GENTIVA HEALTH SERVICES, INC.
 
                           2004 EQUITY INCENTIVE PLAN
 
     1.   PURPOSE. Gentiva Health Services, Inc. 2004 Equity Incentive Plan (the
"PLAN") is intended to attract, retain and motivate highly competent persons as
officers and employees of, consultants to, and non-employee directors of Gentiva
Health Services, Inc. (the "COMPANY") and its subsidiaries and affiliates by
providing them with appropriate incentives and rewards either through a
proprietary interest in the long-term success of the Company or compensation
based on their performance in fulfilling their personal responsibilities.
 
     2.   ADMINISTRATION.
 
          (a)  COMMITTEE. The Plan will be administered by a committee (the
"COMMITTEE") appointed by the Board of Directors of the Company (the "BOARD")
from among its members and shall be comprised, unless otherwise determined by
the Board, solely of not less than two (2) members who shall be (i)
"NON-EMPLOYEE DIRECTORS" within the meaning of Rule 16b-3(b)(3) (or any
successor rule) promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), (ii) "OUTSIDE DIRECTORS" within the meaning of
Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "CODE"), and (iii) "INDEPENDENT DIRECTORS"
within the meaning of the listing requirements of the NASDAQ (and each other
exchange on which the Company may be listed).
 
          (b)  AUTHORITY. The Committee is authorized, subject to the provisions
of the Plan, to establish such rules as it deems necessary for the proper
administration of the Plan and to make such determinations and interpretations
in its sole discretion and to take such action in connection with the Plan and
any awards granted hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all participants and their legal representatives.
 
          (c)  INDEMNIFICATION. Except in circumstances involving bad faith or
willful misconduct of the person acting or failing to act, no member of the
Committee and no employee of the Company shall be liable for any act or failure
to act hereunder or for any act or failure to act hereunder by any other member
or employee or by any agent to whom duties in connection with the administration
of this Plan have been delegated. The Company shall indemnify members of the
Committee and any agent of the Committee who is an employee of the Company, a
subsidiary or an affiliate against any and all liabilities or expenses to which
they may be subjected by reason of any act or failure to act with respect to
their duties on behalf of the Plan, except in circumstances involving such
person's bad faith or willful misconduct.
 
          (d)  DELEGATION AND ADVISERS. The Committee may delegate to one or
more of its members, or to one or more agents, (i) such administrative duties as
it may deem advisable, and (ii) the authority to make awards to any persons not
subject to Section 16 of the Exchange Act. Any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice with respect
to any responsibility the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company, or the subsidiary or affiliate whose
employees have benefited from the Plan, as determined by the Committee.
 
     3.   PARTICIPANTS. Participants will consist of such officers and employees
of, consultants to, and non-employee directors of the Company and its
subsidiaries and affiliates as the Committee in its sole discretion determines
and whom the Committee may designate from time to time to receive awards under
the Plan. Designation of a participant in any year shall not require the
Committee to designate such person to receive an award in any other year or,
once designated, to receive the same type or
 
                                       B-1
<PAGE>
 
amount of award as granted to the participant in any other year. The Committee
shall consider such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective awards.
 
     4.   TYPE OF AWARDS. Awards under the Plan may be granted in any one or a
combination of: (a) stock options, (b) stock appreciation rights, (c) restricted
stock, (d) stock units, and (e) cash. Any awards under the Plan may, as
determined by the Committee in its discretion, constitute performance-based
awards, as described in Section 11 hereof. Awards granted under the Plan shall
be evidenced by agreements (which need not be identical) that provide additional
terms and conditions associated with such awards, as determined by the Committee
in its sole discretion; PROVIDED, HOWEVER, that in the event of any conflict
between the provisions of the Plan and any such agreement, the provisions of the
Plan shall prevail.
 
     5.   COMMON STOCK AVAILABLE UNDER THE PLAN.
 
          (a)  MAXIMUM SHARES. The aggregate number of shares of common stock of
the Company, par value $.10, that may be issued under this Plan shall be
3,500,000 shares of common stock, which may be authorized and unissued or
treasury shares, subject to Section 5(c) hereof and any adjustments made in
accordance with Section 13 hereof plus any shares authorized under the Gentiva
Health Services, Inc. 1999 Stock Incentive Plan ("1999 PLAN") as to which, as of
the Effective Date, awards have not been made ("MAXIMUM SHARES"). The maximum
number of shares of common stock with respect to which awards may be granted or
measured to any individual participant under the Plan in any calendar year
during the term of the Plan shall not exceed 500,000 shares (subject to
adjustments made in accordance with Section 13 hereof) (the "INDIVIDUAL
MAXIMUM"). The maximum number of shares that may be "INCENTIVE STOCK OPTIONS",
within the meaning of Section 422 of the Code, is 3,500,000 shares (the "ISO
MAXIMUM").
 
