenue per requisition. In addition, year-over-year comparisons of selling, general and administrative expenses as a percentage of net revenues, were adversely impacted by 0.2% associated with investment gains and losses earned by employees on assets held in trust under our supplemental deferred compensation plans discussed earlier. Days sales outstanding decreased to 43 days at December 31, 2009 compared to 44 days at December 31, 2008. Continued progress in our billing and collection processes has resulted in stable bad debt and improvements in days sales outstanding and the cost of our billing operations.

          Other Operating Expense (Income), net

          Other operating expense (income), net represents miscellaneous income and expense items related to operating activities and for the years ended December 31, 2009 and 2008, consisted of the following:

	2009			2008			Change
	(dollars in millions)
Insurance settlement for storm-related losses	$	(15.5	)	$	—		$	(15.5	)
Foreign currency transaction losses (gains), net		2.1			(2.7	)		4.8
Other operating expense (income) items, net		3.4			(0.6	)		4.0
Total other operating expense (income), net	$	(10.0	)	$	(3.3	)	$	(6.7	)

          Operating Income

	2009				2008				Change Increase (decrease)
	$		% Net Revenues		$		% Net Revenues		$		% Net Revenues
	(dollars in millions)
Operating income	$	1,359.1	18.2	%	$	1,222.4	16.9	%	$	136.7	1.3	%

          The improvement in operating income, as a percentage of net revenues, for the year ended December 31, 2009 compared to the prior year, was primarily due to higher revenue per requisition and progress we are making with our cost reduction program, as well as discrete cost containment actions we took during 2009. Operating income for the year ended December 31, 2009 also includes a $15.5 million gain associated with an insurance settlement for storm-related losses, which contributed 0.2% to the improvement. The operating income percentage for the year ended December 31, 2009 also reflects the impact of the various items which served to reduce cost of services and selling, general and administrative expenses as a percentage of net revenues. Results for the year ended December 31, 2008

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include a charge of $16.2 million, primarily associated with workforce reductions, which reduced operating income, as a percentage of net revenues, by 0.2%. In addition, year-over-year comparisons were adversely impacted by approximately $18 million, or 0.2%, associated with investment gains and losses earned by employees on assets held in trust under our supplemental deferred compensation plans.

          Interest Expense, net

	2009		2008		Change Increase (decrease)
	(dollars in millions)
Interest expense, net	$	144.1	$	179.8	$	(35.7	)

          The decrease in interest expense, net for the year ended December 31, 2009, compared to the prior year, was primarily due to lower interest rates on our variable-interest rate debt.

          Other Income (Expense), net

          Other income (expense), net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets, and losses on the early extinguishment of debt. For the years ended December 31, 2009 and 2008, other income (expense), net consisted of the following:

	2009			2008			Change
	(dollars in millions)
Investment gains (losses) associated with investments in our supplemental deferred compensation plans	$	8.4		$	(9.9	)	$	18.3
Write-down of an investment		(7.0	)		(8.9	)		1.9
Loss on early extinguishment of debt		(20.4	)		—			(20.4	)
Other expense items, net		(1.3	)		(2.9	)		1.6
Total other income (expense), net	$	(20.3	)	$	(21.7	)	$	1.4

          Income Tax Expense

	2009			2008			Change
	(dollars in millions)
Income tax expense	$	460.5		$	368.8		$	91.7
Effective income tax rate		37.5	%		36.8	%		0.7	%

          The increase in income tax expense for the year ended December 31, 2009 compared to the prior year was primarily due to an increase in income from continuing operations before income taxes of $177.3 million and an increase in the effective income tax rate. The effective income tax rate for the year ended December 31, 2009 increased compared to the prior year primarily due to the favorable resolution of certain tax contingencies reflected in the effective income tax rate for 2008. Results for the year ended December 31, 2009 included $7.0 million of income tax benefits, primarily associated with certain discrete tax benefits. Results for the year ended December 31, 2008 included $16.5 million of income tax benefits, primarily associated with the favorable resolution of certain tax contingencies.

          Discontinued Operations

          Loss from discontinued operations, net of taxes, for the year ended December 31, 2009 was $1.2 million, or $0.01 per diluted share, compared to $51 million, or $0.26 per diluted share, in 2008. During the third quarter of 2008, the Company and NID reached an agreement in principle to settle the previously disclosed federal government investigation of NID, a test kit subsidiary voluntarily closed in 2006. As a result of the agreement in principle, during 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserves for the settlement and related matters. On April 15, 2009, the Company entered into a final settlement agreement with the federal government and paid $308 million, which had been previously reserved in connection with the final settlement. See Note 16 to the Consolidated Financial Statements for further details.

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Quantitative and Qualitative Disclosures About Market Risk

          We address our exposure to market risks, principally the market risk of changes in interest rates, through a controlled program of risk management that includes the use of derivative financial instruments. We do not hold or issue derivative financial instruments for trading purposes. We believe that our exposures to foreign exchange impacts and changes in commodities prices are not material to our consolidated financial condition or results of operations. See Note 11 to the Consolidated Financial Statements for additional discussion of our financial instruments and hedging activities.

          At December 31, 2010 and 2009, the fair value of our debt was estimated at approximately $3.1 billion and $3.3 billion, respectively, using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2010 and 2009, the estimated fair value exceeded the carrying value of the debt by $80 million and $151 million, respectively. A hypothetical 10% increase in interest rates (representing 45 basis points and 46 basis points at December 31, 2010 and 2009, respectively) would potentially reduce the estimated fair value of our debt by approximately $89 million and $96 million at December 31, 2010 and 2009, respectively.

          Borrowings under our senior unsecured revolving credit facility, our secured receivables credit facility and our term loan due May 2012 are subject to variable interest rates. Interest on our secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers. Interest rates on our senior unsecured revolving credit facility and term loan due May 2012 are subject to a pricing schedule that can fluctuate based on changes in our credit ratings. As such, our borrowing cost under these credit arrangements will be subject to both fluctuations in interest rates and changes in our credit ratings. As of December 31, 2010, the borrowing rates under these credit facilities were: for our secured receivables credit facility, 1.16%; for our senior unsecured credit facility, LIBOR plus 0.40%; and for our term loan due May 2012, LIBOR plus 0.40%. At December 31, 2010, the weighted average LIBOR was 0.26%. At December 31, 2010, there was $742 million outstanding under our term loan due May 2012 and no borrowings outstanding under our $750 million senior unsecured revolving credit facility or our $525 million secured receivables credit facility.

          We seek to mitigate the variability in cash outflows that result from changes in interest rates by maintaining a balanced mix of fixed-rate and variable-rate debt obligations. In order to achieve this objective, we have entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements are recognized as an adjustment to interest expense.

          In November 2009, the Company entered into various fixed-to-variable interest rate swap agreements that effectively convert a portion of our 4.75% Senior Notes due 2020 to variable-interest rate debt based on LIBOR plus 1.33%. At December 31, 2010, the interest rate swap agreements which expire in January 2020, have a notional amount totaling $350 million. The fixed-to-variable interest rate swap agreements are accounted for as fair value hedges of a portion of our outstanding 4.75% Senior Notes due 2020. Based on our net exposure to interest rate changes, a hypothetical 10% change in interest rates on our variable rate indebtedness (representing 3 basis points) would impact annual interest expense by approximately $0.3 million, assuming no changes to the debt outstanding at December 31, 2010.

          The fair value of the fixed-to-variable interest rate swap agreements at December 31, 2010 was an asset of $10.5 million. A hypothetical 10% change in interest rates (representing 30 basis points) would potentially change the fair value of the asset of these instruments by approximately $9 million.

          For details regarding our outstanding debt and our financial instruments, see Notes 10 and 11 to the Consolidated Financial Statements.

          Risk Associated with Investment Portfolio

          Our investment portfolio includes equity investments in publicly held companies that are classified as available-for-sale securities and other strategic equity holdings in privately held companies. These securities are exposed to price fluctuations and are generally concentrated in the life sciences industry. The carrying values of our available-for-sale equity securities and privately held securities were $17.6 million at December 31, 2010.

          We regularly evaluate the fair value measurements of our equity investments to determine if losses in value are other than temporary and if an impairment loss has been incurred. The evaluation considers if the security has the ability to recover and, if so, the estimated recovery period. Other factors that are considered in this evaluation include the amount of the other-than-temporary decline and its duration, the issuer’s financial condition and short-term prospects, and whether the market decline was caused by overall economic conditions or conditions specific to the individual security.

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          We do not hedge our equity price risk. The impact of an adverse movement in equity prices on our holdings in privately held companies cannot be easily quantified, as our ability to realize returns on investments depends on, among other things, the enterprises’ ability to raise additional capital or derive cash inflows from continuing operations or through liquidity events such as initial public offerings, mergers or private sales.

          Liquidity and Capital Resources

          Cash and Cash Equivalents

          Cash and cash equivalents at December 31, 2010 totaled $449 million compared to $534 million at December 31, 2009. Cash and cash equivalents consist of cash and highly liquid short-term investments. For the year ended December 31, 2010, cash flows from operating activities of $1.1 billion, together with cash on-hand, were used to fund investing and financing activities of $217 million and $986 million, respectively. Cash and cash equivalents at December 31, 2009 totaled $534 million, compared to $254 million at December 31, 2008. Cash flows from operating activities in 2009 of $1.0 billion were used to fund investing and financing activities of $196 million and $521 million, respectively.

          Cash Flows from Operating Activities

          Net cash provided by operating activities for 2010 was $1.1 billion compared to $1.0 billion in 2009. For the year ended December 31, 2009, cash flows from operating activities included payments primarily made in the second quarter of 2009 totaling $314 million in connection with the NID settlement (see Note 16 to the Consolidated Financial Statements), or $208 million net of an associated reduction in estimated tax payments. After giving consideration to the net settlement payments, underlying cash flows from operating activities for the year ended December 31, 2010 decreased in comparison to the prior year level. This decrease was primarily driven by the timing of payments for variable compensation and accrued expenses. Days sales outstanding, a measure of billing and collection efficiency, increased to 44 days at December 31, 2010 compared to 43 days at December 31, 2009. This increase is primarily due to the temporary suspension of billing to MediCal, the California Medicaid program. See Note 15 to the Consolidated Financial Statements for a further discussion of MediCal.

          Net cash provided by operating activities for 2009 was $1.0 billion compared to $1.1 billion in 2008. For the year ended December 31, 2009, cash flows from operating activities includes payments primarily made in the second quarter of 2009 totaling $314 million in connection with the NID settlement, or $208 million net of an associated reduction in estimated tax payments. After giving consideration to the net settlement payments, underlying cash flows from operating activities exceeded the prior year level, primarily driven by higher earnings in 2009.

          Cash Flows from Investing Activities

          Net cash used in investing activities in 2010 was $217 million, consisting principally of capital expenditures of $205 million.

          Net cash used in investing activities in 2009 was $196 million, consisting principally of capital expenditures of $167 million. In addition, we completed several small acquisitions for a total of $39 million, which was partially offset by $21 million related to the receipt of a payment from an escrow fund established at the time of an acquisition in 2007.

          Cash Flows from Financing Activities

          Net cash used in financing activities in 2010 was $986 million, consisting primarily of debt repayment of $169 million, purchases of treasury stock totaling $750 million, dividend payments of $71 million and distributions to noncontrolling interests of $37 million, partially offset by $49 million in proceeds from the exercise of stock options, including related tax benefits.

          In December 2010, we extended our existing receivables securitization facility. The secured receivables credit facility continues to be supported by back-up facilities provided on a committed basis by two banks: (a) $275 million, which matures on December 9, 2011 and (b) $250 million, which also matures on December 9, 2011. Interest on the secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers. There were no borrowings outstanding under this facility at December 31, 2010.

          Net cash used in financing activities in 2009 was $521 million, consisting primarily of purchases of treasury stock totaling $500 million, dividend payments of $75 million and $10.5 million in payments to settle certain forward-starting interest rate swap agreements, partially offset by $93 million in proceeds from the exercise of stock options, including related tax benefits, and net increases in debt of $27 million. The net increase in debt consists of $1.25 billion of borrowings and $1.22 billion of repayments.

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          During 2009, borrowings under our secured receivables credit facility totaled $510 million and were used primarily to fund the NID settlement payments totaling $314 million and $150 million to fund the retirement of debt in connection with our debt tender offer in June 2009. In addition, we completed a $750 million senior notes offering in November 2009 (the “2009 Senior Notes”). We issued the notes principally to repay certain debt maturing through 2011 and refinance it over a longer term. The 2009 Senior Notes were sold in two tranches: (a) $500 million of 4.75% senior notes due 2020 issued at a discount of $7.5 million; and $250 million of 5.75% senior notes due 2040, issued at a discount of $6.9 million. We used the net proceeds from the 2009 Senior Notes offering to fund the retirement of $150 million of debt in connection with our debt tender offer in November 2009, and the repayment of $100 million outstanding under our secured receivables credit facility and $350 million outstanding under our term loan due May 2012. The 2009 Senior Notes are further described in Note 10 to the Consolidated Financial Statements.

          Debt repayments of $1.22 billion primarily consisted of $510 million on our secured receivables credit facility, $350 million on our term loan due May 2012 and $350 million of repayments in connection with our debt tender offers in June 2009 and November 2009.

          In connection with our June 2009 debt tender offer, we repaid $174 million of aggregate principal amount outstanding under our 5.125% senior notes due 2010 and $26 million of aggregate principal amount outstanding under our 7.50% senior notes due 2011. Total cash payments of $206 million, including approximately $6 million related to premiums and other costs incurred to purchase the notes, were funded with cash on-hand and $150 million of borrowings under our secured receivables credit facility.

          In connection with our November 2009 debt tender offer, we repaid $61 million of aggregate principal amount outstanding under our 5.125% senior notes due 2010 and $89 million of aggregate principal amount outstanding under our 7.50% senior notes due 2011. Total cash payments of $162 million, including approximately $12 million related to premiums and other costs incurred to purchase the notes, were funded with a portion of the net proceeds from our 2009 Senior Notes offering.

          Dividends

          During each of the quarters of 2010 and 2009, our Board of Directors declared a quarterly cash dividend of $0.10 per common share. We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.

          Share Repurchases

          For the year ended December 31, 2010, we repurchased 14.7 million shares of our common stock at an average price of $51.04 per share for $750 million, including 4.5 million shares purchased in the first quarter at an average price of $56.21 per share for $251 million under an accelerated share repurchase transaction with a bank. For the year ended December 31, 2009, we repurchased 10 million shares of our common stock at an average price of $49.83 per share for $500 million, including 4.5 million shares repurchased from SB Holdings Capital Inc., a wholly-owned subsidiary of GlaxoSmithKline plc. (“GSK”), at an average price of $44.33 per share for $200 million. For the years ended December 31, 2010 and 2009, we reissued 2.1 million shares and 3.0 million shares, respectively, for employee benefit plans. Since the inception of our share repurchase program in May 2003, we have repurchased approximately 74 million shares of our common stock at an average price of $47.13 for $3.5 billion. At December 31, 2010, $250 million of our share repurchase authorization remained available. In January 2011, our Board of Directors authorized $750 million of additional share repurchases, bringing the total available under share repurchase authorizations, which have no set expiration or termination date, to $1 billion.

          On January 31, 2011, we agreed to repurchase 15.4 million shares of our common stock from SB Holdings Capital Inc., an affiliate of GSK, at a purchase price of $54.30 per share for $835 million (the “Repurchase”). We funded the Repurchase, which closed on February 4, 2011, with $260 million of cash on-hand, $500 million of borrowings under our secured receivables credit facility and $75 million of borrowings under our senior unsecured revolving credit facility. Subsequent to the Repurchase, our remaining share repurchase authorization totaled $165 million.

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          Contractual Obligations and Commitments

          The following table summarizes certain of our contractual obligations as of December 31, 2010.

	Payments due by period
	(in thousands)
Contractual Obligations	Total		Less than 1 year		1-3 years		3 –5 years		After 5 years
Outstanding debt	$	2,951,268	$	341,268	$	560,000	$	500,000	$	1,550,000
Capital lease obligations		47,184		7,736		14,877		11,016		13,555
Interest payments on outstanding debt		1,676,941		126,786		220,046		217,743		1,112,366
Operating leases		645,358		174,094		217,939		112,651		140,674
Purchase obligations		91,613		49,444		33,162		8,621		386
Total contractual obligations	$	5,412,364	$	699,328	$	1,046,024	$	850,031	$	2,816,981

          Interest payments on our long-term debt have been calculated after giving effect to our interest rate swap agreements, using the interest rates as of December 31, 2010 applied to the December 31, 2010 balances, which are assumed to remain outstanding through their maturity dates.

          A full description of the terms of our indebtedness and related debt service requirements and our future payments under certain of our contractual obligations is contained in Note 10 to the Consolidated Financial Statements. A full discussion and analysis regarding our minimum rental commitments under noncancelable operating leases and noncancelable commitments to purchase product or services at December 31, 2010 is contained in Note 15 to the Consolidated Financial Statements.

          As of December 31, 2010, our total liabilities associated with unrecognized tax benefits were approximately $152 million, which were excluded from the table above. We believe it is reasonably possible that these liabilities may decrease by up to $14 million within the next twelve months, primarily as a result of the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations on certain tax positions. For the remainder, we cannot make reasonably reliable estimates of the timing of the future payments of these liabilities. See Note 5 to the Consolidated Financial Statements for information regarding our contingent tax liability reserves.

          Our credit agreements and our term loan due May 2012 contain various covenants and conditions, including the maintenance of certain financial ratios, that could impact our ability to, among other things, incur additional indebtedness. As of December 31, 2010, we were in compliance with the various financial covenants included in our credit agreements and we do not expect these covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.

          Unconsolidated Joint Ventures

          We have investments in unconsolidated joint ventures in Phoenix, Arizona; Indianapolis, Indiana; and Dayton, Ohio, which are accounted for under the equity method of accounting. We believe that our transactions with our joint ventures are conducted at arm’s length, reflecting current market conditions and pricing. Total net revenues of our unconsolidated joint ventures equal less than 6% of our consolidated net revenues. Total assets associated with our unconsolidated joint ventures are less than 2% of our consolidated total assets. We have no material unconditional obligations or guarantees to, or in support of, our unconsolidated joint ventures and their operations.

          Requirements and Capital Resources

          We estimate that we will invest approximately $220 million during 2011 for capital expenditures, including assets under capitalized leases, to support and expand our existing operations, principally related to investments in information technology, equipment, and facility upgrades.

          As of December 31, 2010, $1.3 billion of borrowing capacity was available under our existing credit facilities, consisting of $525 million available under our secured receivables credit facility and $750 million available under our senior unsecured revolving credit facility. After funding the Repurchase, which closed on February 4, 2011, $700 million of borrowing capacity was available under our existing credit facilities, consisting of $25 million available under our secured receivables credit facility and $675 million available under our senior unsecured revolving credit

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facility.

          We believe the banks participating in our various credit facilities are predominantly highly-rated banks, and that the borrowing capacity under the credit facilities described above is currently available to us. Should one or several banks no longer participate in either of our credit facilities, we would not expect it to impact our ability to fund operations. We expect that we will be able to replace our existing secured receivable credit facility and our senior unsecured revolving credit facility with alternative arrangements prior to their expiration.

          We believe that cash and cash equivalents on-hand and cash from operations, together with our borrowing capacity under our credit facilities, will provide sufficient financial flexibility to meet seasonal working capital requirements and to fund capital expenditures, debt service requirements and other obligations, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future. We believe that our credit profile should provide us with access to additional financing, if necessary, to fund growth opportunities that cannot be funded from existing sources.

Outlook

          As discussed in the Overview, despite the continued consolidation among healthcare insurers, and their continued efforts to reduce reimbursement for providers of diagnostic testing, and the general economic conditions, we believe that the underlying fundamentals of the diagnostic testing industry will continue to improve and that over the long-term the industry will continue to grow. As the world’s leading provider of diagnostic testing, information and services, we believe we are well positioned to benefit from the growth expected in our industry.

          We believe our focus on delivering a superior patient experience and Six Sigma quality as well as the investments we are making in sales, service, science and information technology will further differentiate us over the long-term and strengthen our industry leadership position. In addition, we plan to leverage our knowledge and expertise in diagnostic testing to further expand into international markets and point-of-care testing.

          Our strong cash generation, exisiting credit facilities and access to additional financing position us well to take advantage of these growth opportunities.

Inflation

          We believe that inflation generally does not have a material adverse effect on our results of operations or financial condition because the majority of our contracts are short term.

Impact of New Accounting Standards

          In October 2009, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables, and an amendment to the accounting standards related to certain revenue arrangements that include software elements. In January 2010, the FASB issued an amendment to the accounting standards related to the disclosures about an entity’s use of fair value measurements. In August 2010, the FASB issued an amendment to the accounting standards related to the accounting for insurance recoveries, and an amendment to the accounting standards related to the financial statement disclosure of the amount of charity care provided by a healthcare entity. In December 2010, the FASB issued amendments to the accounting standards related to the testing of goodwill for impairment and the disclosure requirements for business combinations. The impact of these accounting standards is discussed in Note 2 to the Consolidated Financial Statements.

60

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

          The management of the Company, including its Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 based on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2010 is effective.

          The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the financial statements included in this annual report, audited the Company’s internal control over financial reporting as of December 31, 2010 and issued their audit report on the Company’s internal control over financial reporting included therein.

61

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
of Quest Diagnostics Incorporated

          In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Quest Diagnostics Incorporated and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and the financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

          A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/	PricewaterhouseCoopers LLP
	PricewaterhouseCoopers LLP
	Florham Park, New Jersey
	February 16, 2011

F-1

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(in thousands, except per share data)

	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	449,301		$	534,256
Accounts receivable, net of allowance for doubtful accounts of $228,917 and $238,206 at December 31, 2010 and 2009, respectively		845,299			827,343
Inventories		76,572			91,386
Deferred income taxes		142,470			131,800
Prepaid expenses and other current assets		91,775			94,640
Total current assets		1,605,417			1,679,425
Property, plant and equipment, net		834,376			825,946
Goodwill		5,101,938			5,083,944
Intangible assets, net		796,405			823,665
Other assets		189,494			150,663
Total assets	$	8,527,630		$	8,563,643
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	865,272		$	888,705
Current portion of long-term debt		348,996			170,507
Total current liabilities		1,214,268			1,059,212
Long-term debt		2,641,160			2,936,792
Other liabilities		618,077			556,175
Commitments and contingencies
Stockholders’ equity:
Quest Diagnostics stockholders’ equity:
Common stock, par value $0.01 per share; 600,000 shares authorized at both December 31, 2010 and 2009; 214,173 shares and 214,110 shares issued at December 31, 2010 and 2009, respectively		2,142			2,141
Additional paid-in capital		2,311,421			2,302,368
Retained earnings		3,867,420			3,216,639
Accumulated other comprehensive income (loss)		10,626			(20,961	)
Treasury stock, at cost; 43,456 shares and 30,817 shares at December 31, 2010 and 2009, respectively		(2,158,129	)		(1,510,548	)
Total Quest Diagnostics stockholders’ equity		4,033,480			3,989,639
Noncontrolling interests		20,645			21,825
Total stockholders’ equity		4,054,125			4,011,464
Total liabilities and stockholders’ equity	$	8,527,630		$	8,563,643

The accompanying notes are an integral part of these statements.

F-2

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(in thousands, except per share data)

	2010			2009			2008
Net revenues	$	7,368,925		$	7,455,243		$	7,249,447
Operating costs and expenses:
Cost of services		4,317,247			4,321,475			4,256,156
Selling, general and administrative		1,707,673			1,747,618			1,736,934
Amortization of intangible assets		39,221			37,062			37,293
Other operating expense (income), net		9,249			(10,023	)		(3,312	)
Total operating costs and expenses		6,073,390			6,096,132			6,027,071
Operating income		1,295,535			1,359,111			1,222,376
Other income (expense):
Interest expense, net		(146,088	)		(144,068	)		(179,764	)
Equity earnings in unconsolidated joint ventures		29,557			33,207			29,736
Other income (expense), net		5,331			(20,318	)		(21,691	)
Total non-operating expenses, net		(111,200	)		(131,179	)		(171,719	)
Income from continuing operations before taxes		1,184,335			1,227,932			1,050,657
Income tax expense		425,531			460,474			386,768
Income from continuing operations		758,804			767,458			663,889
Loss from discontinued operations, net of taxes		(1,787	)		(1,236	)		(50,694	)
Net income		757,017			766,222			613,195
Less: Net income attributable to noncontrolling interests		36,123			37,111			31,705
Net income attributable to Quest Diagnostics	$	720,894		$	729,111		$	581,490
Amounts attributable to Quest Diagnostics’ stockholders:
Income from continuing operations	$	722,681		$	730,347		$	632,184
Loss from discontinued operations, net of taxes		(1,787	)		(1,236	)		(50,694	)
Net income	$	720,894		$	729,111		$	581,490
Earnings per share attributable to Quest Diagnostics’ common stockholders – basic:
Income from continuing operations	$	4.09		$	3.92		$	3.25
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)
Net income	$	4.08		$	3.91		$	2.99
Earnings per share attributable to Quest Diagnostics’ common stockholders – diluted:
Income from continuing operations	$	4.06		$	3.88		$	3.22
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)
Net income	$	4.05		$	3.87		$	2.96
Dividends per common share	$	0.40		$	0.40		$	0.40

The accompanying notes are an integral part of these statements.

F-3

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(in thousands)

	2010			2009			2008
Cash flows from operating activities:
Net income	$	757,017		$	766,222		$	613,195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		253,964			256,687			264,593
Provision for doubtful accounts		291,737			320,974			326,228
Provision for special charges		—			—			72,650
Deferred income tax (benefit) provision		(18,878	)		83,120			549
Stock-based compensation expense		53,927			75,059			70,581
Excess tax benefits from stock-based compensation arrangements		(884	)		(5,540	)		(2,420	)
Other, net		22,967			29,699			13,772
Changes in operating assets and liabilities:
Accounts receivable		(309,932	)		(314,102	)		(282,634	)
Accounts payable and accrued expenses		18,235			56,533			(12,565	)
Settlement and other special charges		—			(314,386	)		—
Income taxes payable		33,732			21,190			24,653
Other assets and liabilities, net		16,162			21,962			(25,553	)
Net cash provided by operating activities		1,118,047			997,418			1,063,049
Cash flows from investing activities:
Business acquisitions, net of cash acquired		—			(18,295	)		8,066
Capital expenditures		(205,400	)		(166,928	)		(212,681	)
(Increase) decrease in investments and other assets		(11,110	)		(10,681	)		5,732
Net cash used in investing activities		(216,510	)		(195,904	)		(198,883	)
Cash flows from financing activities:
Proceeds from borrowings		—			1,245,525			22,929
Repayments of debt		(169,491	)		(1,218,538	)		(481,870	)
Purchases of treasury stock		(750,000	)		(499,991	)		(253,997	)
Exercise of stock options		48,535			87,120			30,511
Excess tax benefits from stock-based compensation arrangements		884			5,540			2,420
Dividends paid		(71,321	)		(74,748	)		(77,964	)
Distributions to noncontrolling interests		(36,739	)		(35,524	)		(32,931	)
Other financing activities		(8,360	)		(30,588	)		13,088
Net cash used in financing activities		(986,492	)		(521,204	)		(777,814	)
Net change in cash and cash equivalents		(84,955	)		280,310			86,352
Cash and cash equivalents, beginning of year		534,256			253,946			167,594
Cash and cash equivalents, end of year	$	449,301		$	534,256		$	253,946

The accompanying notes are an integral part of these statements.

F-4

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(in thousands)

				Quest Diagnostics Stockholders’ Equity
	Shares of Common Stock Outstand- ing			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Compre- hensive Income (Loss)			Treasury Stock			Compre- hensive Income			Non- controlling Interests			Total Stockholders’ Equity
Balance, December 31, 2007		194,040		$	2,137		$	2,210,825		$	2,057,744		$	25,279		$	(971,743	)				$	21,464		$	3,345,706
Net income											581,490								$	581,490			31,705			613,195
Currency translation														(94,326	)					(94,326	)					(94,326	)
Market valuation, net of tax benefit of $261														(398	)					(398	)					(398	)
Reversal of market adjustment, net of tax expense of $1,257														2,161						2,161						2,161
Net deferred losses on cash flow hedges														(784	)					(784	)					(784	)
Comprehensive income																			$	488,143
Dividends declared											(77,555	)														(77,555	)
Distributions to noncontrolling interests																							(32,931	)		(32,931	)
Issuance of common stock under benefit plans		913			4			81									18,248									18,333
Stock-based compensation expense								63,055									7,526									70,581
Exercise of stock options		987						(18,148	)								48,659									30,511
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(56	)					(962	)								(1,614	)								(2,576	)
Tax benefits associated with stock-based compensation plans								6,881																		6,881
Purchases of treasury stock		(5,510	)														(253,997	)								(253,997	)
Other								333																		333
Balance, December 31, 2008		190,374			2,141			2,262,065			2,561,679			(68,068	)		(1,152,921	)					20,238			3,625,134
Net income											729,111								$	729,111			37,111			766,222
Currency translation														49,586						49,586						49,586
Reversal of market valuation, net of tax expense of $190														290						290						290
Net deferred losses on cash flow hedges														(2,553	)					(2,553	)					(2,553	)
Other														(216	)					(216	)					(216	)
Comprehensive income																			$	776,218
Dividends declared											(74,151	)														(74,151	)
Distributions to noncontrolling interests																							(35,524	)		(35,524	)
Issuance of common stock under benefit plans		711						1,868									17,913									19,781
Stock-based compensation expense								61,005									14,054									75,059
Exercise of stock options		2,376						(27,272	)								114,392									87,120
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(135	)					(2,144	)								(3,995	)								(6,139	)
Tax benefits associated with stock-based compensation plans								6,846																		6,846
Purchases of treasury stock		(10,033	)														(499,991	)								(499,991	)
Balance, December 31, 2009		183,293			2,141			2,302,368			3,216,639			(20,961	)		(1,510,548	)					21,825			4,011,464
Net income											720,894								$	720,894			36,123			757,017
Currency translation														27,271						27,271						27,271
Market valuation, net of tax expense of $1,975														3,090						3,090						3,090
Amortization of net deferred losses on cash flow hedges														724						724						724
Other														502						502			(564	)		(62	)
Comprehensive income																			$	752,481
Dividends declared											(70,113	)														(70,113	)
Distributions to noncontrolling interests																							(36,739	)		(36,739	)
Issuance of common stock under benefit plans		1,125			2			1,050									19,480									20,532
Stock-based compensation expense								24,454									29,473									53,927
Exercise of stock options		1,269						(14,545	)								63,080									48,535
Shares to cover employee payroll tax withholdings on stock issued under benefit plans		(277	)		(1	)		(5,786	)								(9,614	)								(15,401	)
Tax benefits associated with stock-based compensation plans								3,880																		3,880
Purchases of treasury stock		(14,693	)														(750,000	)								(750,000	)
Balance, December 31, 2010		170,717		$	2,142		$	2,311,421		$	3,867,420		$	10,626		$	(2,158,129	)				$	20,645		$	4,054,125

The accompanying notes are an integral part of these statements.

F-5

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands unless otherwise indicated)

1. DESCRIPTION OF BUSINESS

          Quest Diagnostics Incorporated and its subsidiaries (“Quest Diagnostics” or the “Company”) is the world’s leading provider of diagnostic testing, information and services, providing insights that enable patients, physicians and others to make better healthcare decisions. Quest Diagnostics offers patients and physicians the broadest access to diagnostic laboratory services through the Company’s nationwide network of laboratories and patient service centers. The Company provides interpretive consultation through the largest medical and scientific staff in the industry, with approximately 900 M.D.s and Ph.D.s, primarily located in the United States. Quest Diagnostics is the leading provider of clinical testing, including gene-based and esoteric testing, anatomic pathology services and testing for drugs-of-abuse in the United States, and the leading provider of risk assessment services for the life insurance industry in North America. The Company is also a leading provider of testing for clinical trials. The Company’s diagnostics products business manufactures and markets diagnostic test kits and specialized point-of-care testing. Quest Diagnostics empowers healthcare organizations and clinicians with robust information technology solutions that can improve patient care and medical practice.

          During 2010, Quest Diagnostics processed approximately 146 million requisitions through its extensive network of laboratories in virtually every major metropolitan area throughout the United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation

          The consolidated financial statements include the accounts of all entities controlled by the Company through its direct or indirect ownership of a majority voting interest and the accounts of any variable interest entities where the Company is subject to a majority of the risk of loss from the variable interest entity’s activities, or entitled to receive a majority of the entity’s residual returns or both. The Company assesses the requirements related to the consolidation of variable interest entities (“VIEs”), including a qualitative assessment of power and economics that considers which entity has the power to direct the activities that “most significantly impact” the VIE’s economic performance and has the obligation to absorb losses of, or the right to receive benefits that could be potentially significant to, the VIE. The Company’s relationships with variable interest entities were not material at both December 31, 2010 and 2009. Investments in entities which the Company does not control, but in which it has a substantial ownership interest (generally between 20% and 49%) and can exercise significant influence, are accounted for using the equity method of accounting. As of December 31, 2010 and 2009, the Company’s investments in affiliates accounted for under the equity method of accounting totaled $44.9 million and $46.3 million, respectively. The Company’s share of equity earnings from investments in affiliates, accounted for under the equity method, totaled $29.6 million, $33.2 million and $29.7 million, respectively, for 2010, 2009 and 2008. All significant intercompany accounts and transactions are eliminated in consolidation.

          Basis of Presentation

          During the third quarter of 2006, the Company completed its wind-down of NID, a test kit manufacturing subsidiary, and classified the operations of NID as discontinued operations. The accompanying consolidated statements of operations and related disclosures have been prepared to report the results of NID as discontinued operations for all periods presented. See Note 16 for a further discussion of discontinued operations.

          Certain reclassifications have been made to prior year amounts in the consolidated statements of cash flows to conform to the current year’s presentation.

          Use of Estimates

          The preparation of financial statements in conformity with accounting principles generally accepted in the Unites States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-6

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Revenue Recognition

          The Company primarily recognizes revenue for services rendered upon completion of the testing process. Billings for services reimbursed by third-party payers, including Medicare and Medicaid, are recorded as revenues net of allowances for differences between amounts billed and the estimated receipts from such payers. Adjustments to the allowances, based on actual receipts from the third-party payers, are recorded upon settlement. Approximately 18% of the Company’s consolidated net revenues were generated by billings to the Medicare and Medicaid programs in each of the years ending December 31, 2010, 2009 and 2008. Under capitated arrangements with healthcare insurers, the Company recognizes revenue based on a predetermined monthly reimbursement rate for each member of an insurer’s health plan regardless of the number or cost of services provided by the Company. In 2010, 2009 and 2008, approximately 4%, 4%, and 5%, respectively, of the Company’s consolidated net revenues were generated under capitated arrangements.

          Revenues from the Company’s risk assessment services, clinical trials testing and diagnostics products businesses are recognized when persuasive evidence of a final agreement exists; delivery has occurred or services have been rendered; the price of the product or service is fixed or determinable; and collectibility from the customer is reasonably assured. The Company’s healthcare information technology business primarily uses the percentage-of-completion method of contract accounting and recognizes revenue as performance takes place over an extended period of time.

          Taxes on Income

          The Company uses the asset and liability approach to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted.

          Earnings Per Share

          The Company’s unvested restricted common stock and unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method for all periods presented. Basic earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”) and its Amended and Restated Non-Employee Director Long-Term Incentive Plan (“DLTIP”).

          Stock-Based Compensation

          The Company records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. As such, the Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision. The terms of the Company’s performance share unit grants allow the recipients of such awards to earn a variable number of shares based on the achievement of the performance goals specified in the awards. For performance share unit awards, the actual amount of any stock award earned is based on the compound annual growth rate of the Company’s earnings per share from continuing operations over a three-year period as measured in accordance with the ELTIP. Stock-based compensation expense associated with performance share units is recognized based on management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned. The cumulative effect on current and prior

F-7

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

periods of a change in the estimated number of performance share units expected to be earned is recognized as compensation cost in earnings in the period of the revision. The Company recognizes stock-based compensation expense related to the Company’s Amended Employee Stock Purchase Plan (“ESPP”) based on the 15% discount at purchase. See Note 13 for a further discussion of stock-based compensation.

          Fair Value Measurements

          The Company determines fair value measurements used in its consolidated financial statements based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, as determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company has used the most advantageous market, which is the market in which the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement.

          Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3:	Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

          Foreign Currency

          The Company predominately uses the U.S. dollar as its functional currency. The functional currency of the Company’s foreign subsidiaries is the applicable local currency. Assets and liabilities denominated in non-U.S. dollars are translated into U.S. dollars at exchange rates as of the end of the reporting period. Income and expense items are translated at average exchange rates prevailing during the year. The translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Gains and losses from foreign currency transactions are included within other operating expense (income), net in the consolidated statements of operations. Transaction gains and losses have not been material. For a discussion of the Company’s use of derivative financial instruments to manage its exposure for changes in foreign currency rates refer to the caption entitled “Derivative Financial Instruments – Foreign Currency Risk” below.

          Cash and Cash Equivalents

          Cash and cash equivalents include all highly-liquid investments with original maturities, at the time acquired by the Company, of three months or less.

          Concentration of Credit Risk

          Financial instruments that potentially subject the Company to concentrations of credit risk are principally cash, cash equivalents, short-term investments, accounts receivable and derivative financial instruments. The Company’s policy is to place its cash, cash equivalents and short-term investments in highly-rated financial instruments and institutions. Concentration of credit risk with respect to accounts receivable is mitigated by the diversity of the Company’s payers and their dispersion across many different geographic regions, and is limited to certain payers who are large buyers of the Company’s services. To reduce risk, the Company routinely assesses the financial strength of these payers and, consequently, believes that its accounts receivable credit risk exposure, with respect to these payers, is limited. While the Company has receivables due from federal and state governmental agencies, the Company does not

F-8

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

believe that such receivables represent a credit risk since the related healthcare programs are funded by federal and state governments, and payment is primarily dependent on submitting appropriate documentation. As of December 31, 2010 and 2009, receivables due from government payers under the Medicare and Medicaid programs represent approximately 16% and 12%, respectively, of the Company’s consolidated net accounts receivable. See Note 15 for a discussion regarding certain amounts due from MediCal, the California Medicaid program. The portion of the Company’s accounts receivable due from patients comprises the largest portion of credit risk. At both December 31, 2010 and 2009, receivables due from patients represent approximately 19% of the Company’s consolidated net accounts receivable. The Company applies assumptions and judgments including historical collection experience for assessing collectibility and determining allowances for doubtful accounts for accounts receivable from patients.

          Accounts Receivable and Allowance for Doubtful Accounts

          Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectibility of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectibility of these receivables or reserve estimates. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts.

          Inventories

          Inventories, which consist principally of testing supplies and reagents, are valued at the lower of cost (first in, first out method) or market.

          Property, Plant and Equipment

          Property, plant and equipment is recorded at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed as incurred. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and expensed as incurred for preliminary project activities and post-implementation activities. Capitalized costs include external direct costs of materials and services consumed in developing or obtaining internal-use software, payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and interest costs incurred, when material, while developing internal-use software. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose. Certain costs, such as maintenance and training, are expensed as incurred. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the expected useful lives of the assets. Depreciation and amortization are provided on the straight-line method over expected useful asset lives as follows: buildings and improvements, ranging from ten to thirty years; laboratory equipment and furniture and fixtures, ranging from three to seven years; leasehold improvements, the lesser of the useful life of the improvement or the remaining life of the building or lease, as applicable; and computer software developed or obtained for internal use, ranging from three to seven years.

          Goodwill

          Goodwill arising from acquisitions completed prior to January 1, 2009 represents the cost of acquired businesses in excess of the fair value of assets acquired, including separately recognized intangible assets, less the fair value of liabilities assumed in a business combination. On January 1, 2009, the Company adopted a new accounting standard related to business combinations using the acquisition method. Goodwill arising from acquisitions completed on or after January 1, 2009 represents the excess of the fair value of the acquiree (including the fair value of non-controlling interests) over the recognized bases of the net identifiable assets acquired. The Company uses a nonamortization approach to account for goodwill arising from acquisitions. Goodwill is not amortized, but instead is periodically reviewed for impairment.

F-9

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Intangible Assets

          Intangible assets are recognized at fair value, as an asset apart from goodwill if the asset arises from contractual or other legal rights, or if it is separable. Intangible assets, principally representing the cost of customer relationships, customer lists and non-competition agreements acquired, are capitalized and amortized on the straight-line method over their expected useful life, which generally ranges from five to twenty years. Intangible assets with indefinite useful lives, consisting principally of acquired tradenames, are not amortized, but instead are periodically reviewed for impairment.

          Recoverability and Impairment of Goodwill

          The Company reviews goodwill and certain intangible assets periodically for impairment and an impairment charge is recorded in the periods in which the recorded carrying value of goodwill and certain intangibles is more than its estimated fair value. The goodwill impairment test is performed annually, or more frequently, in the case of other events that indicate a potential impairment. The annual impairment test of goodwill was performed at the end of each of the Company’s fiscal years and indicated that there was no impairment of goodwill as of December 31, 2010 or 2009.

          The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Management’s estimate of fair value considers publicly available information regarding the market capitalization of the Company as well as (i) the financial projections and future prospects of the Company’s business, including its growth opportunities and likely operational improvements, and (ii) comparable sales prices, if available. As part of the first step to assess potential impairment, management compares the estimate of fair value for the reporting unit to the book value of the reporting unit. If the book value is greater than the estimate of fair value, the Company would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. Management believes its estimation methods are reasonable and reflective of common valuation practices.

          On a quarterly basis, management performs a review of the Company’s business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, the Company would perform an impairment test of goodwill as of the end of the quarter, consistent with the annual impairment test, and record any noted impairment loss.

          Recoverability and Impairment of Intangible Assets and Other Long-Lived Assets

          The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. Evaluation of possible impairment is based on the Company’s ability to recover the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If the expected undiscounted pre-tax cash flows are less than the carrying amount of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying amount of the asset.

          Investments

          The Company accounts for investments in trading and available-for-sale equity securities, which are included in other assets in the consolidated balance sheets at fair value. Both realized and unrealized gains and losses for trading securities are recorded currently in earnings as a component of non-operating expenses within other income (expense), net in the consolidated statements of operations. Unrealized gains and losses, net of tax, for available-for-sale securities are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

F-10

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Recognized gains and losses for available-for-sale securities are recorded in other income (expense), net in the consolidated statements of operations. Gains and losses on securities sold are based on the average cost method.

          The Company periodically reviews its investments to determine whether a decline in fair value below the cost basis is other than temporary. The primary factors considered in the determination are: the length of time that the fair value of the investment is below carrying value; the financial condition, operating performance and near term prospects of the investee; and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is deemed to be other than temporary, the cost basis of the security is written down to fair value.

          Investments at December 31, 2010 and 2009 consisted of the following:

	2010		2009
Available-for-sale equity securities	$	5,066	$	—
Trading equity securities		38,740		33,871
Cash surrender value of life insurance policies		20,314		15,873
Other investments		12,570		8,360
Total	$	76,690	$	58,104

          Investments in available-for-sale equity securities consist of equity securities in public corporations. Investments in trading equity securities represent participant-directed investments of deferred employee compensation and related Company matching contributions held in a trust pursuant to the Company’s supplemental deferred compensation plan (see Note 13). The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding a non-qualified deferred compensation program. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Other investments do not have readily determinable fair values and consist of investments in preferred and common shares of privately held companies and are accounted for under the cost method.

          As of December 31, 2010 and 2009, the Company had no gross unrealized losses from available-for-sale equity securities. For the year ended December 31, 2009, other income (expense), net within the consolidated statements of operations, includes $7.8 million of charges principally associated with the write-down of an investment accounted for under the cost method. For the year ended December 31, 2008, other income (expense), net includes $8.9 million of charges associated with the write-down of available-for-sale equity securities. For the years ended December 31, 2010, 2009 and 2008, gains (losses) from trading equity securities totaled $3.3 million, $6.0 million and $(9.9) million, respectively, and are included in other income (expense), net. For the years ended December 31, 2010 and 2009, gains from changes in the cash surrender value of life insurance policies totaled $2.4 million and $2.4 million, respectively, and are included in other income (expense), net.

          Derivative Financial Instruments

          The Company uses derivative financial instruments to manage its exposure to market risks for changes in interest rates and foreign currencies. This strategy includes the use of interest rate swap agreements, forward starting interest rate swap agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral.

          Interest Rate Risk

          The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company’s debt obligations consist of fixed-rate and variable-rate debt instruments. The Company’s primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within

F-11

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

an acceptable range. In order to achieve these objectives, the Company has entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense.

          The Company formally documents its hedge relationships, including identifying the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. On the date the derivative is entered into, the Company designates the type of derivative as a fair value hedge or cash flow hedge, and accounts for the derivative in accordance with its designation as prescribed by the standards on accounting for derivative instruments and hedging activities. At inception and at least quarterly thereafter, the Company formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. All components of each derivative financial instrument’s gain or loss are included in the assessment of hedge effectiveness.

          The Company accounts for its derivatives as either an asset or liability measured at its fair value. The fair value is based upon quoted market prices obtained from third-party financial institutions and includes an adjustment for the credit risk of the obligor’s non-performance. For a derivative instrument that has been formally designated as a fair value hedge, fair value gains or losses on the derivative instrument are reported in earnings, together with offsetting fair value gains or losses on the hedged item that are attributable to the risk being hedged. For derivatives that have been formally designated as a cash flow hedge, the effective portion of changes in the fair value of the derivatives is recorded in accumulated other comprehensive income (loss) and the ineffective portion is recorded in earnings. Upon maturity or early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in stockholders’ equity, as a component of accumulated other comprehensive income (loss), and are amortized as an adjustment to interest expense over the period during which the hedged forecasted transaction affects earnings. If it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting and any deferred gains or losses related to a discontinued cash flow hedge shall continue to be reported in accumulated other comprehensive income (loss), unless it is probable that the forecasted transaction will not occur. If it is probable that the forecasted transaction will not occur by the originally specified time period, the Company discontinues hedge accounting, and any deferred gains or losses reported in accumulated other comprehensive income (loss) are classified into earnings immediately.

          Foreign Currency Risk

          The Company is exposed to market risk for changes in foreign exchange rates primarily under certain intercompany receivables and payables. Foreign exchange forward contracts are used to mitigate the exposure of the eventual net cash inflows or outflows resulting from these intercompany transactions. The objective is to hedge a portion of the forecasted foreign currency risk over a rolling 12-month time horizon to mitigate the eventual impacts of changes in foreign exchange rates on the cash flows of the intercompany transactions. As of December 31, 2010, the total notional amount of foreign currency forward contracts in U.S. dollars was $55.9 million and principally consist of contracts in Swedish krona and British pounds. Notional amounts represent the face amount of contractual arrangements and the basis on which currencies are exchanged and are not a measure of market or credit risk exposure. The Company does not designate these derivative instruments as hedges under current accounting standards unless the benefits of doing so are material. The Company’s foreign exchange exposure is not material to the Company’s consolidated financial condition or results of operations. The Company does not hedge its net investment in non-U.S. subsidiaries because it views those investments as long-term in nature.

          Comprehensive Income (Loss)

          Comprehensive income (loss) encompasses all changes in stockholders’ equity (except those arising from transactions with stockholders) and includes net income, net unrealized capital gains or losses on available-for-sale securities, foreign currency translation adjustments and deferred gains and losses related to certain derivative financial instruments (see Note 11). Total comprehensive income, including the amount attributable to noncontrolling interests, was $789 million, $813 million and $520 million for the years ended December 31, 2010, 2009 and 2008, respectively.

F-12

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          New Accounting Standards

          In October 2009, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

          In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

          In January 2010, the FASB issued an amendment to the accounting standards related to the disclosures about an entity’s use of fair value measurements. Among these amendments, entities are required to provide separate disclosures about purchases, sales, issuances and settlements relating to the tabular reconciliation of beginning and ending balances of the Level 3 (fair value determined based on significant unobservable inputs) classification and provide greater disaggregation for each class of assets and liabilities that use fair value measurements. The requirement to provide the enhanced disclosures for Level 3 fair value measurements is effective for the Company for interim and annual reporting periods beginning after December 31, 2010. The Company does not expect that the adoption of these new disclosure requirements will have a material impact on its consolidated financial statements.

          In August 2010, the FASB issued an amendment to the accounting standards related to the accounting for insurance recoveries. This standard clarifies that a healthcare entity may not net insurance recoveries against related professional claim liabilities in its balance sheet. In addition, this standard also requires that claim liabilities be determined without consideration of insurance recoveries. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

          In August 2010, the FASB issued an amendment to the accounting standards related to the financial statement disclosure of the amount of charity care provided by a healthcare entity. This standard requires that the cost of performing services be used as the measurement basis for charity care disclosures. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

          In December 2010, the FASB issued an amendment to the accounting standards related to goodwill which (1) modifies step one of the goodwill impairment test by requiring entities with reporting units that have a zero or negative carrying value to assess, whether it is more likely than not that a goodwill impairment exists and (2) does not prescribe a specific method of calculating the carrying value of a reporting unit in the performance of step one of the goodwill impairment test. Under the requirements of this standard, if the entity concludes that it is more likely than not that a goodwill impairment exists, the entity must perform step two of the goodwill impairment test. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment exists. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

          In December 2010, the FASB issued an amendment related to the accounting for business combinations to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. This standard will become effective for the Company on January 1, 2011 and is not expected to have a material impact on the Company’s consolidated financial statements.

