SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549
  
FORM 8-K
____________________________

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported) : April 9, 2012
____________________________

Quest Diagnostics Incorporated
(Exact Name of Registrant as Specified in Its Charter)
___________________________

Delaware
(State or other jurisdiction of Incorporation)

     
001-12215
 
16-1387862
(Commission File Number)
 
 
(I.R.S. Employer Identification
No.)
     
Three Giralda Farms
Madison, NJ  07940
 
07940
(Address of principal executive
offices)
 
(Zip Code)
     
(973) 520-2700
(Registrant’s telephone number, including area code)
     

___________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction a.2. below):
      
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
    
Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b)

Pursuant to the terms of the letter agreement dated October 21, 2011, effective April 30, 2012, Surya N. Mohapatra, Ph.D., will terminate as Chairman of the Board, President and Chief Executive Officer of Quest Diagnostics Incorporated (the “Company”).  Pursuant to the terms of Dr. Mohapatra’s employment agreement with the Company, Dr. Mohapatra has resigned from the Company’s Board of Directors (the “Board”), effective April 30, 2012.

As of the date of this report, no new compensatory or severance arrangements have been entered into in connection with Dr. Mohapatra’s termination.  Should any such arrangements be entered into in the future, the material terms of such arrangements will be disclosed in a subsequent filing.

(c), (d), (e)

On April 9, 2012, the Board of Directors (the “Board”) of the Company elected Stephen H. Rusckowski as President and Chief Executive Officer, effective May 1, 2012.

Mr. Rusckowski, age 54, has served as Executive Vice President of Royal Philips Electronics N.V. (“Philips”), a member of the Philips Executive Committee and Chief Executive Officer of Philips Healthcare since November 2006.  He has served as a member of the Board of Management of Philips since April 2007.

Mr. Rusckowski was previously the CEO of the Imaging Systems business group of Philips Healthcare. Before joining Philips he held numerous management positions with the healthcare division of Hewlett-Packard/Agilent Technologies.  He was the General Manager of Agilent’s Healthcare Solutions Group when Philips acquired this business in 2001.

Mr. Rusckowski holds a Bachelor of Science in Mechanical Engineering from Worcester Polytechnic Institute and a degree in management science from the Massachusetts Institute of Technology.

On April 9, 2012, the Company entered into an employment letter agreement (the “Employment Agreement”) with Mr. Rusckowski.  The Employment Agreement provides for an initial term expiring on December 31, 2015, provided that the term will be automatically extended for successive one-year periods unless the Company or Mr. Rusckowski notifies the other in accordance with the terms of the Employment Agreement that it will expire.  It is expected that Mr. Rusckowski will commence employment on May 1, 2012.

On April 9, 2012, Mr. Rusckowski was elected a director of the Company effective May 1, 2012, pursuant to the terms of the Employment Agreement.  He will serve as a member of the class of directors whose term expires at the Company’s 2013 annual meeting of stockholders.  
  
 
 
 
  
He will fill the vacancy in that class created by the resignation as a director of Dr. Mohapatra.  As a director who is an employee of the Company, Mr. Rusckowski will receive no additional compensation for his service as a member of the Board.

The Employment Agreement provides that Mr. Rusckowski will receive an annual base salary of $1,050,000, subject to annual review, and will be eligible to receive annual incentive compensation under the Company’s Senior Management Incentive Plan with a target amount of 130% of base salary.  The actual amount of the annual incentive compensation will be determined by the Compensation Committee of the Board.  However, Mr. Rusckowski’s 2012 annual incentive compensation will be not less than $1,365,000.  Mr. Rusckowski also will be eligible to be granted annual equity awards under the Company’s Employee Long-term Incentive Plan (“Employee Plan”) at the time that equity awards generally are made to the Company’s senior executives.

On the day that he commences employment (the “Commencement Date”), Mr. Rusckowski will receive an annual grant under the Employee Plan with a target value of $6,700,000, allocated 40% ($2,680,000) to stock options, 40% ($2,680,000) to performance shares and 20% ($1,340,000) to restricted stock units.  This award will be subject to the same terms and conditions as (including performance goals under the performance shares) and will be set forth in an equity award agreement that is substantially similar to the annual long-term incentive awards granted under the Employee Plan in 2012 to other Company senior executives.

In addition, on the Commencement Date, Mr. Rusckowski will be granted an award of performance shares under the Employee Plan having a target value equal to (i) $2,680,000 multiplied by (ii) a fraction the numerator of which is the number of whole or partial months from the Commencement Date to December 31, 2012 and the denominator of which is 36, which award will be subject to the same terms and conditions as (including performance goals) and will be set forth in an equity award agreement that is substantially similar to the annual award of performance shares granted under the Employee Plan in 2010 to other Company senior executives.

In addition, on the Commencement Date, Mr. Rusckowski will be granted an award of performance shares under the Employee Plan having a target value equal to (i) $2,680,000 multiplied by (ii) a fraction the numerator of which is the number of whole or partial months from the Commencement Date to December 31, 2013 and the denominator of which is 36, which award will be subject to the same terms and conditions as (including performance goals) and will be set forth in an equity award agreement that is substantially similar to the annual award of performance shares granted under the Employee Plan in 2011 to other Company senior executives.

In addition, to compensate Mr. Rusckowski for certain forfeitures incurred in connection with the termination of his employment from his immediately preceding employer and as a sign-on inducement, the Employment Agreement provides for Mr. Rusckowski to receive (i) within 30 days after the Commencement Date, a lump-sum cash payment of $500,000 (the “Make Whole Cash Payment”) and (ii) on the Commencement Date, a grant of 20,000 restricted stock units (the “Make Whole RSUs”).
  
 
 
 
  
Mr. Rusckowski is required under the Employment Agreement to refund the Make Whole Cash Payment if he voluntarily terminates employment without Good Reason (as defined in the Employment Agreement) or if the Company terminates his employment for Cause (as defined in the Employment Agreement), in each case at any time prior to the first anniversary of the Commencement Date.

The Make Whole RSUs will be issued pursuant to the terms and conditions of the Buy-Out Restricted Stock Unit Award Agreement (the “RSU Agreement”) in the form called for by the Employment Agreement.  50% of the Make Whole RSUs are scheduled to vest on April 15, 2013 and an additional 50% are scheduled to vest on April 15, 2014.  In certain situations more fully set forth in the RSU Agreement, the Make Whole RSUs are subject to pro rata or accelerated vesting, in accordance with the terms of the RSU Agreement.

Mr. Rusckowski will be eligible to participate in the employee benefit programs generally available to senior executives of the Company, including health insurance, life and disability insurance, the Employee Stock Purchase Plan, a 401(k) plan and a flexible spending plan.  He will be entitled to annual paid vacation in accordance with the Company’s time off policy applicable to senior executives (which provides 20 days of paid time off in the first year of employment).  Mr. Rusckowski will be entitled to relocation benefits in accordance with the Company’s Tier IV Relocation Policy, with such changes and adjustments appropriate for a Chief Executive Officer as determined by the Board in its discretion; provided that temporary housing under the Tier IV Relocation Policy will be extended up to 180 days.  To ensure Mr. Rusckowski’s accessibility, safety and productivity, the Company will reimburse Mr. Rusckowski for the costs of an executive driver for business purposes, including transportation between his residence and the Company’s offices.

Mr. Rusckowski is required, pursuant to the Employment Agreement, not later than December 31, 2015, to attain the guideline shareholding of the Company’s common stock (currently 100,000 shares) under the Company’s policies in effect from time to time regarding the acquisition and retention of shares of Company common stock.

In the Employment Agreement, the Company agrees to indemnify Mr. Rusckowski (including advancement of expenses) and hold him harmless to the fullest extent permitted by the certificate of incorporation and by-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, and damages resulting from the performance of his duties and obligations with the Company in good faith and with a reasonable belief that such performance was in, and not opposed to, the best interests of the Company.  The Company also agrees to cover Mr. Rusckowski as an insured, during his employment and service as a director of the Company and at all times thereafter during which he may be subject to liability for which he may be indemnified, to the extent of any contract of officers and directors liability insurance of the Company that insures directors.

On the Commencement Date, the Company and Mr. Rusckowski will enter the Company’s standard form Restrictive Covenant Agreement (the “Covenant Agreement”).  In the Covenant Agreement, Mr. Rusckowski generally agrees to protect the Company’s confidential information, refrain from competing with the Company, refrain from soliciting the Company’s customers and employees and comply with provisions regarding ownership of inventions.
  
 
 
 
  
Mr. Rusckowski will be a Schedule A participant in the Company’s Executive Officer Severance Plan, subject to certain modifications set forth in his employment agreement.  These modifications include that (i) any plan amendment or termination adverse to Mr. Rusckowski, other than a change in the form and timing of severance payments, will be disregarded; (ii) prior to the occurrence of a Change in Control, Mr. Rusckowski will be entitled to resign upon the occurrence of a “Good Reason” event (as defined under the Employment Agreement), subject to certain Company cure rights, and thereupon be entitled to severance benefits; (iii) payment of a pro rata bonus based on actual Company performance results for the year of termination and payable when bonuses otherwise are payable to other senior executives, to the extent not otherwise provided under the Executive Officer Severance Plan or the Company’s Senior Management Incentive Plan; and (iv) Mr. Rusckowski will not be entitled to a Section 280G “parachute payment” excise tax gross-up, but instead will be entitled to the better after-tax result of a reduction of any parachute payments to the Section 280G safe harbor amount or no reduction with payment of any applicable excise tax. All severance payments will be subject to Mr. Rusckowski’s resignation from all offices and as a director of the Board, providing a release of all claims and Mr. Rusckowski’s continued compliance with the Covenant Agreement.

