Document:

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                                                                   EXHIBIT 10.25

                            ATRIX LABORATORIES, INC.
                            2000 STOCK INCENTIVE PLAN

         1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.

         2. Definitions. As used herein, the following definitions shall apply:

                  (a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.

                  (b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.

                  (c) "Applicable Laws" means the legal requirements relating to
the administration of stock incentive plans, if any, under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to awards granted to residents therein.

                  (d) "Award" means the grant of an Option or Restricted Stock
under the Plan.

                  (e) "Award Agreement" means the written agreement evidencing
the grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

                  (f) "Board" means the board of directors of the Company.

                  (g) "Cause" means (i) with respect to a Grantee who is a party
to a written agreement with, or alternatively, participates in a compensation or
benefit plan of the Company or a Related Entity, which agreement or plan
contains a definition of "for cause" or "cause" (or words of like import) for
purposes of termination of Continuous Service thereunder by the Company or such
Related Entity, "for cause" or "cause" as defined in the most recent of such
agreements or plans, or (ii) in all other cases, as determined by the
administrator, in its sole discretion, (a) the willful commission by a Grantee
of a criminal or other act that causes or will probably cause substantial
economic damage to the Company or a Related Entity or substantial injury to the
business reputation of the Company or a Related Entity; (b) the continuing
willful failure of a Grantee to perform the duties of such Grantee to the
Company or a Related Entity (other than such failure resulting from the
Grantee's incapacity due to physical or mental illness) after written notice
thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the
Grantee by the administrator; or (c) the order of a federal or state bank
regulatory agency or a court of competent jurisdiction requiring the termination
of the employee's employment. For purposes of the Plan, no act, or failure to
act, on the Grantee's part shall be considered "willful" unless done or omitted

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to be done by the Grantee not in good faith and without reasonable belief that
the Grantee's action or omission was in the best interest of the Company or a
Related Entity.

                  (h) "Change in Control" means a change in ownership or control
of the Company effected through either of the following transactions:

                           (i) the direct or indirect acquisition by any person
or related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than twenty-five percent (25%) of
the total combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's stockholders which
a majority of the Continuing Directors who are not Affiliates or Associates of
the offeror do not recommend such stockholders accept, or

                           (ii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who are
Continuing Directors.

                  (i) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (j) "Committee" means any committee appointed by the Board to
administer the Plan.

                  (k) "Common Stock" means the common stock of the Company.

                  (l) "Company" means Atrix Laboratories, Inc., a Delaware
corporation.

                  (m) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

                  (n) "Continuing Directors" means members of the Board who
either (i) have been Board members continuously for a period of at least
thirty-six (36) months or (ii) have been Board members for less than thirty-six
(36) months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board.

                  (o) "Continuous Service" means that the provision of services
to the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as

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long as the individual remains in the service of the Company or a Related Entity
in any capacity of Employee, Director or Consultant (except as otherwise
provided in the Award Agreement). An approved leave of absence shall include
sick leave, military leave, or any other authorized personal leave. For purposes
of each Incentive Stock Option qualified under the Plan, if such leave exceeds
ninety (90) days, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the expiration of such ninety (90) day period.

                  (p) "Corporate Transaction" means any of the following
transactions:

                           (i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;

                           (ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company (including the capital stock
of the Company's subsidiary corporations);

                           (iii) approval by the Company's stockholders of any
plan or proposal for the complete liquidation or dissolution of the Company;

                           (iv) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than twenty-five
percent (25%) of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger; or

                           (v) acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than twenty-five percent (25%) of the total
combined voting power of the Company's outstanding securities (whether or not in
a transaction also constituting a Change in Control), but excluding any such
transaction that the administrator determines shall not be a Corporate
Transaction.

                  (q) "Covered Employee" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.

                  (r) "Director" means a member of the Board or the board of
directors of any Related Entity.

                  (s) "Disability" means a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy. If the Company or the Related Entity to which the
Grantee provides service does not have a long-term disability plan in place,
"Disability" means that a Grantee is permanently unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable

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physical or mental impairment. A Grantee will not be considered to have incurred
a Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the administrator in its discretion.