          (b)  COUNTING SHARES. Shares shall be charged against the Maximum
Shares and Individual Maximum, and, if applicable, the ISO Maximum, upon the
grant of each award (other than cash awards, stock appreciation rights and stock
units to be settled only in cash and performance-based awards which are not
denominated in common stock) regardless of the vested status of the award,
PROVIDED, HOWEVER, that in the case of a stock appreciation right granted in
tandem with a stock option, only the number of shares subject to the stock
option shall be counted, and, PROVIDED, FURTHER, that two (2) shares shall be
charged against the Maximum Shares for each share of common stock subject to a
restricted stock award or stock unit.
 
          (c)  ADDITIONAL SHARES. Any shares of common stock subject to an
outstanding award, on or after the Effective Date, granted under the Plan or the
1999 Plan, which for any reason are forfeited, expire or are cancelled or
settled in cash without delivery to the award recipient of shares of common
stock, shall again be available for awards under the Plan. Any shares of common
stock (i) delivered to the Company as part or full payment for the exercise or
purchase price of an award granted under the Plan or the 1999 Plan or to satisfy
the Company's withholding obligation with respect to an award granted under the
Plan or the 1999 Plan or (ii) reacquired by the Company on the open market or
otherwise using cash proceeds received by the Company from the exercise of stock
options granted under the Plan or the 1999 Plan, provided that the number of
shares so repurchased shall not exceed (A) the amount of the proceeds, divided
by (B) the fair market value on the date of exercise which generated such
proceeds, shall again be available for awards under the Plan but shall continue
to be counted as outstanding for purposes of determining whether an Individual
Maximum and, if applicable, the ISO Maximum has been attained. Additional shares
that again become available under the Plan shall count as two (2) shares if such
additional shares relate to an award of restricted stock or stock units.
 
     6.   STOCK OPTIONS.
 
          (a)  GENERALLY. Stock options will consist of awards from the Company
that will enable the holder to purchase a number of shares of common stock at
set terms. Generally options granted under the Plan shall be options which do
not constitute incentive stock options ("NONQUALIFIED STOCK OPTIONS"). However,
 
                                      B-2
<PAGE>
 
if the Committee determines that the Plan complies with statutory and regulatory
requirements for granting incentive stock options, the Committee may grant a
number of incentive stock options not to exceed the ISO Maximum. The Committee
will have the authority to grant to any participant stock options (with or
without stock appreciation rights). An option granted as an incentive stock
option shall, to the extent it fails to qualify as an incentive stock option, be
treated as a nonqualified option. Each stock option shall be subject to such
terms and conditions, including vesting, consistent with the Plan as the
Committee may impose from time to time, subject to the following limitations.
 
          (b)  EXERCISE PRICE. Each stock option granted hereunder shall have
such per-share exercise price as the Committee may determine at the date of
grant. Except as hereafter provided, the exercise price of a stock option shall
not be less than the fair market value (as defined in Section 17 of the Plan) on
the date of grant; PROVIDED, HOWEVER, that if an award is retroactively granted
in tandem with or in substitution for other awards made by the Company, the
exercise price may be the price on the date of grant of such other award; and
PROVIDED, FURTHER, that if a stock option is granted to a participant upon
assumption of or in substitution of an award granted by another entity in
connection with a corporate transaction between the Company and the granting
entity, such as a merger, consolidation or acquisition, the exercise price may
be less than fair market value of the common stock on the date the substitute
stock option is granted if the aggregate fair market value of the shares subject
to the substitute stock option over the aggregate exercise price of the
substitute stock option does not exceed the aggregate fair market value of the
shares of the predecessor entity subject to the award being assumed or
substituted as of the date immediately preceding the corporate transaction (as
determined by the Committee), over the aggregate exercise price or the aggregate
base value, if any, of such award.
 
          (c)  PAYMENT OF EXERCISE PRICE. The option exercise price may be paid
in cash or, in the discretion of the Committee, by the delivery of shares of
common stock of the Company then owned by the participant, provided that if such
shares were acquired from the Company by the participant they must have been
held for at least six (6) months. In the discretion of the Committee, payment
may also be made by delivering a properly executed exercise notice to the
Company together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the exercise
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms. The Committee may
prescribe any other method of paying the exercise price that it determines to be
consistent with applicable law and the purpose of the Plan, including, without
limitation, in lieu of permitting the exercise of a stock option by delivery of
shares of common stock of the Company then owned by a participant, permitting
the participant to provide the Company with a notarized statement attesting to
the number of shares owned, where upon verification by the Company, the Company
would issue to the participant only the number of incremental shares to which
the participant is entitled upon exercise of the stock option.
 
