AMERICAN MEDICAL ALERT CORP.
2005 STOCK INCENTIVE PLAN
 
STOCK PURCHASE AGREEMENT
 
STOCK PURCHASE AGREEMENT dated as of January 20, 2006 by and between American
Medical Alert Corp., a New York corporation (the "Company"), and Richard Rallo,
having an address at 3 Byfield Place, Melville, NY 11747 (the "Holder").
 
W I T N E S S E T H:
 
WHEREAS, the Company has adopted the 2005 Stock Incentive Plan (the "Plan");
 
WHEREAS, the Company regards Holder as a valuable contributor to the Company and
has determined that it would be in the interest of the Company and its
Shareholder’s to grant the shares provided for in this Restricted Stock Purchase
Agreement ("Agreement") to Holder in consideration of the services he has or
will perform for the Company;
 
WHEREAS, pursuant to the Plan, the Administrator has determined that the Holder
is entitled to a grant of shares, subject to the terms of the Plan and this
Agreement (the defined terms in such Plan shall, except as otherwise provided
herein, also be applicable to such terms as utilized herein); and
 
WHEREAS, the parties now desire to enter into the Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
 
1. Award of Restricted Shares. (a) Subject to the restrictions, terms and
conditions of this Agreement, the Company hereby awards to the Holder Ten
Thousand (10,000) shares (the "Restricted Shares") of Common Stock of the
Company in consideration of services actually rendered and to be rendered to the
Company by Holder. Such shares shall be subject to the Repurchase Right set
forth in Section 4, below. The Company and Holder acknowledge and agree that the
value of the services actually rendered to the Company prior to the date hereof
by the Holder as consideration for the issuance of the Restricted Shares,
exceeds $100.00.
 
(b) The Restricted Shares, when issued pursuant to the provisions hereof, shall
constitute issued and outstanding shares for all corporate purposes. Subject to
the restrictions set forth herein, the Holder will have the right to exercise
all rights, powers and privileges of a holder of Common Stock with respect to
the Restricted Shares, including the right to vote, receive stock or cash
dividends (but subject to the Repurchase Right with respect to Unvested Shares
(as hereinafter defined)), participate in stock splits or other
recapitalizations and exchange such shares in a merger, consolidation or other
reorganization. The term "Restricted Shares" in addition to the shares received
pursuant to this Agreement, also refers to all securities received in
replacement of the Restricted Shares, as a stock dividend or as a result of any
stock split, recapitalization, merger, reorganization, exchange or the like, and
all new, substituted or additional securities or other properties to Holder is
entitled by reason of Holder’s ownership of the Restricted Shares.
 

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(c) The Company shall hold the certificates representing any Restricted Shares
which are subject to the Repurchase Right (as defined below) in escrow, provided
that, any Restricted Shares held in escrow shall be released from escrow and
delivered to Holder as and when such shares are no longer subject to the
Repurchase Right. In addition, Holder shall execute an assignment in the form
attached hereto as Exhibit A, with respect to the Restricted Shares.
 
2. Legends.
 
(a) The Shares (as hereinafter defined) shall be represented by a stock
certificate or certificates registered in the name of the Holder.
 
(b) From and after the date of original issuance, stock certificates
representing the Restricted Shares shall bear a legend in substantially the
following form:
 
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE SUBJECT TO
CERTAIN REPURCHASE RIGHTS GRANTED TO THE COMPANY AND ACCORDINGLY MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT IN
CONFORMITY WITH THE TERMS OF A STOCK PURCHASE AGREEMENT DATED JANUARY __, 2006,
BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR
IN INTEREST TO THE SHARES). A COPY OF SUCH AGREEMENT IS MAINTAINED AT THE
COMPANY'S PRINCIPAL CORPORATE OFFICES."

3. Transfer Restrictions
 
(a) Restriction on Transfer. Except for any Permitted Transfer, Holder shall not
transfer, assign, encumber or otherwise dispose of any of the Restricted Shares
which are subject to the Repurchase Right.
 
