<PAGE>

                                                                    Exhibit 10.7

                             EMPLOYMENT AGREEMENT
                             --------------------

     This Employment Agreement ("Agreement") is made and entered into on this
                                 ---------
9/th/ day of April, 2001, effective as of April 1, 2001 by and between
AMERIPATH, INC., a Delaware corporation (the "Company"), and STEPHEN V. FULLER
                                              -------        -----------------
(hereinafter, the "Executive").
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                                R E C I T A L S
                                - - - - - - - -

     A.  The Executive is currently employed by the Company as its Senior Vice
President, Human Resources pursuant to a letter agreement dated October 29, 1996
and a letter agreement dated October 14, 1998, each as amended by Personnel
Action Notices dated June 28, 1999 and July 21, 2000 (collectively, the "Prior
                                                                         -----
Employment Agreement").
--------------------

     B.  The Company and the Executive now wish to enter into this new
Agreement, which is intended to supercede and replace the Prior Employment
Agreement in its entirety, to reflect the Executive's position and duties, his
compensation, and other terms and conditions of his employment as Senior Vice
President, Human Resources of the Company.  Upon execution of this Agreement by
both the Executive and the Company, the Prior Employment Agreement shall
terminate and no longer have any force and effect.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, in consideration of the promises and mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Executive and the Company agree
as follows:

     1.  Recitals. The foregoing recitals are true and correct and are
         --------
incorporated herein by this reference.

     2.  Employment.
         ----------

         2.1  Employment and Term.  During the Term of Employment, the Company
              -------------------
hereby agrees to employ the Executive and the Executive hereby agrees to serve
the Company on the terms and conditions set forth herein.

         2.2  Duties of Executive.  During the Term of Employment, the
              -------------------
Executive shall serve as the Senior Vice President, Human Resources of the
Company, shall faithfully and diligently perform all services as may be assigned
to him by the Company, and shall exercise such power and authority as may from
time to time be delegated to him.  The Executive shall devote his full time and
attention to the business and affairs of the Company, render such services to
the best of his ability, and use his reasonable best efforts to promote the
interests of the Company.  The Executive shall comply with the Company's
employment policies and practices generally applicable to its officers and
employees including, without limitation, insider trading and confidentiality
policies.  Notwithstanding the foregoing or any other provision of this

                                      -1-
<PAGE>

Agreement, it shall not be a breach or violation of this Agreement for the
Executive to (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach at educational
institutions, or (iii) manage personal investments, so long as such activities
do not interfere with or detract from the performance of the Executive's
responsibilities to the Company in accordance with this Agreement.

     3.   Term of Employment.     The term of employment under this Agreement,
          ------------------
and the employment of the Executive hereunder (the "Term of Employment"), shall
                                                    ------------------
commence upon execution of this Agreement by both the Executive and the Company
and shall terminate upon the date on which the employment of the Executive is
terminated pursuant to and in accordance with Section 6 hereof (the "Expiration
                                                                     ----------
Date").
----

     4.   Compensation.
          ------------

          4.1  Base Salary.  The Executive shall receive a base salary at the
               -----------
annual rate of $190,000 (the "Base Salary") during the Term of Employment, with
                              ------------
such Base Salary payable in installments consistent with the Company's normal
payroll schedule, subject to applicable withholding and other taxes.  The Base
Salary shall be reviewed at least annually.

          4.2  Bonuses.
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               a.  During the Term of Employment, for each calendar year during
the Term of Employment (the "Bonus Period"), the Board shall establish a bonus
pool from which the Executive shall be eligible to receive an annual bonus
potentially equal to thirty-five percent (35%) of the Executive's Base Salary
(the "Bonus Payment"), to be determined by the Executive's supervisor and based
      -------------
upon the satisfaction by the Executive and/or the Company of the goals (the
"Goals"), to be established by the Company. Notwithstanding the foregoing, in
 -----
the event that the Goals are either exceeded or not fully achieved for a Bonus
Period, the Executive may be eligible to receive a Bonus Payment in an amount in
excess of or less than thirty-five percent (35%) of the Executive's Base Salary.

