Document:

Exhibit
      10.2

     

    CAPITAL
      GOLD CORPORATION

     

    
      2006 EQUITY
        INCENTIVE
        PLAN

    

     

    

      PURPOSES.

    

     

    Background.
      This
      2006
      Equity Incentive Plan was adopted on December 13, 2006 and approved by the
      Company’s stockholders on ________, 2006.

     

    Eligible
      Award Recipients.
      The
      persons eligible to receive Awards are the Employees, Directors and Consultants
      of the Company and its Affiliates.

     

    Available
      Awards.
      The
      purpose of the Plan is to provide a means by which eligible recipients may
      be
      given an opportunity to benefit from increases in value of the Common Stock
      through the granting of the following: (i) Incentive Stock Options,
      (ii) Nonqualified Stock Options, (iii) rights to acquire restricted stock,
      and (iv) stock appreciation rights.

     

    General
      Purpose.
      The
      Company, by means of the Plan, seeks to retain the services of the group of
      persons eligible to receive Awards, to secure and retain the services of new
      members of this group and to provide incentives for such persons to exert
      maximum efforts for the success of the Company and its Affiliates.

     

    
      DEFINITIONS.

    

     

    “Affiliate”
      means
      any entity that controls, is controlled by, or is under common control with
      the
      Company.

     

    “Award”
      means
      any right granted under the Plan, including an Option, a right to acquire
      restricted Common Stock, and a stock appreciation right.

     

    “Award
      Agreement”
      means a
      written agreement between the Company and a holder of an Award (other than
      an
      Option) evidencing the terms and conditions of an individual Award grant.

     

    “Board”
      means
      the board of directors of the Company.

     

    “Code”
      means
      the Internal Revenue Code of 1986, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Committee”
      means a
      pre-existing or newly formed committee of members of the Board appointed by
      the
      Board in accordance with subsection 3(c). 

     

    “Common
      Stock” means
      the
      shares of the Company’s common stock par value $0.00001 and other rights with
      respect to such shares. 

     

    “Company”
      means
      Capital Gold Corporation, a Delaware corporation. 

     

    
      
        
        

      

      
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    “Consultant”
      means
      any person, including an advisor, (i) engaged by the Company or an
      Affiliate to render consulting or advisory services for an initial, renewable
      or
      extended period of twelve months or more and who is compensated for such
      services or (ii) who is a member of the board of directors of an
      Affiliate.

     

    “Continuous
      Service”
      means
      that the Participant’s service with the Company or an Affiliate, whether as an
      Employee, Director or Consultant, is not interrupted or terminated. Unless
      otherwise provided in an Award Agreement or Option Agreement, as applicable,
      the
      Participant’s Continuous Service shall not be deemed to have terminated merely
      because of a change in the capacity in which the Participant renders service
      to
      the Company or an Affiliate as an Employee, Consultant or Director or a change
      in the entity for which the Participant renders such service, provided that
      there is no interruption or termination of the Participant’s service to the
      Company or an Affiliate as an Employee, Director or Consultant. For example,
      a
      change in status from an Employee of the Company to a Consultant of an Affiliate
      shall not constitute an interruption of Continuous Service. The Board, in its
      sole discretion, may determine whether Continuous Service shall be considered
      interrupted in the case of any leave of absence, including sick leave, military
      leave or any other personal leave.

     

    “Covered
      Employee”
      means
      the Company’s chief executive officer and the four (4) other highest
      compensated officers of the Company for whom total compensation is required
      to
      be reported to stockholders under the Exchange Act, as determined for purposes
      of Section 162(m) of the Code.

     

    “Director”
      means a
      member of the Board of the Company.

     

    “Disability”
      means
      the Participant’s inability, due to illness, accident, injury, physical or
      mental incapacity or other disability, to carry out effectively the duties
      and
      obligations to the Company and its Affiliates performed by such person
      immediately prior to such disability for a period of at
      least
      six (6) months, as determined in the good faith judgment of the Board.