(b) Transferee Objections. Each Person (other than the Company) to whom the
Restricted Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Company that such Person is bound by the provisions of this Agreement and
that the transferred shares are subject to the Repurchase Right.
 
4. Repurchase Right.
 
(a) Grant. The Company is hereby granted the right (the "Repurchase Right"),
exercisable at any time during the ninety (90)-day period following the date
Holder ceases for any reason to remain in Service, to repurchase at the Per
Share Purchase Price all or any portion of the Restricted Shares in which Holder
is not, at the time of his or her cessation of Service, vested in accordance
with the Vesting Schedule (such shares to be hereinafter referred to as the
"Unvested Shares").
 
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(b) Exercise of The Repurchase Rights. The Repurchase Right shall be exercisable
by written notice delivered to each Owner of the Unvested Shares prior to the
expiration of the ninety (90)-day exercise period. The notice shall indicate the
number of Unvested Shares to be repurchased and the date on which the repurchase
is to be effected, such date to be not more than thirty (30) days after the date
of such notice. In order to effect any such repurchase, the Company shall pay to
Owner, in cash or cash equivalents, an amount equal to the Per Share Purchase
Price multiplied by the number of Unvested Shares which are to be repurchased
from Owner.
 
(c) Termination of the Repurchase Right. The Repurchase Right shall terminate
with respect to any Unvested Shares for which it is not timely exercised under
Paragraph 4(b). In addition, the Repurchase Right shall terminate and cease to
be exercisable with respect to any and all Restricted Shares in which Holder
vests in accordance with the Vesting Schedule.
 
(d) Recapitalization. Any new, substituted or additional securities or other
property (including cash) paid as a dividend or otherwise) which is by reason of
any Recapitalization distributed with respect to or in exchange for the
Restricted Shares shall be immediately subject to the Repurchase Right, but only
to the extent the Restricted Shares are at the time covered by such right.
Appropriate adjustments to reflect such distribution shall be made to the number
and/or class of Restricted Shares subject to this Agreement and to the Per Share
Purchase Price to be paid upon the exercise of the Repurchase Right in order to
reflect the effect of any such Recapitalization upon the Company's capital
structure; provided, however, that the aggregate of the Per Share Purchase Price
applicable to all Unvested Shares shall remain the same. Any securities or other
property (including cash) distributed with respect to the Restricted Shares as a
dividend or otherwise which are subject to the Repurchase Right shall be held in
escrow.
 
(e) Special Tax Election. The grant of the Restricted Shares may result in
adverse tax consequences which may be avoided or mitigated by filing an election
under Code Section 83(b). Such election must be filed within thirty (30) days
after the date of this Agreement. The form for making the Code Section 83(b)
election are set forth in Exhibit B hereto. HOLDER SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE RESTRICTED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(B)
ELECTION. HOLDER ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY, AND NOT
THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF
EMPLOYEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
OR HER BEHALF.
 
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5. Securities Law Compliance
 
(a) Registration of Securities. The Restricted Shares, have been registered
under the Act and are being issued to Holder pursuant to a Form S-8 registration
statement.
 
(b) Restrictions on Disposition of Restricted Shares. Holder shall make no
disposition of the Restricted Shares (other than a Permitted Transfer) unless
and until there is compliance with all of the following requirements:
 
(i) Holder shall have provided the Company with a written summary of the terms
and conditions of the proposed disposition; and

(ii) Holder shall have complied with all requirements of this Agreement
applicable to the disposition of the Restricted Shares.

(c) In addition, Holder shall make no disposition of the Restricted Shares
unless Holder shall have provided the Company with written assurances, in form
and substance satisfactory to the Company, that (a) the proposed disposition
does not require registration of the Shares under the 1933 Act or (b) all
appropriate action necessary for compliance with the registration requirements
of the 1933 Act or any exemption from registration available under the 1933 Act
(including Rule 144) has been taken.
 
(d) The Company shall not be required (i) to transfer on its books any Shares
which have been sold or transferred in violation of the provisions of this
Agreement or (ii) to treat as the owner of the Restricted Shares, or otherwise
to accord voting, dividend or liquidation rights to, any transferee to whom the
Restricted Shares have been transferred in contravention of this Agreement.
 