          (d)  EXERCISE PERIOD. Stock options granted under the Plan shall be
exercisable to the extent vested, at such time or times and subject to such
terms and conditions as shall be determined by the Committee; PROVIDED, HOWEVER,
that except in the case of a Change of Control, or stock options granted in
settlement of any obligation under any other compensation arrangement, or, to
the extent provided in the award agreement upon the participant's termination of
service due to death or Disability (which shall have the meaning defined in the
applicable award agreement, or in the absence of such definition shall be
defined by the Committee), no stock option shall be exercisable earlier than the
first anniversary of the date of grant; and PROVIDED, FURTHER, that no stock
option shall be exercisable later than ten (10) years after the date it is
granted except in the event of a participant's death within six (6) months prior
to such expiration date, in which case, the exercise period of such
participant's stock options may be extended beyond such period but no later than
one (1) year after the participant's death. All stock options shall terminate at
such earlier times and upon such conditions or circumstances as the Committee
shall in its discretion set forth in such option agreement at the date of grant.
 
                                       B-3
<PAGE>
 
          (e)  LIMITATIONS ON INCENTIVE STOCK OPTIONS. Incentive stock options
may be granted only to participants who are employees of the Company or of a
"PARENT CORPORATION" or "SUBSIDIARY CORPORATION" (as defined in Sections 424(e)
and (f) of the Code, respectively) at the date of grant. The aggregate fair
market value (determined as of the time the stock option is granted) of the
common stock with respect to which incentive stock options are exercisable for
the first time by a participant during any calendar year (under all option plans
of the Company and of any parent corporation or subsidiary corporation) shall
not exceed one hundred thousand dollars ($100,000). For purposes of the
preceding sentence, incentive stock options will be taken into account in the
order in which they are granted. The per-share exercise price of an incentive
stock option shall not be less than one hundred percent (100%) of the fair
market value of the common stock on the date of grant, and no incentive stock
option may be exercised later than ten (10) years after the date it is granted
or, in the case of the death of a participant, such longer period as permitted
by Section 6(d).
 
          (f)  ADDITIONAL LIMITATIONS ON INCENTIVE STOCK OPTIONS FOR TEN PERCENT
SHAREHOLDERS. Incentive stock options may not be granted to any participant who,
at the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
parent corporation or subsidiary corporation, unless the exercise price of the
option is fixed at not less than one hundred ten percent (110%) of the fair
market value of the common stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five (5) years from
the date of grant of such option or, in the case of the death of a participant,
such longer period as permitted by Section 6(d).
 
     7.   STOCK APPRECIATION RIGHTS.
 
          (a)  GENERALLY. The Committee may, in its discretion, grant stock
appreciation rights, including a concurrent grant of stock appreciation rights
in tandem with any stock option grant. A "STOCK APPRECIATION RIGHT" means a
right to receive a payment in cash, common stock or a combination thereof, in an
amount equal to the excess of (i) the fair market value, or other specified
valuation, of a specified number of shares of common stock on the date the right
is exercised over (ii) the "BASE VALUE". Except as provided in Section 7(b)
below, the base value shall not be less than the fair market value of such
shares of common stock on the date the right is granted, PROVIDED, HOWEVER, that
if a stock appreciation right is granted in tandem with or in substitution for a
stock option, the designated fair market value in the award agreement shall
reflect the exercise price of the stock option. Each stock appreciation right
shall be subject to such terms and conditions, including vesting, as the
Committee shall impose from time to time.
 
          (b)  BASE VALUE. If a stock appreciation right is granted in
substitution for other awards made by the Company, the base value may be less
than the fair market value of the common stock underlying the stock appreciation
right if the value used is the value of the shares on the date of grant of the
award being substituted. If a stock appreciation right is granted to a
participant upon assumption of or in substitution of an award granted by another
entity in connection with a corporate transaction between the Company and the
granting entity, such as a merger, consolidation or acquisition, the base value
may be less than the fair market value of the common stock on the date the
substitute stock appreciation right is granted if the aggregate fair market
value of the shares subject to the substitute stock appreciation right over the
aggregate base value of the substitute stock appreciation right does not exceed
the aggregate fair market value of the shares of the predecessor entity subject
to the award being assumed or substituted, as of the date immediately preceding
the corporate transaction (as determined by the Committee), over the aggregate
exercise price or the aggregate base value, if any, of such award.
 
