UNILAB CORP /DE/
10.5 AMENDMENT TO STOCKHOLDERS' AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>10.5 AMENDMENT TO STOCKHOLDERS' AGREEMENT
<TEXT>


415101.01-New York S7A
                                  AMENDMENT TO

                               UNILAB CORPORATION

                             STOCKHOLDERS AGREEMENT


      AMENDMENT dated as of June 30, 2000 (this "Amendment") to the Stockholders
Agreement of Unilab  Corporation (the  "Corporation"),  dated as of November 23,
1999 (the "Stockholders Agreement").


                                 R E C I T A L S

            WHEREAS, the Corporation wishes to amend the Stockholders
Agreement for accounting purposes;

            WHEREAS, pursuant to Section 10.7 of the Stockholders Agreement, the
written consent of the  stockholders set forth on the signature pages hereto are
the only consents required to adopt such Amendment;

            WHEREAS, pursuant to Section 10.7 of the Stockholders Agreement, the
following sections of the Stockholders  Agreement are to be amended as set forth
herein;

            NOW, THEREFORE, it is agreed as follows:


Section 2.3(b) shall be amended and restated in its entirety to read as follows:

            (b) Any payments  based on Fair Market Value  required to be made by
      the  Company  under this  Section 2.3 shall  accrue  interest at 6% simple
      interest  per annum from the date of the exercise of the right to sell set
      forth in this  Article II (or in the case of shares  subject  to  employee
      stock options, which shares have been held for less than six months of the
      exercise  of such  options and are sold  pursuant to clause (i),  (iii) or
      (iv) of Section  2.1(a) (the  "Delayed Sale  Shares"),  from the six-month
      anniversary   of  such  exercise  (such  date,  the  "Delayed  Sale  Share
      Anniversary")) to the date the Company (or Kelso or its designee(s)) makes
      such payments.



<PAGE>



                                        9
415101.01-New York S7A
Section 2.5 shall be amended and restated in its entirety to read as follows:

            2.5  Postponement,  etc.  The date of  payment  and  closing  of any
      purchase  and sale under this  Article II may be  postponed  to the extent
      necessary  to permit such  purchase  and sale under the  Hart-Scott-Rodino
      Antitrust  Improvements  Act of  1976,  as  amended,  and the  regulations
      promulgated  thereunder  (the "HSR  Act").  No party  shall be required to
      consummate  any purchase and sale under this Article II until such time as
      such transaction  would not violate  applicable law, other than violations
      which would not have a direct or indirect  material adverse effect on such
      party.  Notwithstanding anything to the contrary in this Article II, in no
      event  shall any sale of Delayed  Sale  Shares  occur prior to the Delayed
      Sale Share  Anniversary;  provided,  that in the event that  Delayed  Sale
      Shares are to be sold, then (x) the Company (or Kelso, as the case may be)
      will, at its option,  either delay the purchase of all shares held by such
      Management  Stockholder  or delay only the  purchase of the  Delayed  Sale
      Shares, until a date that shall not be earlier than the Delayed Sale Share
      Anniversary  and (y) if pursuant to the foregoing  clause (x) the purchase
      of all  shares  held by  such  Management  Stockholder  is  delayed,  then
      notwithstanding  Section  2.3(b) above,  no interest shall accrue prior to
      the Delayed Sale Share Anniversary with respect to any shares held by such
      Management Stockholder.


The  introductory  paragraph to section 3.1 shall be amended and restated in its
entirety to read as follows:

            3.1 Right to Purchase Shares from Management  Stockholders.  Subject
      to all provisions of this Article III, the Company shall have the right to
      purchase  (and,  if the  Company  does not  exercise  such right by giving
      notice within the 45-day period  referred to in Section 3.2, Kelso (or its
      designee(s))  shall have the right by giving notice not later than the end
      of  the   succeeding   10-day  period  to  purchase)   from  a  Management
      Stockholder,  and such Management Stockholder shall have the obligation to
      sell  to the  Company  (or  Kelso  or its  designee(s)  if such  right  is
      exercised  by Kelso or its  designee(s)),  all,  but not less than all, of
      such Management Stockholder's shares of Common Stock:



<PAGE>



Section 3.3(b) shall be amended and restated in its entirety to read as follows:

            (b) Any payments  based on Fair Market Value  required to be made by
      the  Company  under this  Section 3.3 shall  accrue  interest at 6% simple
      interest  per annum on the amounts not paid from the date of the  exercise
      of the right to purchase  set forth in this Article III (or in the case of
      shares subject to employee stock options,  which shares have been held for
      less than six months of the  exercise of such  options  and are  purchased
      pursuant to clause  (i),  (ii) or (iii) of Section  3.1(a)  (the  "Delayed
      Purchase Shares"),  from the six-month  anniversary of such exercise (such
      date, the "Delayed  Purchase Share  Anniversary")) to the date the Company
      (or Kelso or its designee(s)) makes such payments.


Section 3.4 shall be amended and restated in its entirety to read as follows:

            3.4  Postponement,  etc.  The date of  payment  and  closing  of any
      purchase  and sale under this  Article III may be  postponed to the extent
      necessary  to permit  such  purchase  and sale under the HSR Act. No party
      shall be required to  consummate  any purchase and sale under this Article
      III until such time as such transaction would not violate  applicable law,
      other than violations  which would not have a direct or indirect  material
      adverse effect on such party.  Notwithstanding anything to the contrary in
      this  Article  III,  in no event shall any  purchase  of Delayed  Purchase
      Shares occur prior to the Delayed  Purchase Share  Anniversary;  provided,
      that in the event that Delayed  Purchase Shares are to be purchased,  then
      (x) the Company (or Kelso, as the case may be) will, at its option, either
      delay the purchase of all shares held by such  Management  Stockholder  or
      delay only the purchase of the Delayed Purchase Shares,  until a date that
      shall not be earlier than the Delayed  Purchase Share  Anniversary and (y)
      if pursuant to the foregoing clause (x) the purchase of all shares held by
      such  Management  Stockholder  is delayed,  then  notwithstanding  Section
      3.3(b) above, no interest shall accrue prior to the Delayed Purchase Share
      Anniversary   with   respect  to  any  shares  held  by  such   Management
      Stockholder.



<PAGE>




Section 4.1(b) shall be amended and restated in its entirety to read as follows:




<PAGE>


                  (b) Fair Market Value. For the purposes of this Agreement, the
            "Fair Market Value" of any share of Common Stock being  purchased by
            or  sold  to the  Company,  Kelso  or  their  respective  designees,
            pursuant to this  Agreement  shall be the fair  market  value of the
            entire Common Stock equity interest of the Company taken as a whole,
            divided by the number of  outstanding  shares of Common  Stock,  all
            calculated on a fully diluted basis, without additional premiums for
            control or discounts  for  minority  interests  or  restrictions  on
            transfer,  and shall be determined by Appraisal as of the applicable
            date of termination  of employment  with the Company (or in the case
            of Delayed Sale Shares or Delayed Purchase  Shares,  on the last day
            of the month in which the  Delayed  Sale  Share  Anniversary  or the
            Delayed Purchase Share  Anniversary  occurs) or the date of transfer
            to an  Involuntary  Transferee  (as defined in Section 6.4) (each of
            such dates, a  "Determination  Date"),  which  Appraisal the Company
            shall  have  caused  to have been  undertaken,  in  accordance  with
            Section 4.1(a), promptly but no later than 30 days following (i) the
            date of receipt by the  Company of the notice  described  in Section
            2.2 (in the case of purchases  of Common  Stock  pursuant to Article
            II), (ii) the date on which the Company  gives the notice  described
            in Section  3.2 (in the case of  purchases  by the Company of Common
            Stock  pursuant  to Article  III) or the date on which Kelso (or its
            designees) gives the notice described in Section 3.1 (in the case of
            purchases  of Common Stock by Kelso (or its  designees)  pursuant to
            Section  3.2) and (iii) the date of  receipt  by the  Company of the
            Notice  described in Section 6.4 (in the case of purchases of Common
            Stock  pursuant to Section 6.4) and  notwithstanding  the foregoing,
            (iv)(a) the Delayed Sale Share  Anniversary,  in the case of Delayed
            Sale Shares or (b) the Delayed  Purchase Share  Anniversary,  in the
            case of Delayed Purchase Shares;  provided,  however,  that the Fair
            Market  Value  will be  determined  as of the most  recent  existing
            Appraisal  unless (i) such  existing  Appraisal  is not as of a date
            within  6  months  of the  applicable  Determination  Date  and  the
            relevant  repurchase  involves  more  than one  percent  (1%) of the
            Common Stock  outstanding,  in which case the Company shall order an
            additional  Appraisal  under Section 4.1(a) or (ii) in the Company's
            judgment  there  has been a  material  change  in the  Company,  its
            operations or its value since such existing Appraisal, in which case
            the  Company  may,  in its  sole  discretion,  order  an  additional
            Appraisal  or (iii) a  determination  of Fair Market  Value is being
            made with  respect to (x) Delayed  Sale  Shares or Delayed  Purchase
            Shares or (y) shares  subject to employee stock options which shares
            have been held for at least six  months  from the  exercise  of such
            options and the most recent existing  Appraisal  occurred during the
            first six months that such shares were held,  then the Company shall
            order an additional  Appraisal  under Section 4.1(a) for the purpose
            of  determining  the Fair Market Value of such shares..  Fair Market
            Value of an employee  stock  option  issued  prior to the Closing or
            issued  in  exchange  for an  option  issued  prior  to the  Closing
            ("Pre-existing Option") but which has not been exercised at the time
            of the relevant  calculation  is the Fair Market Value of the Common
            Stock  underlying  such  Pre-existing  Option  minus  the  aggregate
            exercise price of such Pre-existing Option (the "Spread").