Mr. Rusckowski is not party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

The foregoing description of the Employment Agreement, the RSU Agreement and the Covenant Agreement are qualified in their entirety by reference to the full text of the Employment Agreement, the RSU Agreement and the Covenant Agreement, respectively, which are filed as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and are incorporated by reference herein.

Item 7.01.  Regulation FD Disclosure.

On April 11, 2012, the Company issued a press release announcing the changes described in Item 5.02 and Item 8.01 of this Current Report on Form 8-K.  A copy of the Company’s press release is furnished with this Form 8-K and attached hereto as Exhibit 99.1.  The information in Exhibit 99.1 shall not be deemed “filed” for purposes of Securities Exchange Act of 1934, as amended and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

Item 8.01.  Other Events.

On April 9, 2012, the Company’s Board of Directors appointed Daniel C. Stanzione, Ph.D., the Company’s Lead Independent Director, as non-executive Chairman of the Board, effective May 1, 2012.  Dr. Stanzione will continue to serve as Chairman of the Board’s Governance Committee.
 
 
 
  
In addition to the compensation payable to each of the Company’s directors for their service as a director, for the 2012-2013 year, Dr. Stanzione will receive the following compensation for his service as non-executive Chairman of the Board and Chairman of the Board’s Governance Committee: (a) a cash retainer, payable on the same schedule as the Board retainer paid to each director, of $72,500; and (b) non-qualified stock options, granted effective May 11, 2012, delivered pursuant to the Amended and Restated Long-Term Incentive Plan for Non-Employee Directors (the “Director Plan”), having a grant date value of $72,500.

Item 9.01.  Financial Statements and Exhibits

(d) Exhibits.

10.1
Offer Letter of Employment dated April 9, 2012
10.2
Form of Buy-Out Restricted Stock Unit Award Agreement
10.3
Form of Restrictive Covenant Agreement
99.1
Press Release dated April 11, 2012
 
 
 
  
 
 
 
  
Signature


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


April 11, 2012
    
  QUEST DIAGNOSTICS INCORPORATED
           
           
  By:    /s/ William J. O’Shaughnessy, Jr.  
     
William J. O’Shaughnessy, Jr.
 
      Assistant General Counsel and Secretary
           



 
 
 
 
 
 
 
 
 
 

 
Exhibit 10.1
 

David W. Norgard
Vice President, Human Resources
3 Giralda Farms
Madison, New Jersey 07940
Phone: 973-520-2926  Cell: 201-240-4354

 
April 3, 2012
 
Stephen H. Rusckowski
 
 
Re:
Employment Terms
 
Dear Stephen:
 
On behalf of Quest Diagnostics Incorporated (the “ Company ”), I am pleased to offer you employment with the Company on the terms of this letter agreement set forth below (“ Agreement ”).  This offer is irrevocable and will remain open for your acceptance, by your signature on the last page hereof and delivery to me, until April 9, 2012 at 5:00 p.m. (Eastern Time). This Agreement will become effective upon your execution and receipt by the Company.
 
1.            Commencement Date; Term of Employment .  The term of this Agreement and your employment with the Company under this Agreement will commence on July 2, 2012 or such earlier date as the Board of Directors of the Company (the “ Board ”) and you may agree (“ Commencement Date ”) and, subject to earlier termination as provided in Section 11 hereof, the term of this Agreement will end on December 31, 2015; provided , however , that, the term will be automatically extended (subject to Section 11) for successive additional one (1)-year periods unless, at least six (6) months prior to the end of such initial term or any applicable one (1)-year extended term, the Company or you have notified the other in writing that the term of this Agreement will expire on the last day thereof.  For all purposes hereunder, the initial term, as may be so extended, is the “ Term ”.  Any employment after the date of expiration of the Term will be at-will.
 
2.            Position; Principal Place Of Employment . You will be employed as the President and Chief Executive Officer of the Company, reporting to the Board.  Your principal place of employment will be at the Company’s headquarters in Madison, New Jersey.
 
3.            Board Membership .  The Board will take such action as may be necessary to appoint or elect you as a member of the Board effective on your Commencement Date.  Thereafter, during the Term, the Board will nominate you for re-election as a member of the Board as and when your term as a director otherwise would expire.  You agree to serve without additional compensation as an officer and director of any of the Company’s subsidiaries.
 
4.            Base Salary .  You will be paid a base salary at an annual rate of $1,050,000, payable in accordance with the regular payroll practices of the Company.  Your base salary will be reviewed annually by the Board (or a committee thereof) for increase in the sole discretion of the Board (or committee), and once increased will not be decreased except for any proportionate reduction applicable to all senior executives of the Company.  For all purposes under this Agreement, your “ Base Salary ” is the amount then applicable under this Section 4.
 
5.            Annual Incentive .  For each fiscal year during your employment with the Company hereunder, you will be eligible to participate in the Company’s Senior Management Incentive Plan (the “ SMIP ”) and all other annual cash and equity incentive compensation plans and programs generally applicable to the Company’s senior executives.
     
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 2
 
 
You will have the opportunity to earn a target SMIP incentive, measured against criteria to be determined by the Board (or a committee thereof), of 130% of your Base Salary (the “ Target SMIP Incentive ”); provided , your FY 2012 annual incentive will be no less than your Target SMIP Incentive (based on a full year of Base Salary).
 
6.              Long-Term Incentive Compensation .
 
(a)           You will be eligible to participate in the Company’s Employee Long-Term Incentive Plan (the “ LTIP ”) and any other long-term incentive plans and programs for the Company’s senior executives at a level commensurate with your position.  You will be entitled to annual long-term incentive awards at the time granted to senior executives during FY 2013 and thereafter.  All such awards will be determined and granted in the sole discretion of the Board (or a committee thereof).
 
(b)           On the Commencement Date, you will be granted a long-term incentive award under the LTIP having a grant value of $6,700,000, allocated $2,680,000 (40%) to stock options, $1,340,000 (20%) to time-vested restricted stock units and $2,680,000 (40%) to performance shares.  The award will be subject to the same terms and conditions (including performance goals under the performance shares) and will be set forth in an equity award agreement that is substantially similar to annual long-term incentive awards granted under the LTIP in 2012 to other senior executives.
 
(c)           On the Commencement Date, you will be granted an award of performance shares under the LTIP having a target grant value equal to the product of (i) $2,680,000 multiplied by (ii) the fraction the numerator of which is the number of whole or partial months from the Commencement Date to December 31, 2012 and the denominator of which is thirty-six (36), which award will be subject to the same terms and conditions (including performance goals) and will be set forth in an equity award agreement that is substantially similar to the annual award of performance shares granted under the LTIP in 2010 to other senior executives.
 
(d)           On the Commencement Date, you will be granted an award of performance shares under the LTIP having a target grant value equal to the product of (i) $2,680,000 multiplied by (ii) the fraction the numerator of which is the number of whole or partial months from the Commencement Date to December 31, 2013 and the denominator of which is thirty-six (36), which award will be subject to the same terms and conditions (including performance goals) and will be set forth in an equity award agreement that is substantially similar to the annual award of performance shares granted under the LTIP in 2011 to other senior executives.
 
7.            Buy-Out Awards .  To compensate you for certain forfeitures incurred in connection with the termination of your employment with your immediately preceding employer and as a sign-on inducement:
  
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 3
 
 
(a)           On the Commencement Date, you will be granted an award of 20,000 restricted stock units in the form of award attached hereto as Exhibit A ; and
 
(b)           Not later than 30 days following the Commencement Date, the Company will pay you a cash lump sum in the amount of $500,000 (less applicable withholding taxes); provided , in the event that you voluntarily terminate your employment without Good Reason or the Company terminates your employment for Cause (each such term as defined below) at any time prior to the first anniversary of the Commencement Date, you shall refund the full pre-tax amount of that payment to the Company within 30 days after such termination.
 
8.            Employee Benefits; Vacation; Policies . You will be entitled to participate in all employee benefit plans and perquisites that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives at a level commensurate with your position.   You will be entitled to annual paid vacation in accordance with the Company’s time off policy applicable to senior executives (which provides 20 days paid time off in your first year of employment).  To ensure your accessibility, safety and productivity during the Term, the Company will reimburse you for the costs of an executive driver for business purposes (including transportation between your residence and the Company’s offices).  Not later than the last day of the initial term set forth in Section 1, you will be required to attain the guideline shareholding (currently 100,000 shares) under the Company policies  in effect from time to time regarding the acquisition and retention of shares of Company stock.  You shall at all times during your employment be subject to the Company policies in effect from time to time regarding engaging in transactions in Company stock.
 
