Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into effective as of March
22, 2004 (the “Effective Date”), by and between AmeriPath, Inc., a Delaware
corporation (“AmeriPath”), and Donald E. Steen (“Employee”), with reference to
the following facts:

 

R E C I T A L S

 

A. AmeriPath desires to employ Employee in the capacities and on the terms and
conditions hereinafter set forth and Employee is willing to serve in such
capacities and on such terms and conditions.

 

B. Employee currently serves as a Chairman of the Board of United Surgical
Partners International, Inc., a publicly-held Delaware corporation (“USPI”), and
Employee intends to remain as Chairman of the Board of USPI during the term of
this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, AmeriPath and Employee mutually agree as follows:

 

A G R E E M E N T

 

1. Employment. AmeriPath hereby employs Employee, and Employee accepts
employment, as the Chairman of the Board of AmeriPath as of the Effective Date
and, effective as of July 1, 2004, as Chief Executive Officer of AmeriPath.

 

2. Duties.

 

(a) Nature of Duties. In his capacity as Chairman of the Board, Employee shall
have such duties, responsibilities and authority as are set forth in the Bylaws
of AmeriPath and as are typical for the position of Chairman of the Board. In
his capacity as Chief Executive Officer, Employee (i) shall report to the Board
of Directors of AmeriPath, (ii) shall have such duties, responsibilities and
authority as are set forth in the Bylaws of AmeriPath for the position of Chief
Executive Officer and (iii) shall have authority to hire such staff as Employee
determines is necessary and to determine the titles and (subject to established
authority levels for setting salaries) the compensation levels of such staff.

 

(b) Outside Activities. Anything herein to the contrary notwithstanding,
AmeriPath acknowledges and agrees that Employee shall have the right to remain
as Chairman of the Board of USPI at all times during the term of this Agreement.
As a result thereof, Employee shall not be obligated to devote all of his
business time to his duties under this Agreement. In addition, AmeriPath will
coordinate with Employee in disclosing this Agreement to the Board of Directors
of USPI in a manner determined by Employee, and AmeriPath will not make any
public announcement or other disclosure of this Agreement without Employee’s
prior approval, which approval will not be unreasonably withheld or delayed or
cause AmeriPath to be in violation of federal or state securities laws. In the
event of any conflict

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of interest between AmeriPath and USPI, Employee shall be entitled to refrain
from taking any action as to such matter and shall not be considered to be in
breach of any fiduciary or other duty to AmeriPath as a result thereof or as a
result of any actions by USPI.

 

3. Compensation.

 

(a) Base Salary. AmeriPath shall pay Employee a Base Salary (“Base Salary”) at a
rate of $445,000 per year; provided, however, that during any period in which
Employee is serving only as Chairman of the Board, his Base Salary shall be at a
rate of $278,000 per year. The Board of Directors of AmeriPath shall, in good
faith, consider granting increases in such salary based on Employee’s
performance and the growth and/or profitability of AmeriPath, but it shall have
no obligation to grant any such increases in compensation. Base Salary shall be
payable in equal semi-monthly installments on the 15th day and the last working
date of the month, or at such other times and in such installments as may be
agreed upon between AmeriPath and Employee. All payments shall be subject to the
deduction of payroll taxes and similar assessments as required by law.

 

(b) Performance Bonuses. In addition to the Base Salary, Employee shall be
eligible to receive bonus compensation of up to 100% of the Base Salary based on
such performance goals and criteria as the Board of Directors of AmeriPath
shall, from time to time, determine.

 

4. Expenses and Benefits. AmeriPath agrees to provide Employee with the
following benefits:

 

(a) Expense Reimbursements. Employee is authorized to incur reasonable expenses
in connection with the business of AmeriPath, including expenses for
entertainment, travel and similar matters. AmeriPath will reimburse Employee for
such expenses upon presentation by Employee of such documentation as AmeriPath
shall from tune to time require.

 

(b) Office Services. AmeriPath will provide Employee with an administrative
assistant of his choice and reasonable office space at AmeriPath’s corporate
headquarters office, which is currently located in Riviera Beach, Florida.