F-13

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

3. EARNINGS PER SHARE

          The computation of basic and diluted earnings per common share was as follows (in thousands, except per share data):

	2010			2009			2008
Amounts attributable to Quest Diagnostics’ stockholders:
Income from continuing operations	$	722,681		$	730,347		$	632,184
Loss from discontinued operations		(1,787	)		(1,236	)		(50,694	)
Net income available to Quest Diagnostics’ common stockholders	$	720,894		$	729,111		$	581,490
Income from continuing operations	$	722,681		$	730,347		$	632,184
Less: Earnings allocated to participating securities		3,355			2,223			1,314
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted	$	719,326		$	728,124		$	630,870
Weighted average common shares outstanding – basic		175,684			185,948			194,283
Effect of dilutive securities:
Stock options and performance share units		1,636			1,850			1,676
Weighted average common shares outstanding – diluted		177,320			187,798			195,959
Earnings per share attributable to Quest Diagnostics’ common stockholders – basic:
Income from continuing operations	$	4.09		$	3.92		$	3.25
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)
Net income	$	4.08		$	3.91		$	2.99
Earnings per share attributable to Quest Diagnostics’ common stockholders – diluted:
Income from continuing operations	$	4.06		$	3.88		$	3.22
Loss from discontinued operations		(0.01	)		(0.01	)		(0.26	)
Net income	$	4.05		$	3.87		$	2.96

          The following securities were not included in the diluted earnings per share calculation due to their antidilutive effect (in thousands):

	2010		2009		2008
Stock options and performance share units		2,886		3,559		3,631

F-14

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

4. FAIR VALUE MEASUREMENTS

          The following tables provide summaries of the recognized assets and liabilities that are measured at fair value on a recurring basis.

			Basis of Fair Value Measurements
				Quoted Prices in Active Markets for Identical Assets / Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
				Level 1		Level 2		Level 3
December 31, 2010
Assets:
Trading securities	$	38,740		$	38,740	$	—	$	—
Cash surrender value of life insurance policies		20,314			—		20,314		—
Interest rate swaps		10,483			—		10,483		—
Available-for-sale equity securities		5,066			—		—		5,066
Foreign currency forward contracts		4,527			—		4,527		—
Total	$	79,130		$	38,740	$	35,324	$	5,066
Liabilities:
Deferred compensation liabilities	$	61,964		$	—	$	61,964	$	—
Foreign currency forward contracts		464			—		464		—
Total	$	62,428		$	—	$	62,428	$	—
December 31, 2009
Assets:
Trading securities	$	33,871		$	33,871	$	—	$	—
Cash surrender value of life insurance policies		15,873			—		15,873		—
Foreign currency forward contracts		2,357			—		2,357		—
Total	$	52,101		$	33,871	$	18,230	$	—
Liabilities:
Deferred compensation liabilities	$	53,919		$	—	$	53,919	$	—
Interest rate swaps		14,398			—		14,398		—
Foreign currency forward contracts		311			—		311		—
Total	$	68,628		$	—	$	68,628	$	—

          The Company offers certain employees the opportunity to participate in a supplemental deferred compensation plan. A participant’s deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds that are classified as trading securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the trading securities.

F-15

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program. A participant’s deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program’s liability. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the deferred compensation obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments.

           The fair value measurements of foreign currency forward contracts are obtained from a third-party pricing service and are based on market prices in actual transactions and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The fair value measurements of the Company’s interest rate swaps are model-derived valuations as of a given date in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions. The Company does not believe that the changes in the fair values of its foreign currency forward contracts and interest rate swaps will materially differ from the amounts that could be realized upon settlement or maturity or that the changes in fair value will have a material effect on its results of operations, liquidity and capital resources.

          Investments in available-for-sale equity securities consist of the revaluation of an existing investment in unregistered common shares of a publicly-held company. This investment is classified within Level 3 because the unregistered securities contain restrictions on their sale, and therefore, the fair value measurement reflects a discount for the effect of the restriction.

          In the second quarter of 2009, the Company recorded a charge of $7.0 million associated with the write-down of an investment due to the uncertainty of recoverability from an other-than-temporary impairment loss. A fair value measurement, using significant unobservable inputs, has been applied to this asset on a non-recurring basis.

          The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. At December 31, 2010 and 2009, the fair value of the Company’s debt was estimated at approximately $3.1 billion and $3.3 billion, respectively, using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2010 and 2009, the estimated fair value exceeded the carrying value of the debt by $80 million and $151 million, respectively.

5. TAXES ON INCOME

          The Company’s pre-tax income (loss) from continuing operations consisted of $1.18 billion, $1.23 billion and $1.05 billion from U.S. operations and $1.9 million, $1.8 million and $(1.2) million from foreign operations for the years ended December 31, 2010, 2009 and 2008, respectively.

          The components of income tax expense (benefit) for 2010, 2009 and 2008 were as follows:

	2010			2009			2008
Current:
Federal	$	346,739		$	350,582		$	299,937
State and local		93,369			81,292			57,750
Foreign		4,132			3,193			3,833
Deferred:
Federal		(5,103	)		30,624			20,764
State and local		(11,197	)		(3,552	)		10,029
Foreign		(2,409	)		(1,665	)		(5,545	)
Total	$	425,531		$	460,474		$	386,768

F-16

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          A reconciliation of the federal statutory rate to the Company’s effective tax rate for 2010, 2009 and 2008 was as follows:

	2010			2009			2008
Tax provision at statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal benefit		4.0			4.0			4.6
Impact of foreign operations		(0.7	)		(0.7	)		(1.1	)
Tax credits		(0.3	)		(0.9	)		—
Non-deductible expenses, primarily meals and entertainment expenses		0.2			0.2			0.5
Impact of noncontrolling interests		(1.2	)		(1.2	)		(1.2	)
Other, net		(1.1	)		1.1			(1.0	)
Effective tax rate		35.9	%		37.5	%		36.8	%

          The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2010 and 2009 were as follows:

	2010			2009
Current deferred tax assets:
Accounts receivable reserves	$	70,608		$	72,076
Liabilities not currently deductible		71,862			59,724
Total current deferred tax assets	$	142,470		$	131,800
Non-current deferred tax assets (liabilities):
Liabilities not currently deductible	$	142,043		$	124,296
Stock-based compensation		73,661			72,248
Net operating loss carryforwards, net of valuation allowance		37,012			36,354
Depreciation and amortization		(438,617	)		(421,335	)
Total non-current deferred tax liabilities, net	$	(185,901	)	$	(188,437	)

          At December 31, 2010, non-current deferred tax assets of $7 million are recorded in other long-term assets and non-current deferred tax liabilities of $193 million are recorded in other long-term liabilities in the consolidated balance sheet. At December 31, 2009, non-current deferred tax liabilities of $188 million are included in other long-term liabilities in the consolidated balance sheet.

          As of December 31, 2010, the Company had estimated net operating loss carryforwards for federal and state income tax purposes of $10 million and $660 million, respectively, which expire at various dates through 2030. Estimated net operating loss carryforwards for foreign income tax purposes of $38 million at December 31, 2010 can be carried forward indefinitely. As of December 31, 2010 and 2009, deferred tax assets associated with net operating loss carryforwards of $50 million and $48 million, respectively, have each been reduced by a valuation allowance of $13 million and $12 million, respectively.

          Income taxes payable including those classified in other long-term liabilities in the consolidated balance sheets at December 31, 2010 and 2009, were $128 million and $100 million, respectively.

F-17

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          The total amount of unrecognized tax benefits as of and for the years ended December 31, 2010, 2009 and 2008 consists of the following:

	2010			2009			2008
Balance, beginning of year	$	126,454		$	70,877		$	107,943
Additions:
For tax positions of current year		20,904			69,219			3,775
For tax positions of prior years		28,140			22,462			3,916
Reductions:
Changes in judgment		(13,467	)		(11,551	)		(32,684	)
Expirations of statutes of limitations		(10,477	)		(4,926	)		(2,724	)
Settlements		—			(19,627	)		(9,349	)
Balance, end of year	$	151,554		$	126,454		$	70,877

          The contingent liabilities for tax positions primarily relate to uncertainties associated with the realization of tax benefits derived from certain state net operating loss carryforwards, the allocation of income and expense among state jurisdictions, the characterization and timing of certain tax deductions associated with business combinations and employee compensation, income and expenses associated with certain intercompany licensing arrangements, and the deductibility of certain settlement payments.

          The total amount of unrecognized tax benefits as of December 31, 2010, that, if recognized, would affect the effective income tax rate from continuing operations is $64 million. Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits may decrease by up to $14 million within the next twelve months.

          Accruals for interest expense on contingent tax liabilities are classified in income tax expense in the consolidated statements of operations. Accruals for penalties have historically been immaterial. Interest expense included in income tax expense in 2010 and 2009 was approximately $2 million in each year. As a result of changes in judgment and favorable resolutions of uncertain tax positions, $5 million of net interest was credited to income tax expense in 2008. As of December 31, 2010 and 2009, the Company has approximately $9 million and $7 million, respectively, accrued, net of the benefit of a federal and state deduction, for the payment of interest on uncertain tax positions.

          The recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently involves subjectivity. Changes in estimates may create volatility in the Company’s effective tax rate in future periods and may be due to settlements with various tax authorities (either favorable or unfavorable), the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates.

          In the regular course of business, various federal, state and local and foreign tax authorities conduct examinations of the Company’s income tax filings and the Company generally remains subject to examination until the statute of limitations expires for the respective jurisdiction. The Internal Revenue Service (“IRS”) has completed its examinations of the Company’s consolidated federal income tax returns up through and including the 2005 tax year. In addition, the IRS has substantially completed its audit of the Company’s federal income tax returns for its 2006 and 2007 tax years, and has issued their related revenue agent report. In addition, certain state tax authorities are conducting audits for various years between 2000 and 2009. In December 2008, the Company reached a settlement agreement to pay a state tax authority approximately $44 million in taxes, penalties and interest ($26 million, net of federal and state benefits) for certain tax positions associated with intercompany licensing arrangements. This settlement was paid in 2009. At this time, the Company does not believe that there will be any material additional payments beyond its recorded contingent liability reserves that may be required as a result of these tax audits. As of December 31, 2010, a summary of the tax years that remain subject to examination for the Company’s major jurisdictions are:

United States – federal	2006 – 2010
United States – various states	2005 – 2010

F-18

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          In conjunction with its acquisition of SmithKline Beecham Clinical Laboratories, Inc. (“SBCL”), which operated the clinical testing business of SmithKline Beecham plc (“SmithKline Beecham”), the Company entered into a tax indemnification arrangement with SmithKline Beecham that provides the parties with certain rights of indemnification against each other. During 2009, the Company paid SmithKline Beecham approximately $10 million related to the realization of certain pre-acquisition net loss carryforwards that were payable to SmithKline Beecham pursuant to the tax indemnification arrangement.

6. SUPPLEMENTAL CASH FLOW AND OTHER DATA

	2010			2009			2008
Depreciation expense	$	214,743		$	219,625		$	227,300
Interest expense		(147,502	)		(146,586	)		(185,476	)
Interest income		1,414			2,518			5,712
Interest, net		(146,088	)		(144,068	)		(179,764	)
Interest paid		139,802			146,352			189,294
Income taxes paid		421,864			362,524			359,336
Assets acquired under capital lease obligations		18,818			—			—

7. PROPERTY, PLANT AND EQUIPMENT

          Property, plant and equipment at December 31, 2010 and 2009 consisted of the following:

	2010			2009
Land	$	35,786		$	35,786
Buildings and improvements		369,507			360,684
Laboratory equipment, furniture and fixtures		1,207,049			1,140,862
Leasehold improvements		394,296			374,922
Computer software developed or obtained for internal use		427,161			376,004
Construction-in-progress		53,392			51,124
		2,487,191			2,339,382
Less: accumulated depreciation and amortization		(1,652,815	)		(1,513,436	)
Total	$	834,376		$	825,946

8. GOODWILL AND INTANGIBLE ASSETS

          The changes in goodwill for the years ended December 31, 2010 and 2009 were as follows:

	2010		2009
Balance as of January 1	$	5,083,944	$	5,054,926
Goodwill acquired during the year		—		25,973
Other purchase accounting adjustments		246		(21,195	)
Increase related to foreign currency translation		17,748		24,240
Balance as of December 31	$	5,101,938	$	5,083,944

F-19

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          For the year ended December 31, 2009, goodwill acquired was associated with several immaterial acquisitions. For the year ended December 31, 2010, other purchase accounting adjustments were primarily related to a milestone payment on an acquisition from 2008. For the year ended December 31, 2009, other purchase accounting adjustments were primarily related to a payment received from an escrow fund established at the time of the HemoCue acquisition in 2007. Approximately 90% of the Company’s goodwill as of December 31, 2010 and 2009 was associated with its clinical testing business.

          Intangible assets at December 31, 2010 and 2009 consisted of the following:

	Weighted Average Amortization Period	December 31, 2010							December 31, 2009
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizing intangible assets:
Customer-related intangibles	19 years	$	603,203	$	(161,345	)	$	441,858	$	600,460	$	(129,994	)	$	470,466
Non-compete agreements	5 years		54,886		(52,134	)		2,752		54,854		(50,252	)		4,602
Other	11 years		75,895		(26,176	)		49,719		68,896		(18,867	)		50,029
Total	18 years		733,984		(239,655	)		494,329		724,210		(199,113	)		525,097
Intangible assets not subject to amortization:
Tradenames			302,076		—			302,076		298,568		—			298,568
Total intangible assets		$	1,036,060	$	(239,655	)	$	796,405	$	1,022,778	$	(199,113	)	$	823,665

          Amortization expense related to intangible assets was $39.2 million, $37.1 million and $37.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

          The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of December 31, 2010 is as follows:

Fiscal Year Ending December 31,
2011	$	40,731
2012		39,092
2013		37,195
2014		36,604
2015		36,017
Thereafter		304,690
Total	$	494,329

F-20

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

          Accounts payable and accrued expenses at December 31, 2010 and 2009 consisted of the following:

	2010		2009
Trade accounts payable	$	212,494	$	207,327
Accrued wages and benefits		298,842		349,252
Accrued expenses		337,069		322,676
Accrued settlement reserves		16,867		9,450
Total	$	865,272	$	888,705

10. DEBT

          Long-term debt at December 31, 2010 and 2009 consisted of the following:

	2010		2009
Senior Notes due November 2010	$	—	$	165,482
Senior Notes due July 2011		159,234		159,170
Term Loan due May 2012		742,000		742,000
Senior Notes due November 2015		499,227		499,067
Senior Notes due July 2017		374,480		374,400
Senior Notes due January 2020		503,770		478,115
Senior Notes due July 2037		420,840		420,683
Senior Notes due January 2040		243,422		243,088
Other		47,183		25,294
Total long-term debt		2,990,156		3,107,299
Less: current portion of long-term debt		348,996		170,507
Total long-term debt, net of current portion	$	2,641,160	$	2,936,792

          Early Extinguishment of Debt

          For the years ended December 31, 2009 and 2008, the Company recorded $20.4 million and $0.9 million of pre-tax charges related to the early extinguishment of debt, primarily related to the Company’s June 2009 and November 2009 debt tender offers, the repayment of borrowings outstanding under the Term Loan due 2012 in 2009 and 2008, and the 2009 repayment of the remaining principal outstanding under the certain debentures due June 2034.

          June 2009 Debt Tender Offer

          On May 19, 2009, the Company commenced a cash tender offer to purchase up to $200 million aggregate principal amount of its 5.125% Senior Notes due 2010 and 7.50% Senior Notes due 2011. On June 16, 2009, the Company finalized its cash tender offer (the “June 2009 Debt Tender Offer”) by purchasing $174 million aggregate principal amount of its 5.125% Senior Notes due 2010 and $26 million aggregate principal amount of its 7.50% Senior Notes due 2011 that resulted in pre-tax losses of $4.8 million and $1.5 million, respectively. The aggregate pre-tax loss of $6.3 million includes the write-off of $0.5 million of deferred financing fees and unamortized discounts and cash payments of $5.8 million related to premiums and other costs to purchase the 5.125% Senior Notes due 2010 and the 7.50% Senior Notes due 2011 and is included in other income (expense), net. The June 2009 Debt Tender Offer was financed with cash on-hand and $150 million of borrowings under the Secured Receivables Credit Facility discussed below.

F-21

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          November 2009 Debt Tender Offer

          In connection with the 2009 Senior Notes offering which is discussed below, on November 12, 2009, the Company commenced a cash tender offer to purchase any and all of its outstanding 5.125% Senior Notes due 2010, and any and all of its outstanding 7.50% Senior Notes due 2011. On November 20, 2009, the Company finalized its cash tender offer (the “November 2009 Debt Tender Offer”) by purchasing $61 million aggregate principal amount of its 5.125% Senior Notes due 2010 and $89 million aggregate principal amount of its 7.50% Senior Notes due 2011 that resulted in pre-tax losses of $2.6 million and $9.4 million, respectively. The aggregate pre-tax loss of $12.1 million includes the write-off of $0.3 million of deferred financing fees and unamortized discounts and cash payments of $11.8 million related to premiums and other costs to purchase the 5.125% Senior Notes due 2010 and the 7.50% Senior Notes due 2011 and is included in other income (expense), net. The November 2009 Debt Tender Offer was financed with the net proceeds from the Company’s 2009 Senior Notes offering which is discussed below.

          Other Extinguishments

          During the years ended December 31, 2009 and 2008, the Company repaid $350 million and $293 million, respectively, of borrowings outstanding under the Term Loan due 2012 and recorded pre-tax losses of $0.7 million and $0.9 million, respectively, related to the write-off of deferred financing fees.

          In connection with the Company’s repayment in 2009 of the remaining principal outstanding under certain debentures due June 2034, the Company recorded a pre-tax charge of $1.3 million, primarily related to the write-off of unamortized discounts.

          2009 Senior Notes Offering

          On November 17, 2009, the Company completed a $750 million senior notes offering (the “2009 Senior Notes”). The 2009 Senior Notes were sold in two tranches: (a) $500 million aggregate principal amount of 4.75% senior notes due January 30, 2020 (the “Senior Notes due 2020”), issued at a discount of $7.5 million and (b) $250 million aggregate principal amount of 5.75% senior notes due January 30, 2040 (the “Senior Notes due 2040”), issued at a discount of $6.9 million. After considering the discounts, the effective interest rates on the Senior Notes due 2020 and the Senior Notes due 2040 are 4.9% and 5.9%, respectively. The 2009 Senior Notes require semiannual interest payments, which commenced on July 30, 2010. The 2009 Senior Notes are unsecured obligations of the Company and rank equally with the Company’s other unsecured obligations. The 2009 Senior Notes do not have a sinking fund requirement and are guaranteed by certain of the Company’s domestic, wholly-owned subsidiaries (the “Subsidiary Guarantors”).

          The Company incurred $6.9 million of costs associated with the 2009 Senior Notes, which is being amortized over the term of the related debt.

          The Company used $612 million of the net proceeds from the 2009 Senior Notes to fund the retirement of $150 million of debt and cash payments of $11.8 million related to premiums and other costs in connection with the Company’s November 2009 Debt Tender Offer, and the repayment of $100 million outstanding under the Company’s Secured Receivables Credit Facility and $350 million outstanding under the Company’s Term Loan due 2012. The remainder of the net proceeds from the 2009 Senior Notes offering were used for general corporate purposes.

          As further discussed in Note 11, the Company hedged its interest rate exposure on a portion of the Senior Notes due 2020. This hedge has been designated as a fair value hedge. At December 31, 2010 and 2009, the carrying value of the Senior Notes due 2020 has been increased (decreased) by the fair value of this hedge of $10.5 million and ($14.4) million, respectively.

          Senior Unsecured Revolving Credit Facility

          In May 2007, the Company entered into a $750 million senior unsecured revolving credit facility (the “Credit Facility”) which replaced the Company’s $500 million senior unsecured revolving credit facility. The Credit Facility matures in May 2012. Interest on the Credit Facility is based on certain published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis points based on changes in the Company’s public debt ratings. At the option of the Company, it may elect to enter into LIBOR-based interest rate contracts for periods up to six

F-22

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

months. Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of December 31, 2010 and 2009, the Company’s borrowing rate for LIBOR-based loans under the Credit Facility was LIBOR (0.3% and 0.2% at December 31, 2010 and 2009, respectively) plus 0.40%. The Credit Facility is guaranteed by the Subsidiary Guarantors. The Credit Facility contains various covenants, including the maintenance of certain financial ratios, which could impact the Company’s ability to, among other things, incur additional indebtedness. At December 31, 2010 and 2009, there were no outstanding borrowings under the Credit Facility.

          The Company incurred $3.1 million of costs associated with the Credit Facility, which is being amortized over the term of the related debt.

          Secured Receivables Credit Facility

          On December 10, 2010, the Company extended its $525 million secured receivables securitization facility (the “Secured Receivables Credit Facility”). The Secured Receivables Credit Facility continues to be supported by back-up facilities provided on a committed basis by two banks: (a) $275 million, which matures on December 9, 2011 and (b) $250 million, which also matures on December 9, 2011. Interest on the Secured Receivables Credit Facility is based on rates that are intended to approximate commercial paper rates for highly-rated issuers. At December 31, 2010 and 2009, the Company’s borrowing rate under the Secured Receivables Credit Facility was 1.2% and 1.4%, respectively. At December 31, 2010 and 2009, there were no borrowings under the Secured Receivables Credit Facility.

          In April 2009, the Company borrowed $310 million under its Secured Receivables Credit Facility primarily to fund payments totaling $314 million in connection with the previously disclosed settlement of the federal government investigation related to NID (see Note 16). In addition, the Company borrowed $150 million to fund debt repayments in connection with the June 2009 Debt Tender Offer. All 2009 borrowings under the Secured Receivables Credit Facility were repaid prior to December 31, 2009.

          Term Loan due 2012

          On May 31, 2007, the Company entered into a five-year term loan facility (the “Term Loan due 2012”). The Term Loan due 2012 matures on May 31, 2012 and requires principal repayments of $182 million, $280 million and $280 million on December 31, 2011, March 31, 2012 and May 31, 2012, respectively. The Term Loan due 2012 is guaranteed by the Subsidiary Guarantors. Interest under the Term Loan due 2012 is based on certain published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis points based on changes in the Company’s public debt ratings. At the Company’s option, it may elect to enter into LIBOR-based interest rate contracts for periods up to six months. Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of December 31, 2010, the Company’s borrowing rate for LIBOR-based loans was LIBOR (0.3%) plus 0.40%. As of December 31, 2009, the Company’s borrowing rate for LIBOR-based loans was LIBOR (0.2%) plus 0.50%.

          The Company incurred $7 million of costs associated with the Term Loan due 2012, which is being amortized over the term of the related debt.

          During the years ended December 31, 2009 and 2008, the Company repaid $350 million and $293 million, respectively, of borrowings outstanding under the Term Loan due 2012.

          Other Senior Notes

          In 2001, the Company issued $275 million aggregate principal amount of 7.50% senior notes due 2011 (“Senior Notes due 2011”), issued at a discount of $1.1 million. After considering the discount, the effective interest rate on the Senior Notes due 2011 is 7.6%. The Senior Notes due 2011 require semiannual interest payments. The Senior Notes due 2011 are unsecured obligations of the Company and rank equally with the Company’s other unsecured senior obligations. The Senior Notes due 2011 are guaranteed by the Subsidiary Guarantors and do not have a sinking fund requirement. In connection with the Company’s June 2009 Debt Tender Offer and November 2009 Debt Tender Offer, the Company repaid $26 million and $89 million, respectively, outstanding under the Senior Notes due 2011.

F-23

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          On October 31, 2005, the Company completed its $900 million private placement of senior notes (the “2005 Senior Notes”). The 2005 Senior Notes were priced in two tranches: (a) $400 million aggregate principal amount of 5.125% senior notes due November 2010 (“Senior Notes due 2010”); and (b) $500 million aggregate principal amount of 5.45% senior notes due November 2015 (“Senior Notes due 2015”). The Senior Notes due 2010 and 2015 were issued at a discount of $0.8 million and $1.6 million, respectively. After considering the discounts, the effective interest rates on the Senior Notes due 2010 and 2015 are 5.3% and 5.6%, respectively. The 2005 Senior Notes require semiannual interest payments, which commenced on May 1, 2006. The 2005 Senior Notes are unsecured obligations of the Company and rank equally with the Company’s other unsecured senior obligations. The 2005 Senior Notes are guaranteed by the Subsidiary Guarantors. In connection with the Company’s June 2009 Debt Tender Offer and November 2009 Debt Tender Offer, the Company repaid $174 million and $61 million, respectively, outstanding under the Senior Notes due 2010. In November 2010, the remaining outstanding principal balance of the Senior Notes due 2010 of $166 million were repaid in full at maturity.

          On June 22, 2007, the Company completed an $800 million senior notes offering (the “2007 Senior Notes”). The 2007 Senior Notes were priced in two tranches: (a) $375 million aggregate principal amount of 6.40% senior notes due July 2017 (the “Senior Notes due 2017”), issued at a discount of $0.8 million and (b) $425 million aggregate principal amount of 6.95% senior notes due July 2037 (the “Senior Notes due 2037”), issued at a discount of $4.7 million. After considering the discounts, the effective interest rates on the Senior Notes due 2017 and the Senior Notes due 2037 are 6.4% and 7.0%, respectively. The 2007 Senior Notes require semiannual interest payments, which commenced on January 1, 2008. The 2007 Senior Notes are unsecured obligations of the Company and rank equally with the Company’s other unsecured obligations. The 2007 Senior Notes do not have a sinking fund requirement and are guaranteed by the Subsidiary Guarantors.

          The Company incurred $6.3 million of costs associated with the 2007 Senior Notes, which is being amortized over the term of the related debt.

          As of December 31, 2010, long-term debt maturing in each of the years subsequent to December 31, 2011 is as follows:

Year ending December 31,
2012	$	567,668
2013		7,209
2014		6,792
2015		504,224
2016		505
Thereafter		1,563,023
Total maturities of long-term debt		2,649,421
Unamortized discount		(18,744	)
Fair value basis adjustment attributable to hedged debt		10,483
Total long-term debt, net of current portion	$	2,641,160

11. FINANCIAL INSTRUMENTS

          Interest Rate Swap Agreements - Cash Flow Hedges

          During the third quarter of 2009, the Company entered into various forward starting interest rate swap agreements (the “Forward Starting Interest Rate Swap Agreements”) for an aggregate notional amount of $400 million. The Forward Starting Interest Rate Swap Agreements had fixed interest rates ranging from 4.120% to 4.575%. The Forward Starting Interest Rate Swap Agreements were 17 to 18 month forward agreements that covered a ten-year hedging period and were entered into to hedge part of the Company’s interest rate exposure associated with forecasted new debt issuances related to the refinancing of certain debt maturing through 2011. In connection with the issuance of our 2009 Senior Notes, the Forward Starting Interest Rate Swap Agreements were terminated and the Company paid $10.5 million, representing the losses on the settlement of the Forward Starting Interest Rate Swap Agreements, which have been accounted for as cash flow hedges. These losses are deferred in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive income (loss), and amortized as an adjustment to interest expense over the term of the Senior Notes due 2020.

F-24

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Prior to their maturity or settlement, the Company records derivative financial instruments, which have been designated as cash flow hedges, as either an asset or liability measured at its fair value. The effective portion of changes in the fair value of these derivatives represent deferred gains or losses that are recorded in accumulated other comprehensive income (loss). These deferred gains or losses are reclassified from accumulated other comprehensive income (loss) to the statement of operations in the same period or periods during which the hedged transaction affects earnings, which is when the Company recognizes interest expense on the hedged cash flows. The total net loss, net of taxes, recognized in accumulated other comprehensive income (loss), related to the Company’s cash flow hedges as of December 31, 2010 and December 31, 2009 was $6.6 million and $7.3 million, respectively. The loss recognized on the Company’s cash flow hedges for the years ended December 31, 2010, 2009 and 2008, as a result of ineffectiveness, was not material. The net amount of deferred losses on cash flow hedges that is expected to be reclassified from accumulated other comprehensive income (loss) into earnings within the next twelve months is $1.1 million.

          Interest Rate Swap Agreements – Fair Value Hedges

          In November 2009, the Company entered into various fixed-to-variable interest rate swap agreements (the “Fixed-to-Variable Interest Rate Swap Agreements”) which have a notional amount totaling $350 million and a variable interest rate based on one-month LIBOR plus 1.33%. These derivative financial instruments are accounted for as fair value hedges of a portion of our Senior Notes due 2020 and effectively convert that portion of the debt into variable interest rate debt. Accordingly, the Company recognizes the changes in the fair value of both the Fixed-to-Variable Interest Rate Swap Agreements and the underlying debt obligation in other income (expense), net as equal and offsetting gains and losses. The fair value of the Fixed-to-Variable Interest Rate Swap Agreements was an asset of $10.5 million at December 31, 2010 and a liability of $14.4 million at December 31, 2009. Since inception, the fair value hedges have been effective; therefore, there is no impact on earnings for the years ended December 31, 2010 and 2009 as a result of hedge ineffectiveness.

          Foreign Currency Forward Contracts

          The Company uses foreign exchange forward contracts to manage its risk associated with foreign currency denominated cash flows. The primary foreign currency exposures include Swedish krona and British pounds.

          A summary of the fair values of derivative instruments in the consolidated balance sheets is stated in the table below (in thousands):

	December 31, 2010			December 31, 2009
	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Derivatives Designated as Hedging Instruments
Asset Derivatives:
Interest rate swaps	Other assets	$	10,483		$	—
Liability Derivatives:
Interest rate swaps			—	Other liabilities		14,398
Derivatives Not Designated as Hedging Instruments
Asset Derivatives:
Foreign currency forward contracts	Other current assets		4,527	Other current assets		2,357
Liability Derivatives:
Foreign currency forward contracts	Other current liabilities		464	Other current liabilities		311
Total Net Derivatives Asset		$	14,546		$	—
Total Net Derivatives Liability		$	—		$	12,352

F-25

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

12. PREFERRED STOCK AND COMMON STOCKHOLDERS’ EQUITY

          Series Preferred Stock

          Quest Diagnostics is authorized to issue up to 10 million shares of Series Preferred Stock, par value $1.00 per share. The Company’s Board of Directors has the authority to issue such shares without stockholder approval and to determine the designations, preferences, rights and restrictions of such shares. Of the authorized shares, 1,300,000 shares have been designated Series A Preferred Stock and 1,000 shares have been designated Voting Cumulative Preferred Stock. No shares are currently outstanding.

          Common Stock

          On May 4, 2006, the Company’s Restated Certificate of Incorporation was amended to increase the number of authorized shares of common stock, par value $0.01 per share, from 300 million shares to 600 million shares.

          Accumulated Other Comprehensive Income (Loss)

          The components of accumulated other comprehensive income (loss) for 2010, 2009 and 2008 were as follows:

	Foreign Currency Translation Adjustment			Market Value Adjustment			Deferred Loss			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2007	$	31,332		$	(2,053	)	$	(4,000	)	$	25,279
Translation adjustment		(94,326	)		—			—			(94,326	)
Market value adjustment, net of tax benefit of $261		—			(398	)		—			(398	)
Reversal of market value adjustment, net of tax expense of $1,257		—			2,161			—			2,161
Net deferred losses on cash flow hedges		—			—			(784	)		(784	)
Balance, December 31, 2008		(62,994	)		(290	)		(4,784	)		(68,068	)
Translation adjustment		49,586			—			—			49,586
Reversal of market value adjustment, net of tax expense of $190		—			290			—			290
Net deferred losses on cash flow hedges		—			—			(2,553	)		(2,553	)
Other		—			(216	)		—			(216	)
Balance, December 31, 2009		(13,408	)		(216	)		(7,337	)		(20,961	)
Translation adjustment		27,271			—			—			27,271
Market value adjustment, net of tax expense of $1,975		—			3,090			—			3,090
Amortization of net deferred losses on cash flow hedges		—			—			724			724
Other		—			502			—			502
Balance, December 31, 2010	$	13,863		$	3,376		$	(6,613	)	$	10,626

               The market value adjustments for 2008 represented unrealized holding losses, net of taxes. The market value adjustments for 2010 represented unrealized holding gains, net of taxes. The reversal of market value adjustments for 2009 and 2008 represented prior periods unrealized holding losses for investments where the decline in fair value was deemed to be other than temporary in 2009 and 2008, and the resulting loss was recognized in the consolidated statements of operations (see Note 2). The deferred loss for 2009 primarily represented the $10.5 million the Company paid upon settlement of the Forward Starting Interest Rate Swap Agreements, net of amounts reclassified to interest expense (see Note 11). Foreign currency translation adjustments are not adjusted for income taxes since they relate to indefinite investments in non-U.S. subsidiaries.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Dividends

          During each of the quarters of 2010, 2009 and 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per common share.

          Share Repurchases

          For the year ended December 31, 2010, the Company repurchased 14.7 million shares of its common stock at an average price of $51.04 per share for $750 million, including 4.5 million shares purchased in the first quarter at an average price per share of $56.21 for $251 million under an accelerated share repurchase transaction (“ASR”) with a bank.

          Under the ASR, in January 2010, the Company repurchased 4.5 million shares of the Company’s outstanding common stock for an initial purchase price of $56.05 per share. The purchase price of these shares was subject to an adjustment based on the volume weighted average price of the Company’s common stock during a period following execution of the agreement. The total cost of the initial purchase was $250 million. The purchase price adjustment was settled in the first quarter of 2010 and resulted in an additional cash payment of $0.7 million, for a final purchase price of $251 million, or $56.21 per share.

          For the year ended December 31, 2009, the Company repurchased 10.0 million shares of its common stock at an average price of $49.83 per share for $500 million, including 4.5 million shares repurchased from SB Holdings Capital Inc., a wholly-owned subsidiary of GlaxoSmithKline plc. (“GSK”), at an average price of $44.33 per share for $200 million. For the year ended December 31, 2008, the Company repurchased 5.5 million shares of its common stock at an average price of $46.09 per share for $254 million.

          For the years ended December 31, 2010, 2009 and 2008, the Company reissued 2.1 million shares, 3.0 million shares and 1.5 million, respectively, for employee benefit plans.

          On October 20, 2010, the Board of Directors authorized $250 million of additional share repurchases, which have no set expiration or termination date. At December 31, 2010, $250 million remained available under the share repurchase authorizations. In January 2011, the Board of Directors authorized $750 million of additional share repurchases, bringing the total available under share repurchase authorizations to $1 billion.

          On January 31, 2011, the Company agreed to repurchase 15.4 million shares of its common stock from SB Holdings Capital Inc., an affiliate of GSK, at a purchase price of $54.30 per share for $835 million. See Note 18 for further details.

13. STOCK OWNERSHIP AND COMPENSATION PLANS

          Employee and Non-employee Directors Stock Ownership Programs

          In 2005, the Company established the ELTIP to replace the Company’s prior Employee Equity Participation Programs established in 1999 (the “1999 EEPP”) and 1996, as amended (the “1996 EEPP”). At the Company’s annual shareholders’ meeting in May 2009, the shareholders approved certain amendments to the ELTIP including: (i) increasing the number of shares available for award under the ELTIP by approximately 5.2 million shares; (ii) increasing the maximum term that the Board of Directors may establish for awards of stock options and stock appreciation rights from seven to ten years, beginning with awards in 2009; and (iii) extending the term of the ELTIP until the date of the 2019 annual shareholders’ meeting.

          The ELTIP provides for three types of awards: (a) stock options, (b) stock appreciation rights and (c) stock awards. The ELTIP provides for the grant to eligible employees of either non-qualified or incentive stock options, or both, to purchase shares of Company common stock at a price of no less than the fair market value on the date of grant. The stock options are subject to forfeiture if employment terminates prior to the end of the vesting period prescribed by the Board of Directors. Grants of stock appreciation rights allow eligible employees to receive a payment based on the appreciation of Company common stock in cash, shares of Company common stock or a combination thereof. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

stock appreciation rights are granted at an exercise price at no less than the fair market value of the Company’s common stock on the date of grant. Stock options and stock appreciation rights granted under the ELTIP expire on the date designated by the Board of Directors but in no event more than ten years from date of grant. No stock appreciation rights have been granted under the ELTIP or the 1999 EEPP. The ELTIP allows eligible employees to receive awards of shares, or the right to receive shares, of Company common stock, the equivalent value in cash or a combination thereof. These shares are generally earned on achievement of financial performance goals and are subject to forfeiture if employment terminates prior to the end of the vesting period prescribed by the Board of Directors. For performance share unit awards, the actual amount of performance share awards earned is based on the compound annual growth rate of the Company’s earnings per share from continuing operations over a three-year period. Key executive, managerial and technical employees are eligible to participate in the ELTIP. The provisions of the 1999 EEPP and the 1996 EEPP were similar to those outlined above for the ELTIP. Certain options granted under the 1999 EEPP remain outstanding.

          The maximum number of shares of Company common stock that may be optioned or granted under the ELTIP is approximately 53 million shares. In addition, any remaining shares under the 1996 EEPP are available for issuance under the ELTIP.

          In 2005, the Company established the DLTIP, to replace the Company’s prior plan established in 1998. At the Company’s annual shareholders’ meeting in May 2009, the shareholders approved certain amendments to the DLTIP including: (i) increasing the number of shares available for award under the DLTIP by 0.4 million shares; (ii) increasing the maximum term that the Board of Directors may establish for awards of stock options from seven to ten years, beginning with awards in 2009; and (iii) extending the term of the DLTIP until the date of the 2019 annual shareholders’ meeting.

          The DLTIP provides for the grant to non-employee directors of non-qualified stock options to purchase shares of Company common stock at a price of no less than the fair market value on the date of grant. The DLTIP also permits awards of restricted stock and restricted stock units to non-employee directors. Stock options granted under the DLTIP expire on the date designated by the Board of Directors but in no event more than ten years from date of grant, and generally become exercisable in three equal annual installments beginning on the first anniversary date of the grant of the option regardless of whether the optionee remains a director of the Company. The maximum number of shares that may be issued under the DLTIP is 2.4 million shares. For each of the years ended December 31, 2010, 2009 and 2008, grants under the DLTIP totaled 77 thousand shares.

          In general, the Company’s practice has been to issue shares related to its stock-based compensation program from shares of its common stock held in treasury. See Note 12 for further information regarding the Company’s share repurchase program.

          The fair value of each stock option award granted was estimated on the date of grant using a lattice-based option-valuation model. The expected volatility under the lattice-based option-valuation model was based on the current and the historical implied volatilities from traded options of the Company’s common stock. The dividend yield was based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate of each stock option granted was based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to ten years. The expected holding period of the options granted was estimated using the historical exercise behavior of employees. The weighted average assumptions used in valuing options granted in the periods presented are:

	2010		2009		2008
Weighted average fair value of options at grant date		$17.60		$15.78		$11.58
Expected volatility		26.8%		29.4%		22.5%
Dividend yield		0.7%		0.8%		0.8%
Risk-free interest rate		2.8% - 3.2%		2.1% - 2.3%		2.6% - 2.8%
Expected holding period, in years		6.7 – 7.6		6.2 – 7.2		5.2 – 5.9

          The fair value of restricted stock awards and performance share units is the average market price of the Company’s common stock at the date of grant.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Transactions under the stock option plans for 2010 were as follows:

	Shares (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of year		12,680		$	45.19
Options granted		1,384			55.60
Options exercised		(1,269	)		38.44
Options forfeited and cancelled		(384	)		47.98
Options outstanding, end of year		12,411		$	46.96		3.8	$	89,666
Exercisable, end of year		9,834		$	45.55		2.8	$	83,265
Vested and expected to vest, end of year		11,260		$	46.50		3.8	$	86,468

          The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing common stock price on the last trading day of 2010 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2010. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised in 2010, 2009 and 2008 was $22 million, $44 million and $20 million, respectively.

          As of December 31, 2010, there was $12 million of unrecognized stock-based compensation cost related to stock options which is expected to be recognized over a weighted average period of 1.8 years.

          The following summarizes the activity relative to stock awards, including restricted stock awards, restricted stock units and performance share units, for 2010, 2009 and 2008:

	2010					2009					2008
	Shares (in thousands)			Weighted Average Grant Date Fair Value		Shares (in thousands)			WeightedAverageGrant DateFair Value		Shares (inthousands)			Weighted Average Grant Date Fair Value
Shares outstanding, beginning of year		2,747		$	50.27		1,505		$	49.77		677		$	52.24
Shares granted		876			55.44		917			51.36		843			47.60
Shares vested		(742	)		51.48		(360	)		51.06		(175	)		51.67
Shares forfeited and canceled		(130	)		52.34		(60	)		50.67		(62	)		50.16
Adjustment to estimate of performance share units to be earned		(611	)		51.33		745			50.35		222			52.39
Shares outstanding, end of year		2,140		$	51.54		2,747		$	50.27		1,505		$	49.77

          As of December 31, 2010, there was $35 million of unrecognized stock-based compensation cost related to nonvested stock awards, which is expected to be recognized over a weighted average period of 1.7 years. Total fair value of shares vested was $41.2 million, $16.4 million and $8.4 million for the years ended December 31, 2010, 2009 and 2008, respectively. The amount of unrecognized stock-based compensation cost is subject to change based on revisions, if any, to management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that will be earned at the end of the performance periods.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          For the years ended December 31, 2010, 2009 and 2008, stock-based compensation expense totaled $54 million, $75 million and $71 million, respectively. Income tax benefits related to stock-based compensation expense totaled $21 million, $29 million and $28 million for the years ended December 31, 2010, 2009 and 2008, respectively.

          Employee Stock Purchase Plan

          Under the Company’s Employee Stock Purchase Plan (“ESPP”), which was approved by the Company’s shareholders at the 2006 Annual Meeting of Shareholders, substantially all employees can elect to have up to 10% of their annual wages withheld to purchase Quest Diagnostics common stock. The purchase price of the stock is 85% of the market price of the Company’s common stock on the last business day of each calendar month. Under the ESPP, the maximum number of shares of Quest Diagnostics common stock which may be purchased by eligible employees is 5 million. Approximately 464, 445 and 436 thousand shares of common stock were purchased by eligible employees in 2010, 2009 and 2008, respectively.

          Defined Contribution Plans

          The Company maintains qualified defined contribution plans covering substantially all of its employees, and matches employee contributions up to a maximum of 6%. The Company’s expense for contributions to its defined contribution plans aggregated $79 million, $82 million and $78 million for 2010, 2009 and 2008, respectively.

          Supplemental Deferred Compensation Plans

          The Company’s supplemental deferred compensation plan is an unfunded, non-qualified plan that provides for certain management and highly compensated employees to defer up to 50% of their salary in excess of their defined contribution plan limits and for certain eligible employees, up to 95% of their variable incentive compensation. The Company matches employee contributions up to a maximum of 6%. The compensation deferred under this plan, together with Company matching amounts, are credited with earnings or losses measured by the mirrored rate of return on investments elected by plan participants. Each plan participant is fully vested in all deferred compensation, Company match and earnings credited to their account. The amounts accrued under this plan were $39 million and $34 million at December 31, 2010 and 2009, respectively. Although the Company is currently contributing all participant deferrals and matching amounts to a trust, the funds in the trust, totaling $39 million and $34 million at December 31, 2010 and 2009, respectively, are general assets of the Company and are subject to any claims of the Company’s creditors.

          The Company also offers certain employees the opportunity to participate in a non-qualified deferred compensation program. Eligible participants are allowed to defer up to 20 thousand dollars of eligible compensation per year. The Company matches employee contributions equal to 25%, up to a maximum of 5 thousand dollars per plan year. A participant’s deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. Each participant is fully vested in their deferred compensation and vest in Company matching contributions over a four-year period at 25% per year. The amounts accrued under this plan were $23 million and $20 million at December 31, 2010 and 2009, respectively. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program’s liability. The cash surrender value of such life insurance policies was $20 million and $16 million at December 31, 2010 and 2009, respectively.

          For the years ended December 31, 2010, 2009 and 2008, the Company’s expense for matching contributions to these plans was $1.6 million, $0.8 million and $1.0 million, respectively.

14. RELATED PARTY TRANSACTIONS

          At December 31, 2010, GSK beneficially owned approximately 18% of the outstanding shares of Quest Diagnostics common stock. On January 31, 2011, the Company agreed to repurchase from SB Holdings Capital Inc., an affiliate of GSK, approximately one-half of GSK’s ownership interest in the Company, or 15.4 million shares of the Company’s common stock. In a separate transaction on January 31, 2011, GSK agreed to sell in an underwritten offering to the public, its remaining ownership interest in the Company, or 15.4 million shares of the Company’s common stock. Subsequent to these transactions, GSK no longer beneficially owns any shares of Quest Diagnostics common stock. See Note 18 for further details.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          Quest Diagnostics is the primary provider of testing to support GSK’s clinical trials testing requirements under a worldwide agreement (the “Clinical Trials Agreement”). Net revenues, primarily derived under the Clinical Trials Agreement were $63 million, $72 million and $71 million for 2010, 2009 and 2008, respectively. At December 31, 2010 and 2009, accounts receivable due from GSK were $15.7 million and $17.3 million, respectively.

          During 2009, the Company paid SmithKline Beecham approximately $10 million related to the realization of certain pre-acquisition net loss carryforwards that were payable to SmithKline Beecham pursuant to a tax indemnification arrangement. Amounts due to GSK at December 31, 2010 and 2009 were not material.

15. COMMITMENTS AND CONTINGENCIES

          Letter of Credit Lines and Contractual Obligations

          The Company has a line of credit with a financial institution totaling $85 million for the issuance of letters of credit (the “Letter of Credit Line”). The Letter of Credit Line, which is renewed annually, matures on November 19, 2011 and is guaranteed by the Subsidiary Guarantors.

          In support of its risk management program, to ensure the Company’s performance or payment to third parties, $63 million in letters of credit were outstanding at December 31, 2010. The letters of credit primarily represent collateral for current and future automobile liability and workers’ compensation loss payments. In addition, $6 million of bank guarantees were outstanding at December 31, 2010 in support of certain foreign operations.

          Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect at December 31, 2010 are as follows:

Year ending December 31,
2011	$	174,094
2012		127,333
2013		90,606
2014		64,856
2015		47,796
2016 and thereafter		140,673
Minimum lease payments		645,358
Noncancelable sub-lease income		(4,708	)
Net minimum lease payments	$	640,650

          Operating lease rental expense for 2010, 2009 and 2008 aggregated $196 million, $189 million and $190 million, respectively. Rent expense associated with operating leases that include scheduled rent increases and tenant incentives, such as rent holidays, is recorded on a straight-line basis over the term of the lease.

          The Company has certain noncancelable commitments to purchase products or services from various suppliers, mainly for consulting and other service agreements, and standing orders to purchase reagents and other laboratory supplies. At December 31, 2010, the approximate total future purchase commitments are $92 million, of which $49 million are expected to be incurred in 2011, $33 million are expected to be incurred in 2012 through 2013 and the balance thereafter.

          Contingent Lease Obligations

          The Company remains subject to contingent obligations under certain real estate leases that were entered into by certain predecessor companies of a subsidiary prior to the Company’s acquisition of the subsidiary. While over the course of many years, the title to the properties and interest in the subject leases have been transferred to third parties and the subject leases have been amended several times by such third parties, the lessors have not formally released the subsidiary predecessor companies from their original obligations under the leases and therefore remain contingently liable in the event of default. The remaining terms of the lease obligations and the Company’s corresponding indemnifications range from 13 to 37 years. The lease payments under certain leases are subject to market value adjustments and contingent rental payments and therefore, the total contingent obligations

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

under the leases cannot be precisely determined but are likely to total several hundred million dollars. A claim against the Company would be made only upon the current lessee’s default and after a series of claims and corresponding defaults by third parties that precede the Company in the order of liability. The Company also has certain indemnification rights from other parties to recover losses in the event of default on the lease obligations. The Company believes that the likelihood of its performance under these contingent obligations is remote and no liability has been recorded for any potential payments under the contingent lease obligations.

          Legal Matters

          The Company is involved in various legal proceedings. Some of the proceedings against the Company involve claims that are substantial in amount.

          In 2006 and 2008, the Company and several of its subsidiaries received subpoenas from the California Attorney General’s Office seeking documents relating to the Company’s billings to MediCal, the California Medicaid program. The Company cooperated with the government’s requests. Subsequently, the State of California intervened as plaintiff in a civil lawsuit, California ex rel. Hunter Laboratories, LLC v. Quest Diagnostics Incorporated, et al. (the “California Lawsuit”), filed in California Superior Court against a number of clinical laboratories, including the Company and several of its subsidiaries. The complaint was originally filed by a competitor laboratory in California under the whistleblower provisions of the California False Claims Act. The complaint was unsealed on March 20, 2009.

          The complaint alleges that, among other things, the Company overcharged MediCal for testing services and violated the California False Claims Act. Violations of this statute and related regulations could lead to an injunction, fines or penalties, and exclusion from MediCal, as well as claims by third parties.

          In the third quarter of 2010, the California Department of Health Care Services (the “Department”) conducted an audit of the Company’s billing to MediCal. The Department contends that the Company’s billings are not consistent with applicable California regulations, as currently interpreted by the Department. While the Company believes it is in compliance in all material respects with California requirements applicable to billing for clinical laboratory testing, the Company entered into an interim agreement under which it has agreed to temporarily suspend billing MediCal for a period of up to six months through March 1, 2011, during which it continues to provide services. If the California Lawsuit is not resolved by March 1, 2011, the Company and the Department have agreed to negotiate in good faith the terms of a further agreement. The Company has continued to recognize revenue from MediCal for services provided in accordance with its interpretation of California regulations related to billing for clinical laboratory testing. An unfavorable outcome of the California Lawsuit could, among other consequences noted above, result in reduced reimbursement from the MediCal program. Revenue from the MediCal program in 2010 was approximately $66 million. At December 31, 2010, amounts due from MediCal totaled approximately $25 million, including those amounts related to services performed during the temporary suspension of billing under the interim agreement described above.