9.            Relocation .  You will relocate to the vicinity of the Company’s headquarters within a time frame mutually agreed upon between you and the Board.  You will be entitled to relocation benefits in accordance with the Company’s Tier IV relocation policy, with such changes and adjustments appropriate for a Chief Executive Officer as determined by the Board in its discretion; provided , that temporary housing under the Tier IV relocation policy will be extended to up to 180 days.
 
10.            Restrictive Covenant Agreement; Non-Disparagement .
 
(a)           On your Commencement Date, you and the Company will enter into a standard form of Company Restrictive Covenant Agreement (the “ Restrictive Covenant Agreement ”) which includes provisions relating to confidentiality, two (2)-year post-employment non-competition, customer non-solicitation and employee non-solicitation restrictions, and ownership of inventions.
 
(b)           We agree neither the Company nor you will in any manner disparage the other party, or make or solicit any comments, statements or the like to the media or to others that are derogatory or detrimental to their good name or business reputation‬.  For such purposes, however, the obligations of the Company shall apply only respecting such conduct by its officers and directors or any authorized public statement made in the name of the Company.  The covenants under this Section 10(b) shall not prohibit any party from giving truthful testimony under oath in any legal or administrative proceeding or arbitration.
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 4
 
 
11.            Termination .
 
(a)           Your employment may be terminated by either party at any time, and will terminate on the first of the following to occur of your death, Disability, involuntary termination by the Company for Cause, involuntary termination by the Company without Cause, voluntary termination by you for Good Reason or voluntary termination by you without Good Reason.  You shall not voluntarily terminate your employment without giving the Company at least thirty (30) days’ prior notice, and during such thirty (30)-day period shall assist the Company, as and to the extent reasonably requested by the Company, to effect an orderly transition of your duties and responsibilities to the Company.
 
(b)           During the Term, you will participate in the Company’s Executive Officer Severance Plan as such plan may be in effect from time to time (“ EOSP ”), and for purposes of Section 4 and Section 5 (other than Section 5(d)) of which you will be regarded as a participant designated on Schedule A; provided , however , that, during the Term: (i) any amendment of the EOSP adverse to you   (other than any amendment applicable to all participants of the form and timing of any severance payments that may become due thereunder), and without your prior written consent, will be disregarded; (ii)  in the event of your Qualifying Termination, you also will be entitled to a pro rata annual bonus for the fiscal year in which the termination occurs in an amount (if any), based upon actual performance under the SMIP had your employment continued through the last day of the fiscal year, multiplied by the fraction the numerator of which is the number of days employed during the fiscal year through the date of termination and the denominator of which is 365; (iii) a “Qualifying Termination” as provided in the EOSP will also mean a termination of your employment by you, occurring prior to a Change of Control, for Good Reason; (iv) for any such Qualifying Termination that does not occur during the Termination Period, the term “Good Reason” will have the meaning defined on the Attachment attached hereto and not as defined under the EOSP.   The definitions of the following terms will have the meaning as defined in the EOSP: “Cause”, “Disability”, “Change of Control”, “Qualifying Termination” (except as modified above), “Termination Period”, and “Good Reason” as the definition of Good Reason applies to a Qualifying Termination occurring during the Termination Period.  In accordance with the EOSP, your entitlement to severance benefits thereunder (and as provided in this Agreement) will be subject to your providing a release of claims as provided therein.  Your entitlement (and continuing entitlement) to severance benefits thereunder will also be subject to (x) your delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans in which you are then serving and (y) your compliance with all post-termination obligations under the Restrictive Covenant Agreement.  Except as otherwise provided in this Agreement, any termination payments made and benefits provided under this Agreement to you, including pursuant to this Section 11(b) and the EOSP thereunder, shall be in lieu of any other termination or severance payments or benefits for which you may be eligible under any of the plans, practices, policies or programs of the Company or its affiliates.  All benefits, including,
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 5
 
 
without limitation, stock options, restricted stock units, performance shares and other awards under the Company’s long-term incentive programs will be subject to the terms and conditions of the plan, arrangement or agreement under which such benefits accrue, are granted or are awarded.
 
(c)           In the event that you receive any benefits from the Company under the EOSP, then, during the period of 36 months following the date that the termination of your employment became effective, you , 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 you as being convenient to him, all without compensation other than what is provided for under the EOSP; 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 that the termination of your employment became effective (except for any such proceedings relating to this Agreement), without compensation other than what is provided for under the EOSP; provided , that all out-of-pocket expenses you incur in connection with serving as a witness will be paid by the Company.
 
You will not be required to perform your obligations under this Section 11(c) if and so long as the Company is in default with respect to performance of any of its obligations under this Agreement.
 
12.            Reduction of Payments in Certain Circumstances .
 
(a)           Anything in this Agreement to the contrary notwithstanding, in the event that the Company’s independent auditors or such other nationally recognized certified public accounting firm as may be designated by the Company (the “ Accounting Firm ”) determine that receipt of any payment or distribution by the Company or affiliates in the nature of compensation to or for your benefit, whether paid or payable pursuant to this Agreement or otherwise (a “ Payment ”) would subject you to the excise tax under Section 4999 of the Internal Revenue Code of 1986 (“ Code ”), the Accounting Firm will determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (including pursuant to the EOSP and under any annual or long-term incentive award (collectively and selectively, the “ Agreement Payments ”) to the Reduced Amount (as defined below).  The Agreement Payments will be reduced to the Reduced Amount only if the Accounting Firm determines that you would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if your Agreement Payments were reduced to the Reduced Amount.  If the Accounting Firm determines that you would not have a greater Net After-Tax Receipt of aggregate Payments if your Agreement Payments were so reduced, you will receive all Agreement Payments to which you are entitled under this Agreement or otherwise.  For purposes of this Section 12, (i) “ Reduced Amount ” shall mean the greatest amount of Agreement Payments that can be paid that would not result in the
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 6
 
 
imposition of the excise tax under Section 4999 of the Code if the Accounting Firm determines to reduce Agreement Payments pursuant to this Section 12(a); and (ii) “ Net After-Tax Receipt ” shall mean the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all taxes imposed on you with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or such other rate(s) as the Accounting Firm determined to be likely to apply to you in the relevant tax year(s).
 
(b)           If the Accounting Firm determines that aggregate Agreement Payments should be reduced to the Reduced Amount, the Company will promptly give you notice to that effect and a copy of the detailed calculation thereof.  All determinations made by the Accounting Firm under this Section 12 shall be binding upon the Company and you and will be made as soon as reasonably practicable and in no event later than thirty (30) days following the date of any termination of your employment.  For purposes of reducing the Agreement Payments to the Reduced Amount, the reduction will be made by reducing the payments and benefits in the following order:  (i) payments due under the EOSP, (ii) payments due in respect of restricted stock units under any affected long-term incentive award, (iii) payments due in respect of performance shares under any affected long-term incentive award, and (iv) the forfeiture of such portion of any stock options constituting an “excess parachute payment” under Section 280G of the Code.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.
 
(c)           As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of you pursuant to this Agreement which should not have been so paid or distributed (“ Overpayment ”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of you pursuant to this Agreement could have been so paid or distributed (“ Underpayment ”), in each case, consistent with the calculation of the Reduced Amount hereunder.  In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or you which the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, you shall, except to the extent that it would cause a violation of the Sarbanes–Oxley Act of 2002, pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided , however , that no amount will be payable by you to the Company if and to the extent such payment would not either reduce the amount on which you is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes.  In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment will be paid promptly (and in no event later than 60 days following the date on which the Underpayment is determined) by the Company to or for the benefit of you together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.
  
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 7
 
 
13.            Arbitration .
 
(a)           Excepting any claim for benefits under the EOSP or any other employee benefit plan in which you are a participant (which claims shall be determined in accordance with the terms of such plan), to the fullest extent permitted by law, all claims that you may have against Company or which Company may have against you, in any way related to the subject matter, interpretation, application, or alleged breach of this Agreement (“ Arbitrable Claims ”) shall be resolved by binding arbitration in the state of New Jersey.  The arbitration will be held pursuant to the rules of the American Arbitration Association (applicable to commercial disputes).  The decision of the arbitrator shall be in writing and shall include a statement of the essential conclusions and findings upon which the decision is based.  Each party shall bear its own fees and expenses in connection with any such arbitration.
 
(b)           Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all Arbitrable Claims.  Either party may bring an action in a New Jersey court to compel arbitration under this Agreement and to enforce an arbitration award.  Otherwise, neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim.  Notwithstanding the foregoing, either party may, in the event of an actual or threatened breach of this Agreement (including but not limited to the provisions of the Restrictive Covenant Agreement), seek a temporary restraining order or injunction in a New jersey court restraining breach pending a determination on the merits by the arbitrator.
 
(c)           THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING WITHOUT LIMITATION ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY, OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.
 