          (c)  EXERCISE PERIOD. Stock appreciation rights granted under the Plan
shall be exercisable at such time or times and subject to such terms and
conditions, including vesting, as shall be determined by the Committee;
PROVIDED, HOWEVER, that except in the case of a Change of Control, or stock
appreciation rights granted in settlement of any obligation under any other
compensation arrangement or, to the extent provided in the award agreement upon
the participant's termination of service due to death or Disability, no stock
appreciation right shall be exercisable earlier than the first anniversary of
the date of grant; and PROVIDED, FURTHER, that no stock appreciation right shall
be exercisable later than
 
                                       B-4
<PAGE>
 
ten (10) years after the date it is granted except in the event of a
participant's death within six (6) months prior to such expiration date, in
which case, the exercise period of such participant's stock appreciation rights
may be extended beyond such period but no later than one (1) year after the
participant's death. All stock appreciation rights shall terminate at such
earlier times and upon such conditions or circumstances as the Committee shall
in its discretion set forth in such right at the date of grant.
 
     8.   RESTRICTED STOCK AWARDS.
 
          (a)  GENERALLY. The Committee may, in its discretion, grant restricted
stock awards consisting of common stock issued or transferred to participants
with or without other payments therefor, which are subject to transferability
restrictions and/or a substantial risk of forfeiture. Except in the event of a
Change of Control, settlement of any obligation under any other compensation
arrangement, or to the extent provided in the award agreement upon the
participant's death or Disability, each restricted stock award shall vest not
more rapidly than ratably over a period of three (3) years. Restricted stock
awards shall be construed as an offer by the Company to the participant to
purchase the number of shares of common stock subject to the restricted stock
award at the purchase price, if any, established therefor, and shall be subject
to acceptance by a participant.
 
          (b)  PAYMENT OF THE PURCHASE PRICE. If a restricted stock award
requires payment therefor, the purchase price of any shares of common stock
subject to a restricted stock award may be paid in any manner authorized by the
Committee, which may include any manner authorized under the Plan for the
payment of the exercise price of a stock option. Restricted stock awards may
also be made in consideration of services rendered to the Company or its
subsidiaries or affiliates.
 
          (c)  ADDITIONAL TERMS. Restricted stock awards may be subject to such
terms and conditions, including vesting, as the Committee determines
appropriate, including, without limitation, restrictions on the sale or other
disposition of such shares, the right of the Company to reacquire such shares
for no consideration upon termination of the participant's employment within
specified periods, and may constitute performance-based awards, as described in
Section 11 hereof. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the common stock covered by
such an award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed.
 
          (d)  RIGHTS AS A SHAREHOLDER. Holders of restricted stock awards have
the right to receive dividends and to vote the shares; PROVIDED, HOWEVER, unless
the Committee or the award agreement provides otherwise, dividends on restricted
stock awards shall be held in escrow and shall be payable, at such time as the
restrictions on the shares lapse, in either cash, shares or if applicable the
kind of property distributed as a dividend or any combination thereof.
 
     9.   STOCK UNITS.
 
     The Committee may, in its discretion, grant stock units with each such
stock unit representing one share of common stock of the Company. Stock units
will be credited to a notional account maintained by the Company. Unless the
award agreement provides otherwise, each stock unit shall also entitle the
holder to an amount equal to the value of dividends paid in respect of one share
of common stock of the Company during the period the unit is outstanding, which
amount shall also be credited to the notional account. Stock units may be
subject to such terms and conditions, including vesting and the time and method
of settlement, as the Committee determines appropriate; PROVIDED, HOWEVER, that
unless the Committee or the award agreement provides otherwise, stock units
shall be settled in shares of common stock; and PROVIDED, FURTHER, except in the
case of a Change of Control, settlement of any obligation under any other
compensation arrangement, or, to the extent provided in the award agreement upon
the participant's death or Disability, stock units may not completely vest prior
to the expiration of three (3) years from the date of grant although they may
vest ratably over a three year or longer vesting period. Stock units may
constitute performance-based awards, as described in Section 11 hereof.
 
                                       B-5
<PAGE>
 
     10.  CASH AWARDS.
 
     The Committee may grant awards to be settled in cash; PROVIDED, HOWEVER,
that non-employee directors shall not be eligible for cash awards. Cash awards
may be subject to such terms and conditions, including vesting, as the Committee
determines to be appropriate. Cash awards may constitute performance-based
awards, as described in Section 11 hereof. The Company may, in its discretion,
permit participants to defer settlement of cash awards. The maximum award that
may be granted to any participant as a cash award for any performance period of
thirty-six months is $3,000,000, with proportionate adjustments for shorter or
longer performance periods between 1 and 5 years and $1,000,000 for cash awards
that are unrelated to time-based vesting or performance periods.
 