               b.  For the Bonus Period in which the Executive's employment with
the Company terminates for any reason other than by the Company for Cause under
Section 6.1 hereof, provided that the Executive has been continuously employed
with the Company for a minimum of six (6) months during such Bonus Period, the
Company shall pay the Executive a pro rata portion (based upon the period
beginning on the first day of the Bonus Period and ending on the date on which
the Executive's employment with the Company terminates) of the bonus otherwise
payable under Section 4.2 for the Bonus Period in which such termination of
employment occurs; provided, however, that (i) the Bonus Period shall be deemed
to end on the last day of the calendar quarter in which the Executive's
employment so terminates, and (ii) the business criteria used to determine the
bonus for this short Bonus Period shall be annualized and shall be determined
based upon audited financial information prepared in accordance with generally
accepted accounting principles, applied consistently with prior periods, and
reviewed and approved by the Compensation Committee of the Board. The Incentive
Compensation for

                                      -2-
<PAGE>

this Bonus Period is sometimes hereinafter referred to as the "Termination Year
                                                               ----------------
Bonus".
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     5.   Expense Reimbursement and Other Benefits.
          ----------------------------------------

          5.1  Reimbursement of Expenses. Upon the submission of proper
               -------------------------
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred by the Executive during the
Term of Employment in the course of and pursuant to the business of the Company.
The Executive shall account to the Company in writing for all expenses for which
reimbursement is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the Company.

          5.2  Compensation/Benefit Programs.  During the Term of Employment,
               -----------------------------
the Executive shall be entitled to participate in all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, and any and all other plans as are presently and hereinafter
offered by the Company to its executive personnel, including savings, pension,
profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans.

          5.3  Stock Options.  During the Term of Employment hereunder, and
               -------------
subject to the execution of any other applicable agreements, the Executive shall
be eligible on an annual basis to receive options (the "Stock Options") to
                                                        -------------
purchase common stock (the "Common Stock") of the Company, the amount to be
                            -------------
determined by the Chairman of the Board and CEO (the "Chairman") of the Company
                                                      --------
based upon the Executive's performance and services rendered to the Company, and
subject to the approval by both the Compensation Committee and the Board at
their regular annual review of executive performance.  If and to the extent
awarded, the Stock Options shall be granted under (and therefore subject to all
terms of) the Company's stock option plan (the "Stock Option Plan") and pursuant
                                                -----------------
to the terms of a certain stock option agreement (the "Option Agreement") to be
                                                       ----------------
entered into by and between the Executive and the Company.  In addition, during
the Term of Employment, the Executive shall be eligible to be granted additional
options under the Company's Stock Option Plan.  The number, if any, of
additional options and terms and conditions thereof shall be determined by the
Committee appointed pursuant to the Stock Option Plan, or by the Board of
Directors of the Company, in its discretion and pursuant to the Stock Option
Plan.  Notwithstanding any other provision of this Agreement, Option Agreements
entered into by the Executive and the Company prior to the date of this
Agreement shall remain in full force and effect.

          5.4  Other Benefits.  The Executive shall accrue up to four (4) weeks
               --------------
of paid vacation each calendar year during the Term of Employment, to be taken
at such times as the Executive and the Company shall mutually determine and
provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder.  Any accrued vacation time
not taken by Executive during any calendar year may be carried forward into any
succeeding calendar year. Notwithstanding the foregoing, in no event shall the

                                      -3-
<PAGE>

Executive's accrued vacation time exceed four (4) weeks at any point in time.
The Executive shall receive such additional benefits, if any, as the Board of
the Company shall from time to time determine.

     6.   Termination and/or Change of Control.
          ------------------------------------

          6.1  Termination for Cause.  The Company shall at all times have the
               ---------------------
right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause as defined below.  For purposes of this Agreement, the
term "Cause" shall mean (i) an action or omission of the Executive which
      -----
constitutes a willful and material breach of, or willful and material failure or
refusal (other than by reason of his disability or incapacity) to perform his
duties under, this Agreement which is not cured within fifteen (15) days after
receipt by the Executive of written notice of same, (ii) fraud, embezzlement,
misappropriation of funds or breach of trust in connection with his services
hereunder, (iii) a conviction of any crime which involves dishonesty or a breach
of trust, or (iv) gross negligence in connection with the performance of the
Executive's duties hereunder, which the Board in its reasonable discretion deems
to be good and sufficient cause to terminate the Executive's employment with the
Company.  Any termination for Cause shall be made by notice in writing to the
Executive, which notice shall set forth in reasonable detail all acts or
omissions upon which the Company is relying for such termination. Upon any
termination pursuant to this Section 6.1, the Company shall pay to the Executive
any accrued and unpaid Base Salary through the date of termination.  Upon any
termination effected and compensated pursuant to this Section 6.1, the Company
shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 5.1, and payment of compensation for
accrued and unused vacation days).