                  (t) "Employee" means any person, including an Officer or
Director, who is an employee of the Company or any Related Entity. The payment
of a director's fee by the Company or a Related Entity shall not be sufficient
to constitute "employment" by the Company.

                  (u) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  (v) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                           (i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing price for a Share for the
last market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the
administrator to be the primary market for the Common Stock or the Nasdaq
National Market, whichever is applicable or (B) if the Common Stock is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
administrator deems reliable; or

                           (ii) In the absence of an established market for the
Common Stock of the type described in (i), above, the Fair Market Value thereof
shall be determined by the administrator in good faith.

                  (w) "Grantee" means an Employee, Director or Consultant who
receives an Award pursuant to an Award Agreement under the Plan.

                  (x) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

                  (y) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

                  (z) "Non-Qualified Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

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                  (aa) "Officer" means a person who is an officer of the Company
or a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

                  (bb) "Option" means an option to purchase shares pursuant to
an Award Agreement granted under the Plan.

                  (cc) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (dd) "Performance - Based Compensation" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

                  (ee) "Plan" means this 2000 Stock Incentive Plan.

                  (ff) "Related Entity" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.

                  (gg) "Related Entity Disposition" means the sale, distribution
or other disposition by the Company, a Parent or a Subsidiary of all or
substantially all of the interests of the Company, a Parent or a Subsidiary in
any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially
all of the assets of that Related Entity, other than any Related Entity
Disposition to the Company, a Parent or a Subsidiary.

                  (hh) "Restricted Stock" means shares issued under the Plan to
the Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the administrator.

                  (ii) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.

                  (jj) "Share" means a share of the Common Stock.

                  (kk) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.

         3. Stock Subject to the Plan.

                  (a) Subject to the provisions of Section 10, below, the
maximum aggregate number of shares which may be issued pursuant to all awards
(including Incentive Stock Options) is 1,750,000 shares increased by (i) any
shares that are represented by awards under the Company's Amended and Restated
Performance Stock Option Plan which are forfeited, expire or are cancelled
without delivery of shares or which result in the forfeiture of shares back to
the

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Company. The shares to be issued pursuant to awards may be authorized, but
unissued, or reacquired Common Stock.

                  (b) Any shares covered by an Award (or portion of an Award)
which is forfeited or canceled, expires or is settled in cash, shall be deemed
not to have been issued for purposes of determining the maximum aggregate number
of shares which may be issued under the Plan. Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested shares are forfeited, or repurchased by the Company at their original
purchase price, such shares shall become available for future grant under the
Plan.

         4. Administration of the Plan.

                  (a) Plan Administrator.

                           (i) Administration with Respect to Directors and
Officers. With respect to grants of awards to Directors or Employees who are
also Officers or Directors of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from Section
16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.

                           (ii) Administration With Respect to Consultants and
Other Employees. With respect to grants of awards to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one or
more Officers to grant such awards and may limit such authority as the Board
determines from time to time.

                           (iii) Administration With Respect to Covered
Employees. Notwithstanding the foregoing, grants of awards to any Covered
Employee intended to qualify as Performance-Based Compensation shall be made
only by a Committee (or subcommittee of a Committee) which is comprised solely
of two or more Directors eligible to serve on a committee making awards
qualifying as Performance-Based Compensation. In the case of such awards granted
to Covered Employees, references to the "Administrator" or to a "Committee"
shall be deemed to be references to such Committee or subcommittee.

                           (iv) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.