     

    “Dollars”
      or
“$”
      means
      United States dollars.

     

    “Employee”
      means
      any person employed by the Company or an Affiliate. Service as a Director or
      payment of a director’s fee by the Company or an Affiliate alone shall not be
      sufficient to constitute “employment” by the Company or an
      Affiliate.

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    “Fair
      Market Value”
      means,
      as of any date, the value of the Common Stock determined as
      follows:

     

    If
      the
      Common Stock is listed on the Toronto Stock Exchange and is not listed on any
      other established stock exchange in the United States, or traded on the Nasdaq
      National Market or the Nasdaq SmallCap Market, the Fair Market Value of the
      Common Stock shall be the closing price on the Toronto Stock Exchange of the
      Common Stock on the trading day immediately prior to the day of determination
      converted to Dollars using the noon rate of exchange of the Federal Reserve
      Bank
      of New York on the day immediately prior to such determination; and (B) if
      the
      Common Stock is listed on the Toronto Stock Exchange and also is listed on
      any
      other established stock exchange in the United States, or traded on the Nasdaq
      National Market or the Nasdaq SmallCap Market, the Fair Market Value of the
      Common Stock shall be the closing sales price for such stock (or the closing
      bid, if no sales were reported) as quoted on such exchange or market on the
      last
      market trading day prior to the day of determination, as reported by such
      exchange or market with the greatest volume of trading in Common Stock on the
      day prior to the determination date.

     

    In
      the
      absence of such markets, if the Common Stock is quoted on the OTC Bulletin
      Board, the Fair Market Value of the Common Stock shall be the average of the
      closing bid price per share of the Common Stock for the three trading days
      ending on the last trading day prior to the day of determination, as reported
      by
      the OTC Bulletin Board.

     

    
      
        
        

      

      
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    If
      the
      Common Stock is not quoted on the OTC Bulletin Board but is reported on the
      “Pink Sheets” published by the Pink Sheets LLC (or a similar organization or
      agency succeeding to its functions of reporting prices), the Fair Market Value
      of the Common Stock shall be the average of the reported closing bid price
      per
      share of the Common Stock for the three trading days ending on the last trading
      day prior to the day of determination, as reported by the Pink Sheets (or such
      other organization or agency).

     

    In
      the
      absence of such markets for the Common Stock, the Fair Market Value shall be
      determined in good faith by the Board.

     

    “Incentive
      Stock Option”
      means an
      option designated as an incentive stock option in an Option Agreement and that
      is granted in accordance with the requirements of, and that conforms to the
      applicable provisions of, Section 422 of the Code.

     

    “Independent
      Director” means
      (i) a Director who satisfies the definition of Independent Director or
      similar definition under the applicable stock exchange or Nasdaq rules and
      regulations upon which the Common Stock is traded from time to time and
      (ii) a Director who either (A) is not a current employee of the Company or
      an “affiliated corporation” (within the meaning of Treasury Regulations
      promulgated under Section 162(m) of the Code), is not a former employee of
      the
      Company or an “affiliated corporation” receiving compensation for prior services
      (other than benefits under a tax qualified pension plan), was not an officer
      of
      the Company or an “affiliated corporation” at any time and is not currently
      receiving direct or indirect remuneration from the Company or an “affiliated
      corporation” for services in any capacity other than as a Director or (B) is
      otherwise considered an “outside director” for purposes of Section 162(m) of the
      Code.

     

    “Nonqualified
      Stock Option”
      means an
      option that is not designated in an Option Agreement as an Incentive Stock
      Option or was not granted in accordance with the requirements of, and does
      not
      conform to the applicable provisions of, Section 422 of the
      Code.

     

    “Officer”
      means a
      person who is an officer of the Company within the meaning of Section 16 of
      the Exchange Act and the rules and regulations promulgated
      thereunder.