          6.2  Disability.  The Company shall at all times have the right, upon
               ----------
written notice to the Executive, to terminate the Term of Employment, if the
Executive shall become entitled to benefits under the Company's long term
disability plan as then in effect, or, if the Executive shall as the result of
mental or physical incapacity, illness or disability, become unable to perform
his obligations hereunder for a period of 180 days in any 12-month period.  The
Board shall have sole discretion based upon competent medical advice to
determine whether the Executive is or continues to be disabled.  Upon any
termination pursuant to this Section 6.2, the Company shall (i) pay to the
Executive any accrued and unpaid Base Salary and Bonus Payment, through the
effective date of termination specified in such notice, (ii) pay to the
Executive his Termination Year Bonus, if any, at the time provided in Section
4.2b hereof, and (iii) pay the COBRA premiums for the Executive's medical and
dental insurance coverage in effect on the termination date, for a period of
twelve (12) months following the termination of the Executive's employment with
the Company.  Upon any termination effected and compensated pursuant to this
Section 6.2, the Company shall have no further liability hereunder (other than
for reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 5.1, and payment of
compensation for accrued and unused vacation days).

                                      -4-
<PAGE>

          6.3  Death.  Upon the death of the Executive during the Term of
               -----
Employment, the Company shall (i) pay to the estate of the deceased Executive
any accrued and unpaid Base Salary and Bonus Payment, through the Executive's
date of death, (ii) pay to the estate of the deceased Executive, the Executive's
Termination Year Bonus, if any, at the time provided in Section 4.2b hereof.
Upon any termination effected and compensated pursuant to this Section 6.3, the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 5.1, and payment of compensation
for accrued and unused vacation days).

          6.4  Termination Without Cause.  At any time the Company shall have
               -------------------------
the right to terminate the Term of Employment by written notice to the
Executive.  Upon any termination pursuant to this Section 6.4 (that is not a
termination under any of Sections 6.1, 6.2, 6.3 or 6.5) the Company shall (i)
pay to the Executive any accrued and unpaid Base Salary and Bonus Payment,
through the date of termination specified in such notice, (ii) continue to pay
the Executive's Base Salary for a period of twelve (12) months following the
termination of the Executive's employment with the Company, in the manner and at
such times as the Base Salary otherwise would have been payable to the
Executive, (iii) pay to the Executive his Termination Year Bonus, if any, at the
time provided in Section 4.2b, and (iv) pay the COBRA premiums for the
Executive's medical and dental insurance coverage in effect on the termination
date, for a period of twelve (12) months following the termination of the
Executive's employment with the Company.  Upon any termination effected and
compensated pursuant to this Section 6.4, the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 5.1, and payment of compensation for accrued and unused
vacation days).

          6.5  Termination by Executive.
               ------------------------

               a. The Executive shall at all times have the right, by written
notice not less than one hundred and eighty (180) days prior to the termination
date, to terminate his Employment Term.

               b.  Upon termination of the Term of Employment pursuant to this
Section 6.5 (that is not a termination under Section 6.6) by the Executive, the
Company shall pay to the Executive any accrued and unpaid Base Salary and Bonus
Payment, through the effective date of termination specified in such notice.
Upon any termination effected and compensated pursuant to this Section 6.5, the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 5.1, and payment of compensation
for accrued and unused vacation days).