                  (b) Powers of the Administrator. Subject to Applicable Laws
and the provisions of the Plan (including any other powers given to the
administrator hereunder), and

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except as otherwise provided by the Board, the administrator shall have the
authority, in its discretion:

                           (i) to select the Employees, Directors and
Consultants to whom awards may be granted from time to time hereunder;

                           (ii) to determine whether and to what extent awards
are granted hereunder;

                           (iii) to determine the number of shares or the amount
of other consideration to be covered by each Award granted hereunder;

                           (iv) to approve forms of Award Agreements for use
under the Plan;

                           (v) to determine the terms and conditions of any
Award granted hereunder;

                           (vi) to amend the terms of any outstanding Award
granted under the Plan, provided that any amendment that would adversely affect
the Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;

                           (vii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan, including without limitation, any
notice of Award or Award Agreement, granted pursuant to the Plan;

                           (viii) to establish additional terms, conditions,
rules or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under such laws;
provided, however, that no Award shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and

                           (ix) to take such other action, not inconsistent with
the terms of the Plan, as the administrator deems appropriate.

         5. Eligibility. Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the administrator
may determine from time to time.

         6. Terms and Conditions of awards.

                  (a) Type of awards. The administrator is authorized under the
Plan to award any type of arrangement to an Employee, Director or Consultant
that is not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) shares or

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(ii) an Option with a fixed or variable price related to the Fair Market Value
of the shares and with an exercise or conversion privilege related to the
passage of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions. Such awards include, without
limitation, Options and sales or bonuses of Restricted Stock, and an Award may
consist of one such security or benefit, or two (2) or more of them in any
combination or alternative.

                  (b) Designation of Award. Each Award shall be designated in
the Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the shares shall be
determined as of the date the Option with respect to such shares is granted.

                  (c) Conditions of Award. Subject to the terms of the Plan, the
administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

                  (d) Acquisitions and Other Transactions. The administrator may
issue awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

                  (e) Deferral of Award Payment. The administrator may establish
one or more programs under the Plan to permit selected Grantees the opportunity
to elect to defer receipt of consideration upon exercise of an Award,
satisfaction of performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of shares or other consideration
under an Award. The administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
administrator deems advisable for the administration of any such deferral
program.

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                  (f) Award Exchange Programs. The administrator may establish
one or more programs under the Plan to permit selected Grantees to exchange an
Award under the Plan for one or more other types of awards under the Plan on
such terms and conditions as determined by the administrator from time to time.

                  (g) Separate Programs. The administrator may establish one or
more separate programs under the Plan for the purpose of issuing particular
forms of awards to one or more classes of Grantees on such terms and conditions
as determined by the administrator from time to time.

                  (h) Individual Option Limit. The maximum number of shares with
respect to which Options may be granted to any Grantee in any fiscal year of the
Company shall be 250,000 shares. In connection with a Grantee's commencement of
Continuous Service, a Grantee may be granted Options for up to an additional
100,000 shares which shall not count against the limit set forth in the previous
sentence. The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization pursuant to Section
10, below. To the extent required by Section 162(m) of the Code or the
regulations thereunder, in applying the foregoing limitations with respect to a
Grantee, if any Option is canceled, the canceled Option shall continue to count
against the maximum number of shares with respect to which Options may be
granted to the Grantee. For this purpose, the repricing of an Option shall be
treated as the cancellation of the existing Option and the grant of a new
Option.

                  (i) Early Exercise. The Award Agreement may, but need not,
include a provision whereby the Grantee may elect at any time while an Employee,
Director or Consultant to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the administrator determines to be appropriate.

                  (j) Term of Award. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of all awards
shall be no more than ten (10) years from the date of grant thereof. However, in
the case of an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Incentive Stock Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Award Agreement.

                  (k) Transferability of awards. Incentive Stock Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee's Incentive
Stock Option in the event of the Grantee's death on a beneficiary designation
form provided by the administrator. Other awards may be transferred by gift or
through a domestic relations order to members of the Grantee's Immediate Family
to the extent provided in the Award Agreement or in the manner and to the extent
determined by the administrator.

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                  (l) Time of Granting awards. The date of grant of an Award
shall for all purposes be the date on which the administrator makes the
determination to grant such Award, or such other date as is determined by the
administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a
reasonable time after the date of such grant.