     

    “Option”
      means an
      Incentive Stock Option or a Nonqualified Stock Option granted pursuant to the
      Plan.

     

    “Option
      Agreement”
      means a
      written agreement between the Company and an Optionholder evidencing the terms
      and conditions of an individual Option grant. 

     

    “Optionholder”
      means a
      person to whom an Option is granted pursuant to the Plan or, if applicable,
      such
      other person who holds an outstanding Option.

     

    “Participant”
      means a
      person to whom an Award is granted pursuant to the Plan or, if applicable,
      such
      other person who holds an outstanding Award.

     

    “Plan”
      means
      this Capital Gold Corporation 2006 Equity Incentive Plan.

     

    “Rule
      16b-3”
      means
      Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
      as
      in effect from time to time.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
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    “Ten
      Percent Stockholder”
      means a
      person who owns (or is deemed to own pursuant to Section 424(d) of the Code)
      stock possessing more than ten percent (10%) of the total combined voting power
      of all classes of stock of the Company or any parent corporation or any
      subsidiary corporation, both as defined in Section 424 of the Code.

     

    
      ADMINISTRATION.

    

     

    Administration
      by Board.
      The
      Board shall administer the Plan unless and until the Board delegates
      administration to a Committee, as provided in subsection 3(c). The Board may,
      at
      any time and for any reason in its sole discretion, rescind some or all of
      such
      delegation.

     

    Powers
      of Board.
      The
      Board shall have the power, subject to, and within the limitations of, the
      express provisions of the Plan:

     

    To
      determine from time to time which of the persons eligible under the Plan shall
      be granted Awards; when and how each Award shall be granted; what type or
      combination of types of Award shall be granted; the provisions of each Award
      granted (which need not be identical), including the time or times when a person
      shall be permitted to receive Common Stock pursuant to an Award; and the number
      of shares of Common Stock with respect to which an Award shall be granted to
      each such person.

     

    To
      construe and interpret the Plan, Awards granted under it, Option Agreements
      and
      Award Agreements, and to establish, amend and revoke rules and regulations
      for
      their administration. The Board, in the exercise of this power, may correct
      any
      defect, omission or inconsistency in the Plan or in any Option Agreement or
      Award Agreement, in a manner and to the extent it shall deem necessary or
      expedient to make the Plan fully effective.

     

    To
      amend
      the Plan, an Award, an Award Agreement or an Option Agreement as provided in
      Section 12, provided
      that
      the
      Board shall not amend the exercise price of an option, the Fair Market Value
      of
      an Award or extend the term of an Option or Award without obtaining the approval
      of the stockholders if required by the rules of any stock exchange upon which
      the Common Stock is listed.

     

    Generally,
      to exercise such powers and to perform such acts as the Board deems necessary
      or
      expedient to promote the best interests of the Company which are not in conflict
      with the provisions of the Plan.

     

    Delegation
      to Committee.

     

    General.
      The
      Board may delegate administration of the Plan and its powers and duties
      thereunder to a Committee or Committees, and the term “Committee”
shall
      apply to any person or persons to whom such authority has been delegated. Upon
      such delegation, the Committee shall have the powers theretofore possessed
      by
      the Board, including the power to delegate to a subcommittee any of the
      administrative powers the Committee is authorized to exercise (and references
      in
      this Plan to the Board shall thereafter be deemed to include the Committee
      or
      subcommittee), subject, however, to such resolutions, not inconsistent with
      the
      provisions of the Plan, as may be adopted from time to time by the Board. In
      its
      absolute discretion, the Board may at any time and from time to time exercise
      any and all rights and duties of the Committee under this Plan, except
      respecting matters under Rule 16b-3 of the Exchange Act or Section 162(m) of
      the
      Code, or any rules or regulations issued thereunder, which are required to
      be
      determined in the sole discretion of the Committee.