 

(c) Insurance. Disability insurance and other insurance programs that are
currently in place for AmeriPath’s senior executive officers (as the same may be
modified from time to time by AmeriPath for its senior executives). However, so
long as Employee obtains health insurance through USPI, Employee shall not
participate in AmeriPath’s health insurance programs.

 

(d) Employee Benefit Plans. Participation in any other employee benefit plans
now existing or hereafter adopted by AmeriPath for its employees.

 

(e) Lodging Expenses. Employee has purchased a condominium in the West Palm
Beach. AmeriPath agrees to pay, or to reimburse Employee, for all condominium
fees, utility costs, maintenance and other normal out-of-pocket costs of owning
said condominium, which costs the parties estimate will be approximately $50,000
per year.

 

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(f) Vacations. Employee shall be entitled (in addition to the usual public
holidays) to a paid vacation of an aggregate of five weeks in each calendar
year.

 

(g) Air Travel Expenses. AmeriPath acknowledges that Employee has an ownership
interest in a FlexJet Fractional Ownership Program (“FlexJet”) that allows him
to use a jet for a designated number of hours per year. Employee shall be
entitled to use up to 50 of such hours for purposes of travel between Dallas,
Texas and West Palm Beach, Florida, with the cost of such travel to be paid by
Welsh, Carson, Anderson & Stowe IX, L.P. (“WCAS”), which currently owns 100% of
the outstanding common stock of AmeriPath [Holdings, Inc., the parent company of
AmeriPath (“Parent”)], and AmeriPath as follows:

 

(i) By its execution of this Agreement as set forth below, WCAS agrees to pay to
Employee the “wholesale rate” established by FlexJet for hourly use of said jet
by Employee as described above; and

 

(ii) AmeriPath shall directly pay to FlexJet the variable cost charged by
FlexJet for such usage of said jet by Employee.

 

All other travel expenses incurred by Employee shall be reimbursable in
accordance with Section 4(a) above.

 

(h) Club Initiation Fee. Upon Employee becoming Chief Executive Officer,
AmeriPath agrees to pay or reimburse Employee for the initiation fee at a
country club in the West Palm Beach area selected by Employee. Employee shall be
responsible for the monthly club membership fees, but other business expenses at
such club may be reimbursable as appropriate pursuant to Section 4(a). Upon
termination of this Agreement, Employee shall either (i) give up his membership
at said country club and cause any refund of all or a portion of the initiation
fee due from the club in connection therewith to be paid to AmeriPath or (ii)
retain such membership and pay to AmeriPath the amount that would have been paid
to AmeriPath (as described in clause (i) above) if he had resigned his
membership.

 

(i) Indemnity Agreement. At or prior to the Effective Date, Employee and
AmeriPath shall enter into an Indemnity Agreement whereunder AmeriPath agrees to
indemnify and hold Employee harmless from all liabilities and claims (and costs
of defense and expenses related thereto) arising out of the performance by
Employee of his duties hereunder for AmeriPath and its affiliates. Such
Indemnity Agreement shall be in form and substance reasonably satisfactory to
Employee and AmeriPath.

 

5. Term; Severance. The term of this Agreement shall be from the date of this
Agreement to June 30, 2007; provided, however, that the term of this Agreement
shall be automatically renewed for successive additional one year terms unless a
notice of non-renewal is given by either party at least 12 months prior to the
end of the initial term or any such renewal term. Notwithstanding the foregoing,
either party may terminate this Agreement upon not less than 90 days notice, but
if AmeriPath either gives notice of non-renewal or elects to terminate this
Agreement, Employee shall be entitled to severance pay based on the Base Salary
and bonuses that Employee otherwise would have earned pursuant to Section 3
above during the remainder of the term of this Agreement or for 24 months after
termination, whichever is longer. Such severance pay shall be payable in monthly
installments and AmeriPath shall continue the

 

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benefits set forth in Sections 4(c) for the period during which such severance
payments are to be made. A determination by AmeriPath not to renew or to
terminate this Agreement may be made only by an affirmative vote of not less
than 75% of the members of the Board of Directors of AmeriPath then in office.
In addition, this Agreement may be terminated as provided for in Section 7 or
upon the death of Employee.