          The Company has been engaged in discussions in an attempt to resolve the matters described above. During the fourth quarter of 2010, the Company reached an understanding, which was highly conditioned, to settle these matters pursuant to which the Company would pay $241 million. Conditions included, but were not limited to, reaching an agreement regarding the manner in which the Company’s future billings would be treated by the Department. However, as of this date, the Company has been unable to reach an agreement to settle these matters, and no assurance can be given that an agreement will be reached. If the Company cannot resolve these matters through these discussions, it will continue to vigorously defend itself, and will pursue any available collateral actions to enforce its rights, if necessary. Based on the current facts and circumstances, a liability, if any, is not determinable at this time. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company’s financial condition, the outcome may be material to the Company’s results of operations or cash flows in the period in which the impact of such matters is determined or paid.

          In 2005, the Company received a subpoena from the U.S. Department of Health and Human Services, Office of Inspector General, seeking business records including records regarding the Company’s relationship with health maintenance organizations, independent physician associations, group purchasing organizations, and preferred provider

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

organizations relating back to 1995. The Company has cooperated with the investigation. Subsequently, in November 2009, the U.S. District Court for the Southern District of New York partially unsealed a civil complaint, U.S. ex rel. Fair Laboratory Practices Associates v. Quest Diagnostics Incorporated, filed against the Company under the whistleblower provisions of the federal False Claims Act. The complaint alleges, among other things, violations of the federal Anti-Kickback Statute and the federal False Claims Act in connection with the Company’s pricing of laboratory services. The complaint seeks damages for alleged false claims associated with laboratory tests reimbursed by government payors, treble damages and civil penalties.

          In June 2009, a shareholder plaintiff filed a purported derivative action in the Superior Court of New Jersey, Morris County, on behalf of the Company against certain present and former directors and officers of the Company based on, among other things, their alleged breaches of fiduciary duties in connection with the manufacture, marketing, sale and billing related to certain test kits manufactured by NID. The complaint includes claims for, among other things, breach of fiduciary duty and waste of corporate assets and seeks, among other things, damages and remission of compensation received by the individual defendants. The Company filed a motion to dismiss the complaint on June 30, 2010. The motion was granted, and the time for an appeal has expired.

          In April 2010, a putative class action was filed against the Company and NID in the U.S. District Court for the Eastern District of New York on behalf of entities that allegedly purchased or paid for certain of NID’s test kits. The complaint alleges that certain of NID’s test kits were defective and that defendants, among other things, violated RICO and state consumer protection laws. The complaint alleges an unspecified amount of damages.

          In August 2010, a shareholder derivative action was filed in the Superior Court of New Jersey, Morris County, on behalf of the Company against the directors and certain present officers of the Company. The complaint alleges that the defendants breached their fiduciary duties in connection with, among other things, alleged overcharges by the Company to MediCal for testing services, and seeks unspecified compensatory damages and equitable relief.

          In November 2010, a putative class action was filed against the Company and certain present and former officers of the Company in the Superior Court of New Jersey, Essex County, on behalf of the Company’s sales people nationwide who were over forty years old and who either resigned or were terminated after being placed on a performance improvement plan. The complaint alleges that the defendants’ conduct violates the New Jersey Law Against Discrimination, and seeks, among other things, unspecified damages. The defendants removed the complaint to the United States District Court for the District of New Jersey.

          In addition, the Company and certain of its subsidiaries have received subpoenas from state agencies in five states and from the Office of Inspector General of the U.S. Department of Health and Human Services which seek documents relating to the Company’s billing practices. The Company is cooperating with the requests.

          The federal or state governments may bring claims based on new theories as to the Company’s practices which management believes to be in compliance with law. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of certain pending individual or class action lawsuits, and has received several subpoenas, related to billing practices filed under the qui tam provisions of the Civil False Claims Act and/or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other “whistleblowers” as to which the Company cannot determine the extent of any potential liability.

          Several of these matters are in their early stages of development and involve responding to and cooperating with various government investigations and related subpoenas. While the Company believes that at least a reasonable possibility exists that losses may have been incurred, based on the nature and status of the investigations, the losses are either currently not probable or a range of loss cannot be reasonably estimated.

          Management has established reserves in accordance with generally accepted accounting principles for the matters discussed above. Such reserves totaled approximately $10 million as of December 31, 2010. Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company’s financial condition, the outcome may be material to the Company’s results of operations or cash flows in the period in which the impact of such matters is determined or paid.

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company’s client base and reputation. The Company maintains various liability insurance coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. The Company’s insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. Reserves for such matters, including those associated with both asserted and incurred but not reported claims, are established by considering actuarially determined losses based upon the Company’s historical and projected loss experience. Such reserves totaled approximately $130 million and $135 million as of December 31, 2010 and 2009, respectively. Management believes that established reserves and present insurance coverage are sufficient to cover currently estimated exposures. Management cannot predict the outcome of any claims made against the Company. Although management does not anticipate that the ultimate outcome of any such proceedings or claims will have a material adverse effect on the Company’s financial condition, the outcome may be material to the Company’s results of operations or cash flows in the period in which the impact of such claims is determined or paid.

16. DISCONTINUED OPERATIONS

          During the third quarter of 2006, the Company completed its wind down of NID, a test kit manufacturing subsidiary, and classified the operations of NID as discontinued operations. Results of operations for NID have been reported as discontinued operations in the accompanying consolidated statements of operations and related disclosures for all periods presented.

          During the third quarter of 2007, the government and the Company began settlement discussions with respect to the government’s investigation involving NID and the Company. Based on the status of settlement discussions, during 2007 the Company established a reserve, in accordance with generally accepted accounting principles, reflected in discontinued operations, of $241 million in connection with these claims.

          During the third quarter of 2008, the Company and NID reached an agreement in principle with the United States Attorney’s Office to settle the federal government investigation involving NID and the Company regarding NID test kits and tests performed using those test kits. As a result of the agreement in principle in 2008, the Company recorded charges of $75 million in discontinued operations to increase its reserve for the settlement and related matters.

          On April 15, 2009, the Company finalized the resolution of the federal government investigation related to NID and entered into a final settlement agreement with the federal government. In the second quarter of 2009, the Company paid $268 million to settle the civil allegations. The Company also entered into a five-year corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services. In addition, NID pled guilty to a single count of felony misbranding and paid a $40 million fine. These second quarter payments totaling $308 million, which had been previously reserved, were funded out of cash on-hand and available credit facilities. During the third quarter of 2009, the Company finalized separate settlement agreements with certain states and paid approximately $6 million, which had been previously reserved for.

          Summarized financial information for the discontinued operations of NID is set forth below:

	2010			2009			2008
Net revenues	$	—		$	—		$	—
Loss from discontinued operations before income taxes		(22	)		(2,361	)		(79,582	)
Income tax (expense) benefit		(1,765	)		1,125			28,888
Loss from discontinued operations, net of taxes	$	(1,787	)	$	(1,236	)	$	(50,694	)

          The remaining balance sheet information related to NID was not material at December 31, 2010 and 2009.

F-34

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

17. BUSINESS SEGMENT INFORMATION

          Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is generally performed on whole blood, serum, plasma and other body fluids, such as urine, and specimens such as microbiology samples. Anatomic pathology services are principally for the detection of cancer and are performed on tissues, such as biopsies, and other samples, such as human cells. Customers of the clinical testing business include patients, physicians, hospitals, employers, governmental institutions and other commercial clinical laboratories. The clinical testing business accounted for greater than 90% of net revenues from continuing operations in 2010, 2009 and 2008.

          All other operating segments include the Company’s non-clinical testing businesses and consist of its risk assessment services, clinical trials testing, healthcare information technology, and diagnostics products businesses. The Company’s risk assessment services business provides underwriting support services to the life insurance industry including teleunderwriting, specimen collection and paramedical examinations, laboratory testing, medical record retrieval, case management, motor vehicle reports, telephone inspections, prescription histories and credit checks. The Company’s clinical trials testing business provides clinical testing performed in connection with clinical research trials on new drugs, vaccines and certain medical devices. The Company’s healthcare information technology business is a developer and integrator of clinical connectivity and data management solutions for healthcare organizations, physicians and clinicians that can help improve patient care and medical practice. The Company’s diagnostics products business manufactures and markets products that enable healthcare professionals to make healthcare diagnoses, including products for point-of-care testing for the professional market.

          On April 19, 2006, the Company decided to discontinue NID’s operations and results of operations for NID have been classified as discontinued operations for all years presented (see Note 16).

          At December 31, 2010, substantially all of the Company’s services are provided within the United States, and substantially all of the Company’s assets are located within the United States.

          The following table is a summary of segment information for the years ended December 31, 2010, 2009 and 2008. Segment asset information is not presented since it is not used by the chief operating decision maker at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income for the segment. General management and administrative corporate expenses, including amortization of intangible assets, are included in general corporate expenses below. The accounting policies of the segments are the same as those of the Company as set forth in Note 2.

F-35

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

	2010			2009			2008
Net revenues:
Clinical testing business	$	6,738,604		$	6,824,149		$	6,613,101
All other operating segments		630,321			631,094			636,346
Total net revenues	$	7,368,925		$	7,455,243		$	7,249,447
Operating earnings (loss):
Clinical testing business	$	1,424,173		$	1,491,131		$	1,318,904
All other operating segments		44,314			59,862			56,677
General corporate expenses		(172,952	)		(191,882	)		(153,205	)
Total operating income		1,295,535			1,359,111			1,222,376
Non-operating expenses, net		(111,200	)		(131,179	)		(171,719	)
Income from continuing operations before income taxes		1,184,335			1,227,932			1,050,657
Income tax expense		425,531			460,474			386,768
Income from continuing operations		758,804			767,458			663,889
Loss from discontinued operations, net of taxes		(1,787	)		(1,236	)		(50,694	)
Net income		757,017			766,222			613,195
Less: Net income attributable to noncontrolling interests		36,123			37,111			31,705
Net income attributable to Quest Diagnostics	$	720,894		$	729,111		$	581,490
	2010			2009			2008
Depreciation and amortization:
Clinical testing business	$	194,655		$	200,905		$	208,115
All other operating segments		17,457			17,337			18,414
General corporate		41,852			38,445			38,064
Total depreciation and amortization	$	253,964		$	256,687		$	264,593
Capital expenditures:
Clinical testing business	$	166,445		$	136,248		$	178,505
All other operating segments		29,803			23,592			22,891
General corporate		9,152			7,088			11,285
Total capital expenditures	$	205,400		$	166,928		$	212,681

18. SUBSEQUENT EVENTS

          In January 2011, the Company’s Board of Directors authorized $750 million of additional share repurchases, bringing the total available under the share repurchase authorizations, which have no set expiration or termination date, to $1 billion.

          On January 31, 2011, the Company agreed to repurchase from SB Holdings Capital Inc., an affiliate of GSK, approximately one-half of GSK’s ownership interest in the Company, or 15.4 million shares of the Company’s common stock at a purchase price of $54.30 per share for $835 million (the “Repurchase”). The Company funded the Repurchase, which closed on February 4, 2011, with $260 million of cash on-hand, $500 million of borrowings under its Secured Receivables Credit Facility and $75 million of borrowings under its Credit Facility. Subsequent to the Repurchase, the Company’s remaining share repurchase authorization totaled $165 million.

F-36

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

          In a separate transaction on January 31, 2011, GSK agreed to sell in an underwritten offering to the public, its remaining ownership interest in the Company, or 15.4 million shares of the Company’s common stock (the “Offering”). The Company did not sell any shares of common stock in the Offering, which closed on February 4, 2011, and did not receive any of the proceeds. Subsequent to the Repurchase and the Offering, GSK no longer beneficially owns any shares of Quest Diagnostics common stock.

19. SUMMARIZED FINANCIAL INFORMATION

          The Company’s Senior Notes due 2011, Senior Notes due 2015, Senior Notes due 2017, Senior Notes due 2020, Senior Notes due 2037 and Senior Notes due 2040 are fully and unconditionally guaranteed, jointly and severally, by the Subsidiary Guarantors. With the exception of Quest Diagnostics Receivables Incorporated (see paragraph below), the non-guarantor subsidiaries are primarily foreign and less than wholly-owned subsidiaries.

          In conjunction with the Company’s Secured Receivables Credit Facility, the Company maintains a wholly-owned non-guarantor subsidiary, Quest Diagnostics Receivables Incorporated (“QDRI”). The Company and certain of its Subsidiary Guarantors transfer certain domestic receivables to QDRI. QDRI utilizes the transferred receivables to collateralize borrowings under the Company’s Secured Receivables Credit Facility. The Company and the Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash collections principally to purchase new receivables from the Company and the Subsidiary Guarantors.

          The following condensed consolidating financial data illustrates the composition of the combined guarantors. Investments in subsidiaries are accounted for by the parent using the equity method for purposes of the supplemental consolidating presentation. Earnings (losses) of subsidiaries are therefore reflected in the parent’s investment accounts and earnings. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.

F-37

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Balance Sheet December 31, 2010
	Parent		Subsidiary Guarantors		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	392,525	$	928	$	55,848		$	—		$	449,301
Accounts receivable, net		15,913		135,417		693,969			—			845,299
Other current assets		55,723		165,099		96,183			(6,188	)		310,817
Total current assets		464,161		301,444		846,000			(6,188	)		1,605,417
Property, plant and equipment, net		179,624		616,114		38,638			—			834,376
Goodwill and intangible assets, net		155,596		5,279,371		463,376			—			5,898,343
Intercompany receivable (payable)		84,107		231,268		(315,375	)		—			—
Investment in subsidiaries		6,195,557		—		—			(6,195,557	)		—
Other assets		227,822		10,090		48,319			(96,737	)		189,494
Total assets	$	7,306,867	$	6,438,287	$	1,080,958		$	(6,298,482	)	$	8,527,630
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	623,610	$	190,334	$	57,516		$	(6,188	)	$	865,272
Current portion of long-term debt		203,659		144,004		1,333			—			348,996
Total current liabilities		827,269		334,338		58,849			(6,188	)		1,214,268
Long-term debt		2,295,709		19,342		326,109			—			2,641,160
Other liabilities		150,409		512,681		51,724			(96,737	)		618,077
Stockholders’ equity:
Quest Diagnostics stockholders’ equity		4,033,480		5,571,926		623,631			(6,195,557	)		4,033,480
Noncontrolling interests		—		—		20,645			—			20,645
Total stockholders’ equity		4,033,480		5,571,926		644,276			(6,195,557	)		4,054,125
Total liabilities and stockholders’ equity	$	7,306,867	$	6,438,287	$	1,080,958		$	(6,298,482	)	$	8,527,630

F-38

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Balance Sheet December 31, 2009
	Parent		Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	464,958	$	17,457		$	51,841		$	—		$	534,256
Accounts receivable, net		3,461		156,102			667,780			—			827,343
Other current assets		64,354		169,233			99,109			(14,870	)		317,826
Total current assets		532,773		342,792			818,730			(14,870	)		1,679,425
Property, plant and equipment, net		181,790		607,951			36,205			—			825,946
Goodwill and intangible assets, net		153,145		5,308,433			446,031			—			5,907,609
Intercompany receivable (payable)		471,421		(137,227	)		(334,194	)		—			—
Investment in subsidiaries		5,790,333		—			—			(5,790,333	)		—
Other assets		194,990		11,428			49,970			(105,725	)		150,663
Total assets	$	7,324,452	$	6,133,377		$	1,016,742		$	(5,910,928	)	$	8,563,643
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	641,964	$	239,417		$	22,194		$	(14,870	)	$	888,705
Current portion of long-term debt		165,661		2,436			2,410			—			170,507
Total current liabilities		807,625		241,853			24,604			(14,870	)		1,059,212
Long-term debt		2,430,806		146,556			359,430			—			2,936,792
Other liabilities		96,382		513,987			51,531			(105,725	)		556,175
Stockholders’ equity:
Quest Diagnostics stockholders’ equity		3,989,639		5,230,981			559,352			(5,790,333	)		3,989,639
Noncontrolling interests		—		—			21,825			—			21,825
Total stockholders’ equity		3,989,639		5,230,981			581,177			(5,790,333	)		4,011,464
Total liabilities and stockholders’ equity	$	7,324,452	$	6,133,377		$	1,016,742		$	(5,910,928	)	$	8,563,643

F-39

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Operations For the Year Ended December 31, 2010
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net revenues	$	841,637		$	6,065,086		$	744,798	$	(282,596	)	$	7,368,925
Operating costs and expenses:
Cost of services		511,886			3,550,726			254,635		—			4,317,247
Selling, general and administrative		111,530			1,245,050			380,861		(29,768	)		1,707,673
Amortization of intangible assets		967			30,412			7,842		—			39,221
Royalty (income) expense		(414,185	)		414,185			—		—			—
Other operating expense, net		7,691			1,056			502		—			9,249
Total operating costs and expenses		217,889			5,241,429			643,840		(29,768	)		6,073,390
Operating income		623,748			823,657			100,958		(252,828	)		1,295,535
Non-operating (expense) income, net		(134,080	)		(232,908	)		2,960		252,828			(111,200	)
Income from continuing operations before taxes		489,668			590,749			103,918		—			1,184,335
Income tax expense		164,176			233,091			28,264		—			425,531
Income from continuing operations		325,492			357,658			75,654		—			758,804
(Loss) income from discontinued operations, net of taxes		—			(16,713	)		14,926		—			(1,787	)
Equity earnings from subsidiaries		395,402			—			—		(395,402	)		—
Net income		720,894			340,945			90,580		(395,402	)		757,017
Less: Net income attributable to noncontrolling interests		—			—			36,123		—			36,123
Net income attributable to Quest Diagnostics	$	720,894		$	340,945		$	54,457	$	(395,402	)	$	720,894

F-40

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Operations For the Year Ended December 31, 2009
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net revenues	$	877,940		$	6,140,346		$	767,481	$	(330,524	)	$	7,455,243
Operating costs and expenses:
Cost of services		518,958			3,550,414			252,103		—			4,321,475
Selling, general and administrative		171,724			1,232,366			373,542		(30,014	)		1,747,618
Amortization of intangible assets		72			30,218			6,772		—			37,062
Royalty (income) expense		(405,393	)		405,393			—		—			—
Other operating (income) expense, net		(13,017	)		(521	)		3,515		—			(10,023	)
Total operating costs and expenses		272,344			5,217,870			635,932		(30,014	)		6,096,132
Operating income		605,596			922,476			131,549		(300,510	)		1,359,111
Non-operating (expense) income, net		(172,522	)		(274,924	)		15,757		300,510			(131,179	)
Income from continuing operations before taxes		433,074			647,552			147,306		—			1,227,932
Income tax expense		163,846			252,220			44,408		—			460,474
Income from continuing operations		269,228			395,332			102,898		—			767,458
Loss from discontinued operations, net of taxes		—			(1,236	)		—		—			(1,236	)
Equity earnings from subsidiaries		459,883			—			—		(459,883	)		—
Net income		729,111			394,096			102,898		(459,883	)		766,222
Less: Net income attributable to noncontrolling interests		—			—			37,111		—			37,111
Net income attributable to Quest Diagnostics	$	729,111		$	394,096		$	65,787	$	(459,883	)	$	729,111

F-41

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Operations For the Year Ended December 31, 2008
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	829,484		$	5,999,552		$	653,183		$	(232,772	)	$	7,249,447
Operating costs and expenses:
Cost of services		486,922			3,527,559			241,675			—			4,256,156
Selling, general and administrative		191,583			1,234,815			334,772			(24,236	)		1,736,934
Amortization of intangible assets		268			30,857			6,168			—			37,293
Royalty (income) expense		(424,404	)		424,404			—			—			—
Other operating expense (income), net		404			(511	)		(3,205	)		—			(3,312	)
Total operating costs and expenses		254,773			5,217,124			579,410			(24,236	)		6,027,071
Operating income		574,711			782,428			73,773			(208,536	)		1,222,376
Non-operating (expense) income, net		(188,720	)		(198,595	)		7,060			208,536			(171,719	)
Income from continuing operations before taxes		385,991			583,833			80,833			—			1,050,657
Income tax expense		130,746			237,119			18,903			—			386,768
Income from continuing operations		255,245			346,714			61,930			—			663,889
(Loss) income from discontinued operations, net of taxes		—			(55,511	)		4,817			—			(50,694	)
Equity earnings from subsidiaries		326,245			—			—			(326,245	)		—
Net income		581,490			291,203			66,747			(326,245	)		613,195
Less: Net income attributable to noncontrolling interests		—			—			31,705			—			31,705
Net income attributable to Quest Diagnostics	$	581,490		$	291,203		$	35,042		$	(326,245	)	$	581,490

F-42

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2010
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	720,894		$	340,945		$	90,580		$	(395,402	)	$	757,017
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		49,310			188,705			15,949			—			253,964
Provision for doubtful accounts		5,164			55,240			231,333			—			291,737
Other, net		(352,975	)		13,547			1,158			395,402			57,132
Changes in operating assets and liabilities		450,897			(474,476	)		(218,224	)		—			(241,803	)
Net cash provided by operating activities		873,290			123,961			120,796			—			1,118,047
Net cash used in investing activities		(120	)		(144,863	)		(7,725	)		(63,802	)		(216,510	)
Net cash (used in) provided by financing activities		(945,603	)		4,373			(109,064	)		63,802			(986,492	)
Net change in cash and cash equivalents		(72,433	)		(16,529	)		4,007			—			(84,955	)
Cash and cash equivalents, beginning of year		464,958			17,457			51,841			—			534,256
Cash and cash equivalents, end of year	$	392,525		$	928		$	55,848		$	—		$	449,301

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2009
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	729,111		$	394,096		$	102,898		$	(459,883	)	$	766,222
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		54,627			185,743			16,317			—			256,687
Provision for doubtful accounts		5,986			68,089			246,899			—			320,974
Other, net		(381,358	)		96,546			7,267			459,883			182,338
Changes in operating assets and liabilities		228,809			(559,602	)		(198,010	)		—			(528,803	)
Net cash provided by operating activities		637,175			184,872			175,371			—			997,418
Net cash (used in) provided by investing activities		(15,549	)		(160,259	)		14,372			(34,468	)		(195,904	)
Net cash used in financing activities		(375,233	)		(13,871	)		(166,568	)		34,468			(521,204	)
Net change in cash and cash equivalents		246,393			10,742			23,175			—			280,310
Cash and cash equivalents, beginning of year		218,565			6,715			28,666			—			253,946
Cash and cash equivalents, end of year	$	464,958		$	17,457		$	51,841		$	—		$	534,256

F-43

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2008
	Parent			Subsidiary Guarantors			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	581,490		$	291,203		$	66,747		$	(326,245	)	$	613,195
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		53,116			193,975			17,502			—			264,593
Provision for doubtful accounts		11,261			106,804			208,163			—			326,228
Provision for special charges		—			72,650			—			—			72,650
Other, net		(279,394	)		56,698			(21,067	)		326,245			82,482
Changes in operating assets and liabilities		462,768			(470,560	)		(288,307	)		—			(296,099	)
Net cash provided by (used in) operating activities		829,241			250,770			(16,962	)		—			1,063,049
Net cash (used in) provided by investing activities		(144,149	)		(149,004	)		14,137			80,133			(198,883	)
Net cash used in financing activities		(578,137	)		(109,898	)		(9,646	)		(80,133	)		(777,814	)
Net change in cash and cash equivalents		106,955			(8,132	)		(12,471	)		—			86,352
Cash and cash equivalents, beginning of year		111,610			14,847			41,137			—			167,594
Cash and cash equivalents, end of year	$	218,565		$	6,715		$	28,666		$	—		$	253,946

F-44

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
Quarterly Operating Results (unaudited)
(in thousands, except per share data)

2010 (a)	First Quarter				Second Quarter			Third Quarter				Fourth Quarter				Total Year
Net revenues	$	1,805,503		(b)	$	1,874,727		$	1,864,655			$	1,824,040			$	7,368,925
Gross profit		739,130		(b)		795,756			773,190				743,602				3,051,678
Income from continuing operations		171,205		(b) (c)		204,142			208,116		(d)		175,341		(e)		758,804
Loss from discontinued operations, net of taxes		(52	)			(266	)		(360	)			(1,109	)			(1,787	)
Net income		171,153				203,876			207,756				174,232				757,017
Less: Net income attributable to noncontrolling interests		8,705				9,261			9,681				8,476				36,123
Net income attributable to Quest Diagnostics	$	162,448			$	194,615		$	198,075			$	165,756			$	720,894
Amounts attributable to Quest Diagnostics’ stockholders:
Income from continuing operations	$	162,500			$	194,881		$	198,435			$	166,865			$	722,681
Loss from discontinued operations, net of taxes		(52	)			(266	)		(360	)			(1,109	)			(1,787	)
Net income	$	162,448			$	194,615		$	198,075			$	165,756			$	720,894
Earnings per share attributable to Quest Diagnostics’ stockholders – basic:
Income from continuing operations	$	0.90			$	1.08		$	1.14			$	0.97			$	4.09
Loss from discontinued operations		—				—			—				(0.01	)			(0.01	)
Net income	$	0.90			$	1.08		$	1.14			$	0.96			$	4.08
Earnings per share attributable to Quest Diagnostics’ stockholders – diluted:
Income from continuing operations	$	0.89			$	1.07		$	1.13			$	0.97			$	4.06
Loss from discontinued operations		—				—			—				(0.01	)			(0.01	)
Net income	$	0.89			$	1.07		$	1.13			$	0.96			$	4.05

F-45

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
Quarterly Operating Results (unaudited) – Continued
(in thousands, except per share data)

2009 (a)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter				Total Year
Net revenues	$	1,808,006		$	1,901,818		$	1,897,146		$	1,848,273			$	7,455,243
Gross profit		754,517			801,606			799,611			778,034				3,133,768
Income from continuing operations		177,327			198,281	(f) (g)		201,092	(h)		190,758		(i)		767,458
(Loss) income from discontinued operations, net of taxes		(1,671	)		88			543			(196	)			(1,236	)
Net income		175,656			198,369			201,635			190,562				766,222
Less: Net income attributable to noncontrolling interests		8,554			10,169			9,416			8,972				37,111
Net income attributable to Quest Diagnostics	$	167,102		$	188,200		$	192,219		$	181,590			$	729,111
Amounts attributable to Quest Diagnostics’ stockholders:
Income from continuing operations	$	168,773		$	188,112		$	191,676		$	181,786			$	730,347
(Loss) income from discontinued operations, net of taxes		(1,671	)		88			543			(196	)			(1,236	)
Net income	$	167,102		$	188,200		$	192,219		$	181,590			$	729,111
Earnings per share attributable to Quest Diagnostics’ stockholders – basic:
Income from continuing operations	$	0.89		$	1.01		$	1.03		$	0.98			$	3.92
Loss from discontinued operations		(0.01	)		—			—			—				(0.01	)
Net income	$	0.88		$	1.01		$	1.03		$	0.98			$	3.91
Earnings per share attributable to Quest Diagnostics’ stockholders – diluted:
Income from continuing operations	$	0.89		$	1.00		$	1.02		$	0.97			$	3.88
Loss from discontinued operations		(0.01	)		—			—			—				(0.01	)
Net income	$	0.88		$	1.00		$	1.02		$	0.97			$	3.87

(a)	During the third quarter of 2006, the Company completed its wind down of NID and classified the operations of NID as discontinued operations. Results of operations have been prepared to report the results of NID as discontinued operations for all periods presented (see Note 16).
(b)	Management estimates the impact of severe weather in the first quarter of 2010 adversely affected the comparison of net revenues and operating income to the prior year by approximately $19 million and $14 million, respectively.
(c)	In the first quarter of 2010, the Company recorded $17.3 million of charges, primarily related to workforce reductions.
(d)	Includes income tax benefits of $14.4 million, primarily associated with favorable resolutions of certain tax contingencies.
(e)	In the fourth quarter of 2010, the Company recorded $9.6 million of charges, primarily related to workforce reductions. In additon, the Company recorded $9.6 million of charges associated with the settlement of employee litigation. Results for the fourth quarter of 2010 also included income tax benefits of $9.1 million, primarily associated with favorable resolutions of certain tax contingencies.
(f)	In the second quarter of 2009, the Company recorded a $15.5 million gain associated with an insurance settlement for storm-related losses.
(g)	In the second quarter of 2009, the Company recorded $6.3 million in charges related to the early extinguishment of debt, primarily related to the June 2009 Debt Tender Offer (see Note 10) and a $7.0 million charge related to the write-off of an investment (see Note 2).
(h)	In the third quarter of 2009, the Company recorded $1.3 million in charges related to the early extinguishment of debt, primarily related to the repayment of the remaining principal outstanding under the certain debentures due 2034 (see Note 10).
(i)	In the fourth quarter of 2009, the Company recorded $12.8 million in charges related to the early extinguishment of debt, primarily related to the November 2009 Debt Tender Offer (see Note 10). In addition, results for the fourth quarter of 2009 included $7.0 million associated with certain discrete tax benefits.

F-46

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION ACCOUNTS AND RESERVES
(in thousands)

	Balance at 1-1-10		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-10
Year ended December 31, 2010 Doubtful accounts and allowances	$	238,206	$	291,737	$	301,026	(a)	$	228,917
	Balance at 1-1-09		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-09
Year ended December 31, 2009 Doubtful accounts and allowances	$	261,334	$	320,974	$	344,102	(a)	$	238,206
	Balance at 1-1-08		Provision for Doubtful Accounts		Net Deductions and Other			Balance at 12-31-08
Year ended December 31, 2008 Doubtful accounts and allowances	$	250,067	$	326,228	$	314,961	(a)	$	261,334

(a) Primarily represents the write-off of accounts receivable, net of recoveries.

F-47

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

EXHIBITS TO FORM 10-K
For the fiscal year ended December 31, 2010
Commission File No. 001-12215

QUEST DIAGNOSTICS INCORPORATED

Exhibit Number	Description
3.1	Restated Certificate of Incorporation (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: May 31, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
3.2	Amendment of the Restated Certificate of Incorporation (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference)
3.3	Amended and Restated By-Laws of the Registrant (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: October 7, 2010) and incorporated herein by reference)
4.1	Form of 7.5% Senior Note due 2011, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.2	Form of 5.125% Exchange Senior Note due 2010, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 1, 2005) and incorporated herein by reference) (Commission File Number 001-12215)
4.3	Form of 5.45% Exchange Senior Note due 2015, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 1, 2005) and incorporated herein by reference) (Commission File Number 001-12215)
4.4	Form of 6.40% Senior Note due 2017, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.5	Form of 6.95% Senior Note due 2037, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.6	Form 4.750% Senior Note due 2020, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on form 8-K (Date of Report: November 17, 2009) and incorporated herein by reference)
4.7	Form 5.750% Senior Note due 2040, including the form of guarantee endorsed thereon (filed as an Exhibit to the Company’s current report on form 8-K (Date of Report: November 17, 2009) and incorporated herein by reference)
4.8	Indenture dated as of June 27, 2001, among the Company, the Subsidiary Guarantors, and the Trustee (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.9	First Supplemental Indenture, dated as of June 27, 2001, among the Company, the Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 27, 2001) and incorporated herein by reference) (Commission File Number 001-12215)
4.10	Second Supplemental Indenture, dated as of November 26, 2001, among the Company, the Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 26, 2001) and incorporated herein by reference) (Commission File Number 001-12215)

E-1

Exhibit Number	Description
4.11	Third Supplemental Indenture, dated as of April 4, 2002, among the Company, the Additional Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: April 1, 2002) and incorporated herein by reference) (Commission File Number 001-12215)
4.12	Fourth Supplemental Indenture dated as of March 19, 2003, among Unilab Corporation (f/k/a Quest Diagnostics Newco Incorporated), the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference) (Commission File Number 001-12215)
4.13	Fifth Supplemental Indenture dated as of April 16, 2004, among Unilab Acquisition Corporation (d/b/a FNA Clinics of America), the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference) (Commission File Number 001-12215)
4.14	Sixth Supplemental Indenture dated as of October 31, 2005, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: October 31, 2005) and incorporated herein by reference) (Commission File Number 001-12215)
4.15	Seventh Supplemental Indenture dated as of November 21, 2005, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 21, 2005) and incorporated herein by reference) (Commission File Number 001-12215)
4.16	Eighth Supplemental Indenture dated as of July 31, 2006, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: July 31, 2006) and incorporated herein by reference) (Commission File Number 001-12215)
4.17	Ninth Supplemental Indenture dated as of September 30, 2006, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: September 30, 2006) and incorporated herein by reference) (Commission File Number 001-12215)
4.18	Tenth Supplemental Indenture dated as of June 22, 2007, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.19	Eleventh Supplemental Indenture dated as of June 22, 2007, among the Company, The Bank of New York, and the Additional Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.20	Twelfth Supplemental Indenture dated as of June 25, 2007, among the Company, The Bank of New York, and the Additional Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: June 19, 2007) and incorporated herein by reference)
4.21	Thirteenth Supplemental Indenture dated as of November 17, 2009, among the Company, The Bank of New York, and the Subsidiary Guarantors (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: November 17, 2009) and incorporated herein by reference)
10.1	Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)

E-2

Exhibit Number	Description
10.2	Amendment No. 1 dated as of December 12, 2008 to Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo- Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.3	Amendment No. 2 dated as of December 11, 2009 to Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008 among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo- Mitsubishi, UFJ, Ltd., New York Branch, as Administrative Agent (filed as an Exhibit to the Company’s 2009 annual report on Form 10-K and incorporated herein by reference)
10.4*	Amendment No. 3 dated as of December 10, 2010 to Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008 among Quest Diagnostics Receivables Inc., as Borrower, the Company, as Servicer, each of the lenders party thereto and The Bank of Tokyo- Mitsubishi, UFJ, Ltd., New York Branch as Administrative Agent
10.5	Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008, among the Company, its subsidiaries who are or become a seller thereunder, as the Sellers, and Quest Diagnostics Receivables Inc., as the Buyer (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.6	Credit Agreement dated as of May 31, 2007, among the Company, certain subsidiary guarantors of the Company, the lenders party thereto, Bank of America, N.A., as Administrative Agent, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Barclays Bank Plc, JPMorgan Chase Bank, N.A., Merrill Lynch Bank, USA and Wachovia Bank, National Association, as co-Documentation Agents, and Morgan Stanley Senior Funding, Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Book Runners (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: May 31, 2007) and incorporated herein by reference)
10.7	Stock and Asset Purchase Agreement dated as of February 9, 1999, among SmithKline Beecham plc, SmithKline Beecham Corporation and the Company (the “Stock and Asset Purchase Agreement”) (filed as Appendix A of the Company’s Definitive Proxy Statement dated May 11, 1999 and incorporated herein by reference) (Commission File Number 001-12215)
10.8	Amendment No. 1 dated August 6, 1999, to the Stock and Asset Purchase Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: August 16, 1999) and incorporated herein by reference) (Commission File Number 001-12215)
10.9	Stockholders Agreement dated as of August 16, 1999, between SmithKline Beecham plc and the Company (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: August 16, 1999) and incorporated herein by reference) (Commission File Number 001-12215)
10.10	Amendment dated as of June 26, 2009 to Stockholders Agreement between SmithKline Beechman plc and the Company (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009 and incorporated herein by reference)
10.11	Amendment dated as of May 6, 2010 to Stockholders Agreement between SmithKline Beechman plc and the Company (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference)
10.12	Amended and Restated Employee Stock Purchase Plan (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.13‡	1996 Employee Equity Participation Program, as amended (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by reference) (Commission File Number 001-12215)

E-3

Exhibit Number	Description
10.14‡	Equity Award Agreement dated as of March 4, 2008 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)
10.15‡	Equity Award Agreement (CEO) dated as of March 4, 2008 between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference)
10.16‡	Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan as amended April 15, 2009 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference)
10.17‡	Form of Non-Qualified Stock Option Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of report: February 15, 2006) and incorporated herein by reference)
10.18‡	Form of Non-Qualified Stock Option Agreement dated as of February 12, 2007 (filed as an Exhibit to the Company’s 2006 annual report on Form 10-K and incorporated herein by reference)
10.19‡	Non-Qualified Stock Option Agreement, dated as of February 12, 2007, between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.20‡	Form of Performance Share Agreement (2007-2009 Performance Period) (filed as an Exhibit to the Company’s 2006 annual report on Form 10-K and incorporated herein by reference)
10.21‡	Form of Performance Share Agreement (filed as an Exhibit to the Company’s current report on Form 8-K (Date of report: February 15, 2006) and incorporated herein by reference) (Commission File Number 001-12215)
10.22‡	Performance Share Award Agreement, dated as of February 12, 2007, between the Company and Surya N. Mohapatra (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.23‡	Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors as amended April 15, 2009 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference)
10.24‡	Amended and Restated Deferred Compensation Plan For Directors as amended October 31, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.25‡	Amended and Restated Employment Agreement between the Company and Surya N. Mohapatra dated as of November 7, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.26‡	Supplemental Deferred Compensation Plan (Post 2004) amended December 30, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.27‡	Supplemental Deferred Compensation Plan (Pre-2005) amended December 30, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.28‡	Quest Diagnostics Incorporated Supplemental Executive Retirement Plan, as amended effective November 7, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.29‡	Senior Management Incentive Plan (filed as Appendix A to the Company’s Definitive Proxy Statement dated March 28, 2003) and incorporated herein by reference) (Commission File Number 001-12215)
10.30*‡	Amended and Restated Quest Diagnostics Incorporated Executive Officer Severance Plan

E-4

Exhibit Number	Description
10.31‡	AmeriPath Group Holdings, Inc. 2006 Stock Option and Restricted Stock Purchase Plan (filed as an Exhibit to the Company’s registration statement on Form S-8 and incorporated herein by reference) (Commission File Number 333-143889)
10.32‡	Profit Sharing Plan of Quest Diagnostics Incorporated, Amended and Restated as of January 1, 2007 (filed as an Exhibit to the Company’s 2007 annual report on Form 10-K and incorporated herein by reference)
10.33*‡	Amended and Restated 401(k) Savings Plan of Quest Diagnostics Incorporated, as of December 21, 2010
10.34‡	Amendment to the Profit Sharing Plan of Quest Diagnostics Incorporated dated as of December 23, 2008 (filed as an Exhibit to the Company’s 2008 annual report on Form 10-K and incorporated herein by reference)
10.35‡	Amendment No. 2 to the Profit Sharing Plan of Quest Diagnostics Incorporated as of December 22, 2009 (filed as an Exhibit to the Company’s 2009 annual report on Form 10-K and incorporated herein by reference)
10.36*‡	Amendment No. 3 to the Profit Sharing Plan of Quest Diagnostics Incorporated dated November 19, 2010
10.37*‡	Amendment No. 4 to the Profit Sharing Plan of Quest Diagnostics Incorporated dated December 21, 2010
10.38‡	Amendment dated as of August 17, 2007 to the AmeriPath Group Holdings, Inc. 2006 Stock Option Plan and Restricted Stock Purchase Plan (filed as an Exhibit to the Company’s 2007 Annual Report on Form 10-K and incorporated herein by reference)
10.39	Confirmation between Quest Diagnostics Incorporated and Barclays Bank plc acting through its agent Barclays Capital, Inc. dated January 28, 2010 (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report: January 28, 2010) and incorporated herein by reference)
11.1	Statement re: Computation of Earnings Per Common Share (the calculation of per share earnings is in Part II, Item 8, Note 3 to the consolidated financial statements (Earnings Per Share) and is omitted in accordance with Item 601(b)(11) of Regulation S-K)
21.1*	Subsidiaries of Quest Diagnostics Incorporated
23.1*	Consent of PricewaterhouseCoopers LLP
24.1*	Power of Attorney (included on signature page)
31.1*	Rule 13a-14(a) Certification of Chief Executive Officer
31.2*	Rule 13a-14(a) Certification of Chief Financial Officer
32.1**	Section 1350 Certification of Chief Executive Officer
32.2**	Section 1350 Certification of Chief Financial Officer
101.INS*	dgx-20101231.xml
101.SCH*	dgx-20101231.xsd
101.CAL*	dgx-20101231_cal.xml
101.DEF*	dgx-20101231_def.xml
101.LAB*	dgx-20101231_lab.xml
101.PRE*	dgx-20101231_pre.xml
101.REF*	dgx-20101231_ref.xml

E-5

Exhibit Number	Description
*	Filed herewith.
**	Furnished herewith.
‡	Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K.

E-6

EX-10.4

Ex-10.4

AMENDMENT NO. 3 TO FOURTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

                    THIS AMENDMENT NO. 3 TO FOURTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this “Amendment”) is entered into as of December 10, 2010, by and among:

                    (1) QUEST DIAGNOSTICS RECEIVABLES INC., a Delaware corporation (together with its successors and permitted assigns, the “Borrower”),

                    (2) QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation (together with its successors, “Quest Diagnostics”), as initial servicer (in such capacity, together with any successor servicer or sub-servicer, the “Servicer”),

                    (3) ATLANTIC ASSET SECURITIZATION LLC, a Delaware limited liability company, as assignee of Variable Funding Capital Company LLC (“VFCC”) (together with its successors, “Atlantic” and together with VFCC, the “Conduits”), and CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK NEW YORK BRANCH (f/k/a Calyon New York Branch), in its capacity as a Liquidity Bank to Atlantic and assignee of Wachovia Bank, National Association (together with its successors, “Credit Agricole” and together with Atlantic, the “Atlantic Group”),

                    (4) GOTHAM FUNDING CORPORATION, a Delaware corporation (together with its successors, “Gotham” and together with Atlantic, the “Conduits”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, in its capacity as a Liquidity Bank to Gotham (together with its successors, “BTMU” and, together with Gotham, the “Gotham Group”),

                    (5) CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK NEW YORK BRANCH formerly known as Calyon New York Branch, in its capacity as agent for the Atlantic Group (together with its successors in such capacity, the “Atlantic Agent” or a “Co-Agent”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, in its capacity as agent for the Gotham Group (together with its successors in such capacity, the “Gotham Agent” or a “Co-Agent”), and

                    (6) THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as administrative agent for the Atlantic Group, the Gotham Group and the Co-Agents (in such capacity, together with any successors thereto in such capacity, the “Administrative Agent” and together with each of the Co-Agents, the “Agents”),

with respect to that certain Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008, by and among the parties hereto (as heretofore amended, the “Existing Agreement” which, as amended hereby, is hereinafter referred to as the “Agreement”).

                    Unless otherwise indicated, capitalized terms used in this Amendment are used with the meanings attributed thereto in the Existing Agreement.

W I T N E S S E T H :

          WHEREAS, the parties hereto desire to amend the Existing Agreement on the terms and subject to the conditions hereinafter set forth.

                    NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto hereby agree as follows:

                    1. Amendments to Existing Agreement.

                    1.1. All references to “Calyon New York Branch” in the Existing Agreement, and all references to “Calyon” in the Existing Agreement (whether alone, or as part of another defined term) are hereby replaced with references to “Credit Agricole Corporate and Investment Bank New York Branch” and “Credit Agricole,” respectively.

                    1.2. The definition in Annex A to the Existing Agreement of the term set forth below is hereby amended and restated in its entirety to read as follows:

          “Scheduled Termination Date” means as to each Liquidity Bank, the earlier to occur of December 9, 2011 and the date on which its Liquidity Commitment(s) terminate(s) in accordance with the Liquidity Agreement to which it is a party.

                    1.3 Section 6.1(o) to the Existing Agreement is hereby amended to delete Section 6.1(o)(iii) in its entirety.

          1.4 Section 7.3(d) to the Existing Agreement is hereby deleted in its entirety, and Section 7.3(d) is hereby amended and restated in its entirety to read as follows:

          (d) Change in Payment Instructions to Obligors. No Loan Party will after the Collateral Account has been established pursuant to Section 7.1(i), make any change in its instructions to Obligors regarding payments to be made to any Collection Account or Lockbox (except for a change in instructions solely for the purpose of directing Obligors to make such payments to another existing Collection Account or Lockbox, as applicable, and where such change is immaterial and does not adversely affect the interests of the Administrative Agent, on behalf of the Secured Parties, in any respect), unless (i) the Co-Agents shall have received prior written notice of such addition, termination or change and (ii) the Administrative Agent shall have received duly executed copies of appropriate Collection Account Agreements, in a form reasonably acceptable to the Administrative Agent with each new Collection Bank.

2

                    1.5 Section 14.2 to the Existing Agreement is hereby deleted in its entirety, and Section 14.2 is hereby amended and restated in its entirety to read as follows:

Section 14.2 Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication) and shall be personally delivered or sent by express mail or courier or by certified mail, postage prepaid, or by facsimile, to the intended party at such address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, (a) if personally delivered or sent by express mail or courier or if sent by certified mail, when received, and (b) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means.
	1.6 Schedule 6.1(o) is hereby deleted in its entirety.
	1.7 Schedule 14.2 is hereby deleted in its entirety.
	2. Representations.

                    2.1. Each of the Loan Parties represents and warrants to the Lenders and the Agents that it has duly authorized, executed and delivered this Amendment and that the Agreement constitutes, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability).

                    2.2. Each of the Loan Parties further represents and warrants to the Lenders and the Agents that each of its representations and warranties set forth in Section 6.1 of the Agreement is true and correct as of the date hereof and that no Event of Default or Unmatured Default exists as of the date hereof and is continuing.

                    3. Conditions Precedent. This Amendment shall become effective as of the date first above written upon satisfaction of the following conditions precedent:

            (a) receipt by the Administrative Agent of counterparts of this Amendment, duly executed by each of the parties hereto,

            (b) receipt by the Administrative Agent of Amendment No. 2 to Springing Blocked Account Agreement dated December 10, 2010 by and among the Borrower, PNC Bank, National Association (“PNC”), Quest Diagnostics, Quest Diagnostics Clinical Laboratories, Inc. and the Administrative Agent, duly executed by the parties thereto,

            (c) receipt by the Administrative Agent of Amendment No. 2 to Collection Account Control Agreement dated December 10, 2010 by and among the Borrower, Fifth Third Bank (“Fifth Third”), Quest Diagnostics, and the Administrative Agent, duly executed by the parties thereto,

3

          (d) receipt by each of the Atlantic Agent and the Gotham Agent of an amended and restated version of its Group’s Fee Letter, duly executed by the parties thereto, together with payment the upfront fee specified in the applicable Fee Letter, and

          (e) receipt by the Administrative Agent of the Letter Agreement dated December 10, 2010 by and among each of the parties hereto and duly executed by each of the parties thereto.

                    4. Miscellaneous.

                    4.1. Except as expressly amended hereby, the Existing Agreement shall remain unaltered and in full force and effect, and each of the parties hereby ratifies and confirms the Agreement and each of the other Transaction Documents to which it is a party.

                    4.2. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.

                    4.3. EACH LOAN PARTY HEREBY ACKNOWLEDGES AND AGREES THAT:

                    4.3.1. IT IRREVOCABLY (i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT, AND (ii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF AN ACTION OR PROCEEDING IN SUCH COURTS.

                    4.3.2. TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THE AGREEMENT.

                    4.4. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Amendment.

<Signature pages follow>

4

                    IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

QUEST DIAGNOSTICS RECEIVABLES INC.
By:	/s/ Robert F. O’Keef
	Name: Robert F. O’Keef
	Title:   Vice President and Treasurer
QUEST DIAGNOSTICS INCORPORATED
By:	/s/ Robert F. O’Keef
	Name: /s/ Robert F. O’Keef
	Title:   Vice President and Treasurer

[Signature Page to Amendment No. 3 to Fourth Amended and Restated Credit and Security Agreement]

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, INDIVIDUALLY
By:	/s/ T. Kobayashi
	Name: T. Kobayashi
	Title:   Authorized Signatory
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, AS GOTHAM AGENT
By:
	Name:
	Title:
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
By:
	Name:
	Title:

[Signature Page to Amendment No. 3 to Fourth Amended and Restated Credit and Security Agreement]

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, INDIVIDUALLY
By:
	Name:
	Title:
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, AS GOTHAM AGENT
By:	/s/ Aditya Reddy
	Name: Aditya Reddy
	Title:   Senior Vice President
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
By:	/s/ Aditya Reddy
	Name: Aditya Reddy
	Title:   Senior Vice President

[Signature Page to Amendment No. 3 to Fourth Amended and Restated Credit and Security Agreement]

GOTHAM FUNDING CORPORATION
By:	/s/ Frank B. Bilotta
	Name: Frank B. Bilotta
	Title:   President

[Signature Page to Amendment No. 3 to Fourth Amended and Restated Credit and Security Agreement]

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK NEW YORK BRANCH (formerly known as CALYON NEW YORK BRANCH), INDIVIDUALLY
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title:   Managing Director
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title:   Managing Director
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK NEW YORK BRANCH (formerly known as CALYON NEW YORK BRANCH), AS ATLANTIC AGENT
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title:   Managing Director
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title:   Managing Director
ATLANTIC ASSET SECURITIZATION LLC
By: CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK NEW YORK BRANCH (formerly known as CALYON NEW YORK BRANCH), AS ATTORNEY-IN-FACT
By:	/s/ Kostantina Kourmpetis
	Name: Kostantina Kourmpetis
	Title:   Managing Director
By:	/s/ Sam Pilcer
	Name: Sam Pilcer
	Title:   Managing Director

[Signature Page to Amendment No. 3 to Fourth Amended and Restated Credit and Security Agreement]

EX-10.30

Exhibit 10.30

AMENDED AND RESTATED QUEST DIAGNOSTICS INCORPORATED
EXECUTIVE OFFICER SEVERANCE PLAN

                    1. Purpose. The purpose of the Quest Diagnostics Incorporated Executive Officer Severance Plan (together with the attached schedules, appendices and exhibits, the “Plan”) is to secure the continued services of the executive officers of the Company and provide these executives with certain termination benefits in the event of a Qualifying Termination (as defined in Section 2) and to ensure their continued dedication to their duties in the event of any threat or occurrence of a Change in Control of the Company (as defined in Section 2).