14.            Indemnification; Liability Insurance .  The Company agrees to indemnify you (including advance of expenses) and hold you harmless to the fullest extent permitted by the certificate of incorporation and by-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, and damages resulting from your performance of your duties and obligations with the Company in good faith and with a reasonable belief that such performance was in, and not opposed to, the best interests of the Company.  The Company will cover you as an insured, during your employment and service as a member of the Board and at all times thereafter during which you may be subject to any liability for which you may be indemnified above, to the extent of any contract of officers and directors liability insurance of the Company that insures members of the Board.
 
15.            Forfeiture; Recoupment of Incentive Compensation .  All annual, long-term and other incentive compensation hereunder or pursuant to any plan, program or other agreement in which you are a participant or a party shall be subject to cancellation, forfeiture and recoupment by the Company, and shall be repaid by you to the Company, to the extent required by law, regulation or stock exchange listing requirement, or as may be required pursuant to any Company policy adopted pursuant thereto.
  
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 8
 
 
16.            Your Representations; Pre-Employment Conditions .
 
(a)           You represent and warrant that your entering into this Agreement and your employment with the Company will not be in breach of any agreement with any current or former employer and that you are not subject to any other restrictions on solicitation of clients or customers or competing against another entity except general confidentiality requirements.  You understand that the Company has relied on this representation in entering into this Agreement.
 
(b)           The Company’s offer of employment is contingent upon your satisfactory completion of a customary background check, drug screening and legally-required verification of your authorization to work in the United States.
 
17.            Attorneys Fees .  The Company will reimburse you for the reasonable attorneys fees you incur in connection with the negotiation and documentation of this agreement in an amount not to exceed $25,000.
 
18.            Clawback .  In addition to any compensation recovery (clawback) which may be required by law and regulation, you acknowledge and agree that any performance-based or other incentive-based compensation paid or awarded to you in connection with your employment with the Company may be subject to recovery by the Company pursuant to any requirements set forth in Company corporate governance guidelines or policies and to any similar or successor provisions as may be in effect from time to time.
 
19.            Section 409A .  Anything in this Agreement to the contrary notwithstanding:
 
(a)           It is intended that any amounts payable under this Agreement will either be exempt from or comply with Section 409A of the Code (“ Section 409A ”) and all regulations, guidance and other interpretive authority issued thereunder so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A, and this Agreement will be interpreted on a basis consistent with such intent.
 
(b)           To the extent that the reimbursement of any expenses or the provision of any in-kind benefits under this Agreement is subject to Section 409A, (i) the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year ( provided , that, this clause (i) will not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect); (ii) reimbursement of any such expense shall be made by no later than December 31 of the year following the calendar year in which such expense is incurred; and (iii) your right to receive such reimbursements or in-kind benefits shall not be subject to liquidation or exchange for another benefit.  Anything in this Agreement to the contrary notwithstanding, any tax gross-up payment (within the meaning of Treas. Reg. Section 1.409A-3(i)(1)(v)) provided for in this Agreement shall be made to you no later than the end of your taxable year next following your taxable year in which you remit the related taxes.
   
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 9
 
 
(c)           If you are a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of your separation from service (within the meaning of Treas. Reg. Section 1.409A-1(h)), then any payment or benefit pursuant to this Agreement on account of your separation from service, to the extent such payment constitutes non-qualified deferred compensation subject to Section 409A and required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code (after taking into account any exclusions applicable to such payment under Section 409A), shall not be made until the first business day after (i) the expiration of six (6) months from the date of your separation from service, or (ii) if earlier, the date of your death (the “ Delay Period ”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 18(c) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) will be paid or reimbursed to you in a lump sum and any remaining payments and benefits due under this Agreement will be paid or provided in accordance with the normal payment dates specified for them herein.  Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered deferred compensation under Section 409A, references to your “termination of employment” (and corollary terms) with the Company shall be construed to refer to your “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company.
 
(d)           Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment will be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.
 
(e)           To the extent any amount payable to you is subject to your entering into a release of claims with the Company and any such amount is a deferral of compensation under Section 409A and which amount could be payable in either of two taxable years for you, and the timing of such payment is not subject to terms and conditions under another plan, program or agreement of the Company that otherwise satisfies Section 409A, such payments shall be made or commence, as applicable, on January 15 (or any later date within seven (7) days after the release becomes irrevocable) of such later taxable year and shall include all payments that otherwise would have been made before such date.
 
20.            Miscellaneous .
 
(a)            Notices .  Any notices, consents, demands, requests, approvals and other communications to be given under this Agreement by either party to the other shall be in writing and (i) personally delivered, (ii) mailed by registered or certified mail, postage prepaid with return receipt requested, or (iii) delivered by overnight express delivery service or same-day local courier service, to the address set forth below, or to such other address as may be designated by the parties from time to time in accordance with this Section 19(a):
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 10
 
 
If to the Company:

Quest Diagnostics Incorporated
3 Giralda Farms
Madison, NJ 07940
Attention:  General Counsel

If to you:          At the most recent address on file at the Company

Notices delivered personally or by overnight express delivery service or by local courier service are deemed given as of actual receipt.  Mailed notices are deemed given three business days after mailing.
 
(b)            Survival .  Upon the expiration or other termination of this Agreement or of your employment, the respective rights and obligations of the parties hereto shall survive to the extent necessary to carry out the intentions of the parties under this Agreement.
 
(c)            Entire Agreement; Amendments; No Waiver .  This Agreement supersedes all previous employment agreements, whether written or oral between you and the Company and constitutes the entire agreement and understanding between the Company and you concerning the subject matter hereof.  If, and to the extent that, any other written or oral agreement between you and the Company is inconsistent with or contradictory to the terms of this Agreement, the terms of this Agreement shall apply.  No modification, amendment, termination, or waiver of this Agreement shall be binding unless in writing and signed by you and a duly authorized officer of the Company.  Failure of the any party to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such terms, covenants, and conditions.
 
(d)            Successors and Assigns .  This Agreement is binding upon and shall inure to the benefit of you and your heirs, executors, assigns and administrators or your estate and property and the Company and its successors and permitted assigns.  You may not assign or transfer to others the obligation to perform your duties hereunder.  The Company may not assign this Agreement other than to a successor to all or substantially all of its business and then only upon such assignee’s delivery to you of a written assumption of this Agreement.
 
(e)            Counterparts .  This Agreement may be signed in counterparts each of which will be deemed an original, but all of which will constitute one and the same instrument.  This Agreement may be executed by a signature delivered by facsimile or in e-mail/PDF or other electronic format.
 
[Signatures are on the following page]
 
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 11
 
 
On behalf of the Company, I am excited to offer you employment with the Company and look forward to a mutually rewarding relationship.
    
  Sincerely,  
         
         
  /s/ David Norgard  
         
  David Norgard
  Vice President, Human Resources
         
    
Agreed and Accepted:    
         
         
/s/ Stephen H. Rusckowski      
         
         
Dated:  April 9, 2012        
 
 
 
 
 
 
 
 
 
 
    
Mr. Stephen H. Rusckowski
April 3, 2012
Page 12
 
 
ATTACHMENT
 

 
“ Good Reason ” means the occurrence of one or more of the following circumstances, without your express written consent, in which notice is given by you and which circumstance(s) are not remedied by the Company, as provided below:
 
 
(i)
any material change in your duties, responsibilities or status (including reporting responsibilities) that is inconsistent in any material and adverse respect with your position(s), duties, responsibilities or authority with the Company (including any material and adverse diminution of such duties or responsibilities);
 
 
(ii)
any failure of the Board to re-nominate you as a Board director;
 
 
(iii)
a material reduction by the Company in your aggregate rate of Base Salary (other than reductions applicable to senior officers on a proportionate basis) and annual incentive bonus opportunity under the SMIP;
 
 
(iv)
the Company’s requiring you to be based at any office or location more than fifty (50) miles from the office where you are located on the Commencement Date and as a result causing your commute from your residence to the new location to increase by more than fifty (50) miles; 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) of the EOSP.
 
Notwithstanding the foregoing, an isolated, insubstantial and inadvertent action taken in good faith shall not constitute Good Reason if remedied by the Company within thirty (30) days after receipt of written notice thereof given by you to the Company describing in reasonable detail the Good Reason Event claimed. Your right to terminate employment for Good Reason shall not be affected by your incapacities due to mental or physical illness and your continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason. You may terminate your employment for a “Good Reason” event that is not reasonably remedied by the Company provided that you shall have delivered a notice of termination within ninety (90) days after your obtaining knowledge of the event giving rise to such termination.
 
 
 
 
 
 
 
  
Exhibit 10.2
 
        
Quest Diagnostics Incorporated
Form of Buy-Out Restricted Stock Unit Award Agreement
 
This Buy-Out Restricted Stock Award Agreement (the “ Agreement ”) dated as of _____________, 2012 (the “ Grant Date ”) between Quest Diagnostics Incorporated, 3 Giralda Farms, Madison, NJ 07940 (the “ Company ”) and the employee to whom the award described herein is made (the “ Employee ”) is subject in all respects to the Company’s Amended and Restated Employee Long-Term Incentive Plan (the “ Plan ”).  All references to “Shares” means shares of the Company’s Common Stock.
 