     11.  PERFORMANCE-BASED AWARDS.
 
          (a)  GENERALLY. Any awards granted under the Plan may be granted in a
manner such that the awards qualify for the performance-based compensation
exemption of Section 162(m) of the Code ("PERFORMANCE-BASED AWARDS"). As
determined by the Committee in its sole discretion, either the granting or
vesting of such performance-based awards shall be based on achievement of hurdle
rates, growth rates, and/or reductions in one or more business criteria that
apply to the individual participant, one or more business units or the Company
as a whole.
 
          (b)  BUSINESS CRITERIA. The business criteria shall be as follows,
individually or in combination: (i) net earnings; (ii) earnings per share; (iii)
net sales growth; (iv) market share; (v) operating profit; (vi) earnings before
interest and taxes (EBIT); (vii) earnings before interest, taxes, depreciation
and amortization (EBITDA); (viii) gross margin; (ix) expense targets; (x)
working capital targets relating to inventory and/or accounts receivable; (xi)
operating margin; (xii) return on equity; (xiii) return on assets; (xiv)
planning accuracy (as measured by comparing planned results to actual results);
(xv) market price per share; (xvi) total return to shareholders; (xvii) net
income; (xviii) pro forma net income; (xix) return on capital; (xx) revenues;
(xxi) expenses; (xxii) operating cash flow; (xxiii) net profit margin; (xxiv)
employee headcount; (xxv) employee turnover; (xxvi) labor costs; and (xxvii)
customer service. In addition, performance-based awards may include comparisons
to the performance of other companies, such performance to be measured by one or
more of the foregoing business criteria.
 
          (c)  ESTABLISHMENT OF PERFORMANCE GOALS. With respect to
performance-based awards, the Committee shall establish in writing (i) the
performance goals applicable to a given period, and such performance goals shall
state, in terms of an objective formula or standard, the method for computing
the amount of compensation payable to the participant if such performance goals
are obtained and (ii) the individual employees or class of employees to which
such performance goals apply no later than ninety (90) days after the
commencement of such period (but in no event after twenty-five percent (25%) of
such period has elapsed).
 
          (d)  CERTIFICATION OF PERFORMANCE. No performance-based awards shall
be payable to or vest with respect to, as the case may be, any participant for a
given period until the Committee certifies in writing that the objective
performance goals (and any other material terms) applicable to such period have
been satisfied.
 
          (e)  MODIFICATION OF PERFORMANCE-BASED AWARDS. With respect to any
awards intended to qualify as performance-based awards, after establishment of a
performance goal, the Committee shall not revise such performance goal or
increase the amount of compensation payable thereunder (as determined in
accordance with Section 162(m) of the Code) upon the attainment of such
performance goal. However, the measurement of performance against goals shall
exclude the impact of charges for restructurings, discontinued operations,
extraordinary items and other unusual or non-recurring items, and the cumulative
effects of accounting changes, each as defined by generally accepted accounting
principles as identified in the financial statements, notes to the financial
statements or management's discussion or analysis. In accordance with Section
162(m) of the Code, the Committee may only exercise negative discretion with
respect to the amount of a performance-based award.
 
                                       B-6
<PAGE>
 
     12.  FOREIGN LAWS. The Committee may grant awards to individual
participants who are subject to the tax laws of nations other than the United
States, which awards may have terms and conditions as determined by the
Committee as necessary to comply with applicable foreign laws. The Committee may
take any action which it deems advisable to obtain approval of such awards by
the appropriate foreign governmental entity; PROVIDED, HOWEVER, that no such
awards may be granted pursuant to this Section 12 and no action may be taken
which would result in a violation of the Exchange Act, the Code or any other
applicable law.
 
     13.  ADJUSTMENT PROVISIONS; CHANGE OF CONTROL.
 
          (a)  ADJUSTMENT GENERALLY. If there shall be any change in the common
stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, special one-time cash dividend, stock split,
reverse stock split, split up, spin-off, combination of shares, exchange of
shares, dividend in kind or other like change in capital structure or
distribution (other than normal cash dividends) to shareholders of the Company,
an adjustment shall be made to each outstanding stock option and stock
appreciation right such that each such stock option and stock appreciation right
shall thereafter be exercisable for such securities, cash and/or other property
as would have been received in respect of the common stock subject to such stock
option or stock appreciation right had such stock option or stock appreciation
right been exercised in full immediately prior to such change or distribution,
and such an adjustment shall be made successively each time any such change
shall occur.
 