                    2. Definitions. As used in this Plan, the following terms shall have the respective meanings set forth below:

                     (a) “Annual Performance Bonus” means the annual cash bonus awarded under the Company’s applicable incentive plans, as in effect from time to time (as of the date of adoption of this Plan the “Bonus” within the meaning of Section 5(a) of the Company’s Senior Management Incentive Plan, effective as of May 13, 2003 and under the Company’s Management Incentive Plan such plans referred to herein as the “Company Incentive Plan”).

                     (b) “Base Salary” means the Participant’s annual rate of base salary as in effect on the Date of Termination, provided, however, that Base Salary for the Termination Period shall mean the Participant’s highest annual rate of base salary during the twelve-month period immediately prior to the Participant’s Date of Termination.

                     (c) “Board” means the Board of Directors of the Company and, after a Change in Control, the “board of directors” of the surviving corporation. References herein to the Board include any committee or person to whom the Board has designated its authority.

                     (d) “Bonus Amount” means the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs, provided, however, that if the Participant’s Qualifying Termination is on account of Good Reason pursuant to a reduction in a Participant’s compensation or compensation opportunity under Section 2(k)(ii), “Bonus Amount” shall be the Participant’s target Annual Performance Bonus for the prior fiscal year if higher.

                     (e) “Cause” means (i) the willful and continued failure of the Participant to perform substantially his duties with the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness or any such failure subsequent to the Participant being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company) after a written demand for substantial performance is delivered to the Participant by or on behalf of the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his duties, (ii) the

willful engaging by the Participant in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates, (iii) the engaging by the Participant in conduct or misconduct that materially harms the reputation or financial position of the Company, (iv) the Participant (x) obstructs or impedes, (y) endeavors to influence, obstruct or impede or (z) fails to materially cooperate with, an Investigation, (v) the commission of a felony by the Participant or (vi) the Participant is found liable in any Securities and Exchange Commission or other civil or criminal securities law action.

                    For purposes of this paragraph (e), no act or failure to act by the Participant shall be considered “willful” unless done or omitted to be done by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, in accordance with authority duly given by the Board, based upon the advice of counsel for the Company (including counsel employed by the Company) shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company.

                    A Participant who is designated on Schedule A (and, after a Change in Control, a Participant who is designated on Schedule B) shall not be considered to have been terminated for Cause unless and until the Company has delivered to the Participant a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding the Participant from both the numerator and denominator if the Participant is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), (iv), (v), or (vi) has occurred and specifying the particulars thereof in detail.

                    Anything herein to the contrary notwithstanding, if, following a termination of the Participant’s employment by the Company for Cause based upon the conviction of the Participant for a felony, such conviction is overturned in a final determination on appeal, the Participant shall be entitled to the payments and the economic equivalent of the benefits the Participant would have received if his employment had been terminated by the Company without Cause.

                    (f) “Change in Control” means the occurrence of any one of the following events:

          (i) any person is or becomes a “beneficial owner” (as defined in Rule 13d 3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 40% of the total voting power of the Company’s

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then outstanding securities generally eligible to vote for the election of directors (the “Company Voting Securities”), provided, however, that any of the following acquisitions shall not be deemed to be a Change in Control: (1) by the Company or any subsidiary or affiliate, (2) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary or affiliate, (3) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (4) pursuant to a Non-Qualifying Transaction (as defined in paragraph (ii));

          (ii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries or affiliates that requires the approval of the Company’s stockholders whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:

          (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination,

          (B) no person (other than any employee benefit plan (or any related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of securities of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) representing 40% of the total voting power of the securities then outstanding generally eligible to vote for the election of directors of the Parent Corporation (or the Surviving Corporation), and

          (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s

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approval of the execution of the initial agreement providing for such Business Combination;

(Any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);

          (iii) individuals who, on the effective date of this Plan, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the effective date of this Plan, whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or

          (iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of a sale of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (other than pursuant to a Non-Qualifying Transaction).

                    Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 40% of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

                     (g) “Company” means Quest Diagnostics Incorporated, a Delaware corporation.

                     (h) “Date of Termination” means (i) the effective date on which the Participant’s employment by the Company terminates as specified in a prior written notice by the Company or the Participant, as the case may be, to the other, delivered

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pursuant to Section 12 or (ii) if the Participant’s employment by the Company terminates by reason of death, the date of death of the Participant.

                     (i) “Disability” shall have the same meaning ascribed to that term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

                     (j) “Equity Incentive Compensation” means all equity-based compensation (including stock options, stock appreciation rights, restricted stock and performance shares) awarded under the Company’s incentive plan(s), as in effect from time to time (as of the date of adoption of this Plan the Amended and Restated Employee Long-Term Incentive Plan).

                     (k) “Good Reason” means the occurrence of one or more of the following circumstances, without the Participant’s express written consent, and which circumstance(s) are not remedied by the Company within thirty (30) days of receipt of a written notice from the Participant describing in reasonable detail the Good Reason event that has occurred (which notice must be provided within ninety (90) days of the Participant’s obtaining knowledge of the event):

          (i) (A) any material change in the duties, responsibilities or status (including reporting responsibilities) of the Participant that is inconsistent in any material and adverse respect with the Participant’s position(s), duties, responsibilities or authority with the Company immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities); provided, however, that Good Reason shall not be deemed to occur upon a change in duties, responsibilities (other than reporting responsibilities) or status that is solely and directly a result of the Company no longer being a publicly traded entity and does not involve any other event set forth in this Section 2(k) or (B) a material and adverse change in the Participant’s titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in Control;

          (ii) a material reduction by the Company in the Participant’s aggregate rate of annual base salary, Annual Performance Bonus opportunity and Equity Incentive Compensation target opportunity (including any material and adverse change in the formula for such targets) as in effect immediately prior to such Change in Control;

          (iii) the Company’s requiring the Participant to be based at any office or location more than fifty (50) miles from the office where the Participant is located at the time of the Change in Control and as a result causing the

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Participant’s commute from his residence at the time of the Change in Control to the new location to increase by more than fifty (50) miles;

          (iv) the failure of the Company to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or fringe benefit plan in which the Participant is participating immediately prior to such Change in Control or the taking of any action by the Company, in each case which would materially adversely affect the Participant, unless the Participant is permitted to participate in other plans providing the Participant with materially equivalent benefits in the aggregate (at materially equivalent or lower cost with respect to welfare benefit plans); or

          (v) the failure of the Company to obtain the assumption of the Company’s obligations hereunder from any successor as contemplated in Section 11(b).

Notwithstanding the foregoing, an isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within thirty (30) days after receipt of notice thereof given by the Participant shall not constitute Good Reason. The Participant’s right to terminate employment for Good Reason shall not be affected by the Participant’s incapacities due to mental or physical illness and the Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason. The Participant may terminate his employment for a “Good Reason” event that is not reasonably remedied by the Company provided that the Participant shall have delivered a notice of termination within ninety (90) days after delivery of the notice describing the Good Reason event giving rise to such termination.

                    (l) “Investigation” means an investigation authorized by the Board, a self-regulatory organization empowered with self-regulatory responsibilities under federal or state laws or a governmental department or agency.

                     (m) “Participant” means an executive officer of the Company selected, from time to time, by the Board for participation in this Plan and who is designated on Schedule A or B at the applicable time but only if such executive has completed at least one year of continuous employment with the Company and its Subsidiaries at the applicable time (unless such one year employment requirement has been waived in writing by the Board).

                     (n) “Potential Change in Control” means the execution or entering into of any agreement by the Company the consummation of which can be expected to be a Change in Control.

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                    (o) “Qualifying Termination” means a termination of the Participant’s employment with the Company that occurs on or after January 1, 2008 (i) prior to a Change in Control, by the Company other than for Cause and (ii) after a Change in Control, by the Company other than for Cause or by the Participant for Good Reason. Termination of the Participant’s employment on account of death, Disability or Retirement shall not be treated as a Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after notice of termination for Good Reason or without Cause has been validly provided shall be deemed to be a Qualifying Termination.

                    (p) “Retirement” means the Participant’s voluntary termination of employment on or after he or she attains age 60 with five (5) years of service.

                    (q) “Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors (or members of any similar governing body) or in which the Company has the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation or dissolution.

                    (r) “Termination Period” means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control. Notwithstanding anything in this Plan to the contrary, if (i) the Participant’s employment is terminated prior to a Change in Control for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control; (ii) the Participant reasonably demonstrates that such termination (or Good Reason event) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control; and (iii) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur within six (6) months from the date of such termination, then for purposes of this Plan, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as a Change in Control. For purposes of determining the timing of payments and benefits to the Participant under Section 5, the date of the actual Change in Control shall be treated as the Participant’s Date of Termination under Section 2(h), and for purposes of determining the amount of payments and benefits owed to the Participant under Section 5, the date the Participant’s employment is actually terminated shall be treated as the Participant’s Date of Termination under Section 2(h).

                    3. Eligibility. (a) The Board shall determine in its sole discretion which executives of the Company shall be Participants in this Plan and whether a Participant shall be designated on Schedule A or B.

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                    (b) The Board may, in its sole discretion, remove any executive from Schedule A and add such executive to Schedule B but may not remove any executive from participation in this Plan entirely; provided, that a Participant who is designated on Schedule A as of immediately prior to a Change in Control may not be removed from such Schedule without his or her prior written consent within the two year period following a Change in Control.

                    (c) The Board may delegate its authority to determine which senior executives of the Company shall be Participants in this Plan, to designate the Participants on Schedule A or B and to remove a Participant from Schedule A to the Compensation Committee (or any successor committee) of the Board.

                    4. Payments Upon Termination of Employment Prior to a Change in Control. If the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Separation Agreement and Release in the form attached to this Plan as Exhibit A (the “Separation Agreement and Release”) which shall be provided to the Participant no later than two (2) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the fifty-fifth (55^th) day following the Date of Termination, the Company shall provide to the Participant:

          (a) A cash payment equal to the Participant’s Base Salary multiplied by either (i) 2.00 for a Participant designated on Schedule A or (ii) 1.00 for a Participant designated on Schedule B;

          (b) A cash payment equal to the Bonus Amount times (i) 2.00 for a Participant designated on Schedule A or (ii) 1.00 for a Participant designated on Schedule B;

          (c) For eighteen (18) months for a Participant designated on Schedule A or (ii) twelve (12) months for a Participant designated on Schedule B, following the Date of Termination, group medical and life insurance coverage to the Participant (and his eligible dependents), under the terms prevailing at the time immediately preceding the Date of Termination; the Company shall continue to provide such coverage on the same terms as provided by the Company to similarly situated executives; provided, that the Company shall cease to provide such coverage if the Participant obtains alternate employment and is eligible for substantially comparable group medical or life insurance coverage with such employer; provided further, that the Participant shall notify the Company within 10 days of securing such alternate employment; provided further, that in the event of the disability of the Participant, group medical coverage shall continue for a longer period consistent with the Consolidated Omnibus Budget Reconciliation

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Act of 1986 (“COBRA”) and, provided, further, to the extent that any plan does not permit continuation of the Participant’s or his eligible dependents’ participation throughout such period, the Company shall pay the Participant an amount, on an after-tax basis, equal to the Company’s cost of providing such benefits;

          (d) For one (1) year following the Date of Termination, the Participant will be entitled to receive executive outplacement assistance from Lee Hecht Harrison or an equivalent career placement firm at the Company’s expense and in accordance with the Company’s policies for similarly situated executives; and

          (e) A cash payment equal to any matching contributions made by the Company on behalf of the Participant to the Company’s 401(k) plan and the Company’s Supplemental Deferred Compensation Plan during the year preceding the Date of Termination.

                    The cash payments specified in paragraphs (a), (b), (c) and (e) of this Section 4 shall be paid no later than the sixtieth (60^th) day (or the next following business day if the sixtieth day is not a business day) following the Date of Termination, but may be made earlier provided that the Separation Agreement has been executed by the Participant and the revocation period thereunder has lapsed. Each such cash payment shall be deemed to be a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

                    5. Payments Upon Termination of Employment After a Change in Control. If during the Termination Period the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Separation Agreement and Release which shall be provided to the Participant no later than two (2) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the fifty-fifth (55^th) day following the Date of Termination, the Company shall provide to the Participant:

          (a) A cash payment equal to the result of multiplying the sum of the Participant’s Base Salary plus the Participant’s Bonus Amount by (i) either 3.00 for a Participant designated on Schedule A or (ii) 2.00 for a Participant designated on Schedule B; and

          (b) A cash payment equal to the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the fiscal

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year in which the Date of Termination occurred and the denominator of which is 365;

          (c) The benefits and payments specified in paragraphs (c), (d) and (e) of Section 4.

          (d) To the extent provided in Appendix A, if the Participant is subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), a gross-up payment in accordance with the provisions of Appendix A.

                    The cash payments specified in paragraphs (a), (b) and (c) of this Section 5 shall be paid no later than the sixtieth (60^th) day (or the next following business day if the sixtieth day is not a business day) following the Date of Termination, but may be made earlier provided that the Separation Agreement has been executed by the Participant and the revocation period thereunder has lapsed. Each such cash payment shall be deemed to be a separate payment for purposes of Section 409A of the Code.

                    6. Key Employees. It is the intent of the Company that no payments or benefits provided under this Plan shall be considered “non-qualified deferred compensation” within the meaning of Section 409A of the Code and the Plan shall be interpreted accordingly. If and to the extent that any payment or benefit is determined by the Company (a) to constitute “non-qualified deferred compensation” subject to Section 409A of the Code, (b) such payment or benefit is provided to a Participant who is a “specified employee” (within the meaning of Section 409A of the Code and as determined pursuant to procedures established by the Company) and (c) such payment or benefit must be delayed for six months from the Participant’s Date of Termination (or an earlier date) in order to comply with Section 409A(a)(2)(B)(i) of the Code and not cause the Participant to incur any additional tax under Section 409A of the Code, then the Company will delay making any such payment or providing such benefit until the expiration of such six month period. The Company shall set aside those payments that would have been made but for payment delay required by the preceding sentence in a trust that is in compliance with Rev. Proc. 92-64 which may, but need not be, the trust established under the Company’s Supplemental Deferred Compensation Plan; provided, however, that no payment will be made to the Rabbi Trust if it would be contrary to law or cause the Participant to incur additional tax under Section 409A.

                    7. Participant’s Obligations. The Participant agrees that:

          (a) Without the consent of the Company, the Participant will not terminate employment with the Company without giving 30 days prior notice to the Company, and during such 30-day period the Participant will assist the

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Company, as and to the extent reasonably requested by the Company, to effect an orderly transition of the Participant’s duties and responsibilities with the Company.
(b) In the event that the Participant has received any benefits from the Company under Section 4 of this Agreement, then, during the period of 36 months following the Date of Termination, the Participant, upon request by the Company:
	(i) Will consult with one or more of the executive officers concerning the business and affairs of the Company for not to exceed four hours in any month at times and places selected by the Participant as being convenient to him or her, all without compensation other than what is provided for in Section 4 of this Agreement; and
	(ii) Will testify as a witness on behalf of the Company in any legal proceedings involving the Company which arise out of events or circumstances that occurred or existed prior to the Date of Termination (except for any such proceedings relating to this Plan), without compensation other than what is provided for in Section 4 of this Agreement; provided, that all out-of-pocket expenses incurred by the Participant in connection with serving as a witness shall be paid by the Company.

                    The Participant shall not be required to perform the Participant’s obligations under this Section 7 if and so long as the Company is in default with respect to performance of any of its obligations under this Agreement.

                    8. Withholding Taxes. The Company may withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

                    9. Reimbursement of Expenses. Following a Change in Control, if any contest or dispute shall arise under this Plan involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant in connection with such contest or dispute (regardless of the result thereof), together with interest in an amount equal to the prime rate as reported in The Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue thirty (30) days from the date the Company

-11-

receives the Participant’s statement for such fees and expenses through the date of payment thereof, regardless of whether or not the Participant’s claim is upheld by a court of competent jurisdiction or an arbitration panel; provided, however, that the Participant shall be required to repay immediately any such amounts to the Company to the extent that a court or an arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced by the Participant in bad faith.

                    10. No Guarantee of Employment. Nothing in this Plan shall be deemed to entitle the Participant to continued employment with the Company or its Subsidiaries.

                    11. Successors; Binding Agreement. (a) This Plan shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Plan shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

                    (b) The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such Business Combination that constitutes a Change in Control, shall be a breach of this Plan and shall constitute Good Reason hereunder and shall entitle the Participant to compensation and other benefits from the Company in the same amount and on the same terms as the Participant would be entitled hereunder if the Participant’s employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if requested by a Participant.

                    (c) The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

                    12. Notice. (a) For purposes of this Plan, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed

-12-

to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:

                    If to the Participant: the address listed as the Participant’s address in the Company’s personnel files.

If to the Company:

Quest Diagnostics Incorporated
3 Giralda Farms
Madison, NJ 07071
Attention: General Counsel

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

                    (b) A written notice of the Participant’s Date of Termination by the Company or the Participant, as the case may be, to the other, shall (i) indicate the specific termination provision in this Plan relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated and (iii) specify the date of termination, which date shall be not less than fifteen (15) nor more than sixty (60) days after the giving of such notice; provided, however, that the Company may in its sole discretion accelerate such date to an earlier date or, alternatively, place the Participant on paid leave during such period. The failure by the Participant or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the Company hereunder or preclude the Participant or the Company from asserting such fact or circumstance in enforcing the Participant’s or the Company’s rights hereunder.

                    13. Full Settlement; Resolution of Disputes and Costs. (a) The Company’s obligation to make any payments provided for in this Plan and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to the Participant under any other severance or employment agreement between the Participant and the Company, and any severance plan of the Company. In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and, except as provided in the Separation Agreement and Release, such amounts shall not be reduced whether or not the Participant obtains other employment.

-13-

                    (b) Any dispute or controversy arising under or in connection with this Plan shall be settled exclusively by arbitration in New Jersey by three arbitrators in accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. One arbitrator shall be selected by the Company, the other by the Participant and the third jointly by these arbitrators (or if they are unable to agree within thirty (30) days of the commencement of arbitration the third arbitrator will be appointed by the AAA). Judgment may be entered on the arbitrators’ award in any court having jurisdiction. In the event of any such dispute or controversy arising during a Termination Period, the Company shall bear all costs and expenses arising in connection with any arbitration proceeding on the same terms as set forth in Section 9 of this Plan.

                    14. Employment with Subsidiaries. Employment with the Company for purposes of this Plan shall include employment with any Subsidiary.

                    15. Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Sections 4 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Plan) 5, 6, 8(c) and 10 shall survive the termination of this Plan.

                    16. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS PLAN SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS PLAN, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

                    17. Amendment and Termination. The Board may amend or terminate the Plan at any time; provided, however, that (i) Sections 3(b), 4(a) and 4(b) may not be amended in a manner which is materially adverse to any Participant then listed on Schedule A or B without such Participant’s written consent, (ii) during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control, the Plan (including, for the avoidance of doubt, any Schedules, Appendices and Exhibits) may not be amended or terminated by the Board in any manner which is materially adverse to any Participant then listed on Schedule A or B without such Participant’s written consent and (iii) any termination or amendments to the Plan (including, for the avoidance of doubt, any Schedules, Appendices and Exhibits) that are materially adverse to the interests of any Participant then listed on Schedule A or B, and that occur during the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on the termination of the agreement that

-14-

constituted the Potential Change in Control, shall be void unless consented to in writing by the affected Participant.

                    18. Interpretation and Administration. The Plan shall be administered by the Board. The Board may delegate any of its powers under the Plan to the Compensation Committee of the Board (or any successor committee). With respect to those Participants who are not subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Committee may delegate any of its powers under the Plan to the Chief Executive Officer of the Company. The Board, the Compensation Committee (or any successor committee) and the Chief Executive Officer (to the extent of the powers delegated to him) shall have the authority in its sole and absolute discretion to: (i) exercise all of the powers granted to it under this Plan; (ii) construe, interpret and implement this Plan; (iii) prescribe, amend and rescind rules and regulations relating to this Plan, including rules and regulations governing its own operations; (iv) make all determinations necessary or advisable in administering this Plan; (v) correct any defect, supply any omission and reconcile any inconsistency in this Plan; and (vi) amend this Plan to reflect changes in or interpretations of applicable law, rules or regulations. The determination of the Board on all matters relating to the Plan and any amounts payable thereunder shall be final, binding and conclusive on all parties; provided, however, that following a Change in Control, notwithstanding anything in this Plan to the contrary, any court, tribunal or arbitration panel that adjudicates any dispute, controversy or claim arising between a Participant and the Company, or any of their delegates or successors, in respect of a Participant’s Qualifying Termination, will apply a de novo standard of review to any determinations made by such person and such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding or conclusive on any party.

                    19. Claims and Appeals. Participants may submit claims for benefits by giving notice to the Company pursuant to Section 12 of this Plan. If a Participant believes that he or she has not received coverage or benefits to which he or she is entitled under the Plan, the Participant may notify the Board in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Board shall notify the applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions upon which the denial is based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Board, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated, by such other person or entity as may be designated by the Board for this purpose; (ii) review any Policy documents relevant to his or her claim; and (iii) submit issues and comments to the Board

-15-

or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant’s request for review setting forth the reasons for the decision and the Plan provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Board or its delegate receives the applicant’s request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 16 will be permitted at the sole discretion of the Board or its delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be deemed denied.

                    20. Type of Policy. This Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2520.104-24 of the Department of Labor Regulations, maintained primarily for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each case for a select group of management or highly compensated employees.

                    21. No Duplication of Benefits. Except as otherwise expressly provided pursuant to this Plan, this Plan shall be construed and administered in a manner which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other arrangement. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other arrangement, in effect as of his or her Date of Termination, that may duplicate the payments provided in Sections 4 or 5, as applicable, the Company is specifically empowered to reduce or eliminate the duplicative benefits provided for under the Plan. In taking such action, the Company will be guided by the principles that (1) such a Participant will otherwise be treated, for the purpose of the Sections specified above, no more or no less favorably than are other Participants who are not covered by such other plan, program, policy, individually negotiated agreement or other arrangement and (2) the provisions of such other plan, program, policy, individually negotiated agreement or other arrangement (including, but not limited to, a special individual pension, a special deferral account and/or a special equity based grant) which are not duplicative of the payments provided in Sections 4 or 5, as applicable, will not be considered in determining elimination and/or reductions in Plan benefits.

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                    22. Nonassignability. Benefits under the Plan may not be assigned by the Participant. The terms and conditions of the Plan shall be binding on the successors and assigns of the Company.

                    23. Effective Date. The Plan shall be effective as of May 3, 2006.

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Schedule A
Robert A. Hagemann	Senior Vice President and Chief Financial Officer
Joan E. Miller, Ph.D.	Senior Vice President for Pathology and Hospital Services
Michael E. Prevoznik	Senior Vice President and General Counsel
Wayne R. Simmons	Vice President, Operations

Schedule B
Jon R. Cohen, M.D.	Senior Vice President, Chief Medical Officer

Appendix A
Additional Reimbursement Payments by the Company –
Schedule A Participants ONLY

                    (a) Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Participant (whether pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Appendix A) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Participant an additional payment (a “Reimbursement Payment”) in an amount such that after payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an amount of the Reimbursement Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Reimbursement Payment, the Participant shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Reimbursement Payment is to be made and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Reimbursement Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

                    Notwithstanding the foregoing provisions of this Appendix A, if it shall be determined that the Participant is entitled to a Reimbursement Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is no more than 5% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code, then the cash payments payable to the Participant under this Plan shall be reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Reimbursement Payment shall be made to the Participant. The reduction of the cash payments payable hereunder, if applicable, shall be made by reducing the cash payments in the order in which they are written under Section 4 or 5, as applicable. For purposes of reducing the Payments to the Safe Harbor Cap, only the cash payments payable under this Plan (and no other Payments) shall be reduced. If the reduction of the cash payments payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no cash payments payable under this Plan shall be reduced pursuant to this provision.

                    (b) Subject to the provisions of Paragraph (a), all determinations required to be made under this Appendix A, including whether and when a

App. A-1

Reimbursement Payment is required, the amount of such Reimbursement Payment, the amount of any Option Redetermination (as defined below), the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “Determination”). For the avoidance of doubt, the Accounting Firm may use the Option Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Reimbursement Payment under this Appendix A with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by a Participant, it shall furnish the Participant with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on the Participant’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish the Participant with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and the Participant.

                    As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Reimbursement Payments which will not have been made by the Company should have been made (“Underpayment”) or Reimbursement Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event the amount of the Reimbursement Payment is less than the amount necessary to reimburse the Participant for the Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of the Participant (but in any event no later than by the end of the Participant’s taxable year next following the Participant’s taxable year in which the Underpayment of Excise Tax is remitted). In the event the amount of the

App. A-2

Reimbursement Payment exceeds the amount necessary to reimburse the Participant for the Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Participant shall cooperate, to the extent his or her expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. In the event that the Company makes a Reimbursement Payment to the Participant and subsequently the Company determines that the value of any accelerated vesting of stock options held by the Participant shall be redetermined within the context of Treasury Regulation §1.280G -1 Q/A 33 (the “Option Redetermination”), the Participant shall (i) file with the Internal Revenue Service an amended federal income tax return that claims a refund of the overpayment of the Excise Tax attributable to such Option Redetermination and (ii) promptly pay the refunded Excise Tax to the Company; provided that the Company shall pay on a current basis all reasonable professional fees incurred in the preparation of the Participant’s amended federal income tax return. If the Option Redetermination occurs in the same year that the Reimbursement Payment is included in the Participant’s taxable income, then in addition to returning the refund to the Company, the Participant will also promptly return to the Company any tax benefit realized by the return of such refund and the return of the additional tax benefit payment (all determinations pursuant to this sentence shall be made by the Accounting Firm). In the event that the cash payments payable to the Participant under this Plan were reduced pursuant to the second paragraph of Paragraph (a) and subsequently the Participant determines there has been an Option Redetermination that reduces the value of the Payments attributable to such options, the Company shall pay to the Participant (on the first business day of the calendar year following the year the Option Redetermination is made) any cash payments payable under this Plan that were not previously paid solely as a result of the second paragraph of Paragraph (a) up to the Safe Harbor Cap plus interest, from the date the Participant files the amended return as provided above, at the 3 month Treasury Bill rate.

App. A-3

Exhibit A

FORM OF SEPARATION AGREEMENT AND RELEASE
(HEREIN “AGREEMENT”)

                    Quest Diagnostics Incorporated (the “Company”) and _______________ (“Executive”) agree as follows:

                    1. Executive’s employment with the Company will terminate effective [Date].

                    2. Executive agrees to make himself reasonably available to the Company to respond to requests by the Company for information concerning litigation, regulatory inquiry or investigation, involving facts or events relating to the Company that may be within his knowledge. Executive will cooperate fully with the Company in connection with any and all future litigation or regulatory proceedings brought by or against the Company to the extent the Company reasonably deems Executive’s cooperation necessary. Executive will be entitled to reimbursement of reasonable out-of-pocket expenses (not including counsel fees) incurred in connection with fulfilling his obligations under this Section 2.

                    3. In consideration of Executive’s undertakings herein, the Company will pay an amount equal to $____________ in accordance with Section 4 of the Company’s Executive Severance Plan (the “Severance Plan”), less required deductions (including, but not limited to, federal, state and local tax withholdings) as separation/severance pay (the “Severance Payment”). The Severance Payment will be paid in accordance with the Severance Plan. Payment of the Severance Payment is contingent upon the execution of this Agreement by Executive and Executive’s compliance with all terms and conditions of this Agreement and the Severance Plan. Executive agrees that if this Agreement does not become effective, the Company shall not be required to make any further payments to Executive pursuant to this Agreement or the Severance Plan and shall be entitled to recover all payments already made by it (including interest thereon).

                    4. Executive understands and agrees that any amounts that Executive owes the Company, including any salary or other overpayments related to Executive’s employment with the Company, will be offset and deducted from Executive’s final paycheck from the Company. Executive specifically authorizes the Company to offset and deduct any such amounts from his final paycheck. Executive agrees and acknowledges that, to the extent the amount of Executive’s final paycheck is not sufficient to repay the full amount that Executive owes to the Company, if any, the full remaining amount owed to the Company, if any, will be offset and deducted from the amount of the Severance Payment. Executive specifically authorizes the Company to offset and deduct any such amounts from his Severance Payment.

Exh. A-1

                    5. Executive agrees that, after payment of Executive’s final paycheck on [Date] and the Severance Payment, Executive will have received all compensation and benefits that are due and owing to Executive by the Company, including but not limited to salary, vacation pay, bonus, commissions and incentive/override compensation but excluding any benefits or services provided pursuant to Sections 4(e) and 4(f) of the Severance Plan.

                    6. Executive represents that he has returned to the Company all property or information, including, without limitation, all reports, files, memos, plans, lists, or other records (whether electronically stored or not) belonging to the Company or its affiliates, including copies, extracts or other documents derived from such property or information. Executive will immediately forfeit all rights and benefits under this Agreement and the Severance Plan, including, without limitation, the right to receive any Severance Payment if Executive, directly or indirectly, at any time (i) discloses to any third party or entity any trade secrets or other proprietary or confidential information pertaining to the Company or any of its affiliates or uses such secrets or information without the prior written consent of the General Counsel of the Company or (ii) takes any actions or makes or publishes any statements, written or oral, or instigates, assists or participates in the making or publication of any such statements which libel, slander or disparage the Company or any of its past or present directors, officers or employees. Nothing in this Agreement shall prevent or prohibit Executive or the Company from responding to an order, subpoena, other legal process or regulatory inquiry directed to them or from providing information to or making a filing with a governmental or regulatory body. Executive agrees that upon learning of any order, subpoena or other legal process seeking information that would otherwise be prohibited from disclosure under this Agreement, he will promptly notify the Company, in writing, directed to the Company’s General Counsel. In the event disclosure is so required, Executive agrees not to oppose any action by the Company to seek or obtain a protective order or other appropriate remedy.

                    7. Executive agrees that Executive’s Employment and Confidentiality Agreement (the “Employment and Confidentiality Agreement”) shall continue to be in full force and effect, including but not limited to all non-competition and non-solicitation provisions contained therein.

                    8. Executive hereby represents that he has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its affiliates in connection with any matters relating, directly or indirectly, to his employment, and covenants and agrees not to file any such action, complaint or arbitration or commence any other judicial or arbitral proceedings against the Company or any of its affiliates with respect to events occurring prior to the termination of his employment with the Company or any affiliates thereof.

                    9. Effective on [Date], the Company will cease all health benefit coverage and other benefit coverage for Executive.

Exh. A-2

                    10. GENERAL RELEASE – Effective as of the Effective Date, and in return for the consideration set forth above, Executive agrees not to sue or file any action, claim, or lawsuit against the Company, agrees not to pursue, seek to recover or recover any alleged damages, seek to obtain or obtain any other form of relief or remedy with respect to, and cause the dismissal or withdrawal of, any lawsuit, action, claim, or charge against the Company, and Executive agrees to waive all claims and release and forever discharge the Company, its officers, directors, subsidiaries, affiliates, parents, attorneys, shareholders and employees from any claims, demands, actions, causes of action or liabilities for compensatory damages or any other relief or remedy, and obligations of any kind or nature whatsoever, based on any matter, cause or thing, relating in any way, directly or indirectly, to his employment, from the beginning of time through the Effective Date of this Agreement, whether known or unknown, fixed or contingent, liquidated or unliquidated, and whether arising from tort, statute, or contract, including, but not limited to, any claims arising under or pursuant to the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Rehabilitation Act, the Family and Medical Leave Act of 1993, the Occupational Safety & Health Act, the Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967 (“ADEA”), New York State Labor Law, New York State Human Rights Law, New York Human Rights Law, and any other state, federal, city, county or local statute, rule, regulation, ordinance or order, or the national or local law of any foreign country, any claim for future consideration for employment with the Company, any claims for attorneys’ fees and costs and any employment rights or entitlement law, and any claims for wrongful discharge, intentional infliction of emotional distress, defamation, libel or slander, payment of wages, outrageous behavior, breach of contract or any duty allegedly owed to Executive, discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or another unlawful criterion or circumstance, and any other theory of recovery. It is the intention of the parties to make this release as broad and as general as the law permits.

                    [Executive acknowledges that he is aware of, has read, has had explained to him by his attorneys, understands and expressly waives any and all rights he has or may have under Section 1542 of the California Civil Code, which provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him must have materially affected his or her settlement with the debtor.”]¹

¹ Include bracketed language for California employees.

Exh. A-3

                    11. Executive acknowledges that he may later discover facts different from or in addition to those which he knows or believes to be true now, and he agrees that, in such event, this Agreement shall nevertheless remain effective in all respects, notwithstanding such different or additional facts or the discovery of those facts.

                    12. This Agreement may not be introduced in any legal or administrative proceeding, or other similar forum, except one concerning a breach of this Agreement or the Severance Plan.

                    13. Executive acknowledges that Executive has made an independent investigation of the facts, and does not rely on any statement or representation of the Company in entering into this Agreement, other than those set forth herein.

                    14. Executive agrees that, without limiting the Company’s remedies, should he commence, continue, join in, or in any other manner attempt to assert any claim released in connection herewith, or otherwise violate in a material fashion any of the terms of this Agreement, the Company shall not be required to make any further payments to the Executive pursuant to this Agreement or the Severance Plan and shall be entitled to recover all payments already made by it (including interest thereon), in addition to all damages, attorneys’ fees and costs the Company incurs in connection with Executive’s breach of this Agreement. Executive further agrees that the Company shall be entitled to the repayments and recovery of damages described above without waiver of or prejudice to the release granted by him in connection with this Agreement, and that his violation or breach of any provision of this Agreement shall forever release and discharge the Company from the performance of its obligations arising from the Agreement.

                    15. Executive has been advised and acknowledges that he has been given forty-five (45) days to sign this Agreement, he has seven (7) days following his signing of this Agreement to revoke and cancel the terms and conditions contained herein, and the terms and conditions of this Agreement shall not become effective or enforceable until the revocation period has expired (the “Effective Date”).

                    16. Executive acknowledges that Executive has been advised hereby to consult with, and has consulted with, an attorney of his choice prior to signing this Agreement.

                    17. Executive acknowledges that Executive has fully read this Agreement, understands the contents of this Agreement, and agrees to its terms and conditions of his own free will, knowingly and voluntarily, and without any duress or coercion.

                    18. Executive understands that this Agreement includes a final general release, and that Executive can make no further claims against the Company or the persons listed in Section 10 of this Agreement relating in any way, directly or indirectly, to his employment. Executive also understands that this Agreement precludes Executive

Exh. A-4

from recovering any damages or other relief as a result of any lawsuit, grievance, charge or claim brought on Executive’s behalf against the Company or the persons listed in Section 10 of this Agreement.

                    19. Executive acknowledges that Executive is receiving adequate consideration (that is in addition to what Executive is otherwise entitled to) for signing this Agreement.

                    20. This Agreement and the Severance Plan constitute the complete understanding between Executive and the Company regarding the subject matter hereof and thereof. No other promises or agreements regarding the subject matter hereof and thereof will be binding unless signed by Executive and the Company.

                    21. Executive and the Company agree that all notices or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 9 of the Severance Plan.

                    22. Executive and the Company agree that any disputes relating to any matters covered under the terms of this Agreement shall be resolved in accordance with Section 10 of the Severance Plan.

                    23. By entering into this Agreement, the Company does not admit and specifically denies any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Agreement is being entered into solely for the purpose of amicably resolving all matters of any kind whatsoever between Executive and the Company.

                    24. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

                    25. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

                    26. Unless expressly specified elsewhere in this Agreement, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to the principles of conflict of law.

Exh. A-5

                    27. This Agreement may be executed in one or more counterparts.

Company	Executive
By:	By:
Date:	Date:

Exh. A-6

EX-10.33

Ex-10.33

401(k) SAVINGS PLAN OF
QUEST DIAGNOSTICS INCORPORATED

(Second Amendment and Restatement,
Effective as of January 1, 2010)

TABLE OF CONTENTS

			Page
ARTICLE I		DEFINITIONS	3
ARTICLE II		ELIGIBILITY AND PARTICIPATION	23
	2.1	Eligibility	23
	2.2	Participation	23
	2.3	Beneficiary Designation	24
ARTICLE III		CONTRIBUTIONS	26
	3.1	Employee Pre-Tax Contributions	26
	3.2	Employer Matching Contributions	31
	3.3	Discretionary Contributions	32
	3.4	Rollover Contributions	32
	3.5	Maximum Deductible Contribution	34
	3.6	Actual Deferral Percentage Test Safe Harbor	34
	3.7	Payment of Contributions to Trustee	35
	3.8	Employee After-Tax Contributions	36
	3.9	Actual Contribution Percentage Test Safe Harbor	36
	3.10	USERRA	36
	3.11	Corrective Contributions	39
ARTICLE IV		ALLOCATIONS TO ACCOUNTS	41
	4.1	Accounts	41
	4.2	Valuation of Accounts	41
	4.3	Notification of Account Balance	41
	4.4	Allocation of Employee Pre-Tax Contributions	42
	4.5	Allocation of Employer Matching Contributions	42
	4.6	Allocation of Discretionary Contributions and Forfeitures	42
	4.7	Maximum Additions	43
	4.8	Plan Aggregation and Disaggregation under Code Section 415.	47
ARTICLE V		DISTRIBUTIONS	50
	5.1	Normal Retirement	50
	5.2	Disability	50
	5.3	Death Before Retirement or Severance from Employment	50
	5.4	Death After Retirement or Severance from Employment	51
	5.5	Severance from Employment	52
	5.6	Method of Payment	56
	5.7	Cash-Outs; Consent	58
	5.8	Payment of Benefits	59
	5.9	Direct Rollovers	67

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	5.10	Payment to Alternate Payee under QDRO	70
	5.11	Distribution upon Severance from Employment	71
	5.12	Voluntary Direct Transfers	71
	5.13	Restrictions on Certain Distributions	72
ARTICLE VI		LOANS AND WITHDRAWALS	74
	6.1	Loans to Participants	74
	6.2	Hardship Withdrawals	77
	6.3	Non-Hardship Withdrawals	80
	6.4	Withdrawal of Dividends	80
	6.5	Certain Dividends	82
	6.6	Qualified Reservist Distribution	83
ARTICLE VII		TRUST FUND	84
	7.1	Contributions	84
	7.2	Trustee	84
	7.3	Investment Options	85
	7.4	Investment Direction by Participants	86
	7.5	Quest Diagnostics Incorporated Stock Fund	87
	7.6	Expenses of Plan and Trust	88
ARTICLE VIII		PLAN ADMINISTRATION	89
	8.1	General	89
	8.2	Quest Diagnostics	89
	8.3	Benefits Administration Committee; Delegation	90
	8.4	Organization and Operation of the Committee	92
	8.5	Employers: Indemnification and Information	94
	8.6	Claims for Benefits — Initial Review	95
	8.7	Denial of Benefits — Appeal Procedure	96
	8.8	Other Provisions relating to Claims for Benefits	97
	8.9	Records	97
ARTICLE IX		AMENDMENT AND TERMINATION OF THE PLAN; MERGERS AND TRANSFERS	99
	9.1	Amendment of the Plan	99
	9.2	Termination of the Plan	100
	9.3	Merged Plans; Transferred Funds	101
ARTICLE X		PROVISIONS RELATIVE TO EMPLOYERS INCLUDED IN PLAN	103
	10.1	Participation in the Plan by an Affiliate	103
	10.2	Participation in the Plan by other Organizations	105
	10.3	Service and Termination of Service	106

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ARTICLE XI		TOP HEAVY PROVISIONS	107
	11.1	Determination of Top Heavy Status	107
	11.2	Minimum Allocations	108
	11.3	Impact on Minimum Benefits where Employer Maintains Both Defined Benefit and Defined Contribution Plans	108
	11.4	Impact on Vesting	109
	11.5	Requirements Not Applicable	109
	11.6	Top-Heavy Definitions	110
ARTICLE XII		MISCELLANEOUS	112
	12.1	Governing Law	112
	12.2	Construction	112
	12.3	Participant’s Rights; Acquittance	112
	12.4	Spendthrift Clause	113
	12.5	Mistake of Fact	113
	12.6	Recovery of Overpayment	114
	12.7	Plan Corrections	114
	12.8	Consent to Plan Terms	115
	12.9	Facility of Payment; Uncashed Checks; Recipients Who Cannot Be Located.	115
	12.10	Income Tax Withholding	116
	12.11	Counterparts	116
	12.12	Writings and Electronic Communications	116
ARTICLE XIII		ADOPTION OF THE PLAN	118
APPENDIX A		PARTICIPATING EMPLOYERS	1
APPENDIX B		MERGED PLANS: SPECIAL RULES AND PROTECTED BENEFITS	1
APPENDIX C		TRANSFERRED SUB-ACCOUNTS	1
APPENDIX D		SPECIAL DISTRIBUTION PROVISIONS	1
APPENDIX E		AMERISAVE RULES AND DEFINITIONS	1

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INTRODUCTION

          AmeriPath, Inc. established the AmeriSave 401(k) Plan (the “Prior Plan”), effective as of January 1, 1994, for the benefit of employees eligible to participate therein. The predecessor to the Prior Plan was a tax-qualified money purchase pension plan. The Prior Plan was amended and restated from time to time thereafter to reflect certain regulatory provisions and design-based modifications. Pursuant to a merger transaction effective as of May 31, 2007, AmeriPath, Inc. became part of the Quest Diagnostics Incorporated controlled group and continued to maintain the Prior Plan.

          Effective as of January 1, 2009, (i) the Prior Plan was amended and restated in its entirety and renamed the 401(k) Savings Plan of Quest Diagnostics Incorporated (the “Plan”); and (ii) Quest Diagnostics Incorporated became the sponsor of the Plan. Further, also effective January 1, 2009, the Plan’s calculation of “Eligibility Service” and “Vesting Service” was changed from an hours of service counting methodology to an elapsed time methodology. In connection with this change of methodology, effective January 1, 2009 Years of Vesting Service are determined as provided herein. Accordingly, notwithstanding any other provision of the Plan to the contrary, a Participant’s vested interest in his Account under the Plan on and after January 1, 2009 will be not less than his vested interest in that Account on December 31, 2008.

          The Plan, as thereby amended and restated, (i) is hereby further amended and restated generally effective as of January 1, 2010, except as otherwise specified herein or as required by law, in order to make certain technical or clarifying amendments deemed necessary or appropriate to facilitate the administration, management or interpretation of the Plan and to conform the Plan thereto, or to qualify and maintain the Plan as a plan meeting the requirements of the Internal Revenue Code of 1986 and other applicable law; and (ii) continues to be

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maintained for the benefit of Eligible Employees of AmeriPath, Inc. and of the other Employers participating in the Plan.

          It is intended that the Plan continue to be tax-qualified under Code Sections 401(a) and 401(k) as a profit sharing plan under Code Section 401(a)(27) that includes an employee stock ownership plan under Code Sections 409 and 4975(e)(7) and a cash or deferred arrangement under Code Section 401(k). It also is intended that the Plan be an eligible individual account plan under ERISA Section 407(d)(3) and meet the requirements of ERISA Section 404(c), and that it be construed, maintained and administered as an “ERISA Section 404c plan” within the meaning of Department of Labor Regulation Section 2550.404(c) –1(b)(1).

          No provision of this Plan shall be construed to eliminate or reduce any early retirement benefit or subsidy that continues after retirement or optional form of benefit that existed under the Plan before this amendment and restatement, except to the extent permitted under Regulations §§1.401(a)-4 and 1.411(d)-4. Any provision of the Plan that restricted or limited withdrawals, loans or other distributions, or otherwise required separate accounting with respect to any portion of a Participant’s Account immediately prior to January 1, 2010, and the elimination of which would adversely affect the qualification of the Plan under Code Sections 401(a) and 401(k), shall continue in effect with respect to such portion of the Participant’s Account as if fully set forth in this Plan.

          Except as expressly provided herein, the provisions of the Plan as in effect immediately prior to January 1, 2010 remain in effect for those Participants who do not complete an Hour of Service after December 31, 2009 (and their Beneficiaries). The benefits and rights of a Participant who severs from employment (or his Beneficiary) will be determined in accordance with the terms of the Plan as in effect as of the date of such termination.

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ARTICLE I

DEFINITIONS

          As used herein, unless otherwise required by the context, the following words and phrases shall have the meanings indicated:

          Account – The aggregate, as applicable, of: (1) a Participant’s Employee Regular Pre-Tax Sub-Account, Employee Pre-Tax Catch-Up Sub-Account, Employer Matching Sub-Account, Merged Plan Sub-Account, Merged Prior Plan Sub-Account, Money Purchase Pension Plan Sub-Account, Prior Plan Employer Matching Sub-Account, Prior Plan Rollover Sub-Account, Qualified Nonelective Contribution Sub-Account, Rollover Sub-Account, Vested Quest Diagnostics Common Stock Dividend Sub-Account, Vested Money Purchase Pension Plan Dividend Sub-Account; (2) such other recordkeeping sub-accounts as the Participant may have pursuant to Appendix B or Appendix C; and (3) such other recordkeeping sub-accounts as may be authorized by the Plan Administrator for a Participant individually or for Participants generally.

          Active Participant – For purposes of the allocation of a Discretionary Contribution made with respect to a Plan Year, a Participant is an Active Participant if he: (1) is an active Employee as of the last day of such Plan Year; (2) is on authorized leave of absence as of the last day of such Plan Year; (3) has severed from employment due to a reduction-in-force, as determined by the Plan Administrator, during such Plan Year; or (4) has died during such Plan Year.

          Affiliate – A corporation or unincorporated trade or business while it is: (a) a member of a controlled group of corporations (as defined in Code Section 414(b)) of which an Employer is a member; (b) a trade or business under common control (as defined in Code Section 414(c)) of an Employer; (c) a member of an affiliated service group (as defined in Code Section 414(m)) which includes an Employer; or (d) required to be aggregated with an Employer pursuant to

- 3 -

Code Section 414(o); provided that no such corporation or unincorporated trade or business shall be considered an Affiliate at any time prior or subsequent to the time during which it meets the above definition and, provided further, that the status of being employed by an Affiliate shall pertain to an individual only during the time when his employer is an Affiliate and not to any time prior or subsequent to its Affiliate status.

          Appeals Committee – The Appeals Committee, as provided for in Section 8.3.

          Appropriate Request – A request by a Participant in the form and manner provided by the Plan Administrator or by the Plan’s recordkeeper that is appropriate for the intended purpose. If the Plan Administrator and the Plan’s recordkeeper so agree, an Appropriate Request may be executed over the telephone or Internet. To constitute an Appropriate Request, such request must be completed correctly and, if required to be in writing, duly executed and delivered to the Plan Administrator or the Plan’s recordkeeper, as the case may be.

          Beneficiary – Any person designated by a Participant under Section 2.3 to receive such benefits as may become payable hereunder after the death of such Participant.

          Board – The Board of Directors of Quest Diagnostics or a committee of such board, authorized by, and acting on behalf of, such board.

          Catch-Up Pre-Tax Contributions – Contributions made to the Plan by the Employer under Section 3.1(b) pursuant to a salary reduction agreement entered into between the Employer and the Participant.

          Code – The Internal Revenue Code of 1986, as amended from time to time. Reference to a specific provision of the Code shall include such provision, any valid Regulation promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

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          Committee – The Benefits Administration Committee, as provided for in Section 8.3, or a duly-authorized representative of the Benefits Administration Committee. References to the Committee include any person to whom the Committee has delegated proper authority.

          Contributions – Payments as provided herein by the Employer to the Trustee for the purpose of providing the benefits under this Plan.

          Corporation – AmeriPath, Inc. or any successor thereto.

          Deferral Compensation – An Employee’s wages as defined in Code Section 3401(a) and all other payments of compensation to an Employee by an Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Employee a written statement under Code Sections 6041(d), 6051(a)(3) and 6052, excluding reimbursements or other expense allowances, cash and non-cash fringe benefits (e.g., employee discounts), moving expenses, deferred compensation and welfare benefits, but including Employee Pre-Tax Contributions to this Plan, pre-tax employee contributions to a Code Section 125 plan and pre-tax employee contributions to purchase qualified transportation fringe benefits pursuant to Code Section 132(f)(4).

          For these purposes:

          (a) Amounts under Code Section 125 include any amounts not available to an Employee in cash in lieu of group health coverage because the Employee is unable to certify that he has other health coverage.

          (b) An amount will be treated as an amount under Code Section 125 only if the Employer does not request or collect information regarding the Employee’s other health coverage as part of the enrollment process for the health plan.

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          Notwithstanding the preceding paragraphs, (1) Deferral Compensation shall include amounts (e.g., bonuses, commissions or unused vacation) paid by the Employer following the Employee’s severance from employment with the Employer, but only if such amounts are paid no later than 30 days after the Employee’s severance from employment; (2) except as specifically provided in (1) above, Deferral Compensation shall not include severance pay or other form of post-termination compensation; and (3) Deferral Compensation shall not include compensation generated from any of the following: the disqualifying disposition of a statutory stock option; the disposition of shares of stock under an employee stock purchase pension plan if the option price was below the fair market value of the stock at the time the option was granted; the value of a nonstatutory stock option at the time of grant or exercise; the vesting of restricted stock; or the payment of dividends on restricted stock.

          Deferral Compensation in excess of $200,000 (or such other amount as may be applicable under Code Section 401(a)(17)(B)) for any Plan Year shall not be taken into account, provided that the dollar increase, if any, in effect on January 1 of any calendar year is effective for Plan Years beginning in such calendar year.