This Agreement and the awards described herein are effective as of the grant date but shall be canceled if the Employee fails to complete, not later than thirty (30) days after such awards are communicated electronically to the Employee, all the steps to accept the RSUs (as hereinafter defined) electronically at the Morgan Stanley Smith Barney Benefit Access website ( www.benefitaccess.com ) (the “ Site ”), including without limitation acknowledging that the Employee has read all of the documentation provided at the Site and affixing the Employee’s electronic signature, so that the status indicator at the Site reflects “Accepted” for the RSUs.
 
If the status indicator at the Site for the RSUs does not reflect “Accepted” by Midnight on the thirtieth (30 th ) day after the awards described herein are communicated electronically to the Employee, this Agreement, and the awards described herein, shall be cancelled.
 
AWARD COVERED BY THIS AGREEMENT
 
SECTION 1.      Restricted Share Units .  The Company hereby awards 20,000 restricted share units (each, an “ RSU ”) to the Employee under the Plan.  Each RSU corresponds to one Share and constitutes a contingent and unsecured promise of the Company to pay the Employee one Share on the vesting date for the RSU, subject to the terms and conditions set forth in the Plan and this Agreement.  The RSUs shall vest and convert to Shares on the terms set forth in Section 2.  For purposes of this Agreement, an “ RSU Share ” means a Share delivered upon conversion of an RSU.
 
 
 
1   Note to draft : Conform agreement for physical signatures if this award will not be granted via BenefitAccess.Com.
 
  
 
 
 
 
SECTION 2.      Vesting of RSUs .
 
(a)           General Vesting Requirements .  Except as otherwise provided in this Agreement, the RSUs shall vest on the vesting dates set forth below (the “ RSU Vesting Dates ”), provided that the Employee remains in continuous employment with the Company through the applicable RSU Vesting Date.
 
RSU Vesting Dates
Vesting Percent
Cumulative
April 15, 2013
50%
50%
April 15, 2014
50%
100%
     
Except as otherwise set forth in this Agreement, RSUs will convert to Shares as soon as practicable, and in all cases within fourteen (14) days, after the date on which the RSUs vest (whether vesting occurs on a RSU Vesting Date or as provided in Sections 2(b) through 2(g)) and such Shares, net of required tax withholding as described in Section 9 below, shall be transferred into the Employee’s account at the Company’s dedicated broker.
 
(b)           Termination of Employment Generally .  If the Employee’s employment is terminated (other than for one of the reasons set forth elsewhere in this Section 2) three months or more after the Grant Date but prior to April 15, 2014, the Employee will vest as of the Termination Date in a number of RSUs determined by multiplying the number of RSUs that are scheduled to vest on the next RSU Vesting Date by a fraction, (i) the numerator of which is the number of whole months from the Grant Date or, if the Termination Date occurs more than one year after the Grant Date, the most recent anniversary of the Grant Date, to the Termination Date and (ii) the denominator of which is 12; and any unvested RSUs will be canceled.  No RSUs shall vest under this Section 2(b) if the Employee’s termination of employment occurs less than three months after the Grant Date, except as provided below.
 
(c)           Leave of Absence .  Notwithstanding anything to the contrary contained herein, if the Employee is on a bona fide leave of absence approved by the Company for medical, personal, educational and/or other permissible purposes pursuant to policies of the Company as in effect from time to time, for a consecutive six-month period, such Employee will be deemed to have terminated employment for purposes of this Section 2 (including under Section 2(b)) on the first day following the six-month anniversary of the commencement of such leave of absence, provided , however , that the Employee will not be considered to have terminated employment for so long as the Employee retains a right to reemployment with the Company under an applicable statute or by contract.  Upon termination of the Employee’s employment after six months of bona fide leave of absence as provided in the preceding sentence (or upon later lapse or termination of the Employee’s statutory or contractual right to reemployment with the Company), the Employee shall immediately vest in a number of RSUs as provided in Section 2(b).  Any RSUs that remain unvested will be canceled; provided , however , that if the Employee’s employment is terminated pursuant to this Section 2(c) six months following the commencement of a medical or disability leave, any RSUs that have not vested in accordance with the applicable provisions of this Section 2 shall not be canceled until the date that is eighteen (18) months after the Termination Date; and provided , further , that if the Employee delivers to the Company evidence satisfactory to the Company that the Social Security Administration has determined that the Employee is disabled in accordance with the timing requirements set forth in Section 2(e), the provisions of such Section 2(e) shall apply.  For purposes of this Section 2(c), an Employee’s leave of absence shall be considered “bona fide” only if there is a reasonable expectation that the Employee will return to perform services for the employer.
 
 
 
  
(d)           Death .  If the Employee shall die while employed, on the date of the Employee’s death, all RSUs shall vest.
 
(e)           Disability .  In the event that the Employee’s employment has terminated pursuant to Section 2(c) at the end of a medical or disability leave, if the Employee delivers evidence satisfactory to the Company that the Social Security Administration has determined that the Employee is disabled (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “ Code ”)), both (i) on or before the date that is eighteen (18) months after the Termination Date, and (ii) no later than the date that is six (6) months after the date on which the Social Security Administration has made its determination (the “ Disability Determination Date ”), all RSUs shall vest as of the date that is six (6) months following the Disability Determination Date.
 
(f)           Change in Control .  The following shall apply upon the occurrence of a Change in Control, provided the Employee was employed by the Company on the effective date of the Change in Control:
 
(i)     All RSUs will vest immediately upon the Change in Control, but conversion of RSUs to Shares will be determined pursuant to clauses (ii) and (iii) below.
 
(ii)     If the Change in Control constitutes a “change in the ownership” of the Company, a “change in effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company, as such terms are used in Treas. Reg. §1.409A-3(i)(5), then all RSUs shall convert to Shares as soon as practicable, and in all cases within fourteen (14) days after, the effective date of the Change in Control.
 
(iii)     In the case of any Change in Control not described in clause (ii) above, RSUs shall convert to Shares at the time(s) they would have converted pursuant to the applicable provisions of this Section 2 in the absence of the Change in Control, provided , however , that in the event the Employee’s employment with the Company terminates for any reason following the Change in Control, all RSUs shall convert to shares as soon as practicable, and in all cases within fourteen (14) days, following the Termination Date.
 
For purposes of this Agreement, the term “ Change in Control ” shall mean and shall be deemed to occur if and when:
 
(x)     Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding securities; or
 
 
 
(y)     The individuals who, as of the Grant Date, constituted the Company’s Board of Directors (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided , however , that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934)) becoming a director subsequent to the Grant Date, whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
 
(z)     The Company consummates any of the following transactions that are required to be approved by shareholders:  (a) a transaction in which the Company ceases to be an independent publicly owned corporation, or (b) the sale or other disposition of all or substantially all of the Company’s assets, or (c) a plan of partial or complete liquidation of the Company.
 
(g)          Involuntary Termination with Severance or Divestiture .  If prior to April 15, 2014, the Employee’s employment is terminated by the Company as a result of a separation which would entitle the Employee to severance benefits under the Employee’s employment agreement with the Company (and thereby under the Company Executive Officer Severance Plan), all RSUs will immediately vest.
 
(h)          Separation from Service .  For purposes of this Section 2, Employee will be considered to have experienced a “termination of employment” only if the Employee has experienced a “separation from service” with the Company for purposes of Section 409A of the Code determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto.  For purposes of this definition, the Company is considered to include any corporation that is in the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company and any trade or business that is under common control with the Company (within the meaning of Section 414(c) of the Code), determined in each case by substituting “at least 20%” for “at least 50%” as permitted by Treasury Regulation §1.409A-1(h)(3) for purposes of such determinations.  (By way of illustration, an Employee’s transfer to a joint venture or other entity in which the Company has a 40% interest generally would not constitute a “termination of employment” for purposes of this Section 2, while transfer to a joint venture or other entity in which the Company has only a 19% interest would constitute a termination of employment.)
 
(i)          Specified Employees .  Notwithstanding any other terms of this Agreement, if the Company considers the Employee to be one of its “specified employees” as defined in Section 409A of the Code at the time of the Employee’s termination of employment, the conversion of any of the Employee’s RSUs that otherwise would convert upon the Employee’s termination of employment will be delayed for six months after such termination of employment, and such RSUs will convert to Shares on the first business day following the date that is six months after the Employee’s termination of employment; provided , however , that in the event of the Employee’s death, the RSUs will convert to Shares pursuant to Section 2(d).
   
 
 
 
    
TERMS AND CONDITIONS APPLICABLE TO AWARD
 
SECTION 3.      Cancellation .  Notwithstanding anything to the contrary contained herein, this Agreement shall expire and be canceled, the Employee will not vest in any RSUs and all RSUs (whether or not vested) shall be canceled if:
 
(i)     the Employee shall cause the Company to suffer financial harm or damage to its reputation (either before or after termination of employment) through (x) dishonesty, (y) violation of law in the course of the Employee’s employment or violation of the Company’s Corporate Compliance Manual and compliance bulletins or other written policies or (z) material deviation from the duties owed the Company by the Employee; or
 
(ii)     the Employee is subject to the Executive Share Ownership Policy, as such policy may be amended from time to time (the “Ownership Policy”), and the Employee makes any false attestation under the Ownership Policy; or
 
(iii)    the Employee violates the terms of any confidentiality, non-solicit or non-compete obligations or any other restrictive covenant set forth in any agreement between the Employee and the Company, or otherwise pursuant to any written policy of the Company (in any such case, a “ Restrictive Covenant ”).
 