          (b)  MODIFICATION OF AWARDS. In the event of any change or
distribution described in subsection (a) above, in order to prevent dilution or
enlargement of participants' rights under the Plan, the Committee will have
authority to adjust, in an equitable manner, the number and kind of shares that
may be issued under the Plan, the number and kind of shares subject to
outstanding awards, the exercise price applicable to outstanding awards, and the
fair market value of the common stock and other value determinations applicable
to outstanding awards; PROVIDED, HOWEVER, that any such arithmetic adjustment to
a performance-based award shall not cause the amount of compensation payable
thereunder to be increased from what otherwise would have been due upon
attainment of the unadjusted award. Appropriate adjustments may also be made by
the Committee in the terms of any awards under the Plan to reflect such changes
or distributions and to modify any other terms of outstanding awards on an
equitable basis, including modifications of performance targets and changes in
the length of performance periods; PROVIDED, HOWEVER, that any such arithmetic
adjustment to a performance-based award shall not cause the amount of
compensation payable thereunder to be increased from what otherwise would have
been due upon attainment of the unadjusted award. In addition, other than with
respect to stock options, stock appreciation rights, and other awards intended
to constitute performance-based awards, the Committee is authorized to make
adjustments to the terms and conditions of, and the criteria included in, awards
in recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company, or in response to changes in applicable
laws, regulations, or accounting principles.
 
          (c)  EFFECT OF A CHANGE OF CONTROL. Notwithstanding any other
provision of this Plan, if there is a Change of Control (as defined in
subsection (d) below) of the Company, then unless the Committee provides
otherwise, all then outstanding stock options, stock appreciation rights and
stock units and unvested cash awards shall immediately vest and become
exercisable and any restrictions on restricted stock awards or stock units shall
immediately lapse. In addition, unless the Committee provides otherwise, all
awards held by participants who are at the time of the Change of Control in the
service of the Company, a subsidiary or affiliate shall remain exercisable for
the remainder of their terms notwithstanding any subsequent termination of a
participant's service. Thereafter, all awards shall be subject to the terms of
any agreement effecting the Change of Control, which agreement may provide,
without limitation, that in lieu of continuing the awards, each stock option and
stock appreciation right outstanding hereunder shall terminate within a
specified number of days after notice to the holder, and that such holder shall
receive, with respect to each share of common stock subject to such stock option
or stock appreciation right, an amount equal to the excess of the fair market
value of such shares of
 
                                       B-7
<PAGE>
 
common stock immediately prior to the occurrence of such Change of Control over
the exercise price (or base price) per share underlying such stock option or
stock appreciation right with such amount payable in cash, in one or more kinds
of property (including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine. A
provision like the one contained in the preceding sentence shall be inapplicable
to a stock option or stock appreciation right granted within six (6) months
before the occurrence of a Change of Control if the holder of such stock option
or stock appreciation right is subject to the reporting requirements of Section
16(a) of the Exchange Act and no exception from liability under Section 16(b) of
the Exchange Act is otherwise available to such holder.
 
          (d)  DEFINITIONS. For purposes of this Section 13, a "Change of
Control" of the Company shall be deemed to have occurred upon any of the
following events:
 
               (i)  Any person or persons acting together which would constitute
          a "GROUP" for purposes of Section 13(d) of the Exchange Act (other
          than the Company or any subsidiary and other than "PERMITTED HOLDERS",
          as defined below) shall "beneficially own" (as defined in Rule 13d-3
          under the Exchange Act), directly or indirectly, at least twenty-five
          percent (25%) of the total voting power of all classes of capital
          stock of the Company entitled to vote generally in the election of the
          Board;
 
               (ii) Either (A) "CURRENT DIRECTORS", as defined below, shall
          cease for any reason to constitute at least a majority of the members
          of the Board (for these purposes, a current director shall mean any
          member of the Board as of the Effective Date, and any successor of a
          current director whose election, or nomination for election by the
          Company's shareholders was approved by at least two-thirds (2/3) of
          the current directors then on the Board), or (B) at any meeting of the
          shareholders of the Company called for the purpose of electing
          directors, a majority of the persons nominated by the Board for
          election as directors shall fail to be elected;
 
               (iii) Consummation of (A) a plan of complete liquidation of the
          Company, or (B) a merger or consolidation of the Company (x) in which
          the Company is not the continuing or surviving corporation (other than
          a consolidation or merger with a wholly-owned subsidiary of the
          Company in which all shares of common stock outstanding immediately
          prior to the effectiveness thereof are changed into or exchanged for
          common stock of the subsidiary) or (y) pursuant to which the common
          stock is converted into cash, securities or other property, except in
          either case, a consolidation or merger of the Company in which the
          holders of the common stock immediately prior to the consolidation or
          merger have, directly or indirectly, at least a majority of the common
          stock of the continuing or surviving corporation immediately after
          such consolidation or merger or in which the Board immediately prior
          the merger or consolidation would, immediately after the merger or
          consolidation, constitute a majority of the board of directors of the
          continuing or surviving corporation; or
 
               (iv) The consummation of a sale or other disposition (in one
          transaction or a series of transactions) of all or substantially all
          of the assets of the Company.
 