          Notwithstanding anything in the Plan to the contrary, the limit imposed by Code Section 401(a)(17)(B) on Deferral Compensation incorporated under the paragraph immediately above is not applicable for the purpose of determining the amount of Deferral Compensation from which Employee Pre-Tax Contributions can be made during the portion of the Plan Year in which the individual was a Participant.

          Discretionary Contributions – Contributions made by an Employer under Section 3.3.

          Effective Date – January 1, 2010, except that: (i) to the extent certain changes are required to be effective prior to such date, they shall be effective as provided herein or as

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required by law; and (ii) with respect to an Employer that began participating in the Plan after January 1, 2010, the date on which such Employer began its participation in the Plan.

          Eligibility Service

          (a) As of any date, the aggregate of an Employee’s periods of eligibility service (as defined in the next sentence), including any eligibility service credited under subsection (b). For purposes of this subsection (a), a period of eligibility service is each period of time required to be recognized under this Plan commencing on the Employee’s Employment Commencement Date, or any subsequent Reemployment Commencement Date, and ending on a Severance from Service Date.

(c) Eligibility service also shall include the following:

          (1) Periods of employment with an Affiliate (while such organization is an Affiliate) which would have constituted eligibility service under the Plan had the Participant been employed by an Employer;

          (2) Periods of employment with an Employer other than as an Employee, including employment as a leased employee within the meaning of Code Section 414(n), which would have constituted eligibility service under the Plan had the Participant been employed as an Employee; provided that employment as a leased employee within the meaning of Code Section 414(n) shall not be taken into account if more than five (5) calendar days elapses between the last day of employment as a leased employee and the Employment Commencement Date;

          (3) If Quest Diagnostics so permits pursuant to Section 9.1, periods of employment with an Employer prior to the Employer’s Effective Date which would have constituted eligibility service under the Plan had the service been rendered after the

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Employer’s Effective Date, under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law;

          (4) With respect to any individual employed by an Employer that is a joint venture, periods of contiguous employment with the joint venture partner of the Corporation (or an Affiliate thereof) prior to the establishment of the joint venture which would have constituted eligibility service under the Plan had the service been rendered after the establishment of the joint venture, under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law;

          (5) With respect to an Employee who directly transferred employment to the Employer from a joint venture with the Corporation (or an Affiliate thereof) that is not an Employer: (A) periods of contiguous employment with the joint venture which would have constituted eligibility service under the Plan had the joint venture been an Employer, and (B) periods of contiguous employment with the joint venture partner of the Corporation (or Affiliate) prior to the establishment of the joint venture which would have constituted eligibility service under the Plan had the partner been an Employer, both periods of employment credited under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law;

          (6) Periods of Qualified Military Service required under Code Section 414(u); and

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          (7) Periods of employment with an entity that adopts this Plan and that is not an Affiliate of Quest Diagnostics, but solely with respect to periods after the date of such adoption and only while the Plan is maintained by such entity.

          (d) In no event shall Eligibility Service be credited under more than one paragraph of subsection (b).

          Eligible Employee – An Employee eligible for participation under Section 2.1.

          Employee – Any common-law employee of the Corporation or of any other Employer. Notwithstanding the preceding, the following shall not be considered an Employee for purposes of this Plan:

          (1) an individual who is classified as an “independent contractor” or “consultant” by an Employer, regardless of such individual’s reclassification for any reason by the Internal Revenue Service, other governmental agency or any other entity;

          (2) an individual who is covered by a collective bargaining agreement where such agreement provides for a different retirement plan, or where no provision is made for any retirement plan, after good faith bargaining between the Employer and employee representatives;

          (3) an individual who is excluded from participation hereunder by the terms of his Employer’s adoption of this Plan;

          (4) an individual who is classified as a leased employee of an Employer within the meaning of Code Section 414(n) (other than a leased employee of a joint venture Employer who is leased from another Employer), regardless of such individual’s reclassification for any reason by the Internal Revenue Service, other governmental agency or any other entity;

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          (5) an employee who is a nonresident alien and who receives no earned income (within the meaning of Code Section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3));

          (6) an individual who receives compensation solely for service as a member of the Board; or

          (7) an individual employed only in Puerto Rico.

          Employee Pre-Tax Catch-Up Sub-Account – The portion of a Participant’s Account attributable to Catch-Up Pre-Tax Contributions allocated to such Participant under Section 4.4 and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions. The Employee Pre-Tax Catch-Up Sub-Account of a Participant who was a participant in a Merged Plan that contained a qualified cash or deferred arrangement also shall hold any amount transferred to this Plan from such Merged Plan representing the balance of such Participant’s pre-tax catch-up account under such Merged Plan and any earnings or losses thereon.

          Employee Pre-Tax Contributions – Regular Pre-Tax Contributions and Catch-Up Pre-Tax Contributions made to the Plan by the Employer under Section 3.1 pursuant to salary reduction agreements entered into between the Employer and the Participant.

          Employee Regular Pre-Tax Sub-Account – The portion of a Participant’s Account attributable to Regular Pre-Tax Contributions allocated to such Participant under Section 4.4 and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions. The Employee Regular Pre-Tax Sub-Account of a Participant who was a participant in a Merged Plan that contained a qualified cash or deferred

- 10 -

arrangement also shall hold any amount transferred to this Plan from such Merged Plan representing the balance of such Participant’s pre-tax account under such Merged Plan and any earnings or losses thereon.

          Employer – Collectively or individually as the context may indicate, the Corporation and any other entity (or successor thereto) that: (1) has been authorized to adopt the Plan pursuant to Section 9.1; (2) by action of its own board of directors (or duly authorized officer) as specified in Section 10.1 has adopted the Plan; and (3) has not terminated its participation in the Plan. The Employers are listed in Appendix A, as updated from time to time.

          Employer Matching Contributions – Contributions made to the Plan by the Employer under Section 3.2.

          Employer Matching Sub-Account – The portion of a Participant’s Account attributable to Employer Matching Contributions allocated to such Participant under Section 4.5 and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions.

          Employer Prior Plan Matching Sub-Account – The portion of a Participant’s Account attributable to Employer Matching Contributions allocated to such Participant under the Prior Plan and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions.

          Employment Commencement Date – The latest of:

          (a) the date when an Employee first performs an Hour of Service for an Employer;

          (e) in the case of a reemployed Employee (and subject to Section 2.2), his Reemployment Commencement Date;

          (f) an adjusted date in the case of an Employee being credited with prior service; or

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          (g) the Effective Date with respect to the Employer of the Employee.

          ERISA – The Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a specific provision of ERISA shall include such provision, any valid Regulation promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

          Highly Compensated Employee – For any Plan Year, any active or former Employee who is a “highly compensated active Employee” or a “highly compensated former Employee” as determined below:

(a) A “highly compensated active Employee” is an Employee who:

          (1) was a 5% owner (within the meaning of Code Section 416(i)) of an Employer or an Affiliate at any time during the current or preceding Plan Year; or

          (2) received Section 415 Compensation from an Employer or an Affiliate in excess of $80,000 (as adjusted at the same time and in the same manner as under Code Section 415(d), except that the base period is the calendar quarter ending September 30, 1996) for the preceding Plan Year and was a member of the top-paid 20% of Employees ranked on the basis of Section 415 Compensation for the preceding Plan Year.

          (h) A “highly compensated former Employee” is any Employee who separated from service (or was deemed to have separated from service) prior to the current Plan Year, performs no service for an Employer or an Affiliate during the current Plan Year and was a “highly compensated active Employee” for either the separation year or for any Plan Year ending on or after the Employee’s 55^th birthday.

          Hour of Service – An hour for which an Employee is paid or entitled to payment for the performance of duties for an Employer or for an Affiliate.

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          Investment Committee – The Investment Committee, as provided for in Section 8.3.

          Investment Option – An investment alternative under Section 7.3 available to be selected by the Participant, in accordance with Section 7.4, for investment of his Account. The Quest Diagnostics Incorporated Stock Fund shall at all times be an available Investment Option under this Plan.

          Merged Plan – A plan that merged into this Plan or the Prior Plan, as described in Appendix B as it may be amended or supplemented from time to time.

          Merged Plan Sub-Account – The portion of a Participant’s Account attributable to a plan that merged into this Plan (see Appendix B) and invested, at the direction of the Participant, in one or more of the Investment Options and the investment experience, expenses, distributions and withdrawals attributable to such amounts.

          Merged Prior Plan Sub-Account – The portion of a Participant’s Account attributable to a plan that merged into the Prior Plan (see Appendix B) and invested, at the direction of the Participant, in one or more of the Investment Options and the investment experience, expenses, distributions and withdrawals attributable to such amount.

          Money Purchase Pension Plan Sub-Account – The portion of the Account of a Participant who was, before January 1, 1994, a participant in the money purchase pension plan that was a predecessor to the Prior Plan representing employer contributions made to that money purchase pension plan and invested, at the direction of the Participant, in one or more of the Investment Options and the investment experience, expenses, distributions (if any) and withdrawals (if any) attributable to such amount.

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          Normal Retirement Age – Age 65 for those Employees first becoming Participants on or after January 1, 2009 and age 59½ for those Employees first becoming Participants on or before December 31, 2008.

          Participant – An Employee who has commenced, but not terminated, participation in the Plan pursuant to the provisions of Article II, or a former Employee who has a nonzero Account balance under the Plan. Pursuant to Section 5.10, an alternate payee under a QDRO may be considered a Participant for certain limited purposes under the Plan.

          Period of Severance – The period of time commencing on an Employee’s Severance from Service Date and ending on his Reemployment Commencement Date.

          Plan – The 401(k) Savings Plan of Quest Diagnostics Incorporated, contained herein or as hereafter amended.

          Plan Administrator – Quest Diagnostics, with such duties and responsibilities as specified in Section 8.2.

          Plan Year – January 1 – December 31.

          Prior Plan – The AmeriSave 401(k) Plan as in effect through December 31, 2008.

          Prior Plan Employer Matching Sub-Account – The portion of a Participant’s Account attributable to Employer Matching Contributions allocated to such Participant under Section 4.3 of the Prior Plan and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions.

          Prior Plan Rollover Sub-Account – The portion of a Participant’s Account attributable to rollover contributions made under the Prior Plan and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions.

          QDRO – A judgment, decree or order that:

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          (1) relates to the provision of child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a Participant (an “alternate payee”);

          (2) creates or recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee the right to, receive all or a portion of the Participant’s benefits;

          (3) is made pursuant to a state domestic relations law (including community property law); and

          (4) otherwise meets the requirements of Code Section 414(p).

          Qualified Military Service – Qualified military service as defined in Code Section 414(u)(5) and Chapter 43 of Title 38 of the United States Code.

          Qualified Nonelective Contribution Sub-Account – The portion of a Participant’s Account attributable to “qualified nonelective contributions” made pursuant to Section 3.11 and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses thereon.

          Quest Diagnostics – Quest Diagnostics Incorporated, a Delaware corporation, or any successor thereto. Quest Diagnostics is the “plan sponsor” (as such term is defined in ERISA Section 3(16)(B)) and, except as provided in Section 8.2, “administrator” of the Plan (as such term is defined in ERISA Section 3(16)(A)).

          Quest Diagnostics Common Stock – Any class of Quest Diagnostics’ common stock or any class of Quest Diagnostics’ preferred stock that is convertible into common stock.

          Quest Diagnostics Incorporated Stock Fund – The Investment Option consisting primarily of Quest Diagnostics Common Stock. The portion of a Participant’s Account under

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the Plan that is invested in the Quest Diagnostics Incorporated Stock Fund is intended to qualify as a stock bonus plan under Code Section 401(a), an employee stock ownership plan under Code Sections 409 and 4975(e)(7) and an eligible individual account plan under ERISA Section 407(d)(3).

          Reemployment Commencement Date – The first date when an Employee again performs an Hour of Service for an Employer following a Period of Severance.

          Regular Pre-Tax Contributions – Contributions made to the Plan by Employers under Section 3.1(a) pursuant to salary reduction agreements made by Eligible Employees.

          Regulation – Any regulation, ruling or other interpretation, validly promulgated by the U.S. Department of Treasury, U.S. Department of Labor, or other federal agency as the case may be, and in effect at the time in question. Reference to a Regulation or section thereof includes that Regulation or section and any comparable Regulation or section that amends, supplements or supersedes that Regulation or section.

          Rollover Sub-Account – The portion of a Participant’s Account attributable to rollover contributions under Section 3.4 and invested, at the direction of the Participant, in one or more of the Investment Options as well as any earnings or losses on such contributions.

          Section 415 Compensation – Compensation within the meaning of Code Section 415(c)(3), including “post-severance compensation.” “Post-severance compensation” means, for a Limitation Year (as defined in Section 4.7(a)(2)) beginning on or after January 1, 2008, the following amount(s) that would have been included in the definition of Section 415 Compensation if the amounts were paid prior to the Employee’s severance from employment (as defined in Regulation §1.415(a)-1(f)(5)) with the Employer, and that are paid to him by the later of 2½ months after his severance from employment with the Employer or the end of the

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Limitation Year that includes his Severance from Service Date with the Employer, if the payment is:

          (a) regular compensation for services during his regular working hours or compensation for services outside his regular working hours (such as overtime or shift differential), commissions, bonuses or other similar payments and the payment would have been made to him prior to a severance from employment if he had continued in employment with the Employer;

          (i) for unused accrued bona fide sick, vacation or other leave, but only if he would have been able to use the leave if his employment had continued;

          (j) received by him pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been made to him at the same time if he had continued in employment with the Employer and only to the extent that the payment is includible in his gross income; or

          (k) made by the Employer to an individual who does not currently perform services for the Employer by reason of Qualified Military Service to the extent those payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering Qualified Military Service.

          Severance from Service Date –

          (a) Except as provided in subsection (b), the earlier of (1) or (2):

          (1) The date on which the Employee quits, retires, is discharged or dies provided that he does not earn an Hour of Service for an Employer or an Affiliate within 12 months after such date; or

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          (2) The first anniversary of the first date of a period in which an Employee remains absent from service (with or without pay) with an Employer or an Affiliate for any reason other than quit, retirement, discharge or death, such as vacation, holiday, sickness, disability or leave of absence; provided that if the Employee is absent from service by reason of (A) a leave of absence granted by his Employer or an Affiliate (including but not limited to leave pursuant to the Family and Medical Leave Act of 1993 or certain circumstances related to the Qualified Military Service of a family member) and he returns to active employment with the Employer or an Affiliate at the end of such leave of absence, or (B) Qualified Military Service and he returns to active service within the period that his re-employment rights are protected by federal law, then he shall not be deemed to have had a Severance from Service Date by reason of such absence.

(l) (1) For purposes of determining the Severance from Service Date of an Employee who is absent from work beyond the first anniversary of the first day of absence by reason of a “parenthood purpose” described in paragraph (2), the Severance from Service Date shall be the second anniversary of the first day of such absence. The period between the first and second anniversaries of the first day of absence from work is neither a period credited as a Year of Vesting Service nor a Period of Severance. The Plan Administrator may request that the Employee furnish information to establish that the absence is for a parenthood purpose and the number of days for which there was such an absence. In the event such information is not submitted in a timely manner, this subsection (b) shall not apply.

          (2) The following are deemed “parenthood purposes”:

          (A) the pregnancy of the Employee;

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          (B) the birth of a child of the Employee;

          (C) the placement of a child with the Employee in connection with the adoption of such child by such Employee; or

          (D) caring for such child for a period beginning immediately following such birth or placement.

          Total and Permanent Disability – A Participant shall be considered totally and permanently disabled once he has incurred a physical or mental condition which prevents him from performing his duties for an Employer or an Affiliate and which is expected to result in death or to be of long and continued duration and for which he is entitled to receive disability benefits payments under the federal Social Security Act or his Employer’s long-term disability plan (if any). The determination under the federal Social Security Act or his Employer’s long-term disability plan (if any) is conclusive for purposes of this Plan.

          Trust Agreement – The agreement entered into between Quest Diagnostics and the Trustee under Article VII.

          Trust Fund – All funds received by the Trustee together with all income, profits and increments thereon, and less any expenses or payments made therefrom.

          Trustee – Such individual, individuals, financial institution or a combination of them as designated in the Trust Agreement to hold in trust any assets of the Plan for the purpose of providing benefits under the Plan, and including any successor trustee to the Trustee initially designated thereunder.

          Valuation Date – Each business day.

          Vested Quest Diagnostics Common Stock Dividend Sub-Account – Under Section 6.5(a), the portion of a Participant’s Account comprised of cash dividends received under the Quest

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Diagnostics Incorporated Stock Fund that is associated with the portion of the Participant’s Account, other than the Money Purchase Pension Plan Sub-Account (or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C), that is not fully vested and which is invested, at the direction of the Participant, in one or more of the Investment Options as well as applicable earnings or losses thereon.

          Vested Money Purchase Pension Plan Dividend Sub-Account – Under Section 6.5(b), the portion of a Participant’s Account comprised of cash dividends received under the Quest Diagnostics Incorporated Stock Fund that is associated with the portion of the Participant’s Money Purchase Pension Plan Sub-Account (or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) that is not fully vested and which is invested, at the direction of the Participant, in one or more of the Investment Options as well as applicable earnings or losses thereon.

          Year of Vesting Service

          (a) On or after January 1, 2009, the aggregate of an Employee’s periods of vesting service (as defined in the next sentence), including any vesting service credited under subsection (b) and excluding any vesting service disregarded under subsection (c). For purposes of this subsection (a), a period of vesting service is each period of time required to be recognized under this Plan commencing on the Employee’s Employment Commencement Date, or any subsequent Reemployment Commencement Date, and ending on a Severance from Service Date.

          (m) Vesting service also shall include the following:

          (1) Periods of employment with an Affiliate (while such organization is an Affiliate) which would have constituted vesting service under the Plan had the Participant been employed by an Employer;

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           (2) Periods of employment with an Employer other than as an Employee, including employment as a leased employee within the meaning of Code Section 414(n), which would have constituted vesting service under the Plan had the Participant been employed as an Employee; provided that employment as a leased employee within the meaning of Code Section 414(n) shall not be taken into account if more than five (5) calendar days elapses between the last day of employment as a leased employee and the Employment Commencement Date;

           (3) If Quest Diagnostics so permits pursuant to Section 9.1, periods of employment with an Employer prior to the Employer’s Effective Date which would have constituted vesting service under the Plan had the service been rendered after the Employer’s Effective Date, under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law;

           (4) With respect to any individual employed by an Employer that is a joint venture, periods of contiguous employment with the joint venture partner of the Corporation (or an Affiliate thereof) prior to the establishment of the joint venture which would have constituted vesting service under the Plan had the service been rendered after the establishment of the joint venture, under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent required by applicable law;

           (5) With respect to an Employee who directly transferred employment to the Employer from a joint venture with the Corporation (or an Affiliate thereof) that is not an Employer: (A) periods of contiguous employment with the joint venture which would have constituted vesting service under the Plan had the joint venture been an Employer,

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and (B) periods of contiguous employment with the joint venture partner of the Corporation (or Affiliate) prior to the establishment of the joint venture which would have constituted vesting service under the Plan had the partner been an Employer, both periods of employment credited under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law;

           (6) Periods of Qualified Military Service required under Code Section 414(u); and

           (7) Periods of employment with an entity that adopts this Plan and that is not an Affiliate of Quest Diagnostics, but solely with respect to periods after the date of such adoption and only while the Plan is maintained by such entity.

          (n) In no event shall Years of Vesting Service be credited under more than one paragraph of subsection (b).

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ARTICLE II

ELIGIBILITY AND PARTICIPATION

2.1 Eligibility

          (a) Any Employee who was a Participant in the Plan on December 31, 2009 shall be a Participant in this Plan on January 1, 2010, as long as he remains an Employee on such date. Such an Employee shall remain eligible to make Employee Pre-Tax Contributions and to receive Employer Matching Contributions and Discretionary Contributions.

          (b) Any Employee who was not a Participant in the Plan on December 31, 2009 shall become a Participant in this Plan on the date he completes one month of Eligibility Service. Such an Employee shall become eligible to make Employee Pre-Tax Contributions on the date he becomes a Participant, and shall become eligible to receive Employer Matching Contributions and Discretionary Contributions on the date he completes 12 months of Eligibility Service.

2.2 Participation

          (a) Each Eligible Employee may, by making an Appropriate Request, enter into a salary reduction agreement in accordance with Section 3.1(a).

          (b) An Employee who becomes a Participant shall remain a Participant so long as he remains an Employee or is a former Employee who maintains a nonzero Account balance. If he severs from employment with no balance in his Account, he shall cease being a Participant upon his severance from employment.

          (c) If an Employee who was a Participant severs from employment and is reemployed as an Employee, he shall be eligible to make Employee Pre-Tax Contributions upon his Reemployment Commencement Date. He also will be re-credited, for purposes of his eligibility to receive Employer Matching Contributions and Discretionary Contributions (if any), with his Eligibility Service earned prior to his Severance from Service Date.

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          (d) If an Employee who was not a Participant severs from employment and is reemployed as an Employee, he shall become a Participant on the later of: (1) his Reemployment Commencement Date, or (2) the date he completes one month of Eligibility Service (taking into account Eligibility Service both before and after his Reemployment Commencement Date). He shall be eligible to make Employee Pre-Tax Contributions on the date he becomes a Participant and shall be eligible to receive Employer Matching Contributions and Discretionary Contributions (if any) on the date he completes 12 months of Eligibility Service, taking into account Eligibility Service both before and after his Reemployment Commencement Date.

2.3 Beneficiary Designation

          (a) Upon commencing participation, each Participant shall designate a Beneficiary by filing a properly completed form with the Plan Administrator. In the absence of any valid designation of Beneficiary, he is deemed to have designated his spouse as his Beneficiary but, if he is unmarried upon his death, he is deemed to have designated the following as his Beneficiary: (1) the beneficiary designated under the group-term life insurance plan sponsored by a member of the Quest Diagnostics controlled group in which he participates; and (2) if no beneficiary has been designated under the group-term life insurance plan sponsored by a member of the Quest Diagnostics controlled group in which he participates, his estate.

          (b) The Beneficiary of a married Participant shall be his spouse unless: (1) he obtains spousal consent (as described below) to his designation of another person as his primary Beneficiary; or (2) such circumstances exist as the Plan Administrator, in accordance with applicable Regulations, may deem appropriate to waive the spousal consent requirement. Spousal consent shall be made on a form approved by the Plan Administrator, shall be irrevocable by the spouse, shall acknowledge the effect of such designation and shall be

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witnessed by a representative of the Plan Administrator or a notary public. Alternatively, the spouse may execute an irrevocable general consent that does not identify the designated Beneficiary and that allows the Participant to make future changes in his Beneficiary designation without spousal consent. Any such general consent shall satisfy Regulation §1.401(a)-20, Q&A-31(c).

          (c) If an unmarried Participant later marries, or if a married Participant later remarries, his prior designation of a Beneficiary other than the spouse to whom he is married on his date of death shall be null and void unless consented to by such spouse in the manner provided in subsection (b).

          (d) The Committee’s interpretation with respect to any Beneficiary designation is binding and conclusive, subject to applicable law, upon all parties and no person claiming to be a Beneficiary, or other person, has the right to question an action of the Committee in such regard.

          (e) The rights of any spouse or Beneficiary hereunder is subject to the provisions of any QDRO issued with respect to the Participant’s Account under the Plan.

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ARTICLE III

CONTRIBUTIONS

3.1 Employee Pre-Tax Contributions

(a) (1) An Eligible Employee may enter into a salary reduction agreement with his Employer in which it is agreed that the Employer will reduce the Eligible Employee’s Deferral Compensation during each pay period by a designated percentage and contribute the amount so determined to the Plan on behalf of the Eligible Employee. Such contributions are referred to as “Regular Pre-Tax Contributions.” The Plan Administrator may disregard or modify an Eligible Employee’s salary reduction agreement with respect to Regular Pre-Tax Contributions to the extent necessary to ensure that (1) the excess deferral rules of subsection (c) are met; (2) the limitations set forth in Sections 3.5 and 4.7 are not exceeded; and (3) all contributions are deductible under Code Section 404. Regular Pre-Tax Contributions may be any whole percentage between 1% and 35% of the Deferral Compensation otherwise payable to the Eligible Employee during the applicable payroll period.

          (2) The salary reduction agreement of an Employee who becomes eligible to make Regular Pre-Tax Contributions is effective as of the first payroll period coincident with or next following the date on which his Appropriate Request is processed.

          (3) Regular Pre-Tax Contributions shall be invested among the various Investment Options in accordance with the Employee’s outstanding Investment Option election as in effect under Section 7.4.

          (4) A Participant who has in effect a salary reduction agreement with respect to Regular Pre-Tax Contributions may elect to change such agreement, including prospectively suspending such agreement, by making an Appropriate Request. Such new

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election shall become effective as of the Participant’s first payroll period coincident with or next following the date on which the Appropriate Request is processed.

          (5) Regular Pre-Tax Contributions shall be remitted to the Trustee in accordance with Department of Labor Regulation §2510.3-102. An Eligible Employee’s Regular Pre-Tax Contributions shall be credited to his Employee Regular Pre-Tax Sub-Account under Section 4.4.

(b) (1) An Eligible Employee who will have attained age 50 by the end of the Plan Year may enter into a salary reduction agreement with his Employer in which it is agreed that the Employer will reduce his Deferral Compensation during each pay period by a designated percentage (beyond the designated percentage by which his Deferral Compensation is reduced with respect to Regular Pre-Tax Contributions) and contribute the amount so determined to the Plan on behalf of the Eligible Employee. Such additional contributions are referred to as “Catch-Up Pre-Tax Contributions.” Catch-Up Pre-Tax Contributions may be any whole percentage between 1% and, when added to Regular Pre-Tax Contributions, 70% of the Deferral Compensation otherwise payable to the Eligible Employee during the applicable payroll period. Catch-Up Pre-Tax Contributions shall be made in accordance with, and subject to the limitations of, Code Section 414(v). Catch-Up Pre-Tax Contributions shall not be taken into account for purposes of the Code Section 402(g) limitation set forth in Section 3.1(c)(1) (except as modified by Code Sections 414(v)) or the Code Section 415 limitation set forth in Section 4.7. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(12), 410(b) or 416, as applicable, by reason of the making of Catch-Up Pre-Tax Contributions.

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          (2) The salary reduction agreement of a Participant who becomes eligible to make Catch-Up Pre-Tax Contributions is effective as of the first payroll period coincident with or next following the date on which his Appropriate Request is processed.

          (3) Catch-Up Pre-Tax Contributions shall be invested in accordance with the Investment Option specification designated by the Participant for the investment of his Regular Pre-Tax Contributions.

          (4) A Participant who has in effect a salary reduction agreement with respect to Catch-Up Pre-Tax Contributions may elect to change such agreement, including prospectively suspending such agreement, by making an Appropriate Request. Such new election shall become effective as of the first payroll period coincident with or next following the date on which the Appropriate Request is processed.

          (5) Catch-Up Pre-Tax Contributions shall be remitted to the Trustee in accordance with Department of Labor Regulation §2510.3-102. An Eligible Employee’s Catch-Up Pre-Tax Contributions shall be credited to his Employee Pre-Tax Catch-Up Sub-Account under Section 4.4.

          (6) If, by the end of the Plan Year, the amount of Employee Pre-Tax Contributions originally designated as Regular Pre-Tax Contributions does not exceed either the Code Section 402(g) limitation for such Plan Year, the 35% of Deferral Compensation limitation set forth in Section 3.1(a)(1) or the maximum Code Section 415(c) limitation for such Plan Year, then any Employee Pre-Tax Contributions made by the Eligible Employee and originally designated as Catch-Up Pre-Tax Contributions shall be recharacterized as Regular Pre-Tax Contributions to the extent the sum of Employee Pre-Tax Contributions originally designated as Regular Pre-Tax Contributions and

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Employee Pre-Tax Contributions previously recharacterized as Regular Pre-Tax Contributions does not exceed such limitations.

          (7) In order to make a Catch-Up Pre-Tax Contribution, a Participant must make a Regular Pre-Tax Contribution of at least 4% of Deferral Compensation throughout the portion of the Plan Year during which he was an Eligible Employee.

(c) Excess deferrals

          (1) No Participant may have Regular Pre-Tax Contributions made on his behalf under this Plan in any calendar year which in the aggregate exceed the dollar limitation contained in Code Section 402(g) in effect for such calendar year. For purposes of the preceding sentence, Regular Pre-Tax Contributions are deemed made as of the pay date for which the salary is deferred, regardless of when the contributions are actually transmitted to the Trust Fund.

(2) (A) If in any calendar year the aggregate of the Regular Pre-Tax Contributions made on a Participant’s behalf under this Plan, plus his other elective deferrals under any other qualified cash or deferred arrangement (as defined in Code Section 401(k)) maintained by any sponsor, under any simplified employee pension (as defined in Code Section 408(k)), or used to have an annuity contract purchased on his behalf under Code Section 403(b), exceed the limitation of paragraph (1), then no later than the March 1^st following such calendar year he may notify the Plan Administrator: (i) that he has exceeded the limitation and (ii) of the amount of his Regular Pre-Tax Contributions under this Plan which he wants distributed to him (as adjusted for Allocable Income/Loss), notwithstanding his salary reduction agreement, so that he will not exceed the limitation. The Plan

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Administrator may require him to provide reasonable proof that he has exceeded the limitation of paragraph (1).

          If in any calendar year the aggregate of the Regular Pre-Tax Contributions made on a Participant’s behalf under the Plan, plus his other elective deferrals under any other qualified cash or deferred arrangement (as defined in Code Section 401(k)) maintained by the Employer or an Affiliate, under a simplified employee pension (as defined in Code Section 408(k)) sponsored by the Employer or an Affiliate, or used to have the Employer or an Affiliate purchase an annuity contract on his behalf under Code Section 403(b), exceed the limitation of paragraph (1), then he shall be deemed to have notified the Plan Administrator that: (i) he has exceeded the limitation and (ii) he wants distributed to him the amount of such excess deferrals (as adjusted for Allocable Income/Loss) notwithstanding the salary reduction agreement so that he will not exceed the limitation. No later than the next April 15, the Plan Administrator may (but shall not be obligated to) make the distribution requested, or deemed to have been requested, by him under this subparagraph. Such distribution may be made notwithstanding any other provision of law or this Plan. Except as otherwise provided by applicable Regulations, such distribution shall not reduce the amount of Regular Pre-Tax Contributions considered as annual additions under Section 4.7. Any amounts not distributed under this subparagraph shall continue to be held in accordance with the terms of the Plan.

          (B) After a distribution of excess Regular Pre-Tax Contributions (if any) under subparagraph (A), Employer Matching Contributions made with

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	respect to such distributed Regular Pre-Tax Contributions (if any) shall be withdrawn (with Allocable Income/Loss thereon) from such Participant’s Employer Matching Sub-Account and applied to reduce future Employer Matching Contributions under Section 3.2.
	(C) “Allocable Income/Loss” means, with respect to contributions that must be returned to a Participant or forfeited under any of the limitations of Articles III and IV, the income or loss allocable to such contributions for the Plan Year. Income or loss may be determined by any reasonable method for computing income or loss if the method is used consistently for all Participants and all corrective distributions under the Plan for the Plan Year, and is the same method used by the Plan for allocating income or loss to Participants’ Accounts.
(3) Catch-Up Pre-Tax Contributions exceeding the limitations of Code Section 414(v) shall be returned to the Participant under rules similar to those described in subparagraphs (1) and (2) above. Employer Matching Contributions made with respect to excess Catch-Up Pre-Tax Contributions shall be treated as provided in subparagraph (2)(B) above.

3.2 Employer Matching Contributions

          (a) The Employer shall make Employer Matching Contributions to the Trust Fund equal to 100% of the Employee Pre-Tax Contributions made by each Eligible Employee with respect to each payroll period, but taking into account only those Employee Pre-Tax Contributions made by him with respect to such payroll period which are made at a rate that does not exceed 4% of his Deferral Compensation (but only up to the Code Section 401(a)(17)(B) limit). Employer Matching Contributions may be made, at the discretion of Quest Diagnostics,

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solely in cash, solely in Quest Diagnostics Common Stock or in a combination of cash and Quest Diagnostics Common Stock.

          (b) The Employer Matching Contributions shall be invested in accordance with the Investment Option specification designated by the Eligible Employee for the investment of Regular Pre-Tax Contributions and shall be credited to his Employer Matching Sub-Account.

3.3 Discretionary Contributions

          An Employer, in its sole discretion, may elect for any Plan Year to make a Discretionary Contribution in an amount expressed as a percentage of Deferral Compensation and which shall be allocated in accordance with Section 4.6. The Employer also shall contribute such Discretionary Contributions as may be required by Section 11.2. Discretionary Contributions may be made, at the discretion of Quest Diagnostics, solely in cash, solely in Quest Diagnostics Common Stock or in a combination of cash and Quest Diagnostics Common Stock. Discretionary Contributions shall be invested in accordance with the Investment Option specification, if any, designated by the Participant for the investment of Regular Pre-Tax Contributions and otherwise shall be invested in the applicable qualified default investment alternative specified by the Investment Committee, unless and until he makes a different Investment Option specification pursuant to Section 7.4. If Discretionary Contributions are made, the Plan Administrator shall establish an appropriate sub-account to which such contributions shall be credited.

3.4 Rollover Contributions

          (a) An Employee (regardless of whether he has satisfied the initial eligibility requirements of Section 2.1) may, by making an Appropriate Request, request to make a rollover contribution to the Plan from the type of plans described in subsection (b) below.

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          (b) (1) The Plan will accept a direct rollover of an eligible rollover distribution, as defined in Code Section 402(f)(2)(A), from:

	(A) a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions;
	(B) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions; or
	(C) an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state but excluding after-tax employee contributions.
(2) The Plan will accept an Employee’s contribution of an eligible rollover distribution, as defined in Code Section 402(f)(2)(A), from:
	(A) a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions;
	(B) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions;
	(C) an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state but excluding after-tax employee contributions.
(3) The Plan will accept an Employee’s rollover contribution of the portion of a distribution from an individual retirement account or annuity described in Code Section 408(a) or 408(b) that is a “conduit IRA” (i.e., an individual retirement account or annuity that solely holds amounts that were rolled over from a qualified retirement plan and earnings or losses on such amounts).

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          (c) The Plan Administrator may require the Employee requesting to make a rollover contribution to provide whatever documentation and/or certifications the Plan Administrator deems necessary to reasonably conclude that the rollover contribution satisfies the conditions set forth in subsection (b) above.

          (d) Rollover contributions must be in cash; in-kind contributions are not permitted. Such a contribution shall be credited to the Employee’s Rollover Sub-Account and shall be 100% vested at all times. The rollover contribution of an Employee who has not satisfied the initial eligibility requirements of Section 2.1 shall be invested in the applicable qualified default investment alternative specified by the Investment Committee, unless and until he makes a different Investment Option specification pursuant to Section 7.4. The rollover contribution of an Eligible Employee shall be invested in accordance with his outstanding Investment Option specification, if any.

          (e) If the Plan Administrator, after reasonably concluding that a rollover contribution made by an Employee met the conditions set forth in subsection (b) above, later determines that the contribution did not meet those conditions, it shall direct the Trustee to distribute to the Employee the amount of such rollover contribution, plus any earnings or losses attributable thereto, within a reasonable time after such determination.

3.5 Maximum Deductible Contribution

          In no event shall the Employer be obligated to make a Contribution for a Plan Year in excess of the maximum amount deductible by it under Code Section 404.

3.6 Actual Deferral Percentage Test Safe Harbor

          Effective with the Plan Year commencing January 1, 2009, this Plan shall be deemed to meet the requirements of Code Section 401(k)(3)(A)(ii) (the “ADP Test”) since: (1)(A) the rate of Employer Matching Contributions does not increase as an Employee’s rate of Employee Pre-

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Tax Contributions increases, (B) the aggregate amount of Employer Matching Contributions at each rate of Employee Pre-Tax Contributions is at least equal to the aggregate amount of Employer Matching Contributions which would be made if Employer Matching Contributions were made on the basis of the percentages described in Code Section 401(k)(12)(B)(i), and (C) the rate of Employer Matching Contributions with respect to any Employee Pre-Tax Contributions of a Highly Compensated Employee at any rate of Employee Pre-Tax Contributions is not greater than that with respect to an Employee who is not a Highly Compensated Employee; and (2) the Plan Administrator provides each Eligible Employee, within a reasonable period before the Plan Year begins (or within a reasonable period before he becomes an Eligible Employee), written notice of his rights and obligations under the Plan sufficiently accurate and comprehensive to appraise him of such rights and obligations and written in a manner calculated to be understood by the average Eligible Employee.

          Notwithstanding that the Plan is intended to be a “safe harbor” 401(k) plan with respect to Employee Pre-Tax Contributions made on or after January 1, 2009, the provisions of the remainder of this Section 3.6 shall be applicable to Participants during such period as they are able to make Employee Pre-Tax Contributions but are not eligible to receive Employer Matching Contributions. The Plan shall satisfy the ADP Test with respect to such Participants. For this purpose, the Plan shall use the current year testing method.

3.7 Payment of Contributions to Trustee

          Unless an earlier time for contribution is specified elsewhere in this Plan, in all events the Employer shall pay to the Trustee its Contributions for each Plan Year within the time prescribed by law, including extensions of time for the filing of its federal income tax return for the Employer’s taxable year during which such Plan Year ended.

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3.8 Employee After-Tax Contributions

          No Participant shall be permitted to make after-tax contributions under the Plan.

3.9 Actual Contribution Percentage Test Safe Harbor

          Effective with the Plan Year commencing January 1, 2009, this Plan shall be deemed to meet the requirements of Code Section 401(m)(2) (the “ACP Test”) since: (1)(A) the rate of Employer Matching Contributions does not increase as an Employee’s rate of Employee Pre-Tax Contributions increases, (B) the aggregate amount of Employer Matching Contributions at each rate of Employee Pre-Tax Contributions is at least equal to the aggregate amount of Employer Matching Contributions which would be made if Employer Matching Contributions were made on the basis of the percentages described in Code Section 401(k)(12)(B)(i), and (C) the rate of Employer Matching Contributions with respect to any Employee Pre-Tax Contributions of a Highly Compensated Employee at any rate of Employee Pre-Tax Contributions is not greater than that with respect to an Employee who is not a Highly Compensated Employee; (2) the Plan Administrator provides each Eligible Employee, within a reasonable period before the Plan Year begins (or within a reasonable period before he becomes eligible for Employer Matching Contributions), written notice of his rights and obligations under the Plan sufficiently accurate and comprehensive to appraise him of such rights and obligations and written in a manner calculated to be understood by the average Eligible Employee; and (3) Employer Matching Contributions on behalf of an Employee may not be made with respect to his Employee Pre-Tax Contributions in excess of 6% of his Deferral Compensation.

3.10 USERRA

          Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to Qualified Military Service will be provided in accordance with the provisions of USERRA and Code Section 414(u). An Employee who is absent from

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employment solely by reason of Qualified Military Service shall be subject to the following special rules and have the privileges described below:

          (a) If, at the time of the commencement of his absence for Qualified Military Service, the Employee was not yet a Participant solely by reason of his failure to satisfy the minimum service requirements of the Plan, he shall be deemed to have become a Participant as of the Entry Date on which he would otherwise have become a Participant had such employment not been interrupted by Qualified Military Service.

          (b) Solely for the purposes of determining all limitations applicable under the Plan and the Code, all “make-up contributions” by the Participant or the Employer pursuant to this Section shall be deemed to be made in the Plan Year in which originally missed. For the purposes of applying these limitations, the Participant will be imputed with Compensation in an amount equal to the amount he would have earned during his period of Qualified Military Service in the Plan Year (or the fraction thereof) had he been employed through the entirety of such period as an Eligible Employee at his regular rate of wages or salary in effect (including any contractual holiday, vacation or sick pay, contractual bonuses and other contractual direct remuneration) immediately prior to the commencement of such Qualified Military Service.

          (c) A Participant who resumes employment with the Employer following Qualified Military Service within the time during which his reemployment rights are protected by the provisions of USERRA shall be entitled to make up missed Employee Pre-Tax Contributions which he could have made but for such Qualified Military Service at any time during the period commencing with his resumption of employment with the Employer (whether or not then an Employee eligible to participate in the Plan) and ending on the earliest to occur of: (1) the date that occurs five (5) years from the date on which such Qualified Military Service absence

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commenced; (2) the date on which his employment terminates after having been resumed following Qualified Military Service; or (3) the date that occurs after a passage of time commencing on his resumption of employment following Qualified Military Service which is equal to three (3) times the duration of such absence for Qualified Military Service. Any such “make-up” Employee Pre-Tax Contributions shall be made by payroll withholding unless otherwise permitted by applicable Regulations.

          (d) To the extent that the Employer is required to make contributions to the Plan for a Participant in order to comply with the provisions of USERRA and Code Section 414(u), such contributions shall be made when he presents himself to resume services as an Employee of an Employer or an Affiliate within the time his reemployment rights are protected by federal law.

          (e) To the extent a Participant makes “make-up” Employee Pre-Tax Contributions described in paragraph (c) above, the Employer shall contribute for allocation to his Employer Matching Contributions Account an amount equal to the Employer Matching Contributions that would have been made for his benefit if his make-up Elective Deferral Contributions had been made at the time his imputed Compensation would have been earned (without adjustment to reflect investment gains or losses or income or expenses that would have been attributable thereto).

          (f) If a Participant dies while in Qualified Military Service, his Beneficiary shall be entitled to any additional benefits (other than benefit accruals relating to the period of Qualified Military Service) provided under the Plan had the Participant resumed employment and then on the following day severed from employment on account of death.

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          (g) Effective January 1, 2009:

          (1) if a Participant in Qualified Military Service elects to receive a distribution from the Plan on account of his severance from employment pursuant to Section 6.6(d), he shall not be permitted to make Employee Pre-Tax Contributions during, or to “make-up” Employee Pre-Tax Contributions with respect to, the six-month period beginning on the date of the distribution; and

          (2) a Participant in Qualified Military Service receiving a differential wage payment (as defined in Code Section 3401(h)(2)) shall be treated as an Employee of the Employer making the payment, and the differential wage payment shall be treated as Section 415 Compensation and as Deferral Compensation.

3.11 Corrective Contributions

          (a) If it becomes necessary to correct a failure to follow the provisions of the Plan, to correct mistakes made in amounts distributed from or credited to Accounts, to restore the portion of an Account that was forfeited pursuant to any provision of the Plan or if an Employee should have been included as a Participant but is mistakenly excluded for any reason, correction or restoration shall first be made out of Employer contributions and forfeitures and then out of Trust Fund earnings for the Plan Year in question, but only to the extent that such amounts have not already been allocated under the provisions of the Plan. Any additional amounts needed may be provided by a special contribution to the Plan which the Employers, in their sole discretion (but subject to the applicable limitations on deductible contributions and maximum annual additions and considering the rules on deductibility under Code Section 162), may elect to make. Any such correction of mistake or special contribution shall be corrected, allocated or credited in the fashion specified by the Plan Administrator.

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          (b) The provisions of this subsection (b) shall apply only to an Employee or former Employee who becomes entitled to back pay by an award or agreement of an Employer without regard to mitigation of damages. If a person to whom this subsection applies was or would have become an Eligible Employee after such back pay award or agreement has been effected, and if he had not previously elected to make Pre-Tax Contributions pursuant to Section 3.1 but, within 30 days of the date he receives notice of the provisions of this Section, makes an election to make Pre-Tax Contributions in accordance with Section 3.1 (retroactive to any date as of which he was or has become eligible to do so), then he may elect that any Pre-Tax Contributions not previously made on his behalf but which, after application of the foregoing provisions of this subsection, would have been made under the provisions of Article III shall be made out of the proceeds of such back pay award or agreement. In addition, if any such Employee or former Employee would have been eligible to participate in the allocation of Employer Matching or Discretionary Contributions under the provisions of Articles III or XI for any prior Plan Year after such back pay award or agreement has been effected, his Employer shall make Employer Matching and Discretionary Contributions equal to the amount of the Employer Matching and Discretionary Contributions (respectively) which would have been allocated to him under the provisions of Articles III or XI as in effect during each such Plan Year. The amounts of such additional contributions shall be credited to his Account. Any additional contributions made pursuant to this subsection shall be made in accordance with, and subject to the limitations of, the applicable provisions of the Plan.

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ARTICLE IV

ALLOCATIONS TO ACCOUNTS

4.1 Accounts

          (a) The Plan Administrator shall establish and maintain a recordkeeping Account in the name of each Participant, including the following recordkeeping sub-accounts to which the Plan Administrator shall credit all amounts allocated to each such Participant under this Article IV and earnings or losses thereon: an Employee Regular Pre-Tax Sub-Account, an Employee Pre-Tax Catch-Up Sub-Account and an Employer Matching Sub-Account. The Plan Administrator also shall maintain such other recordkeeping sub-accounts as the Participant may have pursuant to Appendix B or Appendix C, and such other recordkeeping sub-accounts, e.g., a Transfer Sub-Account, as may be authorized by the Plan Administrator for a Participant individually or for Participants generally.

          (b) The maintenance of separate Accounts shall not require a segregation of the Trust assets and no Participant shall acquire any right to or interest in any specific asset of the Trust as a result of the allocations provided for in the Plan or by reason of the maintenance of Accounts.

4.2 Valuation of Accounts

          A Participant’s Account (or applicable sub-account thereof) shall be valued at fair market value as of each business day of the Plan Year (the “Valuation Date”). As of each such Valuation Date, the earnings or losses of the Trust Fund shall be allocated to each affected Participant’s Account (or applicable sub-account thereof) pursuant to a consistent non-discriminatory method.

4.3 Notification of Account Balance

          As of the last day of each calendar quarter, and at such other times as the Plan Administrator may direct, the Plan’s recordkeeper shall notify each Participant of the amount of

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Contributions credited to his Account for the period just completed and the balance of his Account, including any distributions, loans and withdrawals or expenses charged to his Account since the effective date of the last such statement.

4.4 Allocation of Employee Pre-Tax Contributions

          An Eligible Employee’s Regular Pre-Tax Contributions under Section 3.1(a) shall be allocated to his Employee Regular Pre-Tax Sub-Account and invested in accordance with his outstanding Investment Option specification. An Eligible Employee’s Catch-Up Pre-Tax Contributions under Section 3.1(b) shall be allocated to his Employee Pre-Tax Catch-Up Sub-Account and invested in accordance with his outstanding Investment Option specification.

4.5 Allocation of Employer Matching Contributions

          As of the end of each payroll period, the Employer Matching Contributions made on behalf of an Eligible Employee under Section 3.2 shall be allocated to his Employer Matching Sub-Account and shall be invested in accordance with the Investment Option specification designated by him for the investment of Regular Pre-Tax Contributions. Notwithstanding the preceding sentence, any Employer Matching Contributions with respect to recharacterized Regular Pre-Tax Contributions shall be made as soon as administratively practicable following the end of the Plan Year for which the Regular Pre-Tax Contributions were originally designated as Catch-Up Pre-Tax Contributions.

4.6 Allocation of Discretionary Contributions and Forfeitures

          (a) Any Discretionary Contributions under Section 3.3 shall be allocated among those Participants who are actively employed on the last day of the Plan Year in proportion to their respective Deferral Compensation (as limited by Code Section 401(a)(17)(B)) for the Plan Year.

          (b) Any forfeitures arising under Section 5.5 shall be used first to restore reemployed Participants’ prior forfeitures pursuant to Section 5.5 and then shall be applied either to reduce

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Employer contributions to the Plan (including corrective allocations made to the Plan and earnings on such corrective allocations) or to pay Plan expenses.

4.7 Maximum Additions

(a)	For purposes of this Section, the following terms have the following meanings:
	(1)	“Annual additions” means for any Limitation Year (as defined below):
		(A)	The sum of the following amounts credited to a Participant’s account in all qualified defined contribution plans (including an annuity contract described in Code Section 403(b)) maintained by the Employer or an Affiliate (or a predecessor employer as defined in Regulation §1.415(f)-1(c)):
			(i)	Employer contributions, even if such Employer contributions are excess contributions (as described in Code Section 401(k)(8)(B)) or excess aggregate contributions (as described in Code Section 401(m)(6)(B)), or such excess contributions or excess aggregate contributions are corrected through distribution;
			(ii)	Employee contributions, including mandatory contributions (as defined in Code Section 411(c)(2)(C) and Regulations thereunder) and voluntary employee contributions;
			(iii)	Forfeitures;
			(iv)	Contributions allocated to any individual medical account, as defined in Code Section 415(1)(2), that is part of a pension or annuity plan established under Code Section 401(h) and maintained by the Employer or an Affiliate;

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	(v)	Amounts attributable to post-retirement medical benefits allocated to a separate account for any Employee who, at any time during the Plan Year or any preceding Plan Year, is or was a key employee pursuant to Code Section 419A(d)), maintained by the Employer or an Affiliate; and
	(vi)	Effective as of January 1, 2008, the difference between the value of any assets transferred to the Plan and the consideration, where an Employee or the Employer transfers assets to the Plan in exchange for consideration that is less than the fair market value of the assets transferred to the Plan.
(B)	Notwithstanding the foregoing, a Participant’s annual additions do not include the following:
	(i)	The restoration of his accrued benefit by an Employer in accordance with Code Sections 411(a)(3)(D) or (7)(C) or resulting from the repayment of cashouts (as described in Code Section 415(k)(3)) under a governmental plan (as defined in Code Section 414(d)) for the Limitation Year in which the restoration occurs, regardless of whether the Plan restricts the timing of repayments to the maximum extent allowed by Code Section 411(a);
	(ii)	Catch-Up Pre-Tax Contributions made in accordance with Code Section 414(v) and Regulation §1.414(v)-1;

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(iii)	A payment made to restore some or all of the Plan’s losses resulting from an action (or a failure to act) by a fiduciary for which there is reasonable risk of liability for breach of a fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan) under ERISA or under other applicable federal or state law, where Participants who are similarly situated are treated similarly with respect to the payments. This includes payments to the Plan made pursuant to a Department of Labor order, the Department of Labor’s Voluntary Fiduciary Correction Program, or a court-approved settlement, to restore losses to a qualified defined contribution plan;
(iv)	Excess elective deferrals distributed in accordance with Regulation §§1.402(g)-1(e)(2) or (3);
(v)	Rollover Contributions (as described in Code Sections 401(a)(31), 402(c)(1), 403(a)(4), 403(b)(8), 408(d)(3) and 457(e)(16));
(vi)	Repayments of loans made to the Participant from the Plan;
(vii)	Repayments of prior Plan distributions described in Code Section 411(a)(7)(B) (in accordance with Code Section 411(a)(7)(C)) and Code Section 411(a)(3)(D) or repayment of contributions to a governmental plan (as defined in Code Section 414(d)) as described in Code Section 415(k)(3);

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(viii)	The direct transfer of a benefit or employee contributions from a qualified plan to a defined contribution plan;
(ix)	The reinvestment of dividends on employer securities under an employee stock ownership plan pursuant to Code Section 404(k)(2)(A)(iii)(II); and
(x)	Employee contributions to a qualified cost of living arrangement as defined in Code Section 415(k)(2)(B).