 

6. Disability.

 

(a) In the event that Employee becomes Permanently Disabled (as hereinafter
defined) during the term of this Agreement, Employee shall continue in the
employ of AmeriPath but his compensation hereunder shall be reduced to
three-fourths of the Base Salary then in effect as set forth in Section 3(a),
commencing upon the determination of Employee’s Permanent Disability and
continuing thereafter until the first to occur of (i) 24 months or (ii) the
death of Employee; and during such period of time, Employee shall not be
entitled to payment of expenses or benefits specified in Section 4 (except for
reimbursement of expenses incurred by Employee prior to becoming Permanently
Disabled), except that AmeriPath shall continue to provide Employee with the
insurance benefits specified in Section 4(c). The obligation of AmeriPath for
continuation of three-fourths of Employee’s Base Salary shall be net of payments
to Employee from the disability insurance referred to in Section 4(c).

 

For purposes of this Agreement, the terms “Permanent Disability” or “Permanently
Disabled” shall mean three months of substantially continuous disability.
Disability shall be deemed “substantially continuous” if, as a practical matter,
Employee, by reason of his mental or physical health, is unable to sustain
reasonably long periods of substantial performance of his duties. Frequent long
illnesses, though different from the preceding illness and though separated by
relatively short periods of performance, shall be deemed to be “substantially
continuous.” Disability shall be determined in good faith by the Board of
Directors, whose decision shall be final and binding upon Employee. Employee
hereby consents to medical examinations by such physicians and medical
consultants as AmeriPath shall, from time to time, require.

 

7. Termination by AmeriPath for Cause. AmeriPath shall have the right to
terminate Employee’s employment under this Agreement for “Cause” by an
affirmative vote to so terminate by not less than 75% of the members of
AmeriPath’s Board of Directors, in which event, no compensation shall be paid or
other benefits furnished to Employee after termination for Cause. Termination
for Cause shall be effective immediately upon notice sent or given to Employee.
For purposes of this Agreement, the term “Cause” shall mean and be strictly
limited to: (a) indictment for a crime constituting a felony under state or
federal law; (b) conviction of a crime constituting a misdemeanor and involving
an act of moral turpitude, including without limitation fraud, embezzlement and
use of illegal drugs; (c) commission of any material act of dishonesty against
AmeriPath; or (d) willful and material breach of this Agreement by Employee.

 

8. Non-Competition. Employee recognizes and understands that in performing the
responsibilities of his employment, he will occupy a position of fiduciary trust
and confidence, pursuant to which he will develop and acquire experience and
knowledge with respect to AmeriPath’s business. It is the expressed intent and
agreement of Employee and AmeriPath that such knowledge and experience shall be
used exclusively in the furtherance of

 

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the interests of AmeriPath and not in any manner which would be detrimental to
AmeriPath’s interests. Employee further understands and agrees that AmeriPath
conducts its business within a specialized market segment throughout the United
States, and that it would be detrimental to the interests of AmeriPath if
Employee used the knowledge and experience which he currently possesses or which
he acquires pursuant to this employment hereunder for the purpose of directly or
indirectly competing with AmeriPath, or for the purpose of aiding other persons
or entities in so competing with AmeriPath. Employee therefore agrees that so
long as he is employed by AmeriPath and, if this Agreement is terminated by
AmeriPath pursuant to Section 5, for an additional period equal to the shorter
of one year following termination or for the period of time Employee is
receiving a salary or severance payments from AmeriPath, unless Employee first
secures the written consent of AmeriPath, Employee will not directly or
indirectly invest, engage or participate in or become employed by any entity in
direct or indirect competition with AmeriPath’s business, which includes the
ownership, operation and/or management of anatomic pathology laboratories and
information services used by physicians in the detection, evaluation and
treatment of cancer and other diseases and medical conditions. These
non-competition provisions shall not be construed to prohibit Employee from
being employed in the health care industry during the applicable period, but
rather to permit him to be so employed so long as such employment does not
involve Employee’s direct or indirect participation in a business which is the
same or similar to AmeriPath’s business (as defined above). In the event that
the provisions of this Section 8 should ever be deemed to exceed the time or
geographic limitations permitted by applicable laws, then such provisions shall
be reformed to the maximum time or geographic limitations permitted by
applicable law.