     

    Committee
      Composition.
      A
      Committee shall consist solely of two or more Independent Directors. Within
      the
      scope of its authority, the Board or the Committee may (1) delegate to a
      committee of one or more members of the Board who are not Independent Directors
      the authority to grant Awards to eligible persons who are either (a) not then
      Covered Employees and are not expected to be Covered Employees at the time
      of
      recognition of income resulting from such Award or (b) not persons with
      respect to whom the Company wishes to comply with Section 162(m) of the Code,
      and/or (2) delegate to a committee of one or more members of the Board who
      are
      not Independent Directors or to the Company’s Chief Executive Officer the
      authority to grant Awards to eligible persons who are not then subject to
      Section 16 of the Exchange Act. 

     

    
      
        
        

      

      
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    Effect
      of Board’s Decision; No Liability.
      All
      determinations, interpretations and constructions made by the Board in good
      faith shall not be subject to review by any person and shall be final, binding
      and conclusive on all persons. No member of the Board or the Committee or any
      person to whom duties hereunder have been delegated shall be liable for any
      action, interpretation or determination made in good faith, and such persons
      shall be entitled to full indemnification and reimbursement consistent with
      applicable law and in the manner provided in the Company’s Articles of
      Incorporation and Bylaws, as the same may be amended from time to time, or
      as
      otherwise provided in any agreement between any such member and the
      Company.

     

    
      STOCK
        SUBJECT
        TO THE PLAN.

    

     

    Stock
      Reserve.
      Subject
      to the provisions of Section 11 relating to adjustments upon changes in Common
      Stock, the shares of Common Stock that may be issued pursuant to
      Awards shall
      not
      exceed in the aggregate 10,000,000 shares
      of
      Common Stock. 

     

    Reversion
      of Stock to the Stock Reserve.
      If any
      Award shall for any reason expire or otherwise terminate, in whole or in part,
      without having been exercised in full, the shares of Common Stock not acquired
      under such Award shall revert to and again become available for issuance under
      the Plan.

     

    Source
      of Stock.
      The
      Common Stock subject to the Plan may be unissued stock or reacquired stock,
      bought on the market or otherwise.

     

    
      ELIGIBILITY.

    

     

    Eligibility
      for Specific Awards.
      Incentive Stock Options may be granted only to Employees. Awards other than
      Incentive Stock Options may be granted to Employees, Directors and
      Consultants.

     

    Ten
      Percent Stockholders.
      A Ten
      Percent Stockholder shall not be granted an Incentive Stock Option unless the
      exercise price of such Option is at least one hundred ten percent (110%) of
      the
      Fair Market Value of the Common Stock at the date of grant and the Option is
      not
      exercisable after the expiration of five (5) years from the date of grant.
      

     

     Limitations
      on Awards. The
      following limits apply to grants of Awards under this Plan: (i) the maximum
      number of shares of Common Stock which may be reserved for issuance to all
      directors, officers and Ten Percent Stockholders, in the aggregate, under this
      Plan, together with any other security-based compensation arrangement, shall
      not, at any time, exceed 10% of the outstanding shares of Common Stock on a
      non-diluted basis; and (ii) the maximum number of shares of Common Stock
which
      may
      be issued to all directors, officers and Ten Percent Stockholders, in the
      aggregate, under this Plan, together with any other security-based compensation
      arrangement, within any one year period, shall not exceed ten percent (10%)
      of
      the outstanding shares of Common Stock on a non-diluted basis.

     

    Consultants.
      

     

    A
      Consultant shall not be eligible for the grant of an Award if, at the time
      of
      grant, a Form S-8 Registration Statement under the Securities Act (“Form
      S-8”)
      is not
      available to register a resale of the Company’s securities issued to such
      Consultant because of the nature of the services that the Consultant is
      providing to the Company, or because the Consultant is not a natural person,
      or
      as otherwise provided by the rules governing the use of Form S-8, unless the
      Board determines both (i) that such grant (A) shall be registered in another
      manner under the Securities Act (e.g.,
      on a
      Form S-3 Registration Statement) or (B) does not require registration under
      the
      Securities Act in order to comply with the requirements of the Securities Act,
      if applicable, and (ii) that such grant complies with the securities laws of
      all
      other relevant jurisdictions.