         7. Award Exercise or Purchase Price, Consideration and Taxes.

                  (a) Exercise or Purchase Price. The exercise or purchase
price, if any, for an Award shall be as follows:

                           (i) In the case of an Incentive Stock Option:

                                    (A) granted to an Employee who, at the time
of the grant of such Incentive Stock Option owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be not less than
one hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant; or

                                    (B) granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

                           (ii) In the case of a Non-Qualified Stock Option, the
per Share exercise price shall be not less than eighty-five percent (85%) of the
Fair Market Value per Share on the date of grant unless otherwise determined by
the administrator.

                           (iii) In the case of awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

                           (iv) In the case of other awards, such price as is
determined by the administrator.

                           (v) Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the principles of Section 424(a) of the Code.

                  (b) Consideration. Subject to Applicable Laws, the
consideration to be paid for the shares to be issued upon exercise or purchase
of an Award including the method of payment, shall be determined by the
administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). In addition to any other types of
consideration the administrator may determine, the administrator is authorized
to accept as consideration for shares issued under the Plan the following,
provided that the portion of the consideration equal to the

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par value of the shares must be paid in cash or other legal consideration
permitted by the Delaware General Corporation Law:

                           (i) cash;

                           (ii) check;

                           (iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the administrator
determines as appropriate;

                           (iv) surrender of shares or delivery of a properly
executed form of attestation of ownership of shares as the administrator may
require (including withholding of shares otherwise deliverable upon exercise of
the Award) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate exercise price of the shares as to which said
Award shall be exercised (but only to the extent that such exercise of the Award
would not result in an accounting compensation charge with respect to the shares
used to pay the exercise price unless otherwise determined by the
administrator);

                           (v) with respect to Options, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (A)
shall provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares and (B) shall provide written directives to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction; or

                           (vi) any combination of the foregoing methods of
payment.

                  (c) Taxes. No shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of shares or the
disqualifying disposition of shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.

         8. Exercise of Award.

                  (a) Procedure for Exercise; Rights as a Stockholder.

                           (i) Any Award granted hereunder shall be exercisable
at such times and under such conditions as determined by the administrator under
the terms of the Plan and specified in the Award Agreement.

                           (ii) An Award shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the

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person entitled to exercise the Award and full payment for the shares with
respect to which the Award is exercised, including, to the extent selected, use
of the broker-dealer sale and remittance procedure to pay the purchase price as
provided in Section 7(b)(v). Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to shares subject to an Award, notwithstanding the exercise of an Option or
other Award. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Award. No adjustment will be made for
a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Award Agreement or
Section 10, below.

                  (b) Exercise of Award Following Termination of Continuous
Service.

                           (i) An Award may not be exercised after the
termination date of such Award set forth in the Award Agreement and may be
exercised following the termination of a Grantee's Continuous Service only to
the extent provided in the Award Agreement.

                           (ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on
the last day of the specified period or the last day of the original term of the
Award, whichever occurs first.

                           (iii) Any Award designated as an Incentive Stock
Option to the extent not exercised within the time permitted by law for the
exercise of Incentive Stock Options following the termination of a Grantee's
Continuous Service shall convert automatically to a Non-Qualified Stock Option
and thereafter shall be exercisable as such to the extent exercisable by its
terms for the period specified in the Award Agreement.

         9. Conditions Upon Issuance of Shares.

                  (a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                  (b) As a condition to the exercise of an Award, the Company
may require the person exercising such Award to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any Applicable Laws.

         10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares covered by each
outstanding Award, and the number of shares which have been authorized for
issuance under the Plan but as to which no awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of shares with respect to which

                                      B-12
<PAGE>   13

Options may be granted to any Employee in any fiscal year of the Company, as
well as any other terms that the administrator determines require adjustment
shall be proportionately adjusted for (i) any increase or decrease in the number
of issued shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the shares, or similar event
affecting the shares, (ii) any other increase or decrease in the number of
issued shares effected without receipt of consideration by the Company, or (iii)
as the administrator may determine in its discretion, any other transaction with
respect to Common Stock to which Section 424(a) of the Code applies or any
similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the administrator
and its determination shall be final, binding and conclusive. Except as the
administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of shares subject to an Award.