The Company may require the Employee to provide a written certification or other evidence, from time to time in the Company’s sole discretion, to confirm that no cancellation event identified in clauses (i), (ii) or (iii) above has occurred, including upon or following a termination of employment for any reason and/or during a specified period of time prior to the scheduled delivery of any RSU Shares.  If the Employee fails to provide any required certification or other evidence by the specified deadline, the Company shall have the right to cancel the Employee’s award and/or, as discussed in the next paragraph, to cause the delivery of any RSU Shares under this Agreement to be rescinded (and if the Employee has previously sold the Shares issued pursuant to this Agreement, the Employee would be required to pay back to the Company the pre-tax proceeds received from the sale of such Shares).
 
The Employee understands that the cancellation of any awards or rights under this Agreement is only one element of the damages potentially sustained by the Company for any action described in this Section 3 or a violation of any Restrictive Covenant.  Such cancellation shall be in addition to any equitable and legal rights the Company has or may have and shall not constitute a release of any claim that the Company may have for damages, past, present, or future.  In addition, a breach by the Employee of any provisions of any Restrictive Covenant that occurs after any delivery of Shares pursuant to this Agreement (including any breach occurring after termination of employment) shall cause the delivery of any RSU Shares under this Agreement to be rescinded (and if the Employee has previously sold the Shares issued pursuant to this Agreement, the Employee would be required to pay back to the Company the pre-tax proceeds received from the sale of such Shares).  For purposes of this Section 3, the term “ Company ” shall mean the Company, its affiliates, divisions and subsidiaries, or any other entity in which the Company, directly or indirectly, controls or has an ownership or equity interest equal to or greater than 25.0% of the combined voting power of the entity’s then outstanding securities, and their respective successors and assigns.
 
 
 
 
SECTION 4.      Executive Share Ownership Policy .
 
(a)           Employees Subject to Ownership Policy .  The Employee is subject to the Ownership Policy.   In consideration of the grant of the awards under this Agreement, the Employee agrees that the RSUs and all RSU Shares shall be subject to cancellation pursuant to Section 3(ii) of this Agreement and all Options, Option Shares, RSUs, RSU Shares, Performance Shares and shares of restricted stock granted to the Employee by the Company prior to the date hereof (the “ Prior Awards ”) shall be subject to cancellation pursuant to Section 3(ii) of this Agreement (for false attestation under the Ownership Policy), the Shares obtained on exercise of such Prior Awards after the date hereof shall be subject to the Ownership Policy pursuant to Section 4(b) of this Agreement and the terms of Sections 3 and 4(b) hereof are made a part of the terms of each of the Prior Awards.
 
(b)           Shares Subject to Ownership Policy .  Any Shares issued under this Agreement or pursuant to any Prior Award (in each case net of tax withholdings) are subject to such policy.  The Employee hereby acknowledges and agrees that the investment risk associated with the retention of any Shares, whether pursuant to the Ownership Policy or otherwise, is the sole responsibility of the Employee and the Employee hereby holds the Company harmless against any claim of loss related to the retention of the Shares.
 
SECTION 5.      Non-Transferability; Voting Rights and Dividends .
 
(a)           Non-Transferability .  The awards and rights under this Agreement shall not be transferable other than by will or the laws of descent and distribution.
 
(b)           Voting and Dividend Rights .  The Employee will not have any voting, dividend or other rights as a stockholder with respect to any RSUs or RSU Shares prior to the date on which he is recorded as the holder of such RSU Shares on the records of the Company; provided , however that until RSUs convert to Shares, if the Company declares and pays a regular or ordinary dividend on its Common Stock, the Employee will be paid a dividend equivalent for vested and unvested RSUs, but no dividend equivalents will be paid on any RSUs that are canceled.  The Employee understands that Shares will not be issued to the Employee in respect of RSUs until after (and to the extent that) RSUs convert to Shares, it being understood that such issuance shall occur in any event on or prior to the March 15 of the taxable year following the taxable year in which such RSUs vest hereunder.  The Employee further understands that all deliveries of Shares under this Agreement shall be net of required tax withholding as described in Section 9 below.  Until Shares have been delivered to or on behalf of the Employee in respect of any RSUs, the Employee shall have only the rights of a general unsecured creditor.
 
(c)          Assignment .  Until Shares are transferred to the Employee’s account at the Company’s dedicated broker or the Employee otherwise receives physical possession of any such Shares, the Employee shall have no right to sell, assign, transfer, pledge or otherwise encumber Shares in any manner.  Any purported attempt to sell, assign, transfer, pledge or otherwise encumber any award under this Agreement will be void and shall result in the cancellation of such award.  Unless otherwise provided at the time of such transfer or delivery to the Employee of any  Shares issued in respect of vested RSUs, upon such transfer or delivery to the Employee the Shares will not be subject to any restrictions on transfer other than those that may arise under the securities laws or the Company’s policies, but the Shares shall remain subject to cancellation as provided in Section 3.
 
 
 
   
SECTION 6.      Consideration .  In consideration for the awards under this Agreement, the Employee hereby agrees to be bound by all Restrictive Covenants applicable to the Employee.
 
SECTION 7.      Clawback .  All awards hereunder to an executive officer shall be subject to cancellation and recoupment by the Company, and shall be repaid by the Employee to the Company, to the extent required by law, regulation or listing requirement, or by any Company policy adopted pursuant thereto.
 
SECTION 8.      The Plan .  The Plan is incorporated herein by reference.  The Employee acknowledges that he/she has read the terms of the Plan and that those terms shall govern in the event of any conflict with the terms of this Agreement.
 
SECTION 9.      Taxes .  The transfer of Shares upon conversion of any vested RSUs under this Agreement will result in the Employee’s recognition of income for U.S. federal income tax purposes and shall be subject to tax and tax withholdings as appropriate.  On the delivery of Shares upon conversion of any RSUs, the Company will reduce the number of Shares to be delivered to the Employee by the amount of the taxes due (with the Shares valued at the mean between its high and low prices on the New York Stock Exchange Composite list (or such other stock exchange as shall be the principal public trading market for the Shares) on the date that the Shares are valued for purposes of reporting compensation for Federal income tax purposes).  The Company shall have the authority to make arrangements for payment of the Employee’s share of any employment/payroll taxes (including Federal Insurance Contributions Act taxes), whether imposition of such taxes occurs upon conversion of RSUs or at some other time.  In particular, the Employee authorizes the Company to withhold such taxes from any payroll or other payment or compensation owed to the Employee, subject to the limitations imposed under Section 409A of the Code.
 
SECTION 10.      Consent Requirement .  If the Company shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the issuance or purchase of Shares or other rights hereunder, or the taking of any other action hereunder (a “ Plan Action ”), then no such Plan Action shall be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Company.  The term “consent” as used herein with respect to any action referred to in this Section 10 means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Employee with respect to the disposition of Shares, or with respect to any other matter, which the Company shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, and (iv) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Company.  Nothing herein shall require the Company to list, register or qualify the Shares on any securities exchange.
  
 
 
 
  
SECTION 11.      Invalidity and Enforcement .  If any provision of this Agreement is deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or to modify, as set forth in this Section, the offending provision or provisions and to alter the bounds of this Agreement in order to render it valid and enforceable.  The Company and the Employee specifically request that any court having jurisdiction over any dispute relating to this Agreement modify, if possible, any offending provision so that such provision will be enforceable to the maximum extent permitted by law.
 
SECTION 12.      No Entitlements .  This Agreement is not an employment agreement, and nothing in this Agreement or the Plan shall alter an Employee’s status as an “at-will” employee of the Company subject to the rights (if any) that the Employee may have under any employment agreement existing between the Company (or any subsidiary) and the Employee.
 
SECTION 13.      Enforcement by Successors and Assigns .  The Company and any of its successors or assignees may enforce the Company’s rights under this Agreement.
 
SECTION 14.      Entire Agreement .  Other than with respect to any existing nonsolicitation, non-competition, nonuse, and non-disclosure obligations of the Employee, this Agreement constitutes the entire agreement between the Company and the Employee regarding the RSUs.  No modification of this Agreement will have any force or effect unless such modification is in writing, signed by the Chief Executive Officer (or Vice President, Human Resources) of the Company and the Employee, and expressly indicates an intent to modify this Agreement.
 
SECTION 15.      Interpretation .  Any dispute, disagreement or matter of interpretation which shall arise under the Agreement shall be finally determined by the Compensation Committee in its absolute discretion.
 