     

    
      
        
        

      

      
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    Form
      S-8
      generally is available to consultants and advisors only if (i) they are natural
      persons; (ii) they provide bona fide services to the issuer, its parents, its
      majority-owned subsidiaries or majority-owned subsidiaries of the issuer's
      parent; and (iii) the services are not in connection with the offer or sale
      of
      securities in a capital-raising transaction, and do not directly or indirectly
      promote or maintain a market for the issuer's securities.

     

    
      OPTION
        PROVISIONS.

    

     

    Each
      Option Agreement shall be subject to the terms and conditions of this Plan.
      Each
      Option and Option Agreement shall be in such form and shall contain such terms
      and conditions as the Board shall deem appropriate. All Options shall be
      separately designated Incentive Stock Options or Nonqualified Stock Options
      at
      the time of grant, and, if certificates are issued, a separate certificate
      or
      certificates will be issued for the shares of Common Stock purchased on exercise
      of each type of Option. The provisions of separate Options need not be
      identical.

     

    Provisions
      Applicable to All Options.
      

     

    Consideration.
      The
      purchase price of the shares of Common Stock acquired pursuant to an Option
      shall be paid in cash in Dollars at the time the Option is exercised.

     

    Vesting
      Generally.
      An
      Option may (A) vest, and therefore become exercisable, in periodic installments
      that may, but need not, be equal, or (B) be fully vested at the time of grant.
      The Option may be subject to such other terms and conditions on the time or
      times when it may be exercised (which may be based on performance or other
      criteria) as the Board or Committee may deem appropriate. The vesting
      provisions, if any, of individual Options may vary. The provisions of this
      subsection 6(a)(ii) are subject to any Option Agreement provisions governing
      the
      minimum number of Common Stock as to which an Option may be exercised.

     

    Termination
      of Continuous Service.
      Unless
      otherwise provided in the Option Agreement, in the event an Optionholder’s
      Continuous Service terminates (other than upon the Optionholder’s death,
      Disability, retirement or as a result of a Change of Control), all Options
      held
      by the Optionholder shall immediately terminate; provided,
      however,
      that an
      Option Agreement may provide that if an Optionholder’s Continuous Service is
      terminated for reasons other than for cause, all vested Options held by such
      person shall continue to be exercisable until the earlier of the expiration
      date
      of such Option or 180 days after the date of such termination. All such
      vested Options not exercised within the period described in the preceding
      sentence shall terminate. 

     

    Disability
      or Death of Optionholder.
      Unless
      otherwise provided in the Option Agreement, in the event of an Optionholder’s
      Disability or death, all unvested Options shall immediately terminate, and
      all
      vested Options held by such person shall continue to be exercisable for
      12 months after the date of such Disability or death. All such vested
      Options not exercised within such 12-month period shall terminate.

     

    Retirement.
      Unless
      otherwise provided in the Option Agreement, in the event of the Optionholder’s
      retirement, all unvested Options shall automatically vest on the date of such
      retirement and all Options shall be exercisable for the earlier of 24 months
      after such retirement date or the expiration date of such Options. All such
      Options not exercised within the period described in the preceding sentence
      shall terminate.

     

    
      
        
        

      

      
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    Provisions
      Applicable to Incentive Stock Options.

     

    Term.
      Subject
      to the provisions of subsection 5(b) regarding Ten Percent Stockholders, no
      Incentive Stock Option shall be exercisable after the expiration of ten (10)
      years from the date it was granted. Further, no grant of an Incentive Stock
      Option shall be made under this Plan more than ten (10) years after the date
      the
      Plan is approved by the stockholders of the Company.