         11. Corporate Transactions/Changes in Control/Related Entity
Dispositions. Except as may be provided in an Award Agreement:

                  (a) The administrator shall have the authority, exercisable
either in advance of any actual or anticipated Corporate Transaction, Change in
Control or Related Entity Disposition or at the time of an actual Corporate
Transaction, Change in Control or Related Entity Disposition and exercisable at
the time of the grant of an Award under the Plan or any time while an Award
remains outstanding, to provide for the full automatic vesting and
exercisability of one or more outstanding unvested awards under the Plan and the
release from restrictions on transfer and repurchase or forfeiture rights of
such awards in connection with a Corporate Transaction, Change in Control or
Related Entity Disposition, on such terms and conditions as the administrator
may specify. The administrator also shall have the authority to condition any
such Award vesting and exercisability or release from such limitations upon the
subsequent termination of the Continuous Service of the Grantee within a
specified period following the effective date of the Corporate Transaction,
Change in Control or Related Entity Disposition. The administrator may provide
that any awards so vested or released from such limitations in connection with a
Change in Control or Related Entity Disposition, shall remain fully exercisable
until the expiration or sooner termination of the Award. Effective upon the
consummation of a Corporate Transaction, all outstanding awards under the Plan
shall terminate unless assumed by the successor company or its parent, including
affirmation of the Award by the Company in the event of a Corporate Transaction
as defined in Section 2(p)(iv) and 2(p)(v), above.

                  (b) The portion of any Incentive Stock Option accelerated
under this Section 11 in connection with a Corporate Transaction, Change in
Control or Related Entity Disposition shall remain exercisable as an Incentive
Stock Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. To the extent such dollar limitation
is exceeded, the accelerated excess portion of such Option shall be exercisable
as a Non-Qualified Stock Option.

                                      B-13
<PAGE>   14

         12. Effective Date and Term of Plan. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, awards may be granted under the Plan upon its becoming effective.

         13. Amendment, Suspension or Termination of the Plan.

                  (a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

                  (b) No Award may be granted during any suspension of the Plan
or after termination of the Plan.

                  (c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 12, above) shall not affect
awards already granted, and such awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the administrator, which agreement must
be in writing and signed by the Grantee and the Company.

         14. Reservation of Shares.

                  (a) The Company, during the term of the Plan, will at all
times reserve and keep available such number of shares as shall be sufficient to
satisfy the requirements of the Plan.

                  (b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained.

         15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.

         16. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

                                      B-14
<PAGE>   15

         17. Stockholder Approval. The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

                                      B-15<PAGE>

                                                                    EXHIBIT 10.9

                       UNIVERSAL HOSPITAL SERVICES, INC.
                         EXECUTIVE SEVERANCE PAY PLAN

                               January 25, 2001

     I.     Purpose.
            -------

     To provide a severance pay plan for the Executives (as defined below) of
the Company who are not eligible for severance pay under any other plan or
agreement with the Company.  The provisions of this plan will not apply to any
Executive who is covered by an employment agreement.  Executives who receive
severance under this plan will not be eligible to receive severance under any
other plan or agreement of the Company.  No severance benefits become payable
pursuant to this plan in the event of termination of employment upon an
Executive's death or disability.

     II.    Definitions.
            -----------

     A. "Cause" means:

     (i)    Executive's continued failure, whether willful, intentional or
            grossly negligent, after written notice, to perform substantially
            Executive's duties (the "Duties") as determined by immediate
            supervisor (Chief Executive Officer or Senior Vice President of the
            Company (other than as a result of a disability);

     (ii)   dishonesty in the performance of Executive's Duties;

     (iii)  conviction or confession of an act or acts on Executive's part
            constituting a felony under the laws of the United States or any
            state thereof; or

     (iv)   any other willful act or omission on Executive's part which is
            materially injurious to the financial condition or business
            reputation of the Company or any of its subsidiaries.