For purposes of this Section 13(d), "PERMITTED HOLDERS" shall mean Miriam
Olsten, Stuart Olsten, and Cheryl Olsten, and each of their spouses, their
lineal descendants and their estates and their "AFFILIATES" or "ASSOCIATES" (as
defined in Rule 12b-2 of the Exchange Act), collectively, the "OLSTEN
STOCKHOLDERS"), so long as the Olsten Stockholders beneficially own 20% or less
of the voting power of all classes of the capital stock of the Company entitled
to vote generally in the election of the Board.
 
     14.  TERMINATION OF SERVICE.
 
          (a)  TERMINATION (OTHER THAN FOR CAUSE). Unless the Committee or the
applicable award agreement provides otherwise, if a participant's service with
the Company or any subsidiary or affiliate terminates for any reason other than
for "cause" (which shall have the meaning defined in the applicable award
agreement or, in the absence of such definition shall be defined by the
Committee):
 
                                       B-8
<PAGE>
 
               (i)  STOCK OPTIONS/STOCK APPRECIATION RIGHTS. Except as provided
          in Section 13(c) hereof, any outstanding stock options and stock
          appreciation rights shall expire on the earlier of:
 
                    (A)  the expiration of their term,
 
                    (B)  ninety (90) days following termination of the
                         participant's service other than termination of service
                         on account of death, Disability or retirement,
 
                    (C)  twelve (12) months following termination of the
                         participant's service as a result of death or
                         Disability or on account of "retirement" (which for
                         this purpose shall mean termination of service at age
                         55 or later with ten (10) or more years of service, at
                         age 62 or later with five (5) or more years of service,
                         at age 65 or later, or at such other age as the
                         Committee may determine);
 
PROVIDED, HOWEVER, that a participant (or in the case of the participant's death
or Disability, the participant's representative) may exercise all or part of the
participant's stock options and stock appreciation rights at any time before the
expiration of such stock options following termination of service only to the
extent that the stock options and stock appreciation rights are vested on or
before the date participant's service terminates. The balance of the stock
options and stock appreciation rights (which are not vested on the date
participant's service terminates) shall lapse when the participant's service
terminates.
 
If by virtue of this provision, an incentive stock option is not exercised
within three (3) months after a participant's employment terminates, then unless
such participant's employment termination is due to his or her death or
Disability (defined for this purpose only as described in Section 22(e)(3) of
the Code), the incentive stock option shall be treated as a nonqualified stock
option.
 
               (ii) RESTRICTED STOCK AWARDS/STOCK UNITS. All unvested restricted
          stock awards and stock units shall expire upon termination of service.
 
              (iii) CASH AWARDS/PERFORMANCE-BASED AWARDS. All cash awards and
          performance-based awards shall be forfeited upon termination of
          service; PROVIDED, HOWEVER, that if a participant has satisfied all of
          the conditions to receiving such award except that the participant is
          not in service on the payment date due to his or her termination of
          service by the Company without cause, or because of the participant's
          retirement, death or Disability, such award shall be payable to the
          participant at the regularly scheduled payment date.
 
          (b)  TERMINATION OF SERVICE (FOR CAUSE). All of a participant's awards
(including any exercised stock options for which shares or cash have not been
delivered to the participant) shall be cancelled and forfeited immediately on
the date of the participant's termination of service with the Company or any
subsidiary if such termination is for cause or cause exists on such date, and
the Company shall return to the participant the price (if any) paid for any
undelivered shares. Should a participant die at a time when cause exists, all of
the participant's awards (including any exercised stock options for which shares
have not been delivered to the participant) shall be cancelled and forfeited
immediately as of the date of the participant's death.
 
          (c)  LEAVE OF ABSENCE. For purposes of this Section, service shall be
deemed to continue while the participant is on a bona fide leave of absence, if
such leave was approved by the Company in writing or if continued crediting of
service for this purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Committee).
 
     15.  NONTRANSFERABILITY. Each award granted under the Plan to a participant
shall not be transferable except by will or the laws of descent and distribution
or as permitted by the Committee, which shall have discretion to permit
transferability to third parties under such terms and conditions as it shall
determine. In the event of the death of a participant (which for this purpose
only shall include any transferee), each stock option or stock appreciation
right theretofore granted to him or her shall be exercisable during such period
after his or her death as described in Section 14 hereof but unless the
Committee or the award agreement provides otherwise, such award shall only be
exercisable by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's rights
under the stock option or stock appreciation right shall pass by will or the
laws of descent and distribution.
 