     

    Exercise
      Price of an Incentive Stock Option.
      Subject
      to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the
      exercise price of each Incentive Stock Option shall be not less than one hundred
      percent (100%) of the Fair Market Value of the Common Stock subject to the
      Option on the date the Option is granted.

     

    Transferability
      of an Incentive Stock Option.
      An
      Incentive Stock Option shall not be transferable except by will or by the laws
      of descent and distribution and shall be exercisable during the lifetime of
      the
      Optionholder only by the Optionholder.

     

    Incentive
      Stock Option $100,000 Limitation.
      Notwithstanding any other provision of the Plan or an Option Agreement, the
      aggregate Fair Market Value of the Common Stock with respect to which Incentive
      Stock Options are exercisable for the first time by an Optionholder in any
      calendar year, under the Plan or any other option plan of the Company or its
      Affiliates, shall not exceed $100,000. For this purpose, the Fair Market Value
      of the Common Stock shall be determined as of the time an Option is granted.
      The
      Options or portions thereof which exceed such limit (according to the order
      in
      which they were granted) shall be treated as Nonqualified Stock
      Options.

     

    Provisions
      Applicable to Nonqualified Stock Options.

     

    Exercise
      Price of a Nonqualified Stock Option.
      The
      exercise price of each Nonqualified Stock Option shall be not less than one
      hundred percent (100%) of the Fair Market Value of the Common Stock subject
      to
      the Option on the date the Option is granted. 

     

    Transferability
      of a Nonqualified Stock Option.
      A
      Nonqualified Stock Option shall be transferable, if at all, to the extent
      provided in the Option Agreement. If the Option Agreement does not provide
      for
      transferability, then the Nonqualified Stock Option shall not be transferable
      except by will or by the laws of descent and distribution and shall be
      exercisable during the lifetime of the Optionholder only by the
      Optionholder.

     

    
      PROVISIONS
        OF AWARDS
        OTHER THAN OPTIONS.

    

     

    Restricted
      Stock Awards.
      Each
      restricted stock Award Agreement shall be in such form and shall contain such
      restrictions, terms and conditions, if any, as the Board shall deem appropriate
      and shall be subject to the terms and conditions of this Plan. The terms and
      conditions of restricted stock Award Agreements may change from time to time,
      and the terms and conditions of separate restricted stock Award Agreements
      need
      not be identical, but each restricted stock Award Agreement shall include
      (through incorporation of provisions hereof by reference in the agreement or
      otherwise) the substance of each of the following provisions: 

     

    Consideration.
      A
      restricted stock Award may be awarded in consideration for past services
      actually rendered, or for future services to be rendered, to the Company or
      an
      Affiliate for its benefit.

     

    
      
        
        

      

      
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    Vesting.
      Common
      Stock awarded under the restricted stock Award Agreement may (A) be subject
      to a
      vesting schedule to be determined by the Board, or (B) be fully vested at the
      time of grant.

     

    Termination
      of Participant’s Continuous Service.
      Unless
      otherwise provided in the restricted stock Award Agreement, in the event a
      Participant’s Continuous Service terminates prior to a vesting date set forth in
      the restricted stock Award Agreement, any unvested restricted stock Award shall
      be forfeited and automatically transferred to and reacquired by the Company
      at
      no cost to the Company, and neither the Participant nor his or her heirs,
      executors, administrators or successors shall have any right or interest in
      the
      restricted stock Award. Notwithstanding the foregoing, unless otherwise provided
      in the restricted stock Award agreement, in the event a Participant’s Continuous
      Service terminates as a result of (A) being terminated by the Company for
      reasons other than for cause, (B) death, (C) Disability,
      (D) retirement, or (E) a Change of Control (subject to the provisions
      of Section 11(c) hereof), then any unvested restricted stock Award shall
      vest immediately upon such date.