          (2) “Limitation Year” means the Plan Year unless changed by a Plan amendment. Notwithstanding the preceding, if the Plan is terminated effective as of a date other than the last day of the Limitation Year, the Plan shall be treated as if amended to change its Limitation Year.

(b) Code Section 415 Limit

          (1) Notwithstanding anything herein to the contrary, in no event may the annual additions (except for Catch-Up Pre-Tax Contributions under Code Section 414(v)) made with respect to a Participant for a Limitation Year under the Plan and any other defined contribution plan, within the meaning of Code Section 415(c), maintained by an Employer or an Affiliate exceed the lesser of $40,000 (as adjusted pursuant to Code Section 415(d)) or 100% of his annual Section 415 Compensation from the Employer or an Affiliate for the Limitation Year. The compensation limitation referred to in the preceding sentence shall not apply to any contribution for medical benefits (within the meaning of Code Sections 401(h) or 419A(f)(2)) which is otherwise treated as an annual addition under Code Sections 415(a)(2) or 415(l)(1). In the event a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-

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consecutive month period, the maximum amount indicated above shall be reduced pro rata in accordance with the number of months in the short Limitation Year.

          (2) If due to a reasonable error in calculating a Participant’s Section 415 Compensation for a Plan Year, due to the allocation of forfeitures or such other facts and circumstances as may justify the availability of this special rule, as determined by the Internal Revenue Service (“IRS”), the annual additions to the Participant’s Account under this Plan and any other defined contribution plan of the Employer exceeds the limitations of paragraph (1) for a Limitation Year, then the excess amounts may be corrected only in accordance with the IRS Employee Plans Compliance Resolution System (“EPCRS”) as set forth in Revenue Ruling 2008-50 or any superseding guidance including, but not limited to, the preamble to the final Code Section 415 Regulations as published in the Federal Register on April 5, 2007.

          (3) The provisions of Code Section 415 and Regulations thereunder are hereby incorporated by reference to the extent not provided above.

4.8 Plan Aggregation and Disaggregation under Code Section 415.

          (a) For purposes of applying the limitations of Section 4.7, all defined contribution plans (without regard to whether a plan has been terminated) ever maintained by the “employer” (or a “predecessor employer”) under which the Participant receives annual additions are treated as one plan. The “employer” means an Employer that adopts this Plan and its Affiliates, except that for purposes of Section 4.7 and this Section, the determination will be made by applying Code Section 415(h) and will take into account tax-exempt organizations under Regulation §1.414(c)-5, as modified by Regulation §1.415(a)-1(f)(1). For purposes of this subsection (a):

          (1) A former employer is a “predecessor employer” with respect to a participant in a plan maintained by an employer if the employer maintains a plan under

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which the participant had accrued a benefit while performing services for the former employer, but only if that benefit is provided under the plan maintained by the employer. For this purpose, the formerly affiliated plan rules in Regulation §1.415(f)-1(b)(2) apply as if the employer and the predecessor employer constituted a single employer under the rules described in Regulation §§1.415(a)-1(f)(1) and (2) immediately prior to the cessation of affiliation (and as if they constituted unrelated employers under the rules described in Regulation §§1.415(a)-1(f)(1) and (2) immediately after the cessation of affiliation), and cessation of affiliation was the event that gives rise to the predecessor employer relationship, such as a transfer of benefits or of plan sponsorship.

          (2) With respect to an employer of a Participant, a former entity that antedates the employer is a “predecessor employer” with respect to the Participant if, under the facts and circumstances, the employer is a continuation of all or a portion of the trade or business of the former entity for which the Participant performed services.

          (b) For purposes of aggregating plans under Code Section 415, a “formerly affiliated plan” of an employer is taken into account for purposes of applying the Code Section 415 limitations to the employer, but the formerly affiliated plan is treated as if it had terminated immediately prior to the “cessation of affiliation.” For purposes of this paragraph, a “formerly affiliated plan” of an employer is a plan that, immediately prior to the cessation of affiliation, was actually maintained by one or more of the entities that constitute the employer (as determined under the employer affiliation rules described in Regulation §§1.415(a)-1(f)(1) and (2)), and immediately after the cessation of affiliation, is not actually maintained by any of the entities that constitute the employer (as determined under the employer affiliation rules described in Regulation §§1.415(a)-1(f)(1) and (2)). For purposes of this paragraph, a “cessation of

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affiliation” means the event that causes an entity to no longer be aggregated with one or more other entities as a single employer under the employer affiliation rules described in Regulation §§1.415(a)-1(f)(1) and (2) (such as the sale of a subsidiary outside a controlled group), or that causes a plan to not actually be maintained by any of the entities that constitute the employer under the employer affiliation rules of Regulation §§1.415(a)-1(f)(1) and (2) (such as a transfer of plan sponsorship outside of a controlled group).

          (c) Two or more defined contribution plans that are not required to be aggregated pursuant to Code Section 415(f) and regulations thereunder as of the first day of a Limitation Year do not fail to satisfy the requirements of Code Section 415 with respect to a Participant for the Limitation Year merely because they are aggregated later in that Limitation Year, provided that no annual additions are credited to the Participant’s account after the date on which the plans are required to be aggregated.

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ARTICLE V

DISTRIBUTIONS

5.1 Normal Retirement

          Upon the retirement of a Participant on or after attaining his Normal Retirement Age, the value of his entire Account (as determined under Section 4.2) automatically shall become 100% vested and shall become payable as soon as administratively feasible following his retirement. The Plan Administrator shall thereupon direct the Trustee to distribute to the retiring Participant such amount in accordance with Section 5.6.

5.2 Disability

          Upon the Total and Permanent Disability of a Participant prior to his Severance from Service Date, the value of his entire Account (as determined under Section 4.2) automatically shall become 100% vested. As soon as administratively feasible following a Participant’s Total and Permanent Disability, the Plan Administrator shall direct the Trustee to distribute to the Participant such amount in accordance with Section 5.6. Notwithstanding the preceding sentence, pursuant to Section 5.7(b), consent of the Participant may be required before distribution can be made.

5.3 Death Before Retirement or Severance from Employment

          (a) Upon the death of a Participant before his Severance from Service Date, the value of his entire Account (as determined under Section 4.2) automatically shall become 100% vested and shall become payable in accordance with subsection (b). The Plan Administrator shall direct the Trustee to distribute to his Beneficiary such amount in accordance with Section 5.6. After his death and before distribution of his Account balance, his Beneficiary is entitled to select the Investment Options in which the Account will be invested in accordance with the rules then applicable to Participant selection of Investment Options.

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          (b) The Beneficiary shall receive the value of the Account (other than the Money Purchase Pension Plan Sub-Account, if any, and any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) in a lump sum or in installments under Section 5.6(c) as soon as administratively feasible, unless the Beneficiary defers the distribution subject to Section 5.8(c). The provisions of Appendix D apply to the Money Purchase Pension Plan Sub-Account (and any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) if a Participant dies with his surviving spouse as Beneficiary.

5.4 Death After Retirement or Severance from Employment

          (a) Upon the death of a Participant who has retired or otherwise severed from employment but who has not received (or begun receiving) his benefit pursuant to the Plan, the value of the vested portion of his Account (as determined under Sections 5.5(b)(2) and 4.2) shall become payable in accordance with subsection (b). For a Participant who has begun benefit payments under the Plan, the provisions of such form of distribution shall control payments upon his death. After his death and before distribution of his entire vested Account balance, his Beneficiary is entitled to select the Investment Options in which the Account will be invested in accordance with the rules then applicable to Participant selection of Investment Options.

          (b) The Beneficiary shall receive the value of the vested portion of the Account (other than the Money Purchase Pension Plan Sub-Account, if any, and any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) in a lump sum or in installments under Section 5.6(c) as soon as administratively feasible, unless the Beneficiary defers the distribution subject to Section 5.8(c). The provisions of Appendix D apply to the Money Purchase Pension Plan Sub-Account (and any other sub-account attributable

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to a money purchase pension plan as indicated in Appendix B or Appendix C) if a Participant dies with his surviving spouse as Beneficiary.

5.5 Severance from Employment

          (a) Reduction-in-Force — Upon the termination of employment of a Participant due to a reduction-in-force, as determined by the Plan Administrator, the value of his entire Account (as determined under Section 4.2) automatically shall become 100% vested.

(b) (1) Upon his severance from employment for any reason other than retirement under Section 5.1; disability under Section 5.2; death under Section 5.3; reduction-in-force under subsection (a) above; or a termination, partial termination or deemed partial termination of the Plan under Section 9.2, a Participant shall be entitled to a distribution of the value of the vested portion of his Account (as determined under paragraph (b)(2) below and Section 4.2).

          As soon as administratively feasible following a Participant’s severance from employment, the Plan Administrator shall direct the Trustee to distribute to such Participant the value of the vested portion of his Account. Notwithstanding the preceding sentence, pursuant to Section 5.7(b), consent of the Participant may be required before distribution can be made. However, if a Participant who severed his employment with an Employer is reemployed by an Employer or an Affiliate prior to receiving a distribution of his Account, he shall not be entitled to a distribution as provided in this Section 5.5 due to such severance, but shall be entitled to a distribution as determined herein upon a subsequent severance from employment for any reason.

(2) (A) A Participant always has a 100% vested percentage in his Employee Pre-Tax Contributions, Rollover Contributions, Employer Matching, Money Purchase Pension Plan, Vested Quest Diagnostics Common Stock

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Dividend and Vested Money Purchase Pension Plan Dividend Sub-Accounts, as applicable.

          (B) A Participant shall have a vested percentage in the balance of his Employer Prior Plan Matching Contributions made before 2009 determined in accordance with the following schedule:

Years of Vesting Service	Vested Interest
Less than 1 year	0	%
1 but less than 2 years	20	%
2 but less than 3 years	40	%
3 but less than 4 years	60	%
4 but less than 5 years	80	%
5 or more years	100	%

          (C) A Participant shall have a vested percentage in the balance of Employer Discretionary Contributions (if any) made after 2008 determined in accordance with the following schedule:

Years of Vesting Service	Vested Interest
Less than 2 years	0	%
2 but less than 3 years	20	%
3 but less than 4 years	40	%
4 but less than 5 years	60	%
5 but less than 6 years	80	%
6 or more years	100	%

          (D) Notwithstanding the foregoing, if a Participant is employed by an Employer or an Affiliate on the date he attains his Normal Retirement Age, the date of determination of his Disability or the date he dies, he shall be 100% vested in his entire Account.

          (c) In General — Any portion of a Participant’s Account in which he is not vested upon his Severance from Service Date for any reason will be forfeited as of the earlier of:

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(1)	the last day of the Plan Year in which the Participant incurs five (5) consecutive One-Year Periods of Severance; or
(2)	the distribution of the balance of the Participant’s entire vested Account.

                    For purposes of paragraph (2) above, a terminated Participant who has no vested benefit in his Account (other than a Rollover Contributions Sub-Account) is deemed to have received a distribution of the balance of his entire vested Account as of his Severance from Service Date.

          (d) Withdrawal of Vested Portion — If a withdrawal is made at a time when a Participant has a vested right to less than 100% of the value of his entire Account and the non-vested portion of his Account has not yet been forfeited pursuant to paragraph (c) above:

	(1)	separate sub-accounts shall be established for the Participant’s interest in his non-vested sub-accounts as of the time of distribution; and
	(2)	at any relevant time the Participant’s vested portion of the separate sub-accounts shall be an amount (“X”) determined by the formula:
X=P(AB+ (RxD))-(RxD).
	For purposes of the above formula: P is the vested percentage at the relevant time; AB is the particular sub-account balance at the relevant time; D is the amount of the distribution; and R is the ratio of such sub-account balance at the relevant time to such sub-account balance after distribution.

          (e) Application of Forfeitures — Forfeitures occurring during the Plan Year first shall be used to reinstate previously forfeited sub-accounts of reemployed Participants, if any, and any remaining forfeitures then will be used either to reduce Employer Contributions (only Employer Discretionary Contributions (if any), effective January 1, 2011) to the Plan or to pay Plan expenses.

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          (f) Restoration of Forfeitures

          (1) Notwithstanding anything herein to the contrary, if a Participant forfeits any portion of his Account pursuant to this Section but returns to the employ of an Employer or an Affiliate, the amount forfeited will be recredited to his Account if he repays to the Plan the full amount of the prior distribution from his Account, without interest, prior to the earlier of:

(A) five (5) consecutive One-Year Periods of Severance; or

(B) the 5^th anniversary of his Reemployment Commencement Date.

          In the case of a Participant whose Severance from Service Date occurred prior to his earning a vested interest in his Account (other than a Rollover Contributions Sub-Account) and who was deemed to have received a distribution of such vested interest under paragraph (c) above, the amount forfeited will be recredited to his Account if he is reemployed by an Employer or an Affiliate prior to incurring five (5) consecutive One-Year Periods of Severance.

          (2) A Participant’s vested percentage in the amount recredited under this paragraph (f) will thereafter be determined under the terms of the Plan as if no forfeiture had previously occurred. The monies required to effect the restoration of a Participant’s Accounts shall come from other Participant’s Accounts forfeited in accordance with this Section or, if necessary, additional Employer contributions.

          (g) If the Plan’s vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of a Participant’s vested percentage, each Participant who has completed three (3) or more Years of Vesting Service, may elect, within the period described below, to have his vested percentage determined without regard to such

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amendment or change. The period referred to in the preceding sentence will begin on the date the amendment of the vesting schedule is adopted and will end 60 days thereafter or, if later, 60 days after the later of:

                    (1) the date on which such amendment becomes effective; and

                    (2) the date on which the Participant is issued written notice of such amendment by the Plan Administrator.

          For purposes of this subsection (g), a Participant will be considered to have completed three (3) Years of Service if he has completed three (3) Years of Service, whether or not consecutive, without regard to the exceptions contained in Code Section 411(a)(4).

5.6 Method of Payment

          (a) Normal Form

          (1) The normal form of distribution under the Plan is a lump sum. All Participants are subject to this paragraph except such Participants as described in paragraph (3) who have a portion of their vested Account attributable to the Money Purchase Pension Plan Sub-Account (or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C). Lump sum payments from investments held in the Quest Diagnostics Incorporated Stock Fund may be distributed in cash or in Quest Diagnostics Common Stock, at the election of the Participant. In the absence of a valid election on the part of the Participant, payments from investments held in the Quest Diagnostics Incorporated Stock Fund will be distributed in cash. Payments from other investments will be made only in cash.

          (2) During the 180-day period ending on the day his distribution commences, a Participant may elect to have his Plan benefit paid in the normal form under paragraph (1) or in one of the options under subsection (c) in lieu of the normal form.

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(b) Election Procedures

          (1) During the 180-day period ending on the day his distribution commences, a Participant may elect to have his benefit hereunder paid in the normal form under subsection (a) or in one of the options under subsection (c) in lieu of the normal form.

          (2) A Participant who desires to have his benefit hereunder paid under one of the options under subsection (c) shall make such an election by making an Appropriate Request. An election by a Participant to receive his retirement benefit under one of the options provided in subsection (c) may be revoked by such Participant at any time and any number of times during the 180-day period ending on the day his benefit payments commence. After retirement benefit payments have commenced, no elections or revocations of an optional method will be permitted under any circumstances.

(c) Available Options

          (1) Monthly, quarterly or annual installments from the Trust Fund over a period not to exceed the lesser of: (A) 10 years; or (B) the life expectancy of the Participant or the joint life expectancies of him and his Beneficiary, in either case determined at the time payments commence. Life expectancies shall be determined when payments commence and shall not thereafter be recalculated. Installment payments shall be made pro-rata from the various sub-accounts within his Account.

          (2) An annuity contract, purchased from an insurance company (or similar source) by the Investment Committee utilizing the value of the vested portion of the Participant’s Account, which provides for equal monthly payments over his lifetime and which contains such other terms and provisions as may be approved in writing by him or as may be required under applicable Regulations.

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	(3) An annuity contract, purchased from an insurance company (or similar source) by the Investment Committee utilizing the value of the vested portion of the Participant’s Account, which provides for equal monthly payments over his lifetime and for such monthly payments (or one-half (½) or three-quarters(¾) thereof) to be continued after his death to his Beneficiary over the lifetime of the Beneficiary. If his Beneficiary is not living at the time of his death, no additional benefit shall be payable hereunder. Such annuity contract shall contain such other terms and provisions as may be approved in writing by him or as may be required under applicable Regulations.
	(4) An annuity contract, purchased from an insurance company (or similar source) by the Investment Committee utilizing the value of the vested portion of the Participant’s Account, which provides for equal monthly payments over his lifetime and in the event of his death before 120 monthly payments have been made, such payments shall be continued to his Beneficiary until the remainder of the 120 monthly payments have been made. Such annuity contract shall contain such other terms and provisions as may be approved in writing by him or as may be required under applicable Regulations. (This option is not available to a Beneficiary.)
5.7 Cash-Outs; Consent

          (a) If a Participant retires under Section 5.1, becomes disabled under Section 5.2 or severs from employment under Section 5.5 and the value (as determined under Section 4.2) of the vested portion of his Account does not exceed $1,000 as of the first Valuation Date (and its confirmation date) thereafter upon which such Account is valued for purposes of determining if it exceeds $1,000, the Plan Administrator shall direct the Trustee to distribute to him such amount in accordance with Section 5.6(a) as soon as administratively feasible following such Valuation Date (and its confirmation date). If the value of the vested portion of his Account

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exceeds $1,000 upon such Valuation Date (or its confirmation date), but is $1,000 or less as of any subsequent Valuation Date upon which such Account is valued for purposes of determining if it exceeds $1,000, the Plan Administrator shall direct the Trustee to distribute to him such amount in accordance with Section 5.6(a) as soon as administratively feasible following such Valuation Date. For purposes of this Section 5.7(a), the value of a Participant’s Account shall be determined by including that portion of the account that is attributable to rollover contributions (and earnings attributable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).

          (b) If a Participant becomes disabled under Section 5.2 or severs from employment under Section 5.5 and the value (as determined under Section 4.2) of the vested portion of his Account exceeds $1,000 (and such value exceeds $1,000 as of each subsequent Valuation Date (or its confirmation date) upon which such Account is valued for purposes of determining if it exceeds $1,000), then no distribution shall be made prior to his “required beginning date” under Section 5.8(f)(5) unless he consents to the making of such distribution through an Appropriate Request. Distribution shall commence no later than 90 days from the date his written consent is obtained. He shall be given a notice of the right to defer any distribution until his “required beginning date” under Section 5.8(f)(5). Such notification shall be addressed no less than 30 days and no more than 180 days prior to the date distribution commences. Notwithstanding the preceding sentence, distribution may commence less than 30 days after the notification was addressed, as long as the notification informs him that he has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution.

5.8 Payment of Benefits

          (a) Except as provided in subsection (b), in the event a Participant’s Account shall be due and payable under this Article V and he has not elected otherwise in accordance with the

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Plan, the payment to him of his Account shall begin not later than 60 days after the close of the Plan Year in which occurs the latest of:

(1) the date on which he attains age 65;

(2) the 10th anniversary of the date on which he commenced participation in the Plan; and

(3) his severance from employment with the Employer.

(b) The requirements of subsections (b) – (f) of this Section 5.8 will apply for purposes of determining required minimum distributions and will take precedence over any inconsistent provisions of the Plan. All distributions required under subsections (b) – (f) will be determined and made in accordance with the Regulations under Code Section 401(a)(9) and the minimum distribution incidental benefit requirements of Code Section 401(a)(9)(G).
	(c)	(1) The Participant’s entire interest will be, or will begin to be, distributed to him no later than his required beginning date.
	(2) As of the first distribution calendar year, distributions, if not made in a single-sum, may be made only over one of the following periods (or a combination thereof):
			(A) his life;
			(B) the lives of him and his designated beneficiary;
			(C) a period certain not extending beyond his life expectancy; or
		(D) a period certain not extending beyond the joint and last survivor expectancy of him and his designated beneficiary.
	(3) If he dies before distributions begin, his entire interest will be, or will begin to be, distributed no later than as follows:

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	(A) If his surviving spouse is his sole designated beneficiary, then except as provided in (D) below, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which he died, or by December 31 of the calendar year in which he would have attained age 70½, if later.
	(B) If his surviving spouse is not his sole designated beneficiary, distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which he died.
	(C) If there is no designated beneficiary as of the date of his death who remains a beneficiary as of September 30 of the year following the year of his death, his entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of his death.
	(D) If his surviving spouse is his sole designated beneficiary and the surviving spouse dies after him but before distributions to the surviving spouse begin, this paragraph (3), other than subparagraph (A), will apply as if the surviving spouse were the Participant.
For purposes of this subsection (c)(3) and subsection (e), unless subparagraph (D) above applies, distributions are considered to begin on his required beginning date. If distributions under an annuity purchased from any insurance company irrevocably commence to him before his required beginning date (or to his surviving spouse before the date distributions are required to begin under subparagraph (A)), the date distributions are considered to begin is the date distributions actually commence.

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          (4) Unless his interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with subsections (d) and (e) of this Section 5.8. If his interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and Regulations thereunder.

(d) (1) During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

          (A) the quotient obtained by dividing his account balance by the distribution period in the Uniform Lifetime Table in Regulation §1.401(a)(9)-9, using his age as of his birthday in the distribution calendar year; or

          (B) if his sole designated beneficiary for the distribution calendar year is his spouse, the quotient obtained by dividing his account balance by the number in the Joint and Last Survivor Table in Regulation §1.401(a)(9)-9, using their attained ages as of their birthdays in the distribution calendar year.

          (2) Required minimum distributions will be determined under this subsection (d) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the date of his death.

(e) (1) (A) If the Participant dies on or after the date required distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of his death is the quotient obtained by dividing his account balance by the longer of

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	his remaining life expectancy or the remaining life expectancy of his designated beneficiary, determined as follows:
		(i)	His remaining life expectancy is calculated using his age in the year of death, reduced by one for each subsequent year.
		(ii)	If his surviving spouse is his sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of his death using the surviving spouse’s age as of the spouse’s birthday in that year. For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.
		(iii)	If his surviving spouse is not his sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of his death, reduced by one for each subsequent year.
(B) If the Participant dies on or after the date required distributions begin and there is no designated beneficiary as of his death who remains a beneficiary as of September 30 of the year after the year of his death, the minimum amount that will be distributed for each distribution calendar year after

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the year of his death is the quotient obtained by dividing his account balance by his remaining life expectancy calculated using his age in the year of death, reduced by one for each subsequent year.
(2)	(A) Except as provided in subsection (c)(5), if the Participant dies before the date required distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of his death is the quotient obtained by dividing his account balance by the remaining life expectancy of his designated beneficiary, as determined under subsection (e)(1).
	(B) If he dies before the date required distributions begin and there is no designated beneficiary as of his death who remains a beneficiary as of September 30 of the year following the year of his death, distribution of his entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of his death.
	(C) If he dies before the date required distributions begin, his surviving spouse is his sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under subsection (c)(2)(A), this subsection (e)(2) will apply as if the surviving spouse were the Participant.

          (f) Notwithstanding Sections 5.8(c) – (e), a Participant or Beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of Code Section 401(a)(9)(H) (“2009 RMDs”), and who would have satisfied that requirement by receiving distributions that are (1) equal to the 2009 RMDs or (2) one or more payments in a

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series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancy) of the Participant and the Participant’s designated Beneficiary, or for a period of at least 10 years (“Extended 2009 RMDs”), will receive those distributions for 2009 unless the Participant or Beneficiary chooses not to receive such distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence. Further, and notwithstanding Section 5.10(b)(1), for purposes of the direct rollover provisions of Section 5.10, 2009 RMDs and Extended 2009 RMDs (both as defined above) also will be treated as eligible rollover distributions in 2009.

          (g) For purposes of this Section 5.8, the following words and phrases shall have the meanings indicated:

          (1) Designated beneficiary – The individual who is designated as the Beneficiary under Section 2.3 of the Plan and who is a designated beneficiary under Code Section 401(a)(9) and Regulation §1.401(a)(9)-1, Q&A 4.

          (2) Distribution calendar year – A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains his required beginning date. For distributions beginning after his death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to subsection (c)(3). The required minimum distribution for his first distribution calendar year will be made on or before his required beginning date. The required minimum distribution for other distribution calendar years, including the

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required minimum distribution for the distribution calendar year in which his required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

          (3) Life expectancy – Life expectancy as computed by use of one of the following tables, as appropriate: (i) Single Life Table, (ii) Uniform Life Table, or (iii) Joint and Last Survivor Table, found in Regulation §1.401(a)(9)-9.

          (4) Account balance – The account balance as of the last Valuation Date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the Valuation Date and decreased by distributions made in the valuation calendar year after the Valuation Date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

          (5) Required beginning date – April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or retires, except in the case of a Participant who is a 5% owner in which case it is April 1 of the calendar year following the calendar year in which he attains age 70½.

          (6) 5% owner — A Participant is treated as a 5% owner for purposes of this Section if he is a 5% owner as defined in Code Section 416 at any time during the Plan Year ending with or within the calendar year in which he attains age 70½. Once required

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distributions have begun to a 5% owner under this Section, they must continue to be distributed, even if he ceases to be a 5% owner in a subsequent year.

5.9 Direct Rollovers

          (a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid in a direct rollover directly to an eligible retirement plan specified by the distributee. For purposes of this Section, the following terms have the meanings below:

(b) (1) An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) a hardship distribution; (iv) a corrective distribution pursuant to Sections 4.1, 4.2, 4.3 or 4.7(b)(2); (v) a deemed distribution resulting from a defaulted loan under Section 6.1 that is not also an offset distribution; (vi) any distribution that is reasonably expected to total less than $200 during a calendar year; (vii) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (viii) any other distributions described in Regulation §1.402(c)-2. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income.

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However, such portion may be transferred only to an individual retirement account or annuity described in Code Sections 408(a) or (b), or to a qualified defined contribution plan described in Code Sections 401(a) or 403(b) that agrees to account separately for amounts so transferred, including accounting separately for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. An “eligible rollover distribution” also includes a distribution to a non-spouse Beneficiary designated by a Participant in accordance with Section 2.3, provided the distribution otherwise qualifies as an eligible rollover distribution hereunder and the distribution is made to an eligible retirement plan.
(2) An “eligible retirement plan” is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), a qualified trust described in Code Section 401(a) or an eligible plan under Code Section 457(b) maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to account separately for amounts transferred into such plan from this Plan. The definition of eligible retirement plan also shall apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Code Section 414(p).
	(A) Effective January 1, 2009, an “eligible retirement plan” for a distributee who is a designated beneficiary (as defined by Code Section 401(a)(9)(E)) of the Participant and who is not the surviving spouse of the Participant is an individual retirement account described in Code Section 408(a)

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	or an individual retirement annuity described in Code Section 408(b) that will be treated as an inherited IRA pursuant to Code Section 402(c)(11).
	(B) For eligible rollover distributions made after 2008 by a non-spouse designated beneficiary, an “eligible retirement plan” also includes a Roth IRA as described in Code Section 408A, provided that for eligible rollover distributions made in 2009, the same income and tax filing status restrictions that apply to a rollover from a traditional IRA into a Roth IRA also will apply to rollovers to a Roth IRA. A non-spouse designated beneficiary, other than a former spouse who is an alternate payee under a qualified domestic relations order, cannot elect to treat the Roth IRA as the beneficiary’s own. For taxable years beginning before January 1, 2010, a non-spouse designated beneficiary cannot make a qualified rollover contribution to a Roth IRA if the beneficiary has modified adjusted gross income exceeding $100,000 or is married and files a separate return.
(3) A “distributee” includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. Effective January 1, 2009, a distributee also includes an individual who is a designated beneficiary (as defined by Code Section 401(a)(9)(E)) of the Participant and who is not the surviving spouse of the Participant. For purposes of this paragraph, to the extent provided in applicable regulations, a trust maintained for the benefit of one or more designated beneficiaries will be treated in the same manner as a designated beneficiary.

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          (4) A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the distributee.

          (5) The Plan Administrator will adopt procedures for elections made pursuant to this Section. Within a reasonable period of time before payment of an eligible rollover distribution, the Plan Administrator will provide a notice to the distributee describing his rights under this Section and such other information as may be required under Code Section 402(f).

          (6) This Section is intended to comply with Code Section 401(a)(31) and will be interpreted in accordance with such Code Section and regulations thereunder.

5.10 Payment to Alternate Payee under QDRO

          (a) Notwithstanding any other provision of this Plan, if the Plan Administrator determines that a domestic relations order is a QDRO, unless the QDRO specifically provides otherwise, the alternate payee specified in the QDRO may elect, through an Appropriate Request, to receive a distribution of the amount assigned to him in the QDRO in accordance with Section 5.6(a). The Plan Administrator shall direct the Trustee to distribute to the alternate payee such amount as soon as administratively feasible following receipt of an Appropriate Request by the alternate payee. The Plan Administrator’s decision whether a domestic relations order is a QDRO is final and conclusive. An alternate payee for whom an Account is maintained under the Plan shall be considered a Participant for purposes of, e.g., the investment of, and designating a beneficiary for, his Account but shall not be eligible to have contributions made on his behalf except as may become necessary under Section 3.11.

          (b) Notwithstanding any other provision of the Plan, upon receipt of an executed QDRO, upon receipt of a joinder that references the Plan, or upon direction provided the Plan’s

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recordkeeper by the Plan Administrator, the Plan’s recordkeeper shall place a disbursement restriction upon the Participant’s Account. The scope and duration of such disbursement restriction shall be determined by procedures adopted by the Plan Administrator and applied in a uniform and nondiscriminatory manner.

          (c) An administrative charge, in an amount determined by the Plan Administrator, may be imposed on the Account of a Participant who is subject to a domestic relations order and on the separate Account, if any, established on behalf of the alternate payee specified in the order. Such charges shall be imposed pursuant to procedures adopted by the Plan Administrator and applied in a uniform and nondiscriminatory manner.

5.11 Distribution upon Severance from Employment

          A Participant’s Employee Regular Pre-Tax Sub-Account and Employee Pre-Tax Catch-Up Sub-Account may be distributed upon a “severance from employment,” as such term is defined under Code Section 401(k)(2)(B)(i)(I). However, such a distribution shall be subject to the other provisions of the Plan regarding distributions.

5.12 Voluntary Direct Transfers

          A Participant whose employment status has changed so that he no longer is eligible for active participation in the Plan and who is not expected to regain such eligibility in the foreseeable future, may request a distribution of his Account at any time prior to his Severance from Service Date. Such Account may be distributed only through transfer to another cash or deferred arrangement under Code Section 401(k) maintained by the Employer or an Affiliate under which the Participant currently is, or soon will be, eligible to participate. The provisions of Section 5.5(g) shall apply to the vesting schedule of such transferee plan as if an amendment to the vesting schedule of this Plan. Payments made pursuant to this Section shall operate as a

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complete discharge of the Trustee, the Committee, the Plan Administrator and the Trust Fund in respect to this Plan.

5.13 Restrictions on Certain Distributions

          (a) Amounts credited to a Participant’s Account attributable to Regular or Catch-up Pre-Tax Contributions or Employer Matching Contributions are not distributable prior to the earliest of the following events or other events permitted by the Code or applicable Regulations:

          (1) his Severance from Service (regardless of when the Severance from Service occurred), Total and Permanent Disability or death;

          (2) his attainment of age 59½;

          (3) his proven financial hardship under Section 6.2; or

          (4) the termination of the Plan without the establishment or maintenance by the Employer or an Affiliate of an alternative defined contribution plan as defined in Regulation §1.401(k)-1(d)((4)(i). A distribution that is made under this subparagraph (4) must be made in a lump-sum.

          (b) Notwithstanding any provision of this Plan to the contrary, to the extent that any optional form of benefit under this Plan permits a distribution prior to the Participant’s retirement, death, Total and Permanent Disability or Severance from Service Date and prior to Plan termination, the optional form of benefit is not available with respect to benefits attributable to assets (including the post-transfer earnings thereon) and liabilities that are transferred, within the meaning of Code Section 414(l), to this Plan from a money purchase pension plan qualified under Code Section 401(a) (other than any portion of those assets and liabilities attributable to after-tax voluntary Employee contributions or to a direct or indirect rollover contribution).

          (c) Nothing in this Section shall preclude the Plan Administrator from making a distribution to a Participant to the extent such distribution is determined by the Plan

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Administrator to be necessary to correct a qualification defect in accordance with the corrective procedures permissible under the EPCRS or any other voluntary compliance program.

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ARTICLE VI

LOANS AND WITHDRAWALS

6.1 Loans to Participants

          A Participant who is a “party in interest” as defined in ERISA Section 3(14) may, by making an Appropriate Request, request a loan from the Trust Fund. The following additional rules shall apply:

          (a) Loans shall be made available to all eligible Participants on a reasonably equivalent basis; provided that the Plan Administrator shall retain the power to approve or decline a loan and may make reasonable distinctions based upon creditworthiness, other obligations of the Participant, state laws affecting payroll deductions and any other factors that may adversely affect the Employer’s ability to deduct loan repayments from a Participant’s pay.

          (b) Effective for loans issued on or after July 15, 2009 and except with respect to pre-existing loans transferred to or merged into this Plan, a Participant may have only one (1) loan outstanding at any time. For purposes of this subsection (b), a loan that is in default under subsection (e) is treated as outstanding.

          (c) The minimum new loan amount shall be $1,000. If a Participant’s vested Account balance is insufficient to support the minimum loan amount loan because of the restrictions below, no loan shall be made. The maximum amount of any loan, when added to the outstanding balance of any existing loan from this Plan, shall be the lesser of (1) or (2):

          (1) $50,000, reduced by the excess of the highest outstanding balance of loans from the Plan during the one-year period ending on the day before the date the loan is made over the outstanding balance of loans from the Plan on the date the loan is made; or

          (2) One-half (½) of the value of the vested portion of the Participant’s Account on the date the loan is made.

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          For purposes of this limit, all plans of the Employer and its Affiliates shall be considered one plan. For purposes of this subsection (c), a loan that is in default under this Plan or another plan is treated as an existing loan, and interest accrued on such loan since it was deemed in default is considered part of the outstanding balance of such loan.

          (d) The Participant must agree in writing to pledge one-half (½) of the value (or, if lesser, the borrowed amount) of the vested portion of his Account in the Plan as security for the loan. All loans shall be repayable in substantially level payments of principal and interest, not less frequently than quarterly, over a period of not more than five (5) years, except that a loan used by the Participant to acquire or construct any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the Participant shall be repayable over a period of not more than ten (10) years. Notwithstanding the preceding provisions, loan repayments during a period of Qualified Military Service will be suspended under this Plan as permitted under Code Section 414(u)(4).

          (e) Any loans shall be made pursuant to a written Participant loan program contained in a separate written document, which is hereby incorporated by reference and made a part of the Plan. Such Participant loan program may be modified or amended in writing from time to time by the Plan Administrator without the necessity of amending this Section. Such loan program will include, but need not be limited to, the following:

                    (1) the identity of the person or positions authorized to administer the Participant loan program;

                    (2) the procedure for applying for loans;

                    (3) the basis on which loans will be approved or denied;

                    (4) limitations, if any, on the types and amounts of loans offered;

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          (5) the procedure for determining a reasonable rate of interest;

          (6) the procedure for repayment of the loan, e.g., under what circumstances repayment by payroll deduction is not required and whether prepayment (full or partial) is permitted); and

          (7) the events constituting default and the steps that will be taken to preserve Plan assets.

          (f) A loan is considered a separate investment option of the Participant’s Account. The amount of the loan shall be withdrawn from the investments in his Account in accordance with such procedures as the Plan Administrator shall determine. Payments of principal and interest against a loan shall be credited to the investments in his Account in accordance with such procedures as the Plan Administrator shall determine.

          (g) Notwithstanding anything in this Plan to the contrary, if a Participant defaults on a loan made pursuant to this Section, the loan default will be a distributable event to the extent permitted by the Code and Regulations.

          (h) The Plan Administrator shall apply the provisions of this Section in a uniform and nondiscriminatory manner that is not inconsistent with Regulations §2550.408b-1.

          (i) A married Participant with a sub-account arising from a money purchase pension plan may not make a loan under this Section 6.1 from such sub-account or from the Vested Money Purchase Pension Plan Dividend Sub-Account unless, during the 180-day period ending on the date on which the loan is secured, his spouse has filed a written consent to such loan with the Plan Administrator, which consent shall be notarized or witnessed by a representative of the Plan Administrator, and shall acknowledge the effect of the loan.

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          (j) Notwithstanding anything in this Section to the contrary, loans made prior to the Effective Date shall be subject to the terms of the Plan (or the Prior Plan) and the loan program in effect at the time such loan was made.

6.2 Hardship Withdrawals

          (a) Upon making an Appropriate Request, and with the approval of the Plan Administrator, a Participant shall be allowed to withdraw all or part of the value of his Account while still employed by the Employer. Withdrawn amounts may not be repaid to the Trust Fund. Withdrawals shall be charged against the available sub-accounts within the Account in such order as the Plan Administrator may determine. Within each sub-account, withdrawals shall be charged against the separate Investment Options under such procedures as the Plan Administrator may determine.

          (b) A Participant may make a withdrawal under this Section 6.2 only if the withdrawal is made on account of his immediate and heavy financial need, as determined under subsection (c)(1), and is necessary to satisfy such need, as determined under subsection (c)(2). The determination of the existence of financial hardship and the amount necessary to be withdrawn to satisfy the immediate financial need created by the hardship shall be made by the Plan Administrator in a uniform and nondiscriminatory manner, in accordance with the standards and restrictions set forth in subsection (c) below. A Participant requesting a withdrawal hereunder may be required to submit whatever documentation the Plan Administrator, in its sole discretion, deems necessary to establish the existence of a financial hardship and the amount necessary to be withdrawn to satisfy the need created by the hardship.

(c) (1) Immediate and heavy financial need. A withdrawal will be considered to be made on account of an immediate and heavy financial need of the Participant for purposes of subsection (b) only if it is for:

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	(A) Expenses of him, his spouse, children or dependents (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2) and (d)1)(B)) for (or necessary to obtain) medical care that would be deductible under Code Section 213(d) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income);
	(B) Costs directly related to the purchase or construction of his principal residence (excluding mortgage payments);
	(C) Payment of tuition, related educational fees and room and board expenses for up to the next twelve (12) months of post-secondary education for him, his spouse, children, or dependents (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2) and (d)1)(B));
	(D) Payments necessary to prevent his eviction from his principal residence or foreclosure on the mortgage of his principal residence;
	(E) Payments for burial or funeral expenses for his deceased parent, spouse, children, or dependents (as defined in Code Section 152 without regard to Code Section 152(d)(1)(B)); or
	(F) Expenses for the repair of damage to his principal residence that would qualify for the casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of his adjusted gross income).
(2) Amount necessary to satisfy the need. A withdrawal will be considered to be in an amount necessary to satisfy a Participant’s need under paragraph (1) for purposes of subsection (b) only if:
	(A) It does not exceed the amount of the need under paragraph (1);

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	(B) He has obtained all non-hardship distributions and non-taxable loans he is eligible for, and is able to provide collateral for, under any plan the Employer or an Affiliate may sponsor (including this Plan); and
	(C) He may not make any Employee Pre-Tax Contributions under Section 3.1 for a period of six (6) months after his withdrawal, nor may he make any other elective contributions to any plan of the Employer or an Affiliate as described in Regulation §1.401(k)-1(d)(2)(iv)(B)(4).
	(D) Notwithstanding subparagraphs (A) through (C), his withdrawal may be considered to be in an amount necessary to satisfy a need under paragraph (1) if it satisfies a method prescribed under Regulation §1.401(k)-1(d)(2)(iv)(C).
	(E) A Participant may make a hardship withdrawal under Sections 6.2(c)(1)(A), (C) and (E) as it relates to his “primary Beneficiary” in the same manner as a hardship withdrawal for a spouse or other dependent if such hardship withdrawal satisfies all the requirements of this Section. For this purpose, a “primary Beneficiary” is an individual named as a Beneficiary who has an unconditional right to all or a portion of the Participant’s Account upon his death.
(d) In addition to the amount necessary to meet the immediate financial need created by the hardship, the Participant also may withdraw an amount necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution.
(e) A Participant’s hardship withdrawal under this Section 6.2 may not be made from a sub-account arising from a money purchase pension plan, qualified matching or safe harbor matching contributions, qualified non-elective contributions, the Vested Money Purchase Pension Plan Dividend Sub-Account or, with respect to sub-accounts arising from employee pre-

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tax contributions, earnings thereon allocated to such sub-accounts as of a date after December 31, 1988.

6.3 Non-Hardship Withdrawals

          (a) A Participant who remains employed by an Employer or an Affiliate after his Normal Retirement Date may elect, as provided in this Section, to receive distribution of all or any part of his Account in the form provided under Article V at any time following such date.

          (b) A Participant who is employed by an Employer or an Affiliate and who has attained age 59½ may elect, as provided in this Section, to make a cash withdrawal from his vested Account, other than his Money Purchase Pension Plan Sub-Account, any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C or any other sub-account so identified in Appendix C.

          (c) A Participant may at any time make an Appropriate Request to withdraw all or part of his Prior Plan Rollover Contributions Account.

          (d) Any withdrawal elected pursuant to this Section 6.3 shall be made through an Appropriate Request, and shall be paid as soon as administratively feasible following receipt of the Appropriate Request. Withdrawn amounts may not be repaid to the Trust Fund.

          (e) Withdrawals shall be charged against the available sub-accounts within the Account in such order as the Plan Administrator shall determine. Within each sub-account, withdrawals shall be charged against the separate Investment Options under such procedures as the Plan Administrator may determine.

6.4 Withdrawal of Dividends

          (a) Under procedures established by the Plan Administrator, a Participant:

          (1) may elect on a quarterly basis to receive a direct payment of any cash dividends on Quest Diagnostics Common Stock otherwise allocable to his Account; or

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          (2) may reinvest such cash dividends, in which case they shall be allocated to his Account.

          If a Participant who has not made an election under Article V to commence receiving distribution of his Account does not file an election pursuant to subsection (a)(1), he will be deemed to have elected reinvestment in accordance with subsection (a)(2). If a Participant has made an election under Article V to commence receiving distribution of his Account which is pending during the ten (10) business day period which begins fifteen (15) business days prior to the dividend payment date, and does not file an election pursuant to subsection (a)(1), he will be deemed to have elected reinvestment in accordance with subsection (a)(2) only with respect to the portion of his Account which is not being distributed. If a Participant has made a request for a hardship withdrawal pursuant to Section 6.2 which is pending during the ten (10) business day period which begins fifteen (15) business days prior to the dividend payment date or has had a hardship withdrawal approved during such period, he will be deemed to have elected a direct cash payment in accordance with subsection (a)(1) for that quarterly dividend payment and such election will remain in effect for future cash dividend payments until changed.

          In no event shall any distribution of cash dividends on Quest Diagnostics Common Stock paid into the Trust Fund be made pursuant to this Section 6.4 later than 90 days following the end of the Plan Year in which such dividends were paid into the Trust Fund.

          Stock dividends on Quest Diagnostics Common Stock shall be reinvested in the Quest Diagnostics Incorporated Stock Fund.

          (b) A Participant’s election to receive direct payment of dividends under Section 6.4(a)(1) must be made during the ten (10) business day period which begins fifteen (15) business days prior to the dividend payment date. The dividends with respect to which he may

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elect a direct payment under Section 6.4(a)(1) are 100% of the cash dividends on shares of Quest Diagnostics Common Stock in the Quest Diagnostics Incorporated Stock Fund and allocated to his Account as of the record date for the dividend (which, for Plan purposes, shall be determined on the “ex-dividend date,” e.g., three (3) business days prior to the record date), provided that the total cash dividend that would be payable if he elected a direct payment of 100% of dividends subject to his election must equal or exceed a de minimis amount. The initial de minimis amount is $10, and may be increased in the discretion of the Plan Administrator.

          (c) Any election under this Section 6.4 shall continue in effect until revoked prospectively by the Participant. Any such election or revocation shall be made at such time and in such manner as the Plan Administrator shall specify.

          (d) If, with respect to any cash dividends declared on shares of Quest Diagnostics Common Stock, Quest Diagnostics authorizes the direct payment under Section 6.4(a)(1) of less than 100% of such cash dividends, the Participant may elect, in accordance with uniform procedures established by the Plan Administrator, a direct payment under this Section 6.4 of such percentage.

6.5 Certain Dividends

          (a) Cash dividends on Quest Diagnostics Common Stock that are received on the portion of a Participant’s Account other than the Money Purchase Pension Plan Sub-Account (or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) that are not fully vested, and that are allocated to the Quest Diagnostics Incorporated Stock Fund, shall be directed to the Vested Quest Diagnostics Common Stock Dividend Sub-Account when received by the Trust Fund and shall be 100% vested upon receipt.

          (b) Cash dividends on Quest Diagnostics Common Stock that are received on the portion of a Participant’s Money Purchase Pension Plan Sub-Account (or any other sub-account

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attributable to a money purchase pension plan as indicated in Appendix B or Appendix C) that is not fully vested, and that are allocated to the Quest Diagnostics Incorporated Stock Fund, shall be directed to the Vested Money Purchase Pension Plan Dividend Sub-Account when received by the Trust Fund and shall be 100% vested upon receipt.

6.6 Qualified Reservist Distribution

          (a) Upon making an Appropriate Request, a Participant who is a member of a reserve component or is ordered or called to active duty for a period in excess of 179 days or an indefinite period shall be allowed to withdraw all or part of the value of his Account attributable to his Employee Pre-Tax Contributions.

          (b) In order to be eligible for a distribution described in a) above, the Participant must be ordered or called-up to active duty after September 11, 2001.

          (c) The distribution under this Section must be made during the period beginning on the date of such order or call and ending no later than the close of the period of active duty.

          (d) Effective January 1, 2010, a Participant in Qualified Military Service for a period of more than 30 days shall be deemed to have incurred a severance from employment and may elect to receive a distribution from the Plan on account of his severance from employment under Code Section 401(k)(2)(B)(i)(I).

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ARTICLE VII

TRUST FUND

7.1 Contributions

          Contributions by the Employer and Participants as provided for in Article III shall be paid over to the Trustee. All Contributions shall be irrevocable, except as otherwise provided in this Plan, and may be used only for the exclusive benefit of Participants and their Beneficiaries or for the payment of reasonable expenses of administering the Plan.

7.2 Trustee

          (a) Quest Diagnostics will maintain an agreement with the Trustee under which the Trustee will receive, invest and administer as a trust fund Contributions made under this Plan, and earnings or losses thereon, in accordance with the Trust Agreement. Such Trust Agreement is incorporated by reference as a part of the Plan, and the rights of all persons entitled to benefits hereunder are subject to the terms of the Trust Agreement. The Trust Agreement specifically provides, among other things, for the investment and reinvestment of the Trust Fund and the income thereof, the management of the Trust Fund, the responsibilities and obligations of the Trustee, removal of the Trustee and appointment of a successor, accounting by the Trustee and the disbursement of the Trust Fund. No Plan fiduciary, other than the Trustee itself, shall be liable for any act or omission of any Trustee with respect to any duties allocated or delegated to such Trustee.

          (b) Except to the extent provided in the Trust Agreement, the Trustee shall have no authority to manage the Trust Fund. Participants may direct the investment of amounts credited to their Accounts and future contributions to their Accounts among the then-available Investment Options in accordance with Section 7.4.

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          (c) Upon the direction of Quest Diagnostics, the Trustee shall maintain all or any part of the Trust Fund in a master trust along with assets allocable to any other tax-qualified employee pension benefit trust sponsored by Quest Diagnostics or an Affiliate. Pursuant to such a master trust agreement, the Trustee shall commingle such assets and make joint or common investments and carry joint accounts on behalf of this Plan and such other trust or trusts, allocating undivided shares or interests in such investments or accounts or any pooled assets of the two or more trusts in accordance with their respective interests, provided that the Trustee also shall maintain records of the separate interests of each such trust participating in the master trust.