          6.6  Change in Control of the Company.
               --------------------------------

               a. Unless otherwise provided in Section 6.7 hereof, in the event
that a Change in Control (as defined in paragraph g. of this Section 6.6) in the
Company shall occur

                                      -5-
<PAGE>

during the Term of Employment, the Company shall (i) pay to the Executive,
within thirty (30) days of the date of the Change in Control, a lump sum bonus
equal to one times the Executive's annual Base Salary (the "Change in Control
Date Bonus"), and (ii) accelerate the vesting of all AmeriPath Stock Options
which have been granted to the Executive but are unvested, so that the unvested
shares are one hundred (100) percent vested on the date of the Change in
Control.

               b. If the Executive's Term of Employment is terminated prior to
the date on which a Change of Control occurs, and it is reasonably demonstrated
that such termination (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control, or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes hereunder, a "Change of Control Termination" shall be deemed to have
occurred.

               c. If Executive's Term of Employment is terminated without cause
pursuant to Section 6.4 hereof, within one year after a Change of Control, a
"Change of Control Termination" shall be deemed to have occurred.

               d. If, within one year following a Change of Control, (i) the
Company requires the Executive to be based at any office or location more than
twenty-five (25) miles from that in which the Executive was based at the time
this Agreement was executed (except for travel reasonably required in the
performance of the Executive's duties and responsibilities hereunder), or (ii)
the Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities are not at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at the time preceding the Change in Control, then in
either event, the Executive may elect to terminate this Agreement and a "Change
of Control Termination" shall be deemed to have occurred.

               e. In the event of a "Change of Control Termination" under
paragraphs b, c, or d of this Section 6.6, the Company shall:

                  (i)   pay to the Executive any accrued and unpaid Base Salary
and Bonus Payment, through the effective date of the termination;

                  (ii)  pay to the Executive his Termination Year Bonus, if any,
at the time provided in Section 4.2b hereof;

                  (iii) pay to the Executive, within 30 days of the
termination of his employment hereunder, a lump sum payment equal to one times
the Executive's annual Base Salary;

                  (iv)  accelerate the vesting of all AmeriPath Stock Options
which have been granted to the Executive since the Change in Control but are
unvested, so that the unvested shares are one hundred (100) percent vested as of
the Executive's Termination Date; and

                                      -6-
<PAGE>

                   (v) pay to the Executive in a lump sum the compensation and
benefits provided in the Termination Without Cause Section 6.4.

The Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 5.1, and payment of
compensation for accrued and unused vacation days).

               f. If, on the date of the one-year anniversary of the date of the
Change In Control, the Executive is in the employ of the Company, or any
successor thereto or assign thereof, the Executive shall be paid, on such one-
year anniversary date, an additional lump sum bonus equal to one times the
Executive's annual Base Salary as determined immediately prior to the Change in
Control Date (the "Anniversary Bonus").

               g. For purposes of this Agreement, the term "Change in Control"
                                                            -----------------
shall mean:

                  (i)    Approval by the shareholders of the Company of (x) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction, or (y) a liquidation or dissolution of the Company or (z) the sale
of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned);

                  (ii)   Individuals who, as of the Commencement Date of this
Agreement, constitute the Board (the "Incumbent Board") cease for any reason to
                                      ---------------
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the Commencement Date of this Agreement whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company) shall be, for purposes
of this Agreement, considered as though such person were a member of the
Incumbent Board; or

                  (iii)  the acquisition (other than by or from the Company) by
any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of beneficial ownership within the
meaning of Rule 13-d promulgated under the Securities Exchange Act of 50% or
more of either the then outstanding shares of the Company's Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors [(hereinafter referred
to as the

                                      -7-
<PAGE>

ownership of a "Controlling Interest") excluding, for this purpose, any
                --------------------
acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity or
"group" that as of the Commencement Date of this Agreement owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of a Controlling Interest or (3) any employee benefit plan of the
Company or its Subsidiaries].

          6.7  Certain Reduction of Payments by the Company.
               --------------------------------------------

               a. For purposes of this section, (i) A Payment shall mean any
                                                      -------
payment or distribution in the nature of compensation to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise;
(ii) Agreement Payment shall mean a Payment paid or payable pursuant to this
     ------------------
Agreement (disregarding this Section 6.7); (iii) Net After Tax Receipt shall
                                                 ---------------------
mean the Present Value of a Payment net of all taxes imposed on the Executive
with respect thereto under Sections 1 and 4999 of the Code, determined by
applying the highest marginal rate under Section 1 of the Code which applied to
the Executive's taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section
 -------------
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the smallest
                                 --------------
aggregate amount of Payments which (a) is less than the sum of all Payments and
(b) results in aggregate Net After Tax Receipts which are equal to or greater
than the Net After Tax Receipts which would result if the aggregate Payments
were any other amount equal to or less than the sum of all Payments.