Section 4.2 shall be amended and restated in its entirety to read as follows:



<PAGE>


            4.2 Carrying Value.  For the purposes of this  Agreement,  "Carrying
      Value" of any share of Common  Stock,  other than  shares  issued upon the
      exercise of Pre-existing Options,  being purchased by the Company shall be
      equal to the price paid by the selling Management Stockholder for any such
      share  ("Cost"),  less the  amount of  dividends  paid to such  Management
      Stockholder in respect of any such share.  Notwithstanding anything to the
      contrary herein,  (i) in the case of any share of Common Stock outstanding
      prior to, and which remains outstanding following, the Closing or that was
      issued in exchange for any share of Common Stock  outstanding prior to the
      Closing, Cost shall be deemed to be $5.85, and the Carrying Value shall be
      calculated  as set forth  above  commencing  from the date of the  Closing
      through the date of purchase by the Company pursuant to Article II or III,
      (ii) in the case of any  Pre-existing  Option which has not been exercised
      at the time of the  calculation of the Cost thereof,  Cost shall be deemed
      to be the product of (x) $5.85 minus the per share  exercise price of such
      Pre-existing  Option (the "Cost  Spread")  and (y) the number of shares of
      Common Stock subject  thereto,  and the Carrying Value shall be calculated
      as set forth above  commencing  from the date of the  Closing  through the
      date of purchase by the Company pursuant to Article II or III and (iii) in
      the case of any share of Common Stock that was issued upon the exercise of
      any Pre-Existing Option, Cost shall be deemed to be $5.85 and the Carrying
      Value shall be calculated as set forth above,  except that interest  shall
      accrue  from the date of Closing  through the date of exercise on the Cost
      Spread of such Pre-existing Option and shall accrue on $5.85 from the date
      of  exercise  through  the date of  purchase  by the  Company  pursuant to
      Article II or III.



<PAGE>


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



                                    UNILAB CORPORATION

                                    By:  /s/ Robert Whalen
                                            ------------------------


                                          Name:  Robert Whalen
                                          Title: Chairman of the Board,
                                                 President, Chief Executive
                                                 Officer and Director


<PAGE>



                                    KELSO INVESTMENT
                                    ASSOCIATES VI, L.P.

                                    By:  Kelso GP VI, LLC, General Partner

                                    By:  /s/ George E. Matelich
                                         -----------------------------
                                               Managing Member


                                    KEP VI, LLC

                                    By: /s/ George E. Matelich
                                        ------------------------------
                                               Managing Member



<PAGE>






                                          By:/s/ Brian D Urban
                                          ----------------------------
                                                Brian Urban



                                          By: /s/ Robert E Whalen
                                          ------------------------
                                               Robert Whalen

</TEXT>
</DOCUMENT>