SECTION 16.      Governing Law .  This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the state of New York applicable to contracts made and to be performed entirely within such state (without reference to its principles of conflicts of law).  Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York state court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York state court or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in state or federal court in New York City.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
  
 
 
 
    
SECTION 17.      Section 409A .  It is the intention and understanding of the parties that the provisions of this Agreement comply with the requirements of Section 409A of the Code.  This Agreement shall be interpreted and administered to give effect to such intention and understanding and to avoid the imposition on the Employee of any tax, interest or penalty under Section 409A of the Code in respect of the RSUs.  Notwithstanding any other provision of this Agreement, the Employee’s consent shall not be required for any amendment to this Agreement which, in the reasonable, good faith judgment of the Company, is necessary or appropriate to avoid the imposition on the Employee of any tax, interest or penalty under Section 409A of the Code.
 
SECTION 18.      Acknowledgements .  By accepting this Equity Award Agreement, the Employee agrees that he/she has received and reviewed a copy of:
 
(a)          the Prospectus ( link to Prospectus :
http://questnet1.qdx.com/Business_Groups/Legal/policies/stock_option/stock_option.htm) relating to the Company’s Employee Equity Participation Program and;
 
(b)          the Quest Diagnostics Incorporated 2011 Annual Report on Form 10-K ( link to 2011 Annual Report : http://www.sec.gov/Archives/edgar/data/1022079/000093041312000949/0000930413-12-000949-index.htm)
 
(c)          the Company’s Policy for Purchasing and Selling Securities (the “Policy”) (link to Trading Policy :  http://questnet1.qdx.com/Business_Groups/Legal/policies/policies.htm).  The Employee further agrees to fully comply with the terms of the Policy; and
 
(d)         the Eligibility Policy.
 
 
 
 
 
 
 

 
 
Exhibit 10.3
 
FORM OF RESTRICTIVE COVENANT AGREEMENT



This Agreement dated ______________ is by and between Quest Diagnostics Incorporated (“ Quest Diagnostics ”), a Delaware corporation with its principal place of business at 3 Giralda Farms, Madison, New Jersey and ___________  (“ the Employee ”).

WHEREAS, the Employee is employed in a senior position with Quest Diagnostics; and

WHEREAS, Quest Diagnostics deems it essential to the protection of its confidential information and competitive standing in its market to have its senior leadership have reasonable restrictive covenants in place; and

WHEREAS, the Employee agrees and acknowledges that Quest Diagnostics has a legitimate interest to protect its confidential information and competitive standing; and

WHEREAS, the Employee agrees and acknowledges that these interests are best protected through a signed agreement.

NOW THEREFORE, in consideration for the provisions stated below, and intending to be legally bound thereby, the parties agree as follows.

1.           The Employee has been informed and is aware that the execution of this Agreement is a necessary term and condition of the Employee’s employment, or continued employment.

2.             The Employee recognizes and acknowledges that during his or her employment with Quest Diagnostics, the Employee may be given access to and/or may develop Confidential Information.  The Employee shall not use or disclose (directly or indirectly) any Confidential Information (whether or not developed by the Employee) at any time or in any manner, except as authorized and required in the course of employment with Quest Diagnostics.  The Employee shall not disclose to Quest Diagnostics or use on behalf of Quest Diagnostics any Confidential Information obtained from any former employer or any other third party.  All documents and things embodying Confidential Information, whether prepared by the Employee or otherwise coming into the Employee’s possession, are the exclusive property of Quest Diagnostics, and must not be removed from any of its premises except as required in the course of employment with Quest Diagnostics.  All such documents and things shall be promptly returned by the Employee to Quest Diagnostics upon the request of Quest Diagnostics and on any termination of employment with Quest Diagnostics.  The Employee will not remove any Confidential Information such as documents or things or retain them in whole or part in any manner.  The Employee shall ensure that any export of Confidential Information undertaken by the Employee or with his/her knowledge or approval shall be in compliance with all applicable laws.
 
3.           The Employee shall promptly disclose to Quest Diagnostics all Confidential Information which the Employee creates, conceives, develops, or improves (either alone or with others) referred to below as a “ Creation ” while in the employment of Quest Diagnostics, if the Creation either:  (1) relates to any actual or demonstrably contemplated business, or research or development project, of Quest Diagnostics or its subsidiaries, or to any reasonable extension or variation thereof; or (2) results from any work performed by the Employee for Quest Diagnostics; or (3) was created utilizing any of Quest Diagnostics’s equipment, supplies, facilities, time, or Confidential Information.
 
 
 
 
 
The Employee shall keep complete, accurate, and authentic records on all Creations in the manner and form requested by Quest Diagnostics.  The Employee shall promptly disclose to Quest Diagnostics, in confidence, all patent, copyright, and trademark applications filed by the Employee within one (1) year after termination of employment with Quest Diagnostics and which relate to any field in which the Employee worked at Quest Diagnostics.  The Employee agrees that any such application for a patent, copyright registration, trademark registration, mask work registration, or similar right filed within one (1) year after termination of employment with Quest Diagnostics shall be presumed to relate to a Creation of the Employee created during employment at Quest Diagnostics, unless the Employee can prove otherwise.
 
4.           The Employee hereby assigns to Quest Diagnostics all of the Employee’s rights in all of the above-described Creations.  All such Creations that are subject to copyright or mask work protection are explicitly considered by the Employee and Quest Diagnostics to be works made for hire to the extent permitted by law.  To the extent that any such Creations are subject to copyright protection and are not works made for hire, any and all of the Employee’s copyright and mask work interest therein are hereby assigned by the Employee to Quest Diagnostics, and are the exclusive property of Quest Diagnostics.
 
5.           The Employee agrees to assist Quest Diagnostics in obtaining and/or maintaining patents, copyrights, trademarks, mask work rights, and similar rights to any Creations assigned by the Employee to Quest Diagnostics, if and to the extent that Quest Diagnostics, in its sole discretion, requests such assistance, the Employee shall sign all documents and do all other things deemed necessary by Quest Diagnostics, at Quest Diagnostics’s expense, to obtain and/or maintain such rights, to provide confirmatory evidence of the Employee’s assignment of such Creations to Quest Diagnostics, to defend them from invalidation, and to protect them against infringement by other parties.  The obligations of this paragraph are continuing and survive the termination of the Employee’s employment with Quest Diagnostics.  The Employee irrevocably appoints the Chief Executive Officer of Quest Diagnostics (with powers of delegation) to act as the Employee’s agent and attorney-in-fact to perform all acts as the Employee’s agent and to file, prosecute, and maintain applications and registrations for patents, trademarks, copyrights, mask work rights, and similar rights to any Creations assigned by the Employee to Quest Diagnostics under this Agreement, such appointment being effective both during the Employee’s employment by Company, and thereafter if the Employee (1) refuses to perform those acts, or (2) is unavailable, within the meaning of any applicable laws.  The Employee acknowledges that the grant of the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive his/her death or disability.
 
6.           During his/her employment with Quest Diagnostics and for a period of two (2) years following the date of the Employee’s termination of employment for any reason, the Employee will not provide services, in any capacity, whether as an employee, consultant, independent contractor, or otherwise, in any country in which Quest Diagnostics conducts business at any time to any person or entity that provides products or services that compete with the Business of Quest Diagnostics, including but not limited to the companies listed on Annex A and such additional persons or entities that provide products or services that compete with the Business of Quest Diagnostics as Quest Diagnostics may communicate in writing from time to time; and their subsidiaries or their successors or assigns.
 
7.           During his/her employment with Quest Diagnostics and for a period of two (2) years following the termination of the Employee’s employment for any reason, the Employee will not directly or indirectly solicit the Business of any customer of Quest Diagnostics of whom the Employee acquired knowledge and/or had direct or indirect contact during the one (1) year period prior to the termination of Employee’s employment relationship with Quest Diagnostics for any purpose other than to obtain, maintain and/or service the customer’s Business for Quest Diagnostics.
 
8.           During his/her employment with Quest Diagnostics and for a period of two (2) years following the termination of the Employee’s employment for any reason, the Employee agrees not to, directly or indirectly, recruit or solicit any employees of Quest Diagnostics to work for the Employee or any other person or entity.
 
 
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9.           As used in this Agreement, the following terms shall have these respective definitions:
 
9.1           “ Business ” shall include the Current Business; and any other product or service which Quest Diagnostics provided during the one-year period prior to Employee’s termination of employment and during the one (1) year period following Employee’s termination of employment, but the restriction on products and services introduced after Employee’s termination of employment shall exclude products and services that were not planned, discussed or contemplated prior to Employee’s termination of employment.
 
9.2           “ Current Business ” shall mean and include:  providing clinical testing information products or services for the diagnosis, monitoring and treatment of disease; providing clinical laboratory management services; providing medical informatics services (i.e., the statistical analysis of medical information) and consulting services based on such analysis; providing data analysis, medical information services and database management services for the health care industry; providing clinical testing information services and other services in support of clinical trials, and clinical testing products for use in clinical trials; providing services of storage, retrieval and communication of medical information via interactive computer networks; providing to managed care organizations, hospitals, employers and other institutional healthcare providers, access to a network of clinical diagnostic laboratories; providing services of processing requests for diagnostic tests, performing tests, reporting test results, and paying claims to network laboratories; providing quality and utilization management; providing consolidated chronological reports in graphical and/or numerical form, representing the results of clinical diagnostic tests performed on individual patients and groups of patients over monitored periods of time, together with analysis of the results; and manufacturing and selling clinical diagnostic assay kits, apparatus and reagents.
 