     

    Transferability.
      Rights
      to acquire Common Stock under the restricted stock Award Agreement shall be
      transferable by the Participant only upon such terms and conditions as are
      set
      forth in the restricted stock Award Agreement, as the Board shall determine
      in
      its discretion, so long as Common Stock awarded under the restricted stock
      Award
      Agreement remain subject to the terms of the restricted stock Award
      Agreement.

     

    Grant
      of Stock Appreciation Rights.
      Stock
      appreciation rights to receive in shares of Common Stock the excess of the
      Fair
      Market Value of Common Stock on the date the rights are surrendered over the
      Fair Market Value of Common Stock on the date of grant may be granted to any
      Employee, Director or Consultant selected by the Board. A stock appreciation
      right may be granted (i) in connection and simultaneously with the grant of
      another Award, (ii) with respect to a previously granted Award, or
      (iii) independent of another Award. A stock appreciation right shall be
      subject to such terms and conditions not inconsistent with this Plan as the
      Board shall impose and shall be evidenced by a written stock appreciation right
      agreement, which shall be executed by the Participant and an authorized officer
      of the Company. The Board, in its discretion, may determine whether a stock
      appreciation right is to qualify as performance-based compensation as described
      in Section 162(m)(4)(C) of the Code and stock appreciation right agreements
      evidencing stock appreciation rights intended to so qualify shall contain such
      terms and conditions as may be necessary to meet the applicable provisions
      of
      Section 162(m) of the Code. The Board may, in its discretion and on such terms
      as it deems appropriate, require as a condition of the grant of a stock
      appreciation right that the Participant surrender for cancellation some or
      all
      of the Awards previously granted to such person under this Plan or otherwise.
      A
      stock appreciation right, the grant of which is conditioned upon such surrender,
      may have an exercise price lower (or higher) than the exercise price of the
      surrendered Award, may contain such other terms as the Board deems appropriate,
      and shall be exercisable in accordance with its terms, without regard to the
      number of shares, price, exercise period or any other term or condition of
      such
      surrendered Award.

     

    
      AVAILABILITY
        OF STOCK.
         Subject
        to
        the restrictions set forth in Section 4(a), during the terms of the Awards,
        the
        Company shall keep available at all times the number of shares of Common
        Stock
        required to satisfy such Awards.

    

     

    
      USE
        OF PROCEEDS
        FROM STOCK.

       

    

    Proceeds
      from the sale of Common Stock pursuant to Awards shall constitute general funds
      of the Company.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      MISCELLANEOUS.

    

     

    Exercise
      of Awards.
      Awards
      shall be exercisable at such times, or upon the occurrence of such event or
      events as the Board shall determine at or subsequent to grant. Awards may be
      exercised in whole or in part. Common Stock purchased upon the exercise of
      an
      Award shall be paid for in full at the time of such purchase. 

     

    Acceleration
      of Exercisability and Vesting.
      The
      Board shall have the power to accelerate the time at which an Award may first
      be
      exercised or the time during which an Award or any part thereof will vest in
      accordance with the Plan, notwithstanding the provisions in the Award stating
      the time at which it may first be exercised or the time during which it will
      vest.

     

    Stockholder
      Rights. 

     

    Options.
      Unless
      otherwise provided in and upon the terms and conditions in the Option Agreement,
      no Participant shall be deemed to be the holder of, or to have any of the rights
      of a holder with respect to, any Common Stock subject to an Option unless and
      until such Participant has satisfied all requirements for exercise of, and
      has
      exercised, the Option pursuant to its terms.

     

    Restricted
      Stock. Unless
      otherwise provided in and upon the terms and conditions in the restricted stock
      Award Agreement, a Participant shall have the right to receive all dividends
      and
      other distributions paid or made respecting such restricted stock, provided,
      however, no unvested restricted stock shall have any voting rights of a
      stockholder respecting such unvested restricted stock unless and until such
      unvested restricted stock become vested.