7.3 Investment Options

          (a) The Trust shall consist of such Investment Options as may be designated from time to time by the Investment Committee. An Investment Option may consist of:

          (1) an interest or interests in registered regulated investment companies (“mutual funds”) that are independent of, or proprietary to, the Trustee or its affiliates; or

          (2) an interest or interests in a group, common or collective trust maintained for the collective investment of employee benefit plans qualified under Code Section 401(a) that is independent of, or proprietary to, the Trustee or its affiliates. If a group, common or collective investment fund or trust maintained by the Trustee (or other person) that may be invested in by a plan and trust qualified under Code Sections 401(a) and 501(a) is so used, the governing provisions of such fund or trust shall be incorporated by reference to the extent required by applicable law.

          (b) Notwithstanding anything in subsection (a) to the contrary, one of the Investment Options shall be the Quest Diagnostics Incorporated Stock Fund described in Section 7.5.

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7.4 Investment Direction by Participants

          (a) Participants shall direct the investment of their Accounts and future contributions to their Accounts among the then-available Investment Options in a manner prescribed by the Plan Administrator or the recordkeeper, which directions shall be in accordance with such rules and procedures as the Plan Administrator or the recordkeeper may establish. It is intended that the Plan meet the requirements of ERISA Section 404(c) and that it be construed, maintained and administered as an “ERISA Section 404c plan” within the meaning of Regulation §2550.404(c) –1(b)(1). Exchanges between Investment Options shall be subject to any restrictions imposed by the Investment Options and such procedures as have been adopted by the Plan Administrator or the recordkeeper. The Plan Administrator or the recordkeeper may modify such procedures after providing reasonable notification to Participants. Subject to such rules and procedures as the Plan Administrator may establish, a Participant’s investment directions shall remain in effect until changed by him.

          (b) In the absence of any valid Investment Option specification to the contrary, a Participant’s Account automatically shall be invested in the applicable default investment alternative specified by the Investment Committee. It is intended that such default Investment Option(s) be a “qualified default investment alternative” in compliance with ERISA Section 404(c)(5). Commencing on the date that is thirty (30) days after the Employee’s date of hire with an Employer (or such other date as the Plan Administrator shall designate), the Employee may change his default Investment Option specification in accordance with subsection (a).

          (c) A loan under Section 6.1 is considered a self-directed investment by the borrower of the portion of his Account that is invested in the note reflecting such loan that he executed in accordance with the provisions of Section 6.1. Notwithstanding any other provision of the Plan

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to the contrary, no Account other than the borrower’s Account shall share in the interest paid on the loan or bear any expense or loss incurred because of the loan.

          (d) The Plan Administrator may provide that any transactional costs or charges imposed or incurred for an Investment Option shall be charged to the Account of the Participant directing such investment. Transactional costs and charges shall include, but are not limited to, charges for the acquisition, sale or exchange of assets, brokerage commissions, service charges and professional fees.

          (e) A Participant may not elect to have more than twenty-five percent (25%) of Contributions on his behalf on a pay period basis allocated to the Quest Diagnostics Incorporated Stock Fund. If twenty-five percent (25%) or more of the value of a Participant’s Account is attributable to an investment in the Quest Diagnostics Incorporated Stock Fund, no future investments into the Quest Diagnostics Incorporated Stock Fund will be permitted until the investment in the Quest Diagnostics Incorporated Stock Fund comprises less than twenty-five percent (25%) of the value of his Account. Future investments into the Quest Diagnostics Incorporated Stock Fund then will be permitted, subject to the preceding sentences of this paragraph (e). Notwithstanding the preceding sentences of this paragraph (e), to the extent any portion of the Employer Matching Contribution or of any Employer Discretionary Contribution is made in Quest Diagnostics Common Stock, that portion shall be invested as a contribution in-kind to the Quest Diagnostics Incorporated Stock Fund.

7.5 Quest Diagnostics Incorporated Stock Fund

          One of the Investment Options shall be the Quest Diagnostics Incorporated Stock Fund, which will be invested primarily in Quest Diagnostics Common Stock, provided such stock qualifies as qualifying employer securities within the meaning of ERISA Section 407(d)(5). The Plan is intended to be an eligible individual account plan under ERISA Section 407(d)(3). The

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portion of the Plan comprised of the Quest Diagnostics Incorporated Stock Fund shall be an employee stock ownership plan under Code Sections 409 and 4975(e)(7), which shall include the share distribution requirements of Code Section 409(h) and the participant pass-through voting rights required under Code Section 409(e). The level of Plan assets invested in such fund shall be determined by Participants’ Investment Option specifications and, subject to any restrictions that may be imposed under Section 7.4(e), may consist of up to 100% of all Plan assets; provided that in no event may any portion of a Participant’s Account be required to be maintained in the Quest Diagnostics Incorporated Stock Fund. With respect to the Quest Diagnostics Incorporated Stock Fund, the Plan is intended to comply with Quest Diagnostics’ securities law compliance policy and with applicable federal securities laws.

7.6 Expenses of Plan and Trust

          All expenses of administering the Plan and the Trust Fund, including expenses of the Committee or the Trustee and direct expenses of the Plan Administrator, shall be paid from the Trust Fund, provided that such expenses (or a portion thereof) may, in the discretion of Quest Diagnostics, be paid by the Employers. If the Employers do not pay all such expenses, expenses may be charged to the Accounts of Participants and alternate payees.

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ARTICLE VIII

PLAN ADMINISTRATION

8.1 General

          (a) A Plan fiduciary shall have only those specific powers, duties, responsibilities, and obligations that are explicitly given such person under the Plan and Trust Agreement. A person may serve in more than one fiduciary capacity with respect to the Plan and may employ one or more persons to render advice with regard to his fiduciary responsibilities. If a person is serving as a fiduciary without compensation, all expenses reasonably incurred by such person shall be reimbursed by the Employers or from the assets of the Trust Fund.

          (b) To the extent provided by ERISA Section 405(c), a fiduciary may allocate any of his responsibilities for the operation and administration of the Plan. However, a fiduciary may not allocate any responsibilities as contained herein relating to the management or control of the Trust Fund except: (1) through the employment of an investment manager; (2) to the Trustee as provided in the Trust Agreement relating to the Trust Fund; (3) to the extent Participants select among the available Investment Options; or (4) through delegation by the Committee, in accordance with Section 8.3, to another committee (the “Investment Committee”) of the responsibility to add, change or delete Investment Options and make other investment-related discretionary decisions, or to another committee (the “Appeals Committee”) of the responsibility to make final determinations of claims for benefits.

8.2 Quest Diagnostics

          Quest Diagnostics established and maintains the Plan for the benefit of Eligible Employees of the Corporation and of the other participating Employers. Quest Diagnostics also is the “administrator” of the Plan within the meaning of ERISA Section 3(16)(A). In accordance with specific provisions of the Plan, Quest Diagnostics has delegated certain of its rights and

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obligations to the Employer, the Trustee and the Committee and these parties shall be solely responsible for these, and only these, delegated rights and obligations. In particular, the Committee shall be the “named fiduciary” of the Plan, as that term is defined in ERISA Section 402(a)(2), with the authority (including the authority as provided in Section 8.3 to delegate duties and responsibilities) to control and manage the operation and administration of the Plan and the authority to select the investment alternatives available under the Plan (other than the Quest Diagnostics Incorporated Stock Fund) and any investment managers; provided that the Committee shall not be responsible for any responsibility allocated to a Trustee, an investment manager or an Employer.

8.3 Benefits Administration Committee; Delegation

          (a) The Board shall appoint a Benefits Administration Committee (the “Committee”) of not less than three (3) persons to hold office at the pleasure of the Board. Members of the Committee shall be paid no compensation from the Trust Fund for their service on the Committee. Except as may be required by law, no bond or other security will be required of any Committee member.

          (b) In accordance with the provisions of the Plan, the Committee has been delegated certain administrative functions relating to the Plan with all powers necessary to enable it properly to carry out such duties. In particular, the Committee shall have discretionary authority to construe the Plan, and to determine, consistent with the terms of the Plan, all questions that may arise thereunder relating to:

          (1) the eligibility of individuals to participate in the Plan;

          (2) the amount of benefits to which any Participant or Beneficiary may become entitled hereunder; and

          (3) any situation not specifically covered by the provisions of the Plan.

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          The Committee has designated the Appeals Committee, whose members need not be members of the Committee, to review appeals from initial claim denials and which shall have the responsibility for determining the eligibility of any Participant or Beneficiary for benefits under the Plan.

          (c) The determination of the Committee (or its designate) shall be final and binding on all interested parties. All disbursements from the Trust Fund by the Trustee shall be made upon, and in accordance with, the written directions of the Committee. When the Committee is required in the performance of its duties hereunder to administer or construe, or to reach a determination under any of the provisions of the Plan, it shall do so on a uniform, equitable and nondiscriminatory basis.

          (d) The Committee has designated the Investment Committee, whose members need not be members of the Committee, to review and monitor the Investment Options under the Plan, and at any time to add, change or delete the available Investment Options and make other investment-related discretionary decisions; provided that neither the Committee nor or its designate (including the Investment Committee) has the power to remove the Quest Diagnostics Incorporated Stock Fund as an available Investment Option under the Plan.

          (e) The Committee also shall be responsible for communicating with Participants as needed to maintain Plan compliance with ERISA Section 404(c) including, but not limited to, the receipt and transmission of Participants’ directions as to the investment of their Accounts and the formation of policies, rules, and procedures pursuant to which Participants may give investment instructions with respect to the investment of their Accounts.

          (f) The Committee has delegated certain administrative function to Quest Diagnostics acting as the “Plan Administrator.” Notwithstanding the preceding, in its capacity as

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Plan Administrator, Quest Diagnostics will have no duties and responsibilities which may be considered administrative in nature but involve an exercise of discretion within the meaning of ERISA Section 3(21)(A)(iii).

          (g) The Plan Administrator has delegated its responsibilities for the day-to-day administration of the Plan to the Human Resources Department of Quest Diagnostics. The Human Resources Department may delegate all or any portion of such ministerial duties to a recordkeeper or other service provider to the Plan. References in the Plan to forms, notices or applications submitted to, and procedures established by, the Plan Administrator or the Committee are deemed to include submissions to and procedures established by the Human Resources Department, the Plan’s recordkeeper or other service provider to the Plan. Further, the Plan Administrator may specifically designate some other person with whom or which such instruments may be filed.

8.4 Organization and Operation of the Committee

          (a) The Committee shall choose from among its members a chairman and a secretary. Actions of the Committee shall be determined by the vote of a majority of its members. Either the chairman or the secretary of the Committee may execute any certificate or other written direction on behalf of the Committee. The Committee may adopt and enforce such rules of procedure as may be appropriate for the administration of the Plan and as are consistent with its terms. The Committee may establish a charter setting forth principles under which the Committee shall conduct its business.

          (b) The Committee shall hold meetings upon such notice, at such place or places and at such time or times as the Committee may from time to time determine. Meetings may be called by the chairman or by any two members. A majority of the members of the Committee at

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the time in office shall constitute a quorum for the transaction of business. The Committee also may act by written consent in lieu of a meeting.

          (c) A member may resign from the Committee at any time by giving written notice of his resignation to Quest Diagnostics at least thirty (30) days in advance, unless Quest Diagnostics waives the requirement of written notice. The Board shall appoint replacement Committee members. An individual employed by Quest Diagnostics or an Affiliate when appointed a member of the Committee shall be deemed to have resigned from the Committee effective as of the date he ceases to be employed by Quest Diagnostics and its Affiliates, unless the Board shall affirmatively act to retain him on the Committee.

          (d) Nothing herein shall prevent a Committee member from being a Participant, or from acting on Plan matters which affect himself by virtue of affecting all Participants generally. However, a Committee member shall not act on any matter which affects himself specially. If application of the preceding sentence results in there not being a quorum to act on any matter, the Board shall appoint the necessary number of temporary Committee members to take action.

          (e) The Committee may retain such accountants, actuaries, attorneys, advisors and other persons as it deems necessary or desirable to the administration of the Plan. The Committee also may delegate its authority and duties to such persons it designates, including persons other than Committee members, and shall not be liable for any act or omission of a person so designated.

          (f) The Committee shall be entitled to rely upon all records furnished by the Employers and upon tables, valuations, certificates and reports furnished by the accountants, actuaries, attorneys, advisors and other persons it has appointed and upon all opinions given by any counsel selected or approved by the Committee or by Quest Diagnostics. References in this

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Plan to the Committee shall be construed to include any person to whom the Committee has delegated authority in regard to the particular matter.

          (g) The procedures described in this Section also shall apply to the Investment Committee, the Appeals Committee and such other committee or subcommittee as may be established by the Committee.

8.5 Employers: Indemnification and Information

          (a) The Employers shall indemnify each member of the Board, the Committee and any employees of the Employers or of Quest Diagnostics to whom any fiduciary responsibility with respect to the Plan is allocated or delegated, from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act or omission to act in connection with the performance of their fiduciary duties, responsibilities and obligations under the Plan and under ERISA, except for liabilities and claims arising from such fiduciary’s willful misconduct or gross negligence. For such purpose, the Employers may obtain, pay for and keep current a policy or policies of insurance. Where such policy or policies of insurance are purchased, there shall be no right to indemnification under this Section 8.5, except to the extent of any deductible amount under the policy or policies or with regard to covered claims in excess of the insured amount. No Plan assets may be used for any indemnification.

          (b) The Employers shall supply such full and timely information for all matters relating to the Plan as (1) the Committee, (2) the Plan Administrator, (3) the Trustee and (4) the accountant engaged on behalf of the Plan by Quest Diagnostics may require for the effective discharge of their respective duties. The Committee, the Plan Administrator and the Trustee shall be entitled to rely upon all records furnished by the Employers.

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8.6 Claims for Benefits — Initial Review

          (a) All claims for benefits under the Plan shall be submitted to the Plan Administrator, which shall have the initial responsibility for determining the eligibility of any Participant or Beneficiary for benefits. All claims for benefits shall be made in writing and shall set forth the facts which such Participant or Beneficiary believes to be sufficient to entitle him to the benefit claimed. The Plan Administrator may adopt forms for the submission of claims for benefits, in which case all claims for benefits shall be filed on such forms. Upon request, the Plan Administrator shall provide Participants and Beneficiaries with all such forms.

          (b) Upon receipt by the Plan Administrator of a claim for benefits, it shall determine all facts which are necessary to establish the right of an applicant to benefits under the provisions of the Plan and the amount thereof as herein provided. The claimant shall be notified in writing by the Plan Administrator of its decision with respect to such claim within 90 days after the receipt of written request for benefits.

          (c) If any claim for benefits is denied, the notice shall be written in a manner calculated to be understood by the claimant and shall include:

          (1) The specific reason or reasons for the denial;

          (2) Specific references to the pertinent Plan provisions on which the denial is based;

          (3) A description of any additional material or information necessary for the applicant to perfect the claim and an explanation why such material or information is necessary;

          (4) An explanation of the Plan’s claim review procedures; and

          (5) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following denial of his appeal.

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          (d) If special circumstances require an extension of time for processing the initial claim, a written notice of the extension and the reason therefor shall be furnished to the claimant by the Plan Administrator before the end of the initial 90-day period. In no event shall such extension exceed 180 days after the receipt of the initial claim for benefits.

8.7 Denial of Benefits — Appeal Procedure

          (a) In the event a claim for benefits is denied, the claimant or his duly authorized representative, at the claimant’s sole expense, may appeal the denial by filing a written request for review with the Appeals Committee within 60 days of the receipt of written notice of denial or 60 days from the date such claim is deemed to be denied. In pursuing such appeal, the claimant or his duly authorized representative may review pertinent Plan documents, and may submit issues and comments in writing.

          (b) The decision on review shall be made by the Appeals Committee within 60 days of receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review. If such an extension of time is required, written notice of the extension shall be furnished to the claimant before the end of the original 60-day period, and such extension notice shall indicate the special circumstance requiring an extension of the time and the date by which the Appeals Committee expects to render a decision.

          (c) The decision on review will consider all information submitted, regardless whether such information was submitted or considered in the original decision. The decision on review shall be in writing, written in a manner calculated to be understood by the claimant, and shall include:

          (1) The specific reason or reasons for the denial;

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          (2) Specific references to the pertinent Plan provisions on which the denial is based;

          (3) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records or other information relevant to the claimant’s claims; and

          (4) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following denial of his appeal on review.

          (d) If the decision on review is not furnished within the time specified above, the claim shall be deemed denied on review. The decision of the Appeals Committee upon review will be final and binding on all parties.

8.8 Other Provisions relating to Claims for Benefits

          For purposes of Sections 8.6 and 8.7, a document, record or other information shall be considered “relevant” to a claimant’s claim if such document, record or other information:

          (a) was relied upon in making the benefit determination;

          (b) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or

          (c) demonstrates compliance with the administrative processes and safeguards required in making the benefit determination.

8.9 Records

          All acts and determinations of the Committee, or of the Investment Committee or Appeals Committee appointed by the Committee pursuant to Section 8.3, shall be duly recorded by the secretary thereof and all such records, together with such other documents as may be necessary in exercising its duties under the Plan shall be preserved in the custody of such

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secretary. Such records and documents shall at all times be open for inspection and for the purpose of making copies by any person designated by Quest Diagnostics. The Committee shall provide such timely information, resulting from the application of its responsibilities under the Plan, as needed by the Trustee and the accountant engaged on behalf of the Plan by Quest Diagnostics, for the effective discharge of their respective duties.

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ARTICLE IX

AMENDMENT AND TERMINATION OF THE PLAN; MERGERS AND TRANSFERS

9.1 Amendment of the Plan

          (a) The Chief Executive Officer, the President and the Vice President of Human Resources of Quest Diagnostics, and any other officer of Quest Diagnostics who is authorized by the Board, shall have the right at any time, with approval of the Board, to amend the Plan in whole or in part, including retroactively to the extent necessary. Notwithstanding the preceding sentence, such Board approval shall not be required for:

          (1) any technical or clarifying amendment deemed necessary or appropriate to facilitate the administration, management or interpretation of the Plan or to conform the Plan thereto or to qualify and maintain the Plan as a plan meeting the requirements of the Code or other applicable law;

          (2) any amendment adding or modifying an operational provision resulting from a corporate transaction (e.g., service-related issues);

          (3) any amendment that does not, in the opinion of the relevant officer, increase the benefits under the Plan or otherwise increase the Employers’ costs with respect to the Plan; or

          (4) the participation in the Plan as an Employer by any entity.

          (b) The duties, powers and liability of the Trustee shall not be increased without its written consent. The amount of benefits which, at the later of the adoption or effective date of such amendment, shall have accrued for any Participant or Beneficiary shall not be adversely affected thereby. No such amendment shall have the effect of revesting in the Employers any part of the principal or income of the Trust Fund. No amendment may eliminate or reduce any early retirement benefit or subsidy that continues after retirement or optional form of benefit

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protected under Code Section 411(d)(6). Unless expressly provided for in such amendment, an amendment shall not affect the rights and obligations of any Participant who severed from employment prior to the effective date of the amendment.

9.2 Termination of the Plan

          (a) Quest Diagnostics expects to continue the Plan indefinitely, but continuance is not assumed as a contractual obligation and Quest Diagnostics may terminate the Plan at any time in whole or in part. Further, each Employer reserves the right at any time by action of its board of directors to terminate the Plan as applicable to itself. If an Employer terminates or partially terminates the Plan or permanently discontinues its Contributions at any time, or if a partial termination of the Plan occurs, each Participant affected thereby shall be fully vested in his Account to the extent then funded or credited except as otherwise required or permitted by applicable Regulations. Also, Quest Diagnostics in its sole discretion, by action of its Chief Executive Officer, President, Vice President of Human Resources or any other officer who is authorized by the Board, may fully vest the Accounts of a group of Participants because they are affected by a business divestiture, layoff or other similar transaction, in which case the rules relating to partial termination referred to above shall apply, even if a true partial termination under Code Section 411(d)(3) has not occurred.

          (b) In the event of termination of the Plan by an Employer, the Plan Administrator shall value the Trust Fund as of the date of termination. That portion of the Trust Fund applicable to any Employer for which the Plan has not been terminated shall be unaffected. The Accounts of Participants and Beneficiaries affected by the termination, as determined by the Plan Administrator, shall, at the direction of the terminating Employer, continue to be administered as part of the Trust Fund, distributed to such Participants or Beneficiaries pursuant to Section 5.6 or transferred to a qualified plan maintained by such Employer. Distributions upon Plan

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termination of amounts attributable to Employee Pre-Tax Contributions and amounts credited to sub-accounts subject to similar distribution restrictions shall be made only to the extent permitted by Code Section 401(k)(10).

9.3 Merged Plans; Transferred Funds

          (a) Upon written direction of Quest Diagnostics, the Trustee may enter into merger agreements or direct transfer of asset agreements with the trustees of other retirement plans described in Code Section 401(a), including any elective transfer, and to accept the direct transfer of plan assets, or to transfer plan assets, as a party to any such agreement.

          (b) In the event another defined contribution plan (a “merged plan”) is merged into and made a part of the Plan, each Employee who was eligible to participate in the “merged plan” immediately prior to the merger shall become a Participant in this Plan on the date of the merger. In no event shall a Participant’s vested interest in his Account attributable to amounts transferred (the “merger sub-account”) to the Plan from the merged plan on and after the merger be less than his vested interest in such account under the merged plan immediately prior to the merger and such transfer, merger or consolidation may not otherwise result in the elimination or reduction of any “Section 411(d)(6) protected benefits” of such Employee or violation of any of the distribution restrictions of Section 5.13 or other restrictions applicable to them under such other plan (to the extent required by law). Notwithstanding any other provision of the Plan to the contrary, a Participant’s service, if any, credited for eligibility and vesting purposes under the merged plan as of the merger shall be included as Eligibility Service and Years of Vesting Service under the Plan. Special provisions, if any, applicable to a Participant’s merger sub-account shall be specifically reflected in Appendix B to the Plan.

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          (c) Notwithstanding any provision in this Plan to the contrary, no contribution by or on behalf of any Participant shall be made under this Plan for any period during which any contribution is made by or on behalf of him while he is a participant in a “merged plan.”

          (d) Other Plan-to-Plan Transfers from Qualified Plans.

          (1) With the consent of the Plan Administrator, amounts may be transferred (within the meaning of Code Section 414(l)) to this Plan from other tax qualified plans under Code Section 401(a), provided the plan from which such funds are transferred permits the transfer to be made and the transfer will not jeopardize the tax-exempt status of the Plan or Trust or create adverse tax consequences for the Employer. The amounts transferred shall be set up in a separate sub-account if deemed advisable by the Plan Administrator.

          (2) Notwithstanding anything herein to the contrary, a transfer directly to this Plan from another qualified plan (or a transaction having the effect of such a transfer) shall be permitted only if it will not result in the elimination or reduction of any “Section 411(d)(6) protected benefit” as described in Section 9.3(b).

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ARTICLE X

PROVISIONS RELATIVE TO EMPLOYERS INCLUDED IN PLAN

10.1 Participation in the Plan by an Affiliate

          (a) With the consent of Quest Diagnostics pursuant to Section 9.1, any Affiliate, by action of its board of directors or duly authorized officer, may adopt the Plan for the benefit of its Employees. Any Affiliate that has adopted the Plan may terminate its participation at any time by action of its board of directors or duly authorized officer. Any Affiliate which has adopted the Plan, and has not terminated its participation in the Plan, shall be listed in an Appendix hereto or listed in the summary plan description of the Plan as an Employer.

          (b) By becoming an Employer, an Affiliate agrees that:

          (1) the provisions of this Plan including, but not limited to, this Article X and any amendments hereto shall control with respect to the duties, rights and benefits under the Plan of the Employer’s Employees and their Beneficiaries;

          (2) Quest Diagnostics, the Committee, the Investment Committee, the Appeals Committee and the Plan Administrator are its agents to exercise on its behalf all the powers and authority conferred upon Quest Diagnostics, the Committee, the Investment Committee, the Appeals Committee and the Plan Administrator, respectively, under the Plan. The authority of Quest Diagnostics, the Committee, the Investment Committee, the Appeals Committee and the Plan Administrator, respectively, to act as such agents shall continue until the Plan is terminated as to such Employer;

          (3) the Trustee shall commingle, hold and invest as one Trust Fund all contributions made by the Employers, as well as all increments thereof;

          (4) any expenses of the Plan which are to be paid by the Employers or borne by the Trust Fund shall be paid by each Employer in the same proportion that the total

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amount standing to the credit of all Participants employed by such Employer bears to the total amount standing to the credit of all Participants, or in such other manner as may be determined by the Committee;

          (5) it will be bound by all interpretations, determinations, and actions taken by the Committee or the Plan Administrator and all actions taken by Quest Diagnostics as settlor of the Plan;

          (6) it will perform such other acts including, but not limited to, payment of such amounts into the Plan to be allocated to Employees of the Employer as Quest Diagnostics, the Committee or the Plan Administrator deem necessary in order to maintain the Plan’s compliance with applicable law; and

          (7) it will indemnify and hold harmless the Committee; Quest Diagnostics and its Affiliates; officers, directors, shareholders, employees and agents of Quest Diagnostics and its Affiliates; the Plan; the Trustee; Plan fiduciaries; and Participants and Beneficiaries of the Plan, as well as their respective successors and assigns, against any cause of action, loss, liability, damage, cost, or expense of any nature whatsoever (including, but not limited to, attorney’s fees and costs, whether or not suit is brought, as well as IRS plan disqualifications, other sanctions or compliance fees or Department of Labor fiduciary breach sanctions and penalties) arising out of or relating to the Employer’s noncompliance with any of the Plan’s terms or requirements; any intentional or negligent act or omission the Employer commits with regard to the Plan; and any omission or provision of incorrect information by the Employer with regard to the Plan which causes the Plan to fail to satisfy the requirements of a tax-qualified plan.

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          (c) In the event an Employee is transferred between Employers, accumulated service and eligibility shall be carried with the Employee involved. No such transfer shall effect a Severance from Employment hereunder, and the Employer to which the Employee is transferred shall thereupon become obligated hereunder with respect to such Employee in the same manner as was the Employer from which the Employee was transferred. An Employee’s transfer of employment from an Employer to an Affiliate that is not an Employer also shall not effect a Severance from Employment hereunder.

          (d) Contributions made by any Employer shall be treated as Contributions made by the Corporation for purposes of the Plan. Forfeitures arising from those Employer contributions shall be used for the benefit of all Participants.

          (e) The Plan Administrator may establish procedures governing the participation of entities other than the Corporation in the Plan.

10.2 Participation in the Plan by other Organizations

          (a) An organization that is not an Affiliate may, with the consent of Quest Diagnostics pursuant to Section 9.1, adopt the Plan. Any unaffiliated organization that becomes an Employer under the Plan shall promptly deliver to Quest Diagnostics and the Committee a copy of the resolutions or other documents evidencing its adoption of the Plan, which resolutions shall include the same undertakings as required of an Affiliate under Section 10.1.

          (b) If any Employer is not an Affiliate, then the Plan shall be a multiple employer plan as described in Code Section 413(c). Nothing in this Article X shall be treated as modifying the definition of “Employer” as shown in Article I. For example, a controlled group of corporations that is unrelated to Quest Diagnostics may adopt the Plan, but that group shall be treated as one Employer to the extent required by the Plan and applicable Regulations.

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10.3 Service and Termination of Service

          An Employee’s service under the Plan includes all service with any and all Employers during the period such entities were Employers. An Employee who terminates employment with one Employer and immediately commences employment with another Employer has not terminated employment or had a separation from service.

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ARTICLE XI

TOP HEAVY PROVISIONS

11.1 Determination of Top Heavy Status

          (a) The Plan will be considered a “Top Heavy Plan” for any Plan Year if as of the Determination Date: (A) the value of the Accounts of Participants who are Key Employees as of such Determination Date exceeds 60% of the value of the Accounts (but excluding catch-up contributions under Code Section 414(v) and earnings thereon) of all Participants as of such Determination Date, excluding former Key Employees (the “60% Test”); or (B) the Plan is part of a Required Aggregation Group which is Top Heavy. Notwithstanding the results of the 60% Test, the Plan shall not be considered a Top Heavy Plan for any Plan Year in which the Plan is a part of a Required or Permissive Aggregation Group that is not Top Heavy.

          (b) For purposes of the 60% Test:

          (1) all distributions made from Accounts within the one-year period ending on the Determination Date (or, in the case of a distribution made for a reason other than separation from service, death or disability, within the five-year period ending on the Determination Date) shall be taken into account;

          (2) if a Participant is a non-Key Employee with respect to the Plan for the Plan Year in question, but he was a Key Employee with respect to the Plan for any prior Plan Year, his Account shall not be considered; and

          (3) If a Participant has not performed any service for an Employer at any time during the one-year period ending on the Determination Date, his Account shall not be considered.

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11.2 Minimum Allocations

          Notwithstanding Sections 4.5 and 4.6, for any Plan Year during which the Plan is a Top Heavy Plan, the rate of Employer Matching Contributions and Discretionary Contributions for such Plan Year allocated to the Accounts of Participants who are non-Key Employees and who remain employed by the Employer (or any Affiliate) at the end of the Plan Year (regardless of any such Participant’s hours of service or level of compensation during the Plan Year) shall be not less than the lesser of:

          (a) three percent (3%) of such non-Key Employee’s Section 415 Compensation, as limited under Code Section 401(a)(17) as adjusted; or

          (b) the highest aggregate percentage of Section 415 Compensation, as limited under Code Section 401(a)(17) as adjusted, at which Employer Matching Contributions, Discretionary Contributions and Employee Pre-Tax Contributions are made (or required to be made) and allocated under Article IV for any Key Employee for the Plan Year.

          If a Participant is covered by more than one defined contribution plan on account of his employment with the Employer or any Affiliate, the minimum allocation required by this Section shall be determined by aggregating the allocations under all such plans.

11.3 Impact on Minimum Benefits where Employer Maintains Both Defined Benefit and Defined Contribution Plans

          If the Employer (or any Affiliate) maintains a defined benefit plan in addition to this defined contribution plan, both of which are Top-Heavy, then:

          (a) in the case of eligible non-Key Employees covered only by the defined benefit plan, the minimum benefit under the defined benefit plan shall be provided; and

          (b) in the case of eligible non-Key Employee not covered by the defined benefit plan but covered under a defined contribution plan, or covered by both plans, a minimum allocation

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of five percent (5%) of such non-Key Employee’s Section 415 Compensation shall be provided. If a Participant is covered by more than one defined contribution plan on account of his employment with the Employer and/or any Affiliate, the minimum allocation required by this Section shall be determined by aggregating the allocations under all such defined contribution plans.

11.4 Impact on Vesting

          (a) If the Plan is top-heavy in any Plan Year, then notwithstanding anything contained in the Plan to the contrary, each Participant with an Hour of Service after the Plan becomes top-heavy shall be vested in the portion of his Account attributable to Employer contributions (to the extent such portion is not then fully vested and nonforfeitable) as determined under the following table:

Years of Vesting Service	Vested Percentage
Less than 3	0%
3 or more	100%

          (b) A Participant’s vested percentage in his Account shall not be less than that determined as of the last day of the most recent top-heavy Plan Year. Further, if the Plan at any time has been top heavy and then ceases being top-heavy, the vested percentage in the Account of a Participant who has at least three (3) Years of Vesting Service (determined as of the last day of the most recent top-heavy year) shall not be less than what it would be if the Plan had not ceased being top-heavy.

11.5 Requirements Not Applicable

          The requirements of this Article shall not apply with respect to any Plan Year in which the Plan consists solely of a cash or deferred arrangement which meets the requirements of Code Sections 401(k)(12) or 401(k)(13), and matching contributions with respect to which the requirements of Code Sections 401(m)(11) or 401(m)(12) are met.

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11.6 Top-Heavy Definitions

          Determination Date – With respect to any Plan Year, the last day of the preceding Plan Year.

          Key Employee – An Employee or former Employee who at any time during the Plan Year containing the Determination Date is or was: (1) an officer of the Employer having annual Section 415 Compensation for such Plan Year which is in excess of $130,000 (as adjusted pursuant to Code Section 416(i)(1)(A)), but in no event shall the number of officers taken into account as Key Employees exceed the lesser of (A) 50 or (B) the greater of 3 or 10% of all employees; (2) a 5% owner of the Employer; or (3) a 1% owner of the Employer who has annual Section 415 Compensation of more than $150,000. For purposes of determining 5% and 1% owners, neither the aggregation rules nor the rules of Code Sections 414(b), (c) and (m) apply. Beneficiaries of a Key Employee are considered Key Employees, and inherited benefits will retain the character of the benefits of the Employee who performed services for the Employer. The identification of Key Employees will be made in accordance with Code Section 416(i)(1).

          Non-Key Employee – Any Employee who is not a Key Employee, or who is a former Key Employee. A Beneficiary of a Non-Key Employee is treated as a Non-Key Employee, but only if the Beneficiary is neither a Key Employee nor a Beneficiary of a Key Employee.

          Permissive Aggregation Group – Each employee pension benefit plan maintained by the Employer (or an Affiliate) which is considered part of the Required Aggregation Group, plus one or more other employee pension benefit plans maintained by the Employer (or an Affiliate) that are not part of the Required Aggregation Group but that satisfy the requirements of Code Sections 401(a)(4) and 410 when considered together with the Required Aggregation Group.

          Required Aggregation Group – Each employee pension benefit plan maintained by the Employer (or any Affiliate), whether or not terminated, in which a Key Employee participates in

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the Plan Year containing the Determination Date, and each other employee pension benefit plan maintained by the Employer (or any Affiliate), whether or not terminated, in which no Key Employee participates but which during that period enables a employee pension benefit plan in which a Key Employee participates to meet the requirements of Code Sections 401(a)(4) or 410.

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ARTICLE XII

MISCELLANEOUS

12.1 Governing Law

          Except as preempted by federal law, the Plan shall be construed, regulated and administered according to the laws of the state of New Jersey (without regard to its conflict of laws provisions).

12.2 Construction

          The headings and subheadings in the Plan (other than in Article I) have been inserted for convenience of reference only and shall not affect the construction of the provisions hereof. In any necessary construction, the masculine shall include the feminine or neuter and the singular the plural, and vice versa. To the extent required by applicable federal law, a “spouse” means the opposite-sex person to whom an Employee is legally married at the time in question. A former spouse may be treated as a spouse or surviving spouse of an Employee to the extent required under the terms of a QDRO.

12.3 Participant’s Rights; Acquittance

          Neither the establishment of the Plan and the Trust Fund nor any modification thereof, nor the creation of any fund or account nor the payment of any benefits, will give, or be construed as giving, to any Participant, Beneficiary or other person any legal or equitable right against an Employer or Affiliate, or any director, officer or employee thereof, or, except as provided herein, the Trustee, other than to the extent provided under ERISA and other applicable law. An Employer or Affiliate expressly reserves its right to discipline, discharge, layoff or terminate the association of any Employee with the Employer or Affiliate at any time to the same extent as if the Plan had never gone into effect irrespective of the effect of such action upon his rights hereunder, and such action will not create any claim against the Employer or an Affiliate

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or against the Trust Fund for any payment except to the extent specifically provided herein. The Employer shall not be liable for the payment of any benefit provided for herein, and all benefits hereunder shall be payable only from the Fund. No Participant, Beneficiary or other person will have any right whatever to inspect for any purpose any book or record of the Employer or Affiliate other than any document as to which ERISA grants inspection rights, and the furnishing to such Participant, Beneficiary or other person by the Plan Administrator of any information or statement with respect to matters appearing in, or which may be based upon, any such book or record will be final, binding and conclusive upon such Participant, Beneficiary or other person.

12.4 Spendthrift Clause

          Except as provided by a QDRO and except pursuant to certain judgments and settlements under ERISA Section 206(d)(4) or as may be required pursuant to the Code or the Mandatory Victims Restitution Act of 1996, none of the benefits, payments, proceeds, or distributions under this Plan shall be subject to the claim of any creditor of a Participant or a Beneficiary hereunder or to any legal process by any creditor of a Participant or Beneficiary. Neither a Participant nor a Beneficiary shall have any right to alienate, commute, anticipate, or assign any of the benefits, payments, proceeds or distributions under this Plan.

12.5 Mistake of Fact

          Notwithstanding anything herein to the contrary, upon the Employer’s request, a Contribution which was made by a mistake of fact, or conditioned upon initial qualification of the Plan or upon the deductibility of the Contribution under Code Section 404, may be returned to the Employer by the Trustee within one (1) year after the payment of the Contribution, the denial of the qualification or the disallowance of the deduction (to the extent disallowed), whichever is latest. For purposes of the preceding sentence, all contributions to the Plan made before receipt of a favorable determination letter on qualification from the Internal Revenue

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Service shall be conditioned on the Plan’s initial qualification, and all contributions, whenever made, shall be conditioned on their deductibility under Code Section 404. Except as this Plan may otherwise provide, any Contribution so returned shall be adjusted to reflect its proportionate share of any Trust Fund gain or loss if, and to the extent, allowable under applicable Regulations. Notwithstanding any provision of this Plan to the contrary, the right or claim of any Participant or Beneficiary to any asset of the Trust Fund or to any benefit under the Plan shall be subject to, and limited by, the provisions of this Section.

12.6 Recovery of Overpayment

          If the Plan makes an overpayment, the Plan has the right at any time to, as elected by the Plan Administrator,:

(a)	recover that overpayment from the person to whom it was made;
(b)	offset the amount of that overpayment from a future payment; or
(c)	a combination of both.

The Plan shall be considered to have established an equitable lien by agreement with the person to whom such overpayment was made. Such payee shall, upon request, execute and deliver such instruments and papers as may be required, and shall do whatever else is necessary, to secure such rights of recovery to the Plan.

12.7 Plan Corrections

          In addition to the actions contemplated under Sections 3.11 and 5.13(c), the Plan Administrator, in conjunction with the Employer, may undertake such correction of Plan errors as the Plan Administrator deems necessary, including correction to preserve tax qualification of the Plan under Code Section 401(a) or to correct a possible fiduciary breach under ERISA. Without limiting the Plan Administrator’s authority under the prior sentence, the Plan Administrator may undertake correction of Plan document, operational, demographic and

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Employer eligibility failures under a method described in the Plan or permissible under the EPCRS or any successor program to EPCRS. The Plan Administrator also may undertake or assist the appropriate Plan fiduciary or Plan official in undertaking correction of a possible fiduciary breach, including correction under the U.S. Department of Labor Voluntary Fiduciary Correction Program (“VFCP”) or any successor program to VFCP. To correct an operational error, the Plan Administrator may require the Trustee to distribute from the Plan Pre-Tax Contributions or vested Employer Matching Contributions, including earnings or losses thereon, where such amounts result from an operational error other than a failure of Code Sections 402(g) or 415, or a failure of the ADP or ACP Tests.

12.8 Consent to Plan Terms

          An Employee, upon becoming a Participant, and any other person, upon becoming a Beneficiary or an alternate payee, shall be deemed conclusively for all purposes hereof to have consented to the terms and conditions of the Plan and to be bound thereby.

12.9 Facility of Payment; Uncashed Checks; Recipients Who Cannot Be Located.

          (a) If the Plan Administrator finds that any Participant or Beneficiary to whom a benefit is payable is unable to care for his affairs because of physical, mental, or legal incompetence, the Plan Administrator, in its sole discretion, may cause any payment due to such Participant or Beneficiary, to be paid to the person deemed by the Plan Administrator to be maintaining or responsible for the maintenance of such Participant or Beneficiary. Any such payment will be deemed a payment for the account of such Participant or Beneficiary and will constitute a complete discharge of the Plan and the Trust Fund of any liability for such payment.

          (b) If an individual dies before receiving all the payments to be made or before cashing any or all of the checks representing such payment or payments, such payments will be made to his Beneficiary or, if there is no Beneficiary, to his estate.

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          (c) If the Trustee is unable to make payment to a Participant or other person to whom a payment is due under the Plan because it cannot ascertain his identity or whereabouts after reasonable efforts have been made to identify or locate him (including a notice of the payment so due mailed to his last known address as shown on the records of the Employer), such payment and all subsequent payments otherwise due him will be forfeited and used to reduce future Contributions to the Plan. Notwithstanding the foregoing, if he (or his Beneficiary) subsequently makes a claim for such benefits, the forfeited benefits will be reinstated and payment of the benefits which previously had been forfeited will be made (without interest) to the party entitled to such benefits as soon as practicable after such party person makes such a claim.

12.10 Income Tax Withholding

          Amounts shall be withheld from any payment due under this Plan as required to conform with applicable income tax laws.

12.11 Counterparts

          The Plan and the Trust Agreement may be executed in counterparts, each of which shall constitute one and the same instrument and may be sufficiently evidenced by any one counterpart.

12.12 Writings and Electronic Communications

          All notices and other communications with respect to the Plan, including signatures relating to such documents, may be executed and stored on paper, electronically or in another medium. Any documentation executed or stored electronically shall comply with the Electronic Signatures Act. The Plan Administrator and the Plan’s recordkeeper may use telephonic or electronic media to satisfy any notice requirements of this Plan, to the extent permitted under applicable Regulations. In addition, a Participant’s consent to immediate distribution may be provided through telephonic or electronic means, to the extent permitted under applicable

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Regulations. The Plan Administrator and the Plan’s recordkeeper also may use telephonic or electronic media to conduct Plan transactions such as enrolling Participants, making or changing salary reduction elections, electing or changing investment allocations, applying for Plan loans and other transactions to the extent permitted under applicable Regulations.

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ARTICLE XIII

ADOPTION OF THE PLAN

          Anything herein to the contrary notwithstanding, this amended and restated Plan is adopted and maintained under the conditions that it is deemed qualified by the Internal Revenue Service under Code Section 401(a) and that the Trust hereunder is exempt under Code Section 501(a).

          As evidence of its adoption of the Plan, Quest Diagnostics Incorporated has caused this instrument to be signed by its authorized officer this 21st day of December, 2010, effective as of January 1, 2010, except as otherwise provided herein or as required by law.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Norgard
Title: Vice President

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APPENDIX A

PARTICIPATING EMPLOYERS

The Plan allows employers other than the Corporation to adopt its provisions. The names (and jurisdictions of organization) of participating employers as of January 1, 2010 are:

AmeriPath Intermediate Holdings, Inc. (DE) 

AmeriPath, Inc. (DE)

AmeriPath 5.01(a) Corporation (TX)

AmeriPath Cincinnati, Inc. (OH)

AmeriPath Cleveland, Inc. (OH)

AmeriPath Consolidated Labs, Inc. (FL)

AmeriPath Florida, LLC (DE)

AmeriPath Hospital Services Florida, LLC (DE)

AmeriPath Indiana, LLC (IN)

AmeriPath, LLC (DE)

AmeriPath Texas, LP

AmeriPath Kentucky, Inc. (KY)

AmeriPath Lubbock 5.01(a) Corporation (TX)

AmeriPath Lubbock Outpatient 5.01(a) Corporation (f/k/a Simpson Pathology 5.01(a) Corporation) (TX)

AmeriPath Marketing USA, Inc (FL)

AmeriPath Michigan, Inc. (MI)

AmeriPath Mississippi, Inc. (MS)

AmeriPath New York, LLC (DE)

AmeriPath North Carolina, Inc. (NC)

AmeriPath Ohio, Inc. (DE)

AmeriPath Youngstown Labs, Inc. (OH)

AmeriPath PAT 5.01(a) Corporation (TX)

AmeriPath Pennsylvania, LLC (PA)

AmeriPath Philadelphia, Inc. (NJ)

AmeriPath San Antonio 5.01(a) Corporation (TX)

AmeriPath SC, Inc. (SC)

AmeriPath Severance 5.01(a) Corporation (TX)

AmeriPath Texarkana 5.01(a) Corporation (TX)

AmeriPath Wisconsin, LLC (WI)

AmeriPath Youngstown, Inc. (OH)

Anatomic Pathology Services, Inc. (OK)

API No. 2, LLC (DE)

Arlington Pathology Association 5.01(a) Corporation (TX)

Dermatopathology Services, Inc. (AL)

DFW 5.01(a) Corporation (TX)

Diagnostic Pathology Management Services, LLC (OK)

Kailash B. Sharma, M.D., Inc. (GA)

NAPA 5.01(a) Corporation (TX)

Nuclear Medicine and Pathology Associates (GA)

Ocmulgee Medical Pathology Association, Inc. (GA)

O’Quinn Medical Pathology Association, LLC (GA)

PCA of Denver, Inc. (TN)

PCA of Nashville, Inc. (TN)

Peter G. Klacsmann, M.D., Inc. (GA)

Sharon G. Daspit, M.D., Inc. (GA)

Shoals Pathology Associates, Inc. (AL)

Strigen, Inc. (UT)

Arizona Pathology Group, Inc. (AZ)

Regional Pathology Consultants, LLC (UT)

Rocky Mountain Pathology, LLC (UT)

TID Acquisition Corp. (DE)

TXAR 5.01(a) Corporation (TX)

A. Bernard Ackerman, M.D. Dermatopathology, PC (NY)

AmeriPath Consulting Pathology Services, P.A. (NC)

AmeriPath Indianapolis, P.C. (IN)

AmeriPath Institute of Urological Pathology, PC (MI), (f/k/a J.J. Humes M.D. and Assoc.)

AmeriPath Milwaukee, S.C. (WI)

AmeriPath Pittsburgh, P.C. (PA)

Colorado Diagnostic Laboratory, LLC (CO)

Colorado Pathology Consultants, P.C. (CO)

Consulting Pathologists of Pennsylvania, P.C. (PA)

Dermatopathology of Wisconsin, S.C. (WI)

Institute for Dermatopathology, P.C. (PA)

Jill A. Cohen, M.D., Inc. (AZ)

Kilpatrick Pathology, P.A. (NC)

Rose Pathology Associates, P.C. (CO)

Southwest Diagnostic Laboratories, P.C. (CO)

St. Luke’s Pathology Associates, P.A. (KS)

Tulsa Diagnostics, P.C. (OK)

A-1

APPENDIX B

MERGED PLANS:

SPECIAL RULES AND PROTECTED BENEFITS

          Effective as of January 1, 2001, January 1, 2002, January 1, 2003, January 1, 2005, April 1, 2005, January 1, 2007 and February 22, 2010 respectively, all assets and liabilities of the Chappell-Joyce Pathology Association, P.A. Profit Sharing Plan, the Pathology Associates, P.S.C. Retirement Plan, the Reference Pathology Services Profit Sharing 401(k) Plan, the Anatomic Pathology Associates Retirement Savings Plan, the Pathology Associates, P.C. Incentive Savings Plan, the Jill A. Cohen, M.D., P.C. 401(k) Profit Sharing Plan and Trust, the Specialty Laboratories, Inc. 401(k) Profit Sharing Plan and the Pathology Affiliated Services, Inc. Employees’ 401(k) Profit Sharing Plan and Trust (each a “Merged Plan”), respectively, were merged into and made a part of the Prior Plan. Each Employee who was eligible to participate in a Merged Plan immediately prior to the respective effective date (the “Merger Date”) of the merger of such Merged Plan into the Prior Plan was eligible to participate in the Prior Plan on and after that Merger Date. A Participant’s vested interest in his Account attributable to amounts transferred to the Prior Plan from a Merged Plan (his “Merged Prior Plan Sub-Account”) on and after the respective Merger Date will not be less, as a result of such merger, than his vested interest in his account under the Merged Plan immediately prior to the respective Merger Date.

          Periods of employment with the sponsor of a Merged Plan prior to that Merged Plan’s Merger Date which would have constituted eligibility or vesting service, respectively, under the Plan or the Prior Plan had the service been rendered after the Merged Plan’s Merger Date shall be considered, under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law, eligibility or vesting service, respectively, under the Plan and the Prior Plan.

B-1

          If a Merged Plan determined Eligibility Service or Vesting Service, respectively, under an hours counting methodology, then Eligibility Service or Vesting Service, respectively, shall be determined under rules promulgated by the Plan Administrator applied in a uniform and nondiscriminatory manner, and to the extent permitted by applicable law, but not less than that determined under the methodology, hours counting or elapsed time, whichever results in the greater Eligibility Service or Vesting Service, respectively.

          Accordingly, notwithstanding any other provision of the Plan or the Prior Plan to the contrary, a Participant’s service, if any, credited for eligibility and vesting purposes under a Merged Plan as of the respective Merger Date is included as Eligibility Service and Years of Vesting Service under the Plan and the Prior Plan to the extent Eligibility Service and Years of Vesting Service are credited under the Plan and the Prior Plan.

          The Employee Pre-Tax Contributions Account of a Participant who was a participant in a Merged Plan that contained a qualified cash or deferred arrangement also shall hold any amount transferred to this Plan or the Prior Plan from such Merged Plan representing the balance of such Participant’s pre-tax contribution account under such Merged Plan and the investment experience, expenses, distributions and withdrawals attributable to such account.

          Notwithstanding any other provision of the Plan to the contrary, the following shall apply with respect to benefits accrued by Employees of AmeriPath, Inc. and its Affiliates who were participants in the Merged Plans listed below:

1) Definitions for Purposes of Appendix B

          (a) “Early Retirement Date” means, with respect to a former participant in the Jill A. Cohen, M.D., P.C. 401(k) Profit Sharing Plan and Trust Fund, the later of age 55 or the date he completes ten (10) years of service.

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          (b) “Prior Company Contributions” means the prior company contributions attributable to assets transferred to the Prior Plan from the Anatomic Pathology Associates Retirement Savings Plan.

          (c) “Prior Employer Discretionary Contributions” means the prior Employer Discretionary Contributions attributable to assets transferred to the Prior Plan from the Pathology Associates, P.C. Incentive Savings Plan.

          (d) “Prior Employer Matching Contributions” means the prior Employer Matching Contributions attributable to assets transferred to the Plan from the Pathology Affiliated Services, Inc. Employees’ 401(k) Profit Sharing Plan and Trust.