9.3           “ Indirectly solicit ” shall include, but are not be limited to, providing Company’s Confidential Information to another individual, or entity, allowing the use of Employee’s name by any company (or any employees of any other company) other than Quest Diagnostics, in the solicitation of the Business of Company’s customers.
 
9.4             “ Confidential Information ” shall mean all ideas, inventions, data, databases, know-how, processes, methods, practices, specifications, raw materials and preparations, compositions, designs, devices, fabrication techniques, technical plans, algorithms, computer programs, protocols, client information, medical records, documentation, customer names and lists, supplier names and lists, price lists, supplier names and lists, apparatus, business plans, marketing plans, financial information, chemical and biological reagents, business methods and systems, literary and graphical and audiovisual works and sound recordings, mask works, computer programs, and the like, and potential trade names, trademarks, and logos, in whatever form or medium and which have commercial value, and whether or not designated or marked “Confidential” or the like, which the Employee learns, acquires, conceives, creates, develops, or improves while employed by Quest Diagnostics and which (1) relate to the past, current, or prospective business of Quest Diagnostics or its subsidiaries and (a) which have not previously been publicly disclosed without restrictions on use by Quest Diagnostics, or (b) which Employee knows or has good reason to know are not generally publicly known; or (2) are received by Quest Diagnostics from a third party under an obligation of confidentiality to the third party which the Employee knows or reasonably should have known are confidential to such third party.  “Confidential Information” shall not include any information known generally to the public (other than as a result of an unauthorized disclosure by the Employee).
 
 
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10.           If so requested in writing by the Employee, Quest Diagnostics shall advise the Employee promptly in writing in advance (but in no case later than thirty (30) calendar days) as to whether, in the exercise of its reasonable discretion, Quest Diagnostics views any proposed activity contemplated by the Employee as constituting a competing “Business.”
 
11.           The Employee acknowledges that, in the event of the termination of his/her employment with Quest Diagnostics for any reason, the Employee will be able to earn a livelihood without violating the restrictions contained in this Agreement, and that the Employee is able to earn a livelihood without violating any such restrictions.
 
12.           Each covenant set forth in this Agreement shall be construed to be separate and distinct from every other covenant set forth herein.  In the event that any court shall declare any of such covenants to be invalid, then the remaining covenants and obligations shall be deemed independent, divisible and enforceable.  It is further agreed that the inclusion of the covenants as specified in this Agreement are reasonable and necessary.  If any provision of this Agreement is held to be unenforceable because of the scope of such provision, the court making such determination shall have the power to modify the terms of such provision(s) and said provision shall then be enforceable.
 
13.           The Employee agrees that the conduct of any activities prohibited by this Agreement will be a breach of his/her business relationship with Quest Diagnostics and will result in substantial irreparable injury to Quest Diagnostics, and that Quest Diagnostics may not be adequately compensated at law for such breach.  Accordingly, the Employee consents to entry of injunctive or other appropriate relief against the undersigned with respect to any such breach or threatened breach, without bond or security.  In the event that a Court determines that the Employee has breached this Agreement, the parties agree that the Employee shall reimburse Quest Diagnostics for all attorneys fees and costs incurred in enforcing the terms of the Agreement, as well as any other damages permitted by law.  The Employee also agrees that he/she will be enjoined from violating the provisions of paragraphs 2 and 3 for an additional two-year period should a court determine that those provisions were breached by the Employee.
 
14.             This Agreement shall be governed by and construed under New Jersey law, and shall inure to benefit and may be enforced by Quest Diagnostics, its successors or assigns, and shall be binding upon the undersigned and their successors and assigns.   The Employee irrevocably and unconditionally agrees that all actions or proceedings relating to or arising from this Agreement will, without exception, be litigated and tried only in Superior Court, Morris County, New Jersey..  Employee submits to the exclusive jurisdiction of this court for the purpose of any such action or proceeding (including, without limitation, any action initiated by Employee, including but not limited to any declaratory judgment actions) and this submission cannot be revoked.  Employee acknowledges and agrees that he/she has more than sufficient means to litigate any and all actions, proceedings or disputes arising from this Agreement before the aforementioned Court. Employee agrees that the aforementioned Court will be the most convenient forum in which to resolve any and all actions, proceedings or disputes arising from this Agreement.
  
15.           In order to waive ( i.e. , relinquish any rights) or modify any part of this Agreement, both Quest Diagnostics and the Employee must sign a written document expressly indicating their intention to waive or modify the specified provisions of this Agreement.  If Quest Diagnostics chooses not to enforce its rights in the event the Employee breaches some or all of the terms of this Agreement, Quest Diagnostics’s rights with respect to any such breach shall not be considered a waiver of a future breach by the Employee of this Agreement, regardless of whether the breach is of a similar nature or not.
 
 
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16.           This Agreement accurately sets forth and entirely sets forth the understandings reached between the Employee and Quest Diagnostics.  If there are any prior written or oral understandings or agreements pertaining to the subject matter addressed in this Agreement, they are specifically superseded by this Agreement and have no effect.  This Agreement is binding on the Employee and Quest Diagnostics, and our respective successors, assigns and representatives.
 

IN WITNESS WHEREOF, Quest Diagnostics and the Employee have executed this Agreement on the date(s) noted next to their respective signatures.

Quest Diagnostics Incorporated

 
 
By:      
  Vice President, Human Resources   [Signature of Employee] / Date
 
 
 
 
 
 
 
 
 
 
 
 
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Annex A

[List entities]

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Exhibit 99.1
 
 
Quest Diagnostics Names Steve Rusckowski as President and CEO

-- Daniel C. Stanzione, Ph.D. is appointed Non-Executive Chairman of the Board of Directors --

MADISON, N.J., April 11, 2012 -- Quest Diagnostics Incorporated (NYSE: DGX) today announced that Stephen H. Rusckowski will succeed Surya N. Mohapatra, Ph.D. as President and Chief Executive Officer, effective May 1, 2012. Dr. Mohapatra will remain in his role through April 30 to ensure a smooth leadership transition. Mr. Rusckowski will also become a member of the Board of Directors.

The company also announced that Daniel C. Stanzione, Ph.D., currently Lead Independent Director, will become Non-Executive Chairman of the Board, effective May 1, 2012.
 
Mr. Rusckowski, 54, is currently Chief Executive Officer of Philips Healthcare, the largest unit of Royal Philips Electronics, a position he has held since 2006.  He has also been a member of the Board of Management of Royal Philips Electronics and its Executive Committee.
 
“Steve Rusckowski is uniquely qualified to be Chief Executive Officer of Quest Diagnostics.” said Dr. Stanzione. “He has built an enviable track record in healthcare by successfully driving growth, both organically and through disciplined, effective acquisitions.  His emphasis on operational excellence has enabled him to deliver consistently impressive results. Steve is a keen conceptual thinker, and his experience and his knowledge of the issues facing the industry make him the ideal leader to capitalize fully on the opportunities that lie ahead in a dynamic healthcare environment.  We look forward to Quest Diagnostics’ next chapter of success under Steve’s leadership.”
 
“Quest Diagnostics is a world leader, and I am delighted to join such a dynamic, innovative company,” said Mr. Rusckowski.  “Given the company’s strong position in diagnostic testing, information and services, I believe there are extraordinary opportunities to grow and build shareholder value. I look forward to working closely with Quest Diagnostics employees, as well as customers, shareholders and business partners.”
 
During Mr. Rusckowski’s tenure as CEO of Philips Healthcare, revenues increased from approximately 6 billion Euro in 2005 to approximately 9 billion Euro in 2011, accounting for approximately 39% of Philips consolidated revenues, from 21% when he became CEO. Philips Healthcare has 38,000 employees in more than 100 countries worldwide. Prior to his current role, Mr. Rusckowski was CEO of the Imaging Systems business group within the company.   Before joining Philips he held numerous management positions with the healthcare division of Hewlett-Packard/Agilent Technologies. He joined Philips when it acquired Agilent’s Healthcare Solutions Group in 2001 .
 
Mr. Rusckowski earned a Bachelor of Science degree in Mechanical Engineering from Worcester Polytechnic Institute and a Master of Science degree in Management from the Massachusetts Institute of Technology’s Sloan School of Management.
 
 
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Commenting on his appointment as Non-Executive Chairman, Dr. Stanzione said: “I look forward to collaborating with Steve to serve the company and its shareholders in this new role.” He added: “Surya’s years at Quest Diagnostics have been marked by visionary leadership.  He has put a very strong team in place and firmly established Quest Diagnostics as an industry-leading, patient-focused healthcare company.  We have a solid foundation for future growth.  We are particularly thankful for the uninterrupted dedication and leadership Surya has shown as the Board searched for his successor over the past months.  His efforts ensure a smooth transition to leadership under Steve Rusckowski.”
 
About Quest Diagnostics
 
Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services that patients and doctors need to make better healthcare decisions. The company, which had 2011 revenues of $7.5 billion, offers the broadest access to diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics, which has approximately 42,000 employees, is a pioneer in developing innovative new diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at: www.questdiagnostics.com
 
 
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