6. No Right to Employment. Nothing in this Agreement shall be construed to give
the Holder any right to be awarded any additional awards of shares or options
under the Plan, or to confer on the Holder any right to continue in the employ
of the Company or to be evidence of any agreement or understanding, express or
implied, that the Company or any of its Subsidiaries or Parent will employ the
Holder in any particular position or at any particular rate of remuneration, or
for any particular period of time or to interfere in any way with or otherwise
restrict in any way the rights of the Company or of the Holder, other as set
forth in the Employment Agreement.
 
7. Amounts Not Salary or Bonus. The Holder agrees that the award of the
Restricted Shares hereunder is special incentive compensation and that it will
not be taken into account as "salary" or "compensation" or "bonus" in
determining the amount of any payment under any pension, retirement,
profit-sharing, savings or stock ownership plan of the Company, its Parent or
any of its Subsidiaries, unless expressly provided pursuant to the terms of such
plan.
 
8. Forfeiture for Violation of Employment Agreement. In the event that Holder
violates any of his or her Confidentiality or Non-Competition obligations
arising under the Employment Agreement or other agreement with the Company, then
all profits or gains realized by Holder as a result of the sale of any of the
Restricted Shares, shall be forfeited and returned to the Company.
 
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9. Amendments. Except as otherwise provided in the Plan, this Agreement may only
be amended or modified by written agreement of the Company and the Holder.
 
10. Successor and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, and shall be binding upon
and inure to the benefit of the Holder and his legatees, distributees and Legal
Representatives. The Company may assign the Repurchase Right to any Person
selected by the Board, including (without limitation) one or more shareholders
of the Company.
 
11. Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York, other
than those laws which would defer to the substantive laws of another
jurisdiction.
 
12. Shares Award Subject to Plan. By entering into this Agreement, the Holder
agrees and acknowledges that the Holder has received and read a copy of the
Plan. The Restricted Shares are subject to the Plan. The terms and provisions of
the Plan as it may be amended from time to time are hereby incorporated herein
by reference. Capitalized terms used herein and not otherwise defined herein
shall have the meaning provided for such terms in the Plan. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan will govern and
prevail.
 
13. Signature in Counterparts. This Agreement may be signed in one or more
counterparts and delivered by facsimile, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
 
14. Definitions. As used herein, the following definitions shall apply:
 
(a) "Agreement" shall mean this Stock Purchase Agreement.
 
(b) "Board" shall mean the Company's Board of Directors.
 
(c) "Change in Control" shall have the same meaning as defined in the Employment
Agreement.
 
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
 
(e) "Common Stock" shall mean the Company's common stock, $.01 par value per
share, as well as all securities received in replacement of the Company's common
stock, as a stock dividend, or as a result of any stock split, recapitalization,
merger, reorganization, exchange or the like, and all new, substituted or
additional securities or other properties that a holder of common stock is
entitled to by reason of the holder's ownership of the common stock.
 
(f) "1933 Act" shall mean the Securities Act of 1933, as amended.
 
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(g) "Employment Agreement" shall mean that certain Employment Agreement dated as
of January 1 2006, between the Company and Holder." (emphasis added to show the
change only - do not make it bold in the filing).
 
(h) "Owner" shall mean Holder and all subsequent holders of the Restricted
Shares who derive their chain of ownership through a Permitted Transfer from
Holder.
 
(i) "Permitted Transfer" shall mean (i) a gratuitous transfer of the Restricted
Shares to any “family member” as such term is defined in Section 1(a)(5) of the
General Instructions to Form S-8 under the 1933 Act, provided and only if Holder
obtains the Company's prior written consent to such transfer, or (ii) a transfer
of title to the Restricted Shares effected pursuant to Holder's will or the laws
of descent and distribution following Holder's death.
 
(j) "Person" means an individual, a partnership, a corporation, a trust, a joint
venture, a limited liability company, an unincorporated organization, a
government or any department or agency thereof or any other entity.
 