          (e) “Prior Safe Harbor Nonelective Contribution” means any safe harbor nonelective employer contribution which was made under the terms of the Jill A. Cohen, M.D., P.C. 401(k) Profit Sharing Plan and Trust Fund and transferred to the Prior Plan on or after January 1, 2007.

          (f) “Prior Specialty Laboratories Contribution” means any matching or employer nonelective contribution which was made under the terms of the Specialty Laboratories, Inc. 401(k) Profit Sharing Plan and transferred to the Prior Plan on or after January 1, 2007.

2) Vesting in Employer Contributions

          (a) A former participant in the Jill A. Cohen, M.D., P.C. 401(k) Profit Sharing Plan and Trust Fund at all times shall have a 100% vested percentage in his Prior Employer Safe Harbor Nonelective Contributions.

          (b) A former participant in the Anatomic Pathology Associates Retirement Savings Plan at all times shall have a 100% vested interest in his Prior Company Contributions.

          (c) A former participant in the Pathology Associates, P.C. Incentive Savings Plan or the Pathology Affiliated Services, Inc. Employees’ 401(k) Profit Sharing Plan and Trust shall

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have his vested interest in his Prior Employer Discretionary Contributions or his Prior Employer Matching Contributions, respectively, determined in accordance with the following schedule:

Years of Vesting Service	Vested Percentage
Less than 2 years	0%
2 but less than 3 years	20%
3 but less than 4 years	40%
4 but less than 5 years	60%
5 but less than 6 years	80%
6 or more years	100%

          (c) A former participant in the Specialty Laboratories, Inc. 401(k) Profit Sharing Plan who had completed three (3) or more years of vesting service under such plan as of December 31, 2006 and who enrolls in the Plan or the Prior Plan on or after January 1, 2007, at all times shall have a 100% vested interest in his Prior Specialty Laboratories Contributions.

          (d) Subject to the foregoing, a former participant in the Specialty Laboratories, Inc. 401(k) Profit Sharing Plan, who had not completed three (3) or more years of vesting service under such plan as of December 31, 2006 or who had completed three (3) or more years of vesting service under such plan as of December 31, 2006, but does not enroll in the Plan or the Prior Plan on or after January 1, 2007, shall have his vested interest in his Prior Specialty Laboratories Contributions determined in accordance with the following schedule:

Years of Vesting Service	Vested Percentage
Less than 1 year	0%
1 but less than 2 years	20%
2 but less than 3 years	40%
3 but less than 4 years	60%
4 but less than 5 years	80%
5 or more years	100%

          (e) Notwithstanding the foregoing, if a Participant is employed by an Employer or an Affiliate on his Normal Retirement Date, his Early Retirement Date, the date of determination of his Total and Permanent Disability or the date he dies, he shall be 100% vested in his Prior

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Employer Discretionary Contributions and his Prior Employer Matching Contributions respectively.

3) In-Service Withdrawals

          A former Participant in the Pathology Associates, P.C. Incentive Savings Plan who is employed by an Employer or an Affiliate may elect, subject to the limitations and conditions of Section 6.3, to make a cash withdrawal or, if the Participant’s Account is subject to the annuity provisions of Appendix D, a withdrawal through the purchase of a Qualified Joint and Survivor Annuity or a Single Life Annuity (both as described in Appendix D) of amounts that have been credited to his Prior Employer Discretionary Contributions for at least two (2) years.

4) Loans

          Notwithstanding any other provision of the Plan to the contrary, loans as described in Section 6.1 will be available to a former participant of the Pathology Associates, P.C. Incentive Savings Plan from his Prior Employer Discretionary Contributions. However, loans will not be available to a former participant of the Anatomic Pathology Associates Retirement Savings Plan from his Prior Company Contributions.

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APPENDIX C

TRANSFERRED SUB-ACCOUNTS

          In the case of a participant in The Profit Sharing Plan of Quest Diagnostics Incorporated whose account is transferred to this Plan, all applicable sub-accounts of such individual under The Profit Sharing Plan of Quest Diagnostics Incorporated generally shall continue to be maintained under this Plan. Such sub-accounts may include, but are not limited to, the following:

(a)	Advance Medical Plan Sub-Account;
(b)	AML-East Plan Sub-Account;
(c)	AML-West Plan Sub-Account;
(d)	CBCLS Employer Contribution Sub-Account;
(e)	CDS Plan Sub-Account;
(f)	Corning Stock Fund Sub-Account;
(g)	Covance Stock Fund Sub-Account;
(h)	CPF Money Purchase Pension Plan Sub-Account;
(i)	CPF Pension Plan Sub-Account;
(j)	CPF Savings Plan Sub-Account;
(k)	Damon Plan Sub-Account;
(l)	DeYor Plan Sub-Account;
(m)	Employee After-Tax Sub-Account;
(n)	Employee Pre-Tax Catch-Up Sub-Account;
(o)	Employee Regular Pre-Tax Sub-Account;
(p)	Employer Matching Sub-Account;
(q)	Quest Stock Matching Sub-Account;
(r)	ESOP Diversification Sub-Account;
(s)	LabOne (k) Plan Sub-Account;
(t)	LabOne Pension Plan Sub-Account;
(u)	LabPortal Plan Sub-Account;
(v)	Maryland Medical Laboratory Plan Sub-Account;
(w)	MedPlus Plan Sub-Account;

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(x)	MetWest Plan Sub-Account;
(y)	Money Purchase Pension Plan Sub-Account;
(z)	Nichols Institute Plan Sub-Account;
(aa)	Partnership Sub-Account;
(bb)	Podiatric Pathology Laboratories Plan Sub-Account;
(cc)	Post-1999 Cash Match Sub-Account;
(dd)	Post 1999 Stock Match Sub-Account;
(ee)	Pre-1999 Cash Match Sub-Account;
(ff)	Pre-1999 Stock Match Sub-Account;
(gg)	Prior Employer Match Sub-Account;
(hh)	Prior ESOP Employer Contributions Sub-Account;
(ii)	Prior ESOP Quest Stock Sub-Account;
(jj)	Prior Focus Plan Match Sub-Account;
(kk)	Prior LabOne Money Purchase Pension Plan Sub-Account;
(ll)	Prior LabOne Employer Match Sub-Account;
(mm)	Prior Plan Employer Contribution Sub-Account;
(nn)	Prior Plan Employer Qualified Sub-Account;
(oo)	Prior Plan Rollover Sub-Account;
(pp)	Prior Profit Sharing Sub-Account;
(qq)	Prior Unilab Employer Contribution Sub-Account;
(rr)	Qualified Nonelective Contribution Sub-Account;
(ss)	Rollover Sub-Account;
(tt)	Statlab Plan Sub-Account;
(uu)	Unilab Plan Sub-Account;
(vv)	Vested Employer Stock Dividend Sub-Account; and
(ww)	Vested Money Purchase Pension Plan Dividend Sub-Account.

          All benefits, rights and features that are required to be preserved with respect to such sub-accounts under Code Section 411(d)(6) shall be preserved following such transfer including, but not limited to, rights to in-service withdrawals, rights to annuity or other optional forms of distribution and the requirement, where applicable, of spousal consent to distributions, loans or in-service withdrawals.

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APPENDIX D

SPECIAL DISTRIBUTION PROVISIONS

          The provisions of this Appendix D apply to a Participant who has a portion of his Account attributable to the Money Purchase Pension Plan Sub-Account or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C. Such provisions may be waived through a “Qualified Election” described in paragraph (c) below. The provisions of this Appendix D apply only to such portion of his Account.

          (b) Automatic and Optional Annuity Requirements. If a Participant has a Money Purchase Pension Plan Sub-Account or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C (or his Account includes assets transferred directly from a plan subject to Code Section 417), distribution shall be made to him through the purchase of an annuity contract that provides for payment in one of the following annuity forms unless he elects a different form of payment available under Section 5.6.

          (1) The “automatic annuity form” for a Participant who is married on his Benefit Payment Date is a 50% Qualified Joint and Survivor Annuity.

          (2) The “optional annuity form” for a Participant who is married on his Benefit Payment Date is a 75% Qualified Joint and Survivor Annuity.

          (3) The “automatic annuity form” for a Participant who is not married on his Benefit Payment Date is a Single Life Annuity.

          His election of any form of payment other than the “automatic annuity form” shall not be effective unless it is a “qualified election;” provided that consent of his spouse shall not be required if he elects the optional form of Qualified Joint and Survivor Annuity.

          (c) Qualified Preretirement Survivor Annuity Requirements. If a married Participant has a Money Purchase Pension Plan Sub-Account or any other sub-account attributable to a

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money purchase pension plan as indicated in Appendix B or Appendix C (or his Account includes assets transferred directly from a plan subject to Code Section 417) dies before his Benefit Payment Date, his spouse shall receive distribution of the value of his vested interest in such sub-accounts through the purchase of an annuity contract that provides for payment over the life of the spouse. His spouse may elect to receive distribution under any one of the other forms of payment available under Section 5.6 instead of in the Qualified Preretirement Survivor Annuity form. He may designate a non-spouse Beneficiary to receive distribution of such sub-accounts only pursuant to a “qualified election” unless his spouse has previously consented to the naming of such non-spouse Beneficiary as the sole Beneficiary.

          (d) Qualified Election Procedures.

          (1) No less than seven (7) and no more than 180 days before distribution of such a Participant’s benefit commences, he and his spouse (if any) shall be given a written notice to the effect that if he is married on the date of commencement of payments, benefits will be payable in form of a 50% (or 75%) Qualified Joint and Survivor Annuity under this Appendix unless he, with the consent of his spouse, elects to the contrary prior to the commencement of payments. Consent of the spouse is not required for an election if the Beneficiary is not the spouse. The notice shall describe, in a manner intended to be understood by him and his spouse, the terms and conditions of the Qualified Joint and Survivor Annuity, the financial effect of the election of an optional form or to revoke such an election, and the rights of the spouse to consent to an election of an optional form. In addition, the notice shall inform him that he has 30 days to elect whether to have benefits paid in an optional form described in Section 5.6 in lieu of the automatic form provided for in paragraph (b) above.

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(2) A Participant who desires to have his benefit under this Appendix D paid under one of the options provided in Section 5.6 shall make such an election through an Appropriate Request. His election to receive his retirement benefit under any of the options provided in Section 5.6 may be revoked by him at any time, and any number of times, during the 180-day period ending on the day his benefit payments commence. After retirement benefit payments have commenced, no elections or revocations of an optional method of distribution will be permitted under any circumstances.
(3) The date payment of his benefit is to commence for a distribution in a form other than the 50% (or 75%) Qualified Joint and Survivor Annuity under this Appendix may be less than 30 days after receipt of the written notice described above if:
	(A) he has been provided with information that clearly indicates that he has at least 30 days to consider whether to waive the 50% (or 75%) Qualified Joint and Survivor Annuity, and elects (with written consent of his spouse, if necessary) another form of distribution;
	(B) he is permitted to revoke any affirmative distribution election at least until the Benefit Payment Date or, if later, at any time prior to the expiration of the seven (7) day period that begins the day after he is provided the explanation of the 50% (or 75%) Qualified Joint and Survivor Annuity; and
	(C) the date payment of his benefit is to commence is a date after the date that the written notice was provided to him.

          (e) Notwithstanding any provision of this Plan to the contrary, to the extent that any optional form of benefit under this Plan permits a distribution prior to the Participant’s retirement, death, Total and Permanent Disability, or Severance from Service Date, and prior to

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Plan termination, the optional form of benefit is not available with respect to his Money Purchase Pension Plan Sub-Account or any other sub-account attributable to a money purchase pension plan as indicated in Appendix B or Appendix C (or the portion of his Account that includes assets transferred directly from a plan subject to Code Section 417), other than any portion of those assets and liabilities attributable to after-tax voluntary Employee contributions or to a direct or indirect rollover contribution.

          (f) For purposes of this Appendix D, the following terms have the following meanings:

(1) “Qualified Joint and Survivor Annuity” means an immediate annuity payable at earliest retirement age under the Plan, as defined in Regulations under Code Section 401(a)(11), that is payable for the life of a Participant with a survivor annuity payable for the life of his spouse that is equal to at least 50% but no more than 100% of the amount of the annuity payable during the joint lives of him and his spouse. No survivor annuity shall be payable to his spouse under a Qualified Joint and Survivor Annuity if such spouse is not the same spouse to whom he was married on his Benefit Payment Date.
(2) “Qualified Pre-Retirement Survivor Annuity” means an annuity payable for the life of a Participant’s surviving spouse upon his death prior to his Benefit Payment Date.
(3) “Benefit Payment Date” means:
	(A) the first day of the first period for which an amount is payable as an annuity, as described in Code Section 417(f)(2)(A)(i);

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          (B) in the case of a benefit not payable in the form of an annuity, the starting date for the Qualified Joint and Survivor Annuity that is payable under the Plan at the same time and form as the benefit that is not payable as an annuity;

          (C) in the case of an amount payable under a retroactive annuity starting date, the annuity starting date; or

          (D) the date of the purchase of an irrevocable commitment from an insurer to pay the benefits due under the Plan.

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APPENDIX E

AMERISAVE RULES AND DEFINITIONS

A. The following definitions applied to the Prior Plan, and may need to be referenced in the current administration of the Plan.

Hour of Service – Prior to January 1, 2009:

          (1) each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer for the performance of duties (these hours to be credited to the Employee for the computation period in which the duties are performed);

          (4) each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer (irrespective of whether the employment relationship has terminated) for reasons other than performance of duties (such as vacation, holidays, sickness, jury duty, disability, lay-off, military duty or leave of absence) during the applicable computation period (these hours will be calculated and credited pursuant to Regulation §2530.200b-2, incorporated herein by reference); and

          (5) each hour for which back pay is awarded or agreed to by the Employer without regard to mitigation of damages (these hours to be credited to the Employee for the computation period(s) to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made).

          The same Hours of Service shall not be credited both under (1) or (2), as the case may be, and under (3).

          Notwithstanding the above: (A) no more than 501 Hours of Service are required to be credited to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period); (B) an hour for which an Employee is directly or indirectly paid, or

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entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s compensation, or unemployment compensation or disability insurance laws; and (C) Hours of Service are not required to be credited for a payment which solely reimburses an Employee for medical or medically-related expenses incurred by the Employee.

          For purposes of this definition, a payment shall be deemed to be made by or due from the Employer regardless of whether such payment is made by or due from the Employer directly or indirectly through, among others, a trust fund or insurer to which the Employer contributes or pays premiums, and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate.

          A period of Qualified Military Service shall be included with Hours of Service to the extent it has not already been credited. For purposes of crediting Hours of Service during a period of Qualified Military Service, an Hour of Service shall be credited for each hour such Employee would normally have been scheduled to work for the Employer or an Affiliate during such period.

          Notwithstanding the preceding provisions of this definition, if an Employer does not maintain records that accurately reflect actual Hours of Service creditable to an Employee hereunder, such Employee will be credited with 45 Hours of Service for each week he performs at least one Hour of Service.

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          For purposes of this definition, Hours of Service will be credited for employment with nonparticipating Affiliates for eligibility and vesting purposes. The provisions of Regulation §§2530.200b-2(b) and (c) are incorporated herein by reference.

One-Year Break in Service – Prior to January 1, 2009:

          (1) A 12-consecutive month computation period (as defined under the definition of a Year of Vesting Service) in which the Employee does not complete at least 501 Hours of Service.

          (g) (2) Any period of unpaid leave pursuant to the Family and Medical Leave Act of 1993 or certain circumstances related to the Qualified Military Service of a family member shall not be treated or counted toward a One-Year Break in Service.

          (3) Solely for determining whether a One-Year Break in Service has occurred in a computation period for participation and vesting purposes, an individual who is absent from work for maternity or paternity reasons or for Qualified Military Service will receive credit for the Hours of Service which would otherwise have been credited to such individual. In the event these hours cannot be determined, eight (8) Hours of Service per day will be used. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence: (A) by reason of the pregnancy of the individual; (B) by reason of the birth of a child of the individual; (C) by reason of the placement of a child with the individual in connection with the adoption of the child by such individual; or (D) for purposes of caring for the child for a period beginning immediately following such birth or placement. However, in no event will the hours treated as Hours of Service under this paragraph by reason of any absence from work for maternity or paternity reasons exceed 501 hours. The Hours of Service credited under this paragraph will be

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	credited: (i) in the computation period in which the absence begins if the crediting is necessary to prevent a One-Year Break in Service in that period; or (ii) in all other cases, in the following computation period.
B. The following rules apply with respect to the conversion from an hours of service method to an elapsed time method that became effective on January 1, 2009, and may need to be referenced in the current administration of the Plan:
	(1) The Prior Plan determined Vesting Service under an Hours of Service counting methodology. If a Participant was participating in the Prior Plan during the Plan Year beginning January 1, 2008, had at least 1,000 Hours of Service for vesting purposes during the Plan Year beginning January 1, 2008 and also had a Year of Vesting Service (under the elapsed time method) with respect to the year beginning on the anniversary of his Employment Commencement Date occurring in 2008, such Participant shall be credited with two Years of Vesting Service for the period from January 1, 2008 through the anniversary of his Employment Commencement Date occurring in 2009.
	(2) The Prior Plan determined Eligibility Service under an elapsed time methodology. Accordingly, there is no change in the calculation of Eligibility Service arising from the amendment and restatement of the Prior Plan into the Plan.

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EX-10.36

Ex-10.36

AMENDMENT No. 3 TO
THE PROFIT SHARING PLAN OF
QUEST DIAGNOSTICS INCORPORATED

          The Profit Sharing Plan of Quest Diagnostics Incorporated, whose predecessor was originally effective October 1, 1973, as presently maintained under an amendment and restatement made effective as of January 1, 2007, and as amended from time to time thereafter, is hereby further amended, generally effective as of January 1, 2003, except as specifically stated herein, in the following respects:

          1. A new paragraph is added at the end of the “Introduction” as follows:

          “Certain bona fide residents of Puerto Rico who were Employees of Quest Diagnostics of Puerto Rico, Inc. (“the Puerto Rico Participants”) for a short period participated in the Plan. However, effective August 15, 1999, the Puerto Rico Participants were no longer considered to be Employees, thus becoming ineligible to participate in the Plan for purposes of any contributions, including but not limited to Employee Pre-Tax Contributions, Employer Matching Contributions and Discretionary Contributions. The Puerto Rico Participants, however, have accrued vested benefits in their Individual Accounts under the Plan. On or before December 31, 2010, the entire value of the Individual Accounts of the Puerto Rico Participants shall be transferred, as permitted by the provisions of IRS Revenue Ruling 2008-40, to the Quest Diagnostics Puerto Rico Defined Contribution Plan, which is exempt from taxation under Section 1165(a) of the Puerto Rico Internal Revenue Code of 1994, as amended, and pursuant to Section 1022(i)(1) of ERISA, deemed qualified under Section 501(a) of the United States Internal Revenue Code of 1986, as amended.”

          2. Appendix D is added to the Plan, as follows in the attached Appendix D, in order for the Plan to comply with the qualification requirements of Section 1165(a) of the Puerto Rico Internal Revenue Code of 1994 with respect to Puerto Rico Participants, although since January 1, 2003 in operation the Plan has complied with the PR Code requirements.

          3. In all other respects, the Plan shall remain unchanged by this Amendment.

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          As evidence of its adoption, Quest Diagnostics Incorporated has caused this instrument to be signed by its authorized officer this 19th day of November, 2010, generally effective as of January 1, 2003, except as specifically stated herein.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Norgard
Title: Vice President

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APPENDIX D

PROVISIONS APPLICABLE TO BONA FIDE RESIDENTS OF PUERTO RICO

          This Appendix D (the “PR Appendix”) to the Plan pertains exclusively to PR Participants, as defined below.

          A. Purpose

          The purpose of this PR Appendix is to comply with the qualification requirements of Section 1165(a) of the PR Code, as defined below.

          B. Definitions

          1. Deferral Compensation

          Deferral Compensation is as defined in the Plan, provided that the Deferral Compensation of a PR Participant taken into account under the Plan for a Plan Year shall not exceed $200,000, as adjusted for cost of living increases.

          The following rules apply for purposes of this definition:

a. Any pre-tax contributions of a PR Participant to a deferred compensation plan under Section 1165(e) of the PR Code shall be included in Deferral Compensation.

b. Any benefits paid under this or any other deferred compensation plan or any qualified retirement plan shall be excluded from Deferral Compensation.

          2. Highly Compensated Puerto Rico Employee (“HCPRE”)

          A HCPRE is a PR Participant who is more highly compensated than two-thirds of all other PR Participants, taking into account only compensation considered in applying and/or meeting participation and discrimination standards.

          3. Non-Highly Compensated PR Employee (“NHCPRE”)

          A NHCPRE is a PR Participant who is not a HCPRE, as said term is defined herein and in accordance with Section 1165(e)(3)(E)(iii) of the PR Code.

          4. PR Code

          The Puerto Rico Internal Revenue Code of 1994, as amended. Reference to a Section or Subsection of the PR Code and regulations promulgated thereunder includes reference to any comparable or succeeding provisions of any legislation or regulation that amends, supplements or replaces such Section or Subsection.

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5. Affiliate
An “Affiliate” means any corporation during the time it belongs to a “controlled group” (as defined by PR Code Section 1028) of which an Employer is a member.
6. PR Participant
The term “PR Participant” means:
	a. a Participant whose compensation is subject to PR income taxes;
	b. whose services are primarily provided in Puerto Rico; and
	c. who, during the time when the services were provided, was a bona fide resident of Puerto Rico.

          C. Rollover Contributions

          1. In general. A PR Participant may roll over into the Plan any amount eligible for a tax-free rollover if the requirements of Section 1165(b)(2) of the PR Code are met.

          2. Rollover Contributions rolled over to the Plan must be made within sixty (60) days of receipt by the PR Participant and in the form of cash, unless otherwise specifically permitted by the Committee.

          3. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s, as defined below, election under this PR Appendix, a Distributee may, by making an Appropriate Request at the time and in the manner prescribed by the Committee, to have an Eligible Rollover Distribution, as defined below, paid directly to an Eligible Retirement Plan, as defined below, specified by the Distributee in a Direct Rollover, as defined below. For purposes of this Section, the following definitions apply:

a. Eligible Rollover Distribution: An Eligible Rollover Distribution includes any distribution of all of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s Beneficiary, or for a specified period of ten years or more; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).

b. Eligible Retirement Plan: An Eligible Retirement Plan also includes an individual retirement account or annuity plan described in PR Code Section 1169(a), or a qualified trust described in PR

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Code Section 1165(a), that accepts the Distributee’s Eligible Rollover Distribution.

c. Distributee: A Distributee includes a PR Participant or former PR Participant.

d. Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

          D. PR Participants’ Regular Pre-Tax Contributions

          A PR Participant shall be allowed to elect to have his or her Compensation reduced in an amount not less than one percent (1%) and not more than ten percent (10%), in whole increments of one percent (1%), as required under the PR Code.

          In addition to the above, the Actual Deferral Percentage for any HCPRE for the Plan Year and who is eligible to have pre-tax contributions allocated to his account under two or more plans or arrangements described in PR Code Section 1165(e) that are maintained by the participating Employer or an Affiliate, shall be determined as if such pre-tax contributions were made under a single arrangement.

E. Annual Limitation on PR Participants’ Regular Pre-Tax Contributions
1. In no event shall a PR Participant’s Regular Pre-Tax Contributions during any calendar year exceed $8,000 or such other amount as may be permitted under the PR Code. If a PR Participant’s Regular Pre-Tax Contributions, together with any additional elective contributions to a qualified cash or deferred arrangement, and any elective deferrals under a tax-sheltered annuity program or a simplified employee pension plan, exceed such dollar limitation for any calendar year, such excess, and any earnings allocable thereto, shall be distributed to the PR Participant; provided that, if such excess contributions were made to a plan or arrangement not maintained by the Employer or an Affiliate, the PR Participant must notify the Committee by March 1 of the following year of the amount of such excess allocable to this Plan.
2. Notwithstanding any other provision of this Plan to the contrary, the Regular Pre-Tax Contributions for the HCPREs for a Plan Year shall be reduced in accordance with the following provisions:
	a. The Regular Pre-Tax Contributions of the HCPRE shall be reduced if neither of the Actual Deferral Percentage Tests set forth in (A) or (B) below is satisfied after taking into account the provisions of subsection (6) below:
		A. The 1.25 Test. The Actual Deferral Percentage of the HCPREs is not more than the Actual Deferral Percentage of the NHCPREs multiplied by 1.25.
		B. The 2.0 Test. The Actual Deferral Percentage of the HCPREs is not more than 2 percentage points greater than the Actual Deferral Percentage of the NHCPREs and

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		the Actual Deferral Percentage of the HCPREs is not more than the Actual Deferral Percentage of the NHCPREs multiplied by 2.0.
	b. As used in this subsection, “Actual Deferral Percentage” means:
		A. With respect to NHCPREs, the average of the ratios of each NHCPRE’s Regular Pre-Tax Contributions with respect to the current Plan Year, to each such NHCPRE’s Compensation for such Plan Year; and
		B. With respect to HCPREs, the average of the ratios of each HCPRE’s Regular Pre-Tax Contributions with respect to the current Plan Year, to each such HCPRE’s Compensation for such Plan Year.
	c. If neither Actual Deferral Percentage Test is satisfied as of the end of the Plan Year, the Committee shall cause the Regular Pre-Tax Contributions for the HCPREs to be reduced and refunded to each such HCPRE until either Actual Deferral Percentage Test is satisfied. The sequence of such reductions and refunds shall begin with HCPREs who deferred the greatest percentage, starting with the unmatched Regular Pre-Tax Contributions, if any, then the second greatest percentage, continuing until either Actual Deferral Percentage Test is satisfied. This process shall continue through the remaining unmatched Regular Pre-Tax Contributions, if any, and continuing with the matched Regular Pre-Tax Contributions until either Actual Deferral Percentage Test is satisfied. Once either Actual Deferral Percentage Test is satisfied, the Contributions shall direct the Trustee to distribute to the appropriate HCPREs the amount of the reduction of the Regular Pre-Tax Contributions of each such HCPRE and to treat as forfeitures the appropriate amount of Employer Matching Contributions, together with the net earnings or losses allocable thereto. The Committee shall designate such distribution and forfeiture as a distribution and forfeiture of excess contributions, determine the amount of the allocable net earnings or losses to be distributed in accordance with subsection (3) below, and cause such distributions and forfeitures to occur prior to the end of the Plan Year following the Plan Year in which the excess Regular Pre-Tax Contributions and excess Employer Matching Contributions were made.
3. Net earnings or losses to be refunded with the excess Regular Pre-Tax Contributions shall be equal to the net earnings or losses on such contributions for the Plan Year in which the contributions were made.
4. Net earnings or losses to be treated as forfeitures together with the Employer Matching Contributions shall be equal to the net earnings or losses on

D-4

such contributions for the Plan Year in which the contributions were made. Net earnings or losses on Employer Matching Contributions shall be determined in the same manner as in subsection (3) above, except that the phrase “Employer Matching Contributions” shall be substituted for the phrase “Regular Pre-Tax Contributions” wherever used therein.

5. Employer Matching Contributions treated as forfeitures pursuant to subsection (b) above shall be used to reduce future Employer Matching Contributions to the Plan.
6. To avoid the need to make adjustments pursuant to this Section:
	a. The Committee may adopt such rules as it deems necessary or desirable to:
		A. impose limitations during a Plan Year on the percentage of Regular Pre-Tax Contributions elected by PR Participants pursuant to the Plan for the purpose of avoiding the necessity of adjustments pursuant to this section or to comply with any other applicable law or regulation; or
		B. increase during a Plan Year the percentage of Deferral Compensation with respect to which a PR Participant may elect Regular Pre-Tax Contributions for the purpose of providing PR Participants with the opportunity to increase their Regular Pre-Tax Contributions within the limitations of this section.
	b. The Employer may, at its sole discretion, make fully vested contributions to the Plan which will be allocated to one or more PR Participants who are NHCPREs in such amounts as the Employer directs for the purpose of complying with the applicable limits of the PR Code. Such contributions will not be taken into account in the allocation of the Employer Matching Contributions.

          F. Discretionary Contributions

          The Plan Administrator may elect to have all or a portion of the Discretionary Contributions (that meet the requirements of the applicable Puerto Rico Treasury Regulations) for a calendar year taken into account in calculating the PR Code Section 1165(a)(3) tests for that year.

          G. Withdrawals

          General Rules. In accordance with Section 6.2 of the Plan, a PR Participant, upon making an Appropriate Request, and with approval of the Committee, may make a withdrawal from his Individual Account in cash (or its equivalent). No PR Participant shall be permitted to make a withdrawal under Section 6.2 more often than once in any one-year period. A PR Participant may not make any Employee Pre-Tax Contributions under Section 3.1 of the Plan for each payroll period that begins during the period starting on the withdrawal approval date and ending twelve (12) months following that

D-5

date, nor may he make any other election contributions to any “employee plan” pursuant to Section 1165-8(d)(2)(iii)(B) of the PR Code. Following such 12-month period, the PR Participant may resume his Employee Pre-Tax Contributions only as permitted by the PR Code.

          A PR Participant may make a withdrawal under Section 6.2 only to meet a financial obligation for:

          1. Unreimbursed expenses for medical care (as defined in Section 1023(a)(2)(P) of the PR Code) incurred by the PR Participant, his or her spouse or any dependent (as defined in Section 1025 of the PR Code) of the PR Participant, or necessary to enable any such person to obtain such care;

          2. Down payment and closing costs (excluding mortgage payments) directly related to the purchase of the PR Participant’s principal residence;

          3. Payment of tuition, room and board and related educational expenses for up to the next 12 months of post-secondary education for the PR Participant, his or her spouse, children or any dependent (as defined in Section 1025 of the PR Code) of the PR Participant; or

          4. Prevention of the eviction of the PR Participant from his or her principal residence or foreclosure on the mortgage or deed of trust on the PR Participant’s principal residence.

          5. The Secretary of the Puerto Rico Department of the Treasury may expand the above list under published documents of general applicability, as provided under Puerto Rico Treasury Regulation §1165-8(d)(2)(ii)(B).

          H. Use of Terms

          All terms and provisions of the Plan shall apply to this PR Appendix, except that where the terms and provisions of the Plan and this PR Appendix conflict, the terms and provisions of this PR Appendix shall govern with respect to PR Participants.

          I. Effective Date

          The provisions of this PR Appendix shall be effective as of January 1, 2003.

          J. Miscellaneous

          1. Information Between Plan Administrator and Trustee. The Plan Administrator and the Trustee will furnish each other such information relating to the Plan and Trust as may be required under the PR Code and any regulations issued or forms adopted by the Puerto Rico Treasury Department thereunder or under ERISA and any regulations issued.

          2. Governing Law. This PR Appendix will be construed, administered and enforced according to the laws of the Commonwealth of Puerto Rico to the extent such laws are not inconsistent with and/or preempted by ERISA.

D-6

          3. Exclusive Benefit of Participants. All contributions made by an Employer are conditional upon qualification of the Plan under PR Code Section 1165(a) and upon deductibility under PR Code Section 1023. Notwithstanding anything in the Plan to the contrary, it shall be prohibited at any time for any part of the Trust Fund (other than such part as is required to pay taxes and administrative expenses) to be used for, or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries, except that upon the direction of the Committee, (a) any contribution made by an Employer by a mistake of fact shall be returned to an Employer within one year after the payment of the contribution; (b) any contribution shall be returned to the Employer within one year after the denial of initial qualification of the Plan under PR Code Section 1165(a); and (c) any contribution may be returned to the extent disallowed as a deduction under PR Code Section 1023(n) within one year after the disallowance of the deduction.

D-7

EX-10.37

Ex-10.37

AMENDMENT No. 4 TO
THE PROFIT SHARING PLAN OF
QUEST DIAGNOSTICS INCORPORATED

          The Profit Sharing Plan of Quest Diagnostics Incorporated, whose predecessor was originally effective October 1, 1973, as presently maintained under an amendment and restatement made effective as of January 1, 2007, as amended generally effective as of January 1, 2008, and as subsequently amended generally effective as of January 1, 2009, is hereby further amended, generally effective as of January 1, 2010, except as specifically stated herein or as may be required by applicable law, in the following respects:

1.	Section 3.11(f) is amended in its entirety to provide as follows:
	(a) “Effective January 1, 2007, if a Participant dies while in Qualified Military Service, his Beneficiary shall be entitled to any additional benefits (other than benefit accruals relating to the period of Qualified Military Service) provided under the Plan had the Participant resumed employment and then on the following day severed from employment on account of death.”
2.	Section 3.11(g)(2) is amended in its entirety to provide as follows:
		“(2) a Participant in Qualified Military Service receiving a differential wage payment (as defined in Code Section 3401(h)(2)) shall be treated as an Employee of the Employer making the payment, and the differential wage payment shall be treated as Section 415 Compensation but not as Deferral Compensation.”
3.	Section 5.11 is amended in its entirety to provide as follows:
	(a) “Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid in a direct rollover directly to an eligible retirement plan specified by the distributee. For purposes of this Section, the following terms have the meanings below:
		(b) (1) An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) a hardship distribution; (iv) a corrective distribution pursuant to Sections 3.1, 3.6, 3.9 or 4.6(b)(2); (v) a deemed distribution resulting from a defaulted loan under Section 6.1 that is not also an offset distribution; (vi) any distribution that is reasonably expected to total less than $200 during a calendar year; (vii) the portion of any distribution that is

not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (viii) any other distributions described in Regulation §1.402(c)-2. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Sections 408(a) or (b), or to a qualified defined contribution plan described in Code Sections 401(a) or 403(b) that agrees to account separately for amounts so transferred, including accounting separately for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. An “eligible rollover distribution” also includes a distribution to a non-spouse Beneficiary designated by a Participant in accordance with Section 2.3, provided the distribution otherwise qualifies as an eligible rollover distribution hereunder and the distribution is made to an eligible retirement plan.

          (2) An “eligible retirement plan” is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), a qualified trust described in Code Section 401(a) or an eligible plan under Code Section 457(b) maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to account separately for amounts transferred into such plan from this Plan. The definition of eligible retirement plan also shall apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Code Section 414(p).

          (A) Effective January 1, 2009, an “eligible retirement plan” for a distributee who is a designated beneficiary (as defined by Code Section 401(a)(9)(E)) of the Participant and who is not the surviving spouse of the Participant is an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b) that will be treated as an inherited IRA pursuant to Code Section 402(c)(11).

          (B) For eligible rollover distributions made after 2008, or such later date as may be specified by Quest Diagnostics, by a non-spouse designated beneficiary, an “eligible retirement plan” also includes a Roth IRA as described in Code Section 408A, provided that for eligible rollover distributions made in 2009, the same income and tax filing status restrictions that apply to a rollover from a traditional IRA into a Roth IRA also will apply to rollovers to a Roth IRA. A non-spouse designated beneficiary, other than a former spouse who is an alternate payee under a qualified domestic relations order, cannot elect to treat the Roth IRA as the beneficiary’s own. For taxable years beginning before January 1, 2010, a non-spouse designated beneficiary cannot make a qualified rollover contribution to a Roth IRA if the beneficiary has modified

2

			adjusted gross income exceeding $100,000 or is married and files a separate return.
		(3) A “distributee” includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. Effective January 1, 2009, a distributee also includes an individual who is a designated beneficiary (as defined by Code Section 401(a)(9)(E)) of the Participant and who is not the surviving spouse of the Participant. For purposes of this paragraph, to the extent provided in applicable regulations, a trust maintained for the benefit of one or more designated beneficiaries will be treated in the same manner as a designated beneficiary.
		(4) A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the distributee.
		(5) The Committee will adopt procedures for elections made pursuant to this Section. Within a reasonable period of time before payment of an eligible rollover distribution, the Committee will provide a notice to the distributee describing his rights under this Section and such other information as may be required under Code Section 402(f).
		(6) This Section is intended to comply with Code Section 401(a)(31) and will be interpreted in accordance with such Code Section and regulations thereunder.”
4.	Section 6.6(d) is amended to add the phrase “under Code Section 401(k)(2)(B)(i)(I)” at the end thereof.
5.	Appendix A is amended in its entirety to provide as follows in the attached Appendix A.
6.	In all other respects, the Plan shall remain unchanged by this Amendment.

3

          As evidence of its adoption of this Amendment, Quest Diagnostics Incorporated has caused this instrument to be signed by its authorized officer this 21^st day of December, 2010, generally effective as of January 1, 2010, except as specifically stated herein or as may be required by applicable law.

QUEST DIAGNOSTICS INCORPORATED
By:	/s/ David W. Nogard
Title: Vice President

4

Appendix A

The Plan allows employers other than Quest Diagnostics to adopt its provisions. Except as specifically provided below, the names (and jurisdictions of organization) of other employers who, as of January 1, 2010, have adopted this Plan are:

American Medical Laboratories, Incorporated (DE)

APL Properties Limited Liability Company (NV)

Central Plains Holdings, Inc. (KS)

C & S Clinical Laboratory, Inc. (NJ)

Diagnostic Path Lab, Inc. (TX)

Diagnostics Reference Services Inc. (MD)

DPD Holdings Inc. (DE)

Enterix, Inc. (DE)

ExamOne Worldwide, Inc. (PA)

ExamOne Worldwide of NJ, Inc. (NJ)

Focus Diagnostics, Inc. (DE)

Focus Technologies Holding Company (DE)

HemoCue, Inc. (CA)

LabOne, Inc. (MO)

LabOne, L.L.C. (KS)

LabOne of Ohio, Inc. (DE)

Lab Portal, Inc. (DE)

Lifepoint Medical Corporation (DE)

MedPlus, Inc. (OH)

MetWest Inc. (DE)

Nichols Institute Diagnostics (CA)

Nomad Massachusetts, Inc. (MA)

OralDNA Labs, Inc. (DE)

Osborn Group Inc. (DE)

Quest Diagnostics Clinical Laboratories, Inc.

Quest Diagnostics Holdings Incorporated (DE)

Quest Diagnostics Nichols Institute (CA) (formerly Quest Diagnostics Incorporated (CA))

Quest Diagnostics Incorporated (MD)

Quest Diagnostics Incorporated (MI)

Quest Diagnostics Incorporated (NV)

Quest Diagnostics Nichols Institute, Inc. (VA)

Quest Diagnostics LLC (CT)

Quest Diagnostics LLC (IL)

Quest Diagnostics LLC (MA)

Quest Diagnostics of Pennsylvania Inc. (DE)

Quest Diagnostics Provider Network, LLC (CO)

Quest Diagnostics Ventures LLC (DE)

Specialty Laboratories, Inc. (CA)

Unilab Corporation (DE)

Valcor Associates Inc. (PA)

Associated Pathologists, Chartered (NV)

Associated Diagnostic Pathologists, Inc. (CA)

EX-21.1

Ex-21.1

(rev. 12/07/2010)

Quest Diagnostics Incorporated (DE)
(Incorporated on December 12, 1990 in Delaware; FEIN No. 16-1387862)

Subsidiaries, Joint Ventures and Affiliates

100%	Quest Diagnostics Holdings Incorporated (f/k/a SBCL, Inc.) (DE)
	100%	Quest Diagnostics Clinical Laboratories, Inc. (f/k/a SmithKline Beecham Clinical Laboratories, Inc.) (DE)
		(33-l/3%)	Compunet Clinical Laboratories (OH)
		(44%)	Mid America Clinical Laboratories (IN)
		(51%)	Diagnostic Laboratory of Oklahoma LLC (OK)
100%	Quest Diagnostics Incorporated (MD)
	100%	Diagnostic Reference Services Inc. (MD)
		100%	Pathology Building Partnership (MD) (gen. ptnrshp.)
100%	Quest Diagnostics Incorporated (MI)
100%	Quest Diagnostics Investments Incorporated (DE)
	100%	Quest Diagnostics Finance Incorporated (DE)
100%	Quest Diagnostics LLC (IL)
100%	Quest Diagnostics LLC (MA)
100%	Quest Diagnostics LLC (CT)
100%	Quest Diagnostics Nichols Institute (f/k/a Quest Diagnostics Incorporated) (CA)
100%	Quest Diagnostics of Pennsylvania Inc. (DE)
	51%	Quest Diagnostics Venture LLC (PA)
	53.5%	Associated Clinical Laboratories (PA) (gen. ptnrshp.)
		100%	North Coast General Services, Inc. (PA)
100%	Quest Diagnostics of Puerto Rico, Inc. (PR)
100%	Quest Diagnostics Receivables Inc. (DE)
100%	Quest Diagnostics Ventures LLC (DE)
100%	American Medical Laboratories, Incorporated (DE)
	100%	Quest Diagnostics Nichols Institute, Inc. (f/k/a Medical Laboratories Corporation) (VA)
	100%	Quest Diagnostics Incorporated (NV)
		100%	APL Properties Limited Liability Company (NV)
100%	DPD Holdings, Inc. (DE)
	100%	MetWest Inc. (DE)
		100%	Diagnostic Path Lab, Inc. (TX)
		100%	Quest Diagnostics Provider Network, LLC (CO)
		49%	Sonora Quest Laboratories LLC (AZ)
100%	Enterix Inc. (DE)
	100%	Enterix (Australia) Pty Limited (Australia)
		100%	Enterix Pty Limited (Australia)
100%	Focus Diagnostics GmbH (Germany)
100%	Focus Technologies Holding Company (DE)
	100%	Focus Diagnostics, Inc. (DE)

100%	HemoCue, Inc. (CA)
100%	QDI Acquisition AB (Sweden)
	100%	POCT Holding AB (Sweden)
		100%	HemoCue Holding AB (Sweden)
			100%	HemoCue AB (Sweden)
				100%    HemoCue Oy (Finland)
			100%	HemoCue GmbH (Germany)
			99.7%	HemoCue AG (Switzerland) (remaining 0.3% held in trust for HemoCue Holding AB)
			100%	Biotest Medizintechnik GmbH (Germany)
			100%	HemoCue Diagnostics B.V. (The Netherlands)
			100%	HC Diagnostics, Limited (UK)
			100%	HemoCue South Africa (Pty) Limited (South Africa)
100%	Lab Portal, Inc. (DE)
100%	LabOne, Inc. (MO)
	100%	ExamOne World Wide, Inc. (PA)
		100%	ExamOne World Wide of NJ, Inc. (NJ)
	100%	LabOne, L.L.C. (KS)
	100%	Central Plains Holdings, Inc. (KS)
	100%	Lab One Canada, Inc. (Ontario)
		100%	ExamOne Canada, Inc. (Ontario)
			100%	Rapid-Med Plus Franchise Corporation (Ontario)
	100%	LabOne of Ohio, Inc. (DE)
	100%	Osborn Group Inc. (DE)
100%	Lifepoint Medical Corporation (DE)
	100%	C&S Clinical Laboratory, Inc. (d/b/a Clinical Diagnostic Services) (NJ)
100%	MedPlus, Inc. (OH)
	100%	Valcor Associates Inc. (PA)
100%	Unilab Corporation (DE)
100%	Nichols Institute Diagnostics (CA)
100%	Nichols Institute Diagnostics Limited (UK)
100%	Nichols Institute International Holding B.V. (Netherlands)
	100%	Nichols Institute Diagnostics B.V. (Netherlands)
	100%	Nichols Institute Diagnostics SARL “in liquidation” (France)
100%	Nomad Massachusetts, Inc. (MA)
	100%	Laboratorio de Analisis Biomedicos, S.A. (Mexico)
100%	OralDNA Labs, Inc. (DE)
88%	Quest Diagnostics Mexico, S.A. de C.V. (Mexico)
	(12% owned by Nomad)
100%	Quest Diagnostics do Brasil Ltda. (Brazil)
100%	Quest Diagnostics India Private Limited (India)
100%	Quest Diagnostics Ireland Limited (Ireland)
100%	Quest Diagnostics Limited (UK)
	100%	The Pathology Partnership plc (UK)
19.9%	Clinical Genomics Pty Ltd. (Australia)

100%	AmeriPath Group Holdings, Inc. (DE)
	100%	AmeriPath Holdings, Inc. (DE)
		100%	AmeriPath Intermediate Holdings, Inc. (DE)
			100%	AmeriPath, Inc. (DE)
				100%	AmeriPath 5.01(a) Corporation (TX)
				100%	AmeriPath Cincinnati, Inc. (OH)
				100%	AmeriPath Cleveland, Inc. (OH)
				100%	AmeriPath Consolidated Labs, Inc. (FL)
				100%	AmeriPath Florida, LLC (DE)
				100%	AmeriPath Hospital Services Florida, LLC (DE)
				100%	AmeriPath Indemnity, Ltd. (Cayman Islands)
				100%	AmeriPath Indiana, LLC (IN)
				100%	AmeriPath, LLC (DE)
					100% AmeriPath Texas, LP
				100%	AmeriPath Kentucky, Inc. (KY)
				100%	AmeriPath Lubbock 5.01(a) Corporation (TX)
				100%	AmeriPath Lubbock Outpatient 5.01(a) Corporation (f/k/a Simpson Pathology 5.01(a) Corporation) (TX)
				100%	AmeriPath Marketing USA, Inc (FL)
				100%	AmeriPath Michigan, Inc. (MI)
				100%	AmeriPath Mississippi, Inc. (MS)
				100%	AmeriPath New York, LLC (DE)
				100%	AmeriPath North Carolina, Inc. (NC)
				100%	AmeriPath Ohio, Inc. (DE)
					100% AmeriPath Youngstown Labs, Inc. (OH)
				100%	AmeriPath PAT 5.01(a) Corporation (TX)
				100%	AmeriPath Pennsylvania, LLC (PA)
				100%	AmeriPath Philadelphia, Inc. (NJ)
				100%	AmeriPath San Antonio 5.01(a) Corporation (TX)
				100%	AmeriPath SC, Inc. (SC)
				100%	AmeriPath Severance 5.01(a) Corporation (TX)
				100%	AmeriPath Texarkana 5.01(a) Corporation (TX)
				100%	AmeriPath Wisconsin, LLC (WI)
				100%	AmeriPath Youngstown, Inc. (OH)
				100%	Anatomic Pathology Services, Inc. (OK)
				100%	API No. 2, LLC (DE)
				100%	Arlington Pathology Association 5.01(a) Corporation (TX)
				100%	Dermatopathology Services, Inc. (AL)
				100%	DFW 5.01(a) Corporation (TX)
				100%	Diagnostic Pathology Management Services, LLC (OK)
				100%	Kailash B. Sharma, M.D., Inc. (GA)
				100%	NAPA 5.01(a) Corporation (TX)
				100%	Nuclear Medicine and Pathology Associates (GA)
				100%	Ocmulgee Medical Pathology Association, Inc. (GA)
				100%	O’Quinn Medical Pathology Association, LLC (GA)
				100%	PCA of Denver, Inc. (TN)
				100%	PCA of Nashville, Inc. (TN)
				100%	Peter G. Klacsmann, M.D., Inc. (GA)
				100%	Sharon G. Daspit, M.D., Inc. (GA)
				100%	Shoals Pathology Associates, Inc. (AL)
				100%	Specialty Laboratories, Inc. (CA)
				100%	Strigen, Inc. (UT)
					100% Arizona Pathology Group, Inc. (AZ)
					100% Regional Pathology Consultants, LLC (UT)
					100% Rocky Mountain Pathology, LLC (UT)
				100%	TID Acquisition Corp. (DE)
				100%	TXAR 5.01(a) Corporation (TX)

Additional Entities Consolidated for Accounting Purposes

A. Bernard Ackerman, M.D. Dermatopathology, PC (NY)

AmeriPath Consulting Pathology Services, P.A. (NC)

AmeriPath Indianapolis, P.C. (IN)

AmeriPath Institute of Urological Pathology, PC (MI)., (f/k/a J.J. Humes M.D. and Assoc.)

AmeriPath Milwaukee, S.C. (WI)

AmeriPath Pittsburgh, P.C. (PA)

Colorado Diagnostic Laboratory, LLC (CO)

Colorado Pathology Consultants, P.C. (CO)

Consulting Pathologists of Pennsylvania, P.C. (PA)

Dermatopathology of Wisconsin, S.C. (WI)

Diagnostic Pathology Services, P.C. (OK)

Institute for Dermatopathology, P.C. (PA)

Jill A. Cohen, M.D., Inc. (AZ)

Kilpatrick Pathology, P.A. (NC)

Rose Pathology Associates, P.C. (CO)

Southwest Diagnostic Laboratories, P.C. (CO)

St. Luke’s Pathology Associates, P.A. (KS)

Tulsa Diagnostics, P.C. (OK)

EX-23.1

Exhibit-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-167603) and Form S-8 (Nos. 333-143889, 333-136196, 333-136195, 333-103555, 333-60758, 333-85713, 333-74103, 333-66177, 333-60477, 333-17077, 333-17079, 333-17083, 333-157447, 333-162710 and 333-162711) of Quest Diagnostics Incorporated of our report dated February 16, 2011 relating to the financial statements, financial statement scheduleand the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 16, 2011

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Surya N. Mohapatra, certify that:
1.	I have reviewed this annual report on Form 10-K of Quest Diagnostics Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 16, 2011
By	/s/ Surya N. Mohapatra
	Surya N. Mohapatra, Ph.D.
	Chairman of the Board, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Hagemann, certify that:
1.	I have reviewed this annual report on Form 10-K of Quest Diagnostics Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 16, 2011
By	/s/ Robert A. Hagemann
	Robert A. Hagemann
	Senior Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Annual Report on Form 10-K for the period ended December 31, 2010 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated:	February 16, 2011	/s/ Surya N. Mohapatra
		Surya N. Mohapatra, Ph.D.
		Chairman of the Board, President and
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Annual Report on Form 10-K for the period ended December 31, 2010 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated:	February 16, 2011	/s/ Robert A. Hagemann
		Robert A. Hagemann
		Senior Vice President and
		Chief Financial Officer