                                       B-9
<PAGE>
 
     16.  OTHER PROVISIONS. The granting of or distribution under any award
under the Plan may also be subject to such other provisions (whether or not
applicable to the awards of any other participant) as the Committee determines
appropriate, including, without limitation, for the forfeiture of, or
restrictions on resale or other disposition of, common stock acquired under any
form of award, for the acceleration of exercisability or vesting of awards in
the event of a Change of Control, for the payment of the value of awards to
participants in the event of a Change of Control, or to comply with federal and
state securities laws, or understandings or conditions as to the participant's
employment in addition to those specifically provided for under the Plan.
 
     17.  FAIR MARKET VALUE. For purposes of this Plan and any awards awarded
hereunder, fair market value shall mean the amount determined by the Committee
as the fair market value of the common stock of the Company, except that for
purposes of settling the amount due in respect of any award in connection with a
Change of Control, fair market value shall mean the consideration paid in
connection with the Change of Control.
 
     18.  WITHHOLDING. All payments or distributions of awards made pursuant to
the Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements at the minimum
statutory withholding rates. If the Company proposes or is required to
distribute common stock pursuant to the Plan, it may require the recipient to
remit to it or to the corporation that employs such recipient an amount
sufficient to satisfy such tax withholding requirements prior to the delivery of
any certificates for such common stock. In lieu thereof, the Company or the
employing corporation shall have the right to withhold the amount of such taxes
from any other sums due or to become due from such corporation to the recipient
as the Committee shall prescribe. The Committee may, in its discretion and
subject to such rules as it may adopt (including any as may be required to
satisfy applicable tax and/or non-tax regulatory requirements), permit an
optionee or award or right holder to pay all or a portion of the federal, state
and local withholding taxes arising in connection with any award consisting of
shares of common stock by electing to have the Company withhold shares of common
stock having a fair market value equal to the amount of tax to be withheld, such
tax calculated at minimum statutory withholding rates.
 
     19.  TENURE. A participant's right, if any, to continue to serve the
Company or any of its subsidiaries or affiliates as an officer, employee, or
otherwise, shall not be enlarged or otherwise affected by his or her designation
as a participant under the Plan.
 
     20.  UNFUNDED PLAN. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is not intended to
be subject to the Employee Retirement Income Security Act of 1974, as amended.
 
     21.  NO FRACTIONAL SHARES. No fractional shares of common stock shall be
issued or delivered pursuant to the Plan or any award. The Committee shall
determine whether cash, or awards, or other property shall be issued or paid in
lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
 
     22.  DURATION, AMENDMENT AND TERMINATION. No award shall be granted more
than ten (10) years after the Effective Date. The Committee may amend the Plan
from time to time or suspend or terminate the Plan at any time. No amendment of
the Plan may be made without approval of the shareholders of the Company if the
amendment will: (i) increase the aggregate number of shares of common stock that
may be delivered through stock options under the Plan; (ii) increase the Maximum
Shares or the
 
                                      B-10
<PAGE>
 
Individual Maximum as set forth in Section 5 hereof; (iii) permit the re-pricing
of an award to a lower exercise price, base price or purchase price, as
applicable, (including, without limitation, the cancellation of an award
followed by a re-grant of that award six (6) months later; (iv) change the types
of business criteria on which performance-based awards are to be based under the
Plan; (v) modify the requirements as to eligibility for participation in the
Plan; or (vi) change the legal entity authorized to make awards under the Plan.
 
     23.  GOVERNING LAW. This Plan, awards granted hereunder and actions taken
in connection herewith shall be governed and construed in accordance with the
laws of the State of Delaware (regardless of the law that might otherwise govern
under applicable Delaware principles of conflict of laws).
 
     24.  EFFECTIVE DATE. The Plan shall be effective as of March 15, 2004, the
date on which the Plan was adopted by the Board (the "Effective Date"), provided
that the Plan is approved by the shareholders of the Company at an annual
meeting or any special meeting of shareholders of the Company within twelve (12)
months of the Effective Date, and such approval of shareholders shall be a
condition to the right of each participant to receive any awards hereunder. Any
awards granted under the Plan prior to such approval of shareholders shall be
effective as of the date of grant (unless, with respect to any award, the
Committee specifies otherwise at the time of grant), but no such award may be
exercised or settled and no restrictions relating to any award may lapse prior
to such shareholder approval, and if shareholders fail to approve the Plan as
specified hereunder, any such award shall be cancelled.
 
                                      B-11