(k) "Per Share Purchase Price" means $.01.
 
(l) "Recapitalization" shall mean any stock split, stock dividend,
recapitalization, combination of shares, merger, consolidation, exchange of
shares or other change affecting the Company's outstanding Common Stock as a
class.
 
(m) "SEC" shall mean the Securities and Exchange Commission.
 
(n) "Service" shall mean Holder's provision of services to the Company (or a
Parent or Subsidiary) pursuant to the Employment Agreement.
 
(o) "Vesting Schedule" shall mean the vesting schedule specified Section 4(b) in
the Employment Agreement pursuant to which Holder is to vest in the Restricted
Shares in a series of installments over his period of Service, subject to
certain acceleration events in the event of a "Change in Control."
 
15. Notices. Any notice required to be given under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon delivery
through the U. S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days' advance written notice under this
paragraph to all other parties to this Agreement.
 
16. No Waiver. The failure of the Company in any instance to exercise the
Repurchase Right shall not constitute a waiver of any other repurchase rights
that may subsequently arise under the provisions of this Agreement or any other
agreement between the Company and Holder. No waiver of any breach or condition
of this Agreement shall be deemed to be a waiver of any other or subsequent
breach or condition, whether of like or different nature.
 
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17. Cancellation of Restricted Shares. If the Company shall make available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time the person from whom
such shares are to be repurchased shall no longer have any rights as a holder of
such shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such shares shall be deemed purchased in
accordance with the applicable provisions hereof, and the Company shall be
deemed the owner and holder of such shares, whether or not the certificates
therefor have been delivered as required by this Agreement.
 
18. Holder Undertaking. Holder hereby agrees to take whatever additional action
and execute whatever additional documents the Company may deem necessary or
advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on either Holder or the Restricted Shares pursuant to the
provisions of this Agreement.
 
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
its agent thereunto duly authorized, and the Holder has hereunto set his hand,
all as of the date first above written.
 

 
AMERICAN MEDICAL ALERT CORP.
 
By: /s/ Howard M. Siegel                              
Name: Howard M. Siegel
Title: Chairman and CEO
 
 
 
   /s/ Richard Rallo                                        
Holder: Richard Rallo
 

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EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED _________________________ hereby sell(s), assign(s)and
transfer(s) unto American Medical Alert Corp. (the "Company"),
_________________________ (__________) shares of the Common Stock of the Company
standing in his or her name on the books of the Company represented by
Certificate No. _________________________ herewith and do(es) hereby irrevocably
constitute and appoint _________________________ Attorney to transfer the said
stock on the books of the Company with full power of substitution in the
premises.

Dated: _________________________

                            Signature: _________________________

INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Company to exercise
the Repurchase Right without requiring additional signatures on the part of
Employee.

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EXHIBIT B

SECTION 83(B) ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

(1)  The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:

(2)  The property with respect to which the election is being made is
____________ shares of the common stock of American Medical Alert Corp., (the
"Company")

(3) The property was issued on [_____ __], 2006.
 
(4) The taxable year in which the election is being made is the calendar year
2006.

(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if
taxpayer's employment with the issuer is terminated under certain circumstances.

(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never lapse) is
[$ ] per share.

(7) The amount paid for such property is [$ ] per share.

(8) A copy of this statement was furnished to the Company.

(9)  This statement is executed [____ __], 200_.

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Spouse (if any)                                          Taxpayer

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
TAXPAYER FILES HIS OR HER FEDERAL INCOME TAX RETURNS AND MUST BE MADE WITHIN
THIRTY (30) DAYS AFTER THE EXECUTION DATE OF THE STOCK PURCHASE AGREEMENT. THIS
FILING SHOULD BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
TAXPAYER MUST RETAIN TWO (2) COPIES OF THE COMPLETED FORM FOR FILING WITH HIS OR
HER FEDERAL AND STATE TAX RETURNS FOR THE CURRENT TAX YEAR AND AN ADDITIONAL
COPY FOR HIS OR HER RECORDS.

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