               b. Anything in this Agreement to the contrary notwithstanding, in
the event that the Company's independent auditors or, at the Executive's option,
any other nationally or regionally recognized firm of independent accountants
selected by the Executive and approved by the Company, which approval shall not
be unreasonably withheld (the "Accounting Firm"), shall determine that receipt
                               ---------------
of all Payments would subject the Executive to tax under Section 4999 of the
Code, it shall determine whether some amount of Payments would meet the
definition of a "Reduced Amount." If the Accounting Firm determines that there
                 --------------
is a Reduced Amount, the aggregate Agreement Payments shall be reduced to such
Reduced Amount; provided, however, that if the Reduced Amount exceeds the
aggregate Agreement Payments, the aggregate Payments shall, after the reduction
of all Agreement Payments, be reduced (but not below zero) in the amount of such
excess.

               c. If the Accounting Firm determines that aggregate Agreement
Payments or Payments, as the case may be, should be reduced to the Reduced
Amount, the Company shall promptly give the Executive notice to that effect and
a copy of the detailed calculation thereof, and the Executive may then elect, in
his sole discretion, which and how much of the Agreement Payments or Payments,
as the case may be, shall be eliminated or reduced (as long as after such
election the present value of the aggregate Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within ten days of his
receipt of notice. If no such election is made by the Executive within such ten-
day period, the Company may elect which of the Agreement Payments or Payments,
as the case may be, shall be eliminated or reduced (as long as after such
election the present value of the aggregate Payments equals the

                                      -8-
<PAGE>

Reduced Amount) and shall notify the Executive promptly of such election. All
determinations made by the Accounting Firm under this Section shall be binding
upon the Company and the Executive and shall be made within 60 days of a
termination of employment of the Executive. As promptly as practicable following
such determination, the Company shall pay to or distribute for the benefit of
the Executive such Payments as are then due to the Executive under this
Agreement and shall promptly pay to or distribute for the benefit of the
Executive in the future such Payments as become due to the Executive under this
Agreement.

               d. While it is the intention of the Company and the Executive to
reduce the amounts payable or distributable to the Executive hereunder only if
the aggregate Net After Tax Receipts to the Executive would thereby be
increased, 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 not have been paid or distributed by
the Company to or for the benefit of the Executive 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 the Executive 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 either upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Executive which the Accounting Firm believes
has a high probability of success or controlling precedent or other substantial
authority, determines that an Overpayment has been made, any such Overpayment
paid or distributed by the Company to or for the benefit of the Executive shall
be treated for all purposes as a loan ab initio to the Executive which the
                                      -- ------
Executive shall repay 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 loan shall be deemed to have been made and no amount shall be payable by
the Executive to the Company if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive 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 other
substantial authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.

          6.8  Resignation.  Upon any termination of employment pursuant to this
               -----------
Article 6, the Executive shall be deemed to have resigned as an officer, and if
he was then serving as a director of the Company, as a director, and if required
by the Board, the Executive hereby agrees to immediately execute a resignation
letter to the Board.

          6.9  Survival.  The provisions of this Article 6 shall survive the
               --------
termination of this Agreement, as applicable.

     7.   Restrictive Covenants.
          ---------------------

          7.1  Non-competition. At all times while the Executive is employed by
               ---------------
the

                                      -9-
<PAGE>

Company and for a one (1) year period immediately following the termination of
the Executive's employment with the Company for any reason, the Executive shall
not, directly or indirectly, engage in or have any interest in any sole
proprietorship, corporation, company, partnership, association, venture or
business or any other person or entity (whether as an employee, officer,
director, partner, agent, security holder, creditor, consultant or otherwise)
that directly or indirectly (or through any affiliated entity) competes with the
Company's business (for purposes of this Agreement, any business that engages in
the management or provision of anatomic pathology diagnostic services {whether
through physician practices, laboratories, hospitals, medical or surgery centers
or otherwise} shall be deemed to compete with the Company's business); provided
that such provision shall not apply to the Executive's ownership of common stock
of the Company or the acquisition by the Executive, solely as an investment, of
securities of any issuer that are registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and that are listed or admitted for
trading on any United States national securities exchange or that are quoted on
the National Association of Securities Dealers Automated Quotations System, or
any similar system or automated dissemination of quotations of securities prices
in common use, so long as the Executive does not control, acquire a controlling
interest in or become a member of a group which exercises direct or indirect
control of, more than five percent (5.0%) of any class of capital stock of such
corporation.