 

9. Stock Options. AmeriPath has granted to Employee stock options covering a
number of shares of common stock of AmeriPath representing 4% of the currently
issued and outstanding common stock of AmeriPath, at an exercise price of $6.00
per share. Such stock option grant will (i) be 20% vested on the Effective Date,
with the balance to be vested 20% each year over the initial four year period,
(ii) have a 10 year term and (iii) be evidenced by a Stock Option Agreement in a
form reasonably acceptable to both parties that is to be prepared by AmeriPath
and entered into by Employee and AmeriPath. In the event that there is a “Change
of Control Event” (as defined below), all AmeriPath stock options held by
Employee (whether granted subject to forfeiture or vesting) shall thereupon
automatically be amended so as (a) to vest, immediately prior to the date of
such Change in Control Event, all then unvested stock options and (b) to provide
Employee 90 days to exercise such options (or such greater period as may be
provided by the terms of such options).

 

For purposes of this Section 9, the term “Change of Control Event” shall mean
(1) a consolidation or merger of either AmeriPath or its parent company
(“Parent”), which currently is AmeriPath Holdings, Inc., with or into any other
entity (other than a merger which will not result in more than 50% of the voting
capital stock of AmeriPath or Parent outstanding immediately after the effective
date of such merger being owned of record or beneficially by persons other than
the holders of such voting capital stock immediately prior to such merger in the
same proportions in which such shares were held immediately prior to such
merger), (2) a sale of all or substantially all of the properties and assets of
AmeriPath as an entirety in a single transaction or in a series or related
transactions to any other person or (3) the acquisition of “beneficial
ownership” by any “person” or “group” (other than WCAS or its affiliates) of
voting stock of AmeriPath or Parent representing more than 50% of the voting
power of all outstanding shares of such voting stock, whether by way of merger,
tender offer, purchase of shares from AmeriPath or Parent or otherwise.

 

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As used herein, (1) the terms “person” and “group” shall have the meaning set
forth in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), whether or not applicable, (2) the term “beneficial owner”
shall have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a person shall be deemed to have
“beneficial ownership” of all shares that any such person has the right to
acquire, whether such right is excisable immediately or only after the passage
of time or upon the occurrence of certain events, and (3) any “person” or
“group” will be deemed to beneficially own any voting stock of AmeriPath or
Parent so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting stock of a registered
holder of the voting stock of AmeriPath or Parent.

 

10. General Provisions.

 

(a) Notices. All notices required or permitted by this Agreement shall be in
writing and may be delivered in person or sent by regular, registered or
certified mail or United States Postal Service Express Mail, with postage
prepaid, or by other courier service, or by facsimile transmission, and shall be
deemed sufficiently given if served in the manner specified in this Section
10(a). The addresses and facsimile numbers set forth below shall be the parties
addressed and facsimile numbers for purposes for purposes of delivery or mailing
of notices:

 

If to AmeriPath:

 

AmeriPath, Inc.

   

7289 Garden Road, Suite 200

   

Riviera Beach, Florida 33404

   

Attention: Joseph A. Sonnier, M.D., President

   

Fax No.: (561)                     

If to Employee:

 

Donald E. Steen

   

5715 Thames Court

   

Dallas, Texas 75252

   

Fax No.: (972)248-8868

 

The parties may change addresses and facsimile numbers noted above through
written notice in compliance with this Section 10(a). Any notice sent by
registered or certified mail, return receipt requested, shall be deemed given
when actually received by the addressee, as shown on the receipt card which must
be signed by a representative of the addressee. If sent by regular mail, the
notice shall be deemed given after the notice is addressed, mailed with postage
prepaid and when actually received by the addressee. Notices delivered by United
States Express Mail, Federal Express or other courier service shall be deemed
given when actually received by the addressee as shown by the signature of an
authorized representative of the addressee on the log or other documentation
maintained by the United States Postal Service, Federal Express or courier to
show proof of delivery. If any notice is transmitted by facsimile transmission
or similar means, the notice shall be deemed served or delivered upon telephone
confirmation of receipt of the transmission.