     B.  "Date of Termination" means the date specified as Executive's last date
of employment in the Company's notice of termination to Executive or Executive's
Notice of Resignation for Good Cause to the Company.

     C.   "Resignation For Good Cause" means:
     Executive termination of employment upon 30 days' written notice to the
company, for Good Cause. Executive shall have "Good Cause" for termination of
employment if, other than for cause, any of the following has occurred:

     (i)    the Company has reduced or reassigned a material portion of
            Executive duties (per Executive job description);

     (ii)   the Executive's base salary has been reduced other than in
            connection with an across-the-board reduction (of approximately the
            same percentage) in executive compensation to Executive Employees
            imposed by the Board in response to

<PAGE>

            negative financial results or other adverse circumstances affecting
            the Company; or

     (iii)  the Company has required Executive to relocate in excess of fifty
            (50) miles from the location where the Executive is currently
            employed.

     C. "Executive" means the President, any Senior Vice President or any Vice
President of the Company as such titles are in use effective 1/25/01.

     D. "Severance Period" means the period from the Date of Termination through
the date, which is 12 months from the Date of Termination.

     III.   Severance Pay.
            -------------

     A. Executives who  separate from the Company and who sign the general
release and other agreement described in Section IV below are entitled to the
severance pay specified below; provided, however, that (1) an Executive that is
separated from employment due to dismissal for Cause is not entitled to any
severance pay and (2) an Executive that voluntarily resigns, except for Good
Cause, from employment is not entitled to severance pay.

     B. Upon qualifying for severance pay, Executive will be paid the following
amounts in the following manner:

     (i)    Executive will continued to be paid his or her base salary through
            the Severance Period, in the manner and at the times paid during
            such Executive's employment with the Company.

     (ii)   Company shall provide the Executive continuation of medical and
            dental insurance benefits for the duration of the Severance Period.

     (iii)  If prior to the date which is 12 months after the Date of
            Termination, Executive finds other employment, the amount of
            severance payments payable to Executive after such termination in
            accordance with B(i) above will be reduced by the value of the
            compensation Executive receives in his or her new employment through
            the date which is 12 months after the Date of Termination; B(ii)
            shall be similarly discontinued if similar medical and dental
            benefits are secured with new employer through the date which is 12
            months after the Date of Termination.

     (iv)   If termination is pursuant to Resignation for Good Cause, The
            Company shall provide the Executive a prorated portion of the bonus
            earned for the then current fiscal year, based upon the number of
            days Executive was employed during that year. Such Executive bonus
            shall be payable at the time annual bonuses are paid to the other
            executives employed by the Company, on the last day of the Company's
            fiscal year.

     (v)    Executive will be paid or otherwise provided such other benefits as
            may be required by law.

     (vi)   All severance payments are subject to any required withholding.

<PAGE>

     IV.   General Release and Other Agreements.
           ------------------------------------

     Executive will not be entitled to receive any of the severance pay
described above until such time as Executive signs (A) an effective general
release of all claims against the Company and its affiliates in the form and
manner prescribed by the Company and (B) an agreement further providing (i)
Executive's agreement not to disclose or use confidential information of the
Company, (ii) Executive's agreement during the Severance Period not to compete
with the Company in the medical equipment rental business, (iii) Executive's
agreement during the Severance Period not to solicit for employment or hire any
employee of the Company, and (iv) Executive's agreement during the Severance
Period not to solicit as a customer or client of medical equipment rental
business and customer or client of the Company. A failure to execute such a
general release and other agreements within one month of Executive's Date of
Termination shall result in the loss of any rights to receive payments or
benefits under this plan.

     VI.   Amendment and Modification of Plan.  This plan may be modified,
           ----------------------------------
amended or terminated at any time by the CEO and the Board of Directors of the
Company.

     VII.  No Employment Rights.  Neither this plan for the benefits hereunder
           --------------------
shall be a term of the employment of any employee, and the Company shall not be
obligated in any way to continue the plan. The terms of this plan shall not give
any employee the right to be retained in the employment of the Company.

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