          7.2  Confidential Information. The Executive shall not at any time
               ------------------------
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company.  Any
Confidential Information or data now or hereafter acquired by the Executive with
respect to the business of the Company (which shall include, but not be limited
to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, employees, employee compensation or benefits,
employment practices and methods of doing business) shall be deemed a valuable,
special and unique asset of the Company that is received by the Executive in
confidence and as a fiduciary, and Executive shall remain a fiduciary to the
Company with respect to all of such information. For purposes of this Agreement,
"Confidential Information" means information disclosed to the Executive or known
 ------------------------
by the Executive as a consequence of or through the unique position of his
employment with the Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the date hereof, and
not generally or publicly known, about the Company or its business.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information to promote the best interests
of the Company or to the extent required by law.

          7.3  Nonsolicitation of Employees and Customers.  At all times while
               ------------------------------------------
the Executive is employed by the Company and for the two (2) year period
immediately following the termination of the Executive's employment with the
Company for any reason, the Executive shall not, directly or indirectly, for
himself or for or on behalf of any other person, firm, corporation, partnership,
association or other entity (a) employ or attempt to employ or solicit the
termination of employment of or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been

                                      -10-
<PAGE>

employed by the Company for a period in excess of six (6) months, and/or (b)
call on or solicit any of the actual or targeted prospective customers or
clients of the Company (or of its physician practices or laboratories) on behalf
of any person or entity in connection with any business that competes with the
Company's business, nor shall the Executive make known the names and/or
addresses of such employees, customers or clients or any information relating in
any manner to the Company's trade or business relationships with such employees,
customers or clients, other than in connection with the performance of
Executive's duties under this Agreement.

          7.4  Ownership of Developments.  All copyrights, patents, trade
               -------------------------
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by Executive during the course of performing work for the Company or its
clients (collectively, the "Work Product") shall belong exclusively to the
                            ------------
Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code.  To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product.  Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.

          7.5  Books and Records.  All books, records, and accounts relating in
               -----------------
any manner to the customers or clients of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Executive's employment hereunder or on the
Company's request at any time.

          7.6  Definition of Company.  Solely for purposes of this Article 7,
               ---------------------
the term "Company" also shall include any existing or future subsidiaries of the
          -------
Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.

          7.7  Acknowledgment by Executive. The Executive acknowledges and
               ---------------------------
confirms that (a) the restrictive covenants contained in this Article 7 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Article 7 (including without
limitation the length of the term of the provisions of this Article 7) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Article 7. The Executive further acknowledges that the
restrictions contained in this Article 7 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.

                                      -11-
<PAGE>

          7.8  Reformation by Court. In the event that a court of competent
               --------------------
jurisdiction shall determine that any provision of this Article 7 is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article 7 within the jurisdiction of such
court, such provision shall be interpreted and enforced as if it provided for
the maximum restriction permitted under such governing law.

           7.9  Extension of Time. If the Executive shall be in violation of any
                -----------------
provision of this Article 7, then each time limitation set forth in this Article
7 shall be extended for a period of time equal to the period of time which such
violation or violations occur. If the Company seeks injunctive relief from such
violation in any court, then the covenants set forth in this Article 7 shall be
extended for a period of time equal to the pendency of such proceeding including
all appeals by the Executive.

          7.10  Survival. The provisions of this Article 7 shall survive the
                --------
termination of this Agreement, as applicable.

     8.  Injunction.  It is recognized and hereby acknowledged by the parties
         ----------
hereto that a breach by the Executive of any of the covenants contained in
Article 7 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Article 7 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.