 

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(b) Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, excluding principles of
conflict of laws.

 

(c) Integration; Modification and Waiver. This Agreement and the Indemnity
Agreement and Stock Option Agreement referred to in Sections 4(i) and 9
constitute the entire understanding of the parties hereto relating to the
subject matter hereof, supersede any and all other agreements, whether oral or
in writing, between the parties hereto and their affiliates with respect to the
employment of Employee, and contain all covenants and agreements between the
parties hereto relating to such employment in any manner whatsoever; provided,
however, that except as expressly provided herein, this Agreement shall not
affect any agreements relating to Employee’s purchase or ownership of AmeriPath
securities to which Employee is hereafter a party. This Agreement shall not be
amended, modified or revised in any respect, except by a writing signed by
AmeriPath and Employee. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision, whether or
not similar, and no waiver shall constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.

 

(d) Severability. If any provision of this Agreement shall be determined by a
court or governmental agency of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
the remainder of this Agreement, which shall remain in full force and effect and
be enforced in accordance with its remaining enforceable terms.

 

(e) Assignment. Because of the personal nature of the services to be rendered
hereunder, the obligations of Employee under this Agreement may not be delegated
or assigned in whole or in part without the prior written consent of AmeriPath
(which consent may be withheld in its sole discretion). However, subject to the
foregoing limitation, this Agreement shall be binding upon, and shall insure to
the benefit of, the parties hereto and their respective heirs, devisees,
executors, administrators, trustees, legal representatives, successors,
transferees and assigns.

 

(f) Attorneys’ Fees. In any action or proceeding at law or in equity, including
but not limited to arbitration, brought to enforce or construe any provisions or
rights under this Agreement, the unsuccessful party or parties to such
litigation or arbitration, as determined by the appropriate court or arbitrator
pursuant to a final judgment or decree, shall pay the successful party or
parties all costs, expenses and reasonable attorneys’ fees incurred by such
successful party or parties (including but not limited to such costs, expenses
and fees in connection with any appeals) and, if such successful party or
parties shall recover judgment in any such action or proceeding, such costs,
expenses and attorneys’ fees shall be included as part of such judgment.

 

(g) Survival of Certain Provisions. The provisions of Sections 4(a), (e) and (g)
(as to expenses incurred prior to termination), 5, 8 and 9 shall survive the
expiration or other termination of this Agreement.

 

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(h) Headings and Captions. Headings and captions are included in this Agreement
for purposes of convenience only and are not a part of this Agreement.

 

(i) Miscellaneous. Any term used in the plural shall refer to all members of the
relevant class and any term used in the singular shall refer to any one or more
of the members of the relevant class. References in this Agreement to articles,
sections, paragraphs and exhibits are to articles, sections, paragraphs and
exhibits to this Agreement. The terms “herein,” “hereof,” “hereto,” “hereunder”
and other terms similar to such terms refer to this Agreement as a whole and not
merely to the specific article, section, paragraph or clause where such terms
may appear.

 

(j) Counterparts and Facsimile Signatures. Separate copies of this Agreement may
be signed by the parties hereto, with the same effect as though all of the
parties had signed one copy of this Agreement. Signatures transmitted by
facsimile shall be accepted as original signatures.

 

[Signatures on next page]

 

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IN WITNESS WHEREOF, the undersigned have duly executed this Employment Agreement
as of the date first written above.

 

AMERIPATH:

 

AMERIPATH, INC.

   

By

 

/s/ Paul B. Queally

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Paul B. Queally

       

Chairman of the Executive Committee

EMPLOYEE:

     

/s/ Donald E. Steen

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Donald E. Steen

 

The undersigned agrees to pay to Employee a wholesale rate for travel time on
the FlexJet used for travel by Employee between West Palm Beach and Dallas,
subject to the terms and limitations described in Section 4(g) above.

 

WELSH, CARSON, ANDERSON & STOWE IX, L.P.

By:

 

WCAS IX Partners, L.P.

    By  

/s/ Paul B. Queally

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                        , General Partner

 

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