     9.  Arbitration.  Any dispute or controversy arising under or in connection
         ------------
with this Agreement shall be settled exclusively by arbitration in Palm Beach
County, Florida, in accordance with the Rules of the American Arbitration
Association then in effect (except to the extent that the procedures outlined
below differ from such rules).  Within thirty (30) days after written notice by
either party has been given that a dispute exists and that arbitration is
required, each party must select an arbitrator and those two arbitrators shall
promptly, but in no event later than thirty (30) days after their selection,
select a third arbitrator.  The parties agree to act as expeditiously as
possible to select arbitrators and conclude the dispute. The selected
arbitrators must render their decision in writing. The cost and expenses of the
arbitration and of enforcement of any award in any court shall be borne by the
non-prevailing party. If advances are required, each party will advance one-half
of the estimated fees and expenses of the arbitrators. Judgment may be entered
on the arbitrators' award in any court having jurisdiction. Although arbitration
is contemplated to resolve disputes hereunder, either party may proceed to court
to obtain an injunction to protect its rights hereunder, the parties agreeing
that either could suffer irreparable harm by reason of any breach of this
Agreement. Pursuit of an injunction shall not impair arbitration on all
remaining issues.

                                      -12-
<PAGE>

     10.  Section 162(m) Limits.  Notwithstanding any other provision of this
          ---------------------
Agreement to the contrary, if and to the extent that any remuneration payable by
the Company to the Executive for any year would exceed the maximum amount of
remuneration that the Company may deduct for that year under Section 162(m)

("Section 162(m)") of the Code, payment of the portion of the remuneration for
  --------------
that year that would not be so deductible under Section 162(m) shall, in the
sole discretion of the Board, be deferred and become payable at such time or
times as the Board determines that it first would be deductible by the Company
under Section 162(m), with interest at the "short-term applicable rate" as such
term is defined in Section 1274(d) of the Code.  The limitation set forth under
this Section 10 shall not apply with respect to any amounts payable to the
Executive pursuant to Article 6 hereof.

     11.  Assignment.  Neither party shall have the right to assign or delegate
          ----------
his rights or obligations hereunder, or any portion thereof, to any other
person.

     12.  Governing Law.  This Agreement shall be governed by and construed and
          -------------
enforced in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws.

     13.  Entire Agreement; Prior Agreements.  This Agreement constitutes the
          ----------------------------------
entire agreement between the parties hereto with respect to the subject matter
hereof and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive
and the Company (or any of its affiliates) with respect to such subject matter.
In addition, this shall supercede and replace the Executive's Prior Employment
Agreement, as well as any and all other agreements between the Executive and the
Company and, upon execution of this Agreement by the Executive and the Company,
the Prior Employment Agreement and any and all other agreements between the
Executive and the Company shall terminate and shall no longer have any force and
effect.  Notwithstanding this Article 13 or any other provision of this
Agreement, Option Agreements entered into by the Executive and the Company prior
to the date of this Agreement shall remain in full force and effect.  This
Agreement may not be modified in any way unless by a written instrument signed
by both the Company and the Executive.


     14.  Notices:  All notices and other communications hereunder shall be in
          -------
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

          If to the Executive:
          -------------------

          Stephen V. Fuller
          3906 Sherwood Boulevard
          Delray Beach, Florida 33445


                                      -13-
<PAGE>

          If to the Company:
          -----------------

          AmeriPath, Inc.
          7289 Garden Road, Suite 200
          Riviera Beach, FL 33404
          Attention:  Chairman of the Board

     or to such other address as either party shall have furnished to the other
in writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

     15.  Benefits; Binding Effect.  This Agreement shall be for the benefit of
          ------------------------
and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where permitted and
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.

     16.  Severability.  The invalidity of any one or more of the words,
          ------------
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, provisions or provisions,  section or sections or article or articles
had not been inserted.  If such invalidity is caused by length of time or size
of area, or both, the otherwise invalid provision will be considered to be
reduced to a period or area which would cure such invalidity.

     17.  Waivers.  The waiver by either party hereto of a breach or violation
          -------
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.

     18.  Damages.  Nothing contained herein shall be construed to prevent the
          -------
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement.  In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other.

     19.  Section Headings.  The article, section and paragraph headings
          ----------------
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

                                      -14-
<PAGE>

     20.  No Third Party Beneficiary.  Nothing expressed or implied in this
          --------------------------
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.

     21.  Withholding Taxes. The Company may withhold from any amounts payable
          -----------------
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

     22.  Counterparts.  This Agreement may be executed in one or more
          -------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument and agreement.

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

EXECUTIVE:                                  COMPANY:

                                            AMERIPATH, INC.


________________________________            By:_________________________________
Stephen V. Fuller                              James C. New
                                               Chairman and Chief Executive
                                               Officer

                                      -15-