     

    No
      Employment or other Service Rights.
      Nothing
      in the Plan or any instrument executed or Award granted pursuant thereto shall
      confer upon any Participant any right to continue to serve the Company or an
      Affiliate in the capacity in effect at the time the Award was granted, or any
      other capacity, or shall affect the right of the Company or an Affiliate to
      terminate with or without notice and with or without cause (i) the employment
      of
      an Employee, (ii) the service of a Consultant to the Company or an Affiliate
      or
      (iii) the service of a Director of the Company or an Affiliate.

     

    Withholding
      Obligations.
      If the
      Company has or will have a legal obligation to withhold the taxes related to
      the
      grant, vesting or exercise of the Award, such Award may not be granted, vested
      or exercised in whole or in part, unless such tax obligation is first satisfied
      in a manner satisfactory to the Company. To the extent provided by the terms
      of
      an Award Agreement or Option Agreement, the Participant may satisfy any federal,
      state or local tax withholding obligation relating to the exercise or
      acquisition of Common Stock under an Award by any of the following means (in
      addition to the Company’s right to withhold from any compensation paid to the
      Participant by the Company) or by a combination of such means: (i) tendering
      a
      cash payment in Dollars; (ii) authorizing the Company to withhold Common Stock
      from the Common Stock otherwise issuable to the Participant as a result of
      the
      exercise or acquisition of Common Stock under the Award, provided, however,
      that
      no shares of Common Stock are withheld with a value exceeding the minimum amount
      of tax required to be withheld by law; or (iii) delivering to the Company owned
      and unencumbered Common Stock.

     

    Listing
      and Qualification of Stock.
      This
      Plan and the grant and exercise of Awards hereunder, and the obligation of
      the
      Company to sell and deliver Common Stock under such Awards, shall be subject
      to
      all applicable United States federal and state laws, rules and regulations,
      and
      any other laws applicable to the Company, and to such approvals by any
      government or regulatory agency as may be required. The Company, in its
      discretion, may postpone the issuance or delivery of Common Stock upon any
      exercise of an Award until completion of any stock exchange listing, or the
      receipt of any required approval from any stock exchange or other qualification
      of such Common Stock under any United States federal or state law rule or
      regulation as the Company may consider appropriate, and may require any
      individual to whom an Award is granted, such individual’s beneficiary or legal
      representative, as applicable, to make such representations and furnish such
      information as the Board may consider necessary, desirable or advisable in
      connection with the issuance or delivery of the Common Stock in compliance
      with
      applicable laws, rules and regulations.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Non-Uniform
      Determinations.
      The
      Board’s determinations under this Plan (including, without limitation,
      determinations of the persons to receive Awards, the form, term, provisions,
      amount and timing of the grant of such Awards and of the agreements evidencing
      the same) need not be uniform and may be made by it selectively among persons
      who receive, or are eligible to receive, Awards under this Plan, whether or
      not
      such persons are similarly situated.

     

    
      ADJUSTMENTS
        UPON CHANGES
        IN STOCK.

    

     

    Capitalization
      Adjustments.
      If any
      change is made in the Common Stock subject to the Plan, or subject to any Award,
      without the receipt of consideration by the Company (through
      merger, consolidation, reorganization, recapitalization, reincorporation, stock
      dividend, dividend in property other than cash, stock split, liquidating
      dividend, combination of stock, exchange of stock, change in corporate structure
      or other transaction), the Plan will be appropriately adjusted in the class(es)
      and maximum number of securities subject to the Plan pursuant to subsection
      4(a)
      and the maximum number of securities subject to award to any person pursuant
      to
      subsection 5(c), and the outstanding Awards will be appropriately adjusted
      in
      the class(es) and number of securities and price per stock of Common Stock
      subject to such outstanding Awards. The Board shall make such adjustments,
      and
      its determination shall be final, binding and conclusive. (The conversion of
      any
      convertible securities of the Company shall not be treated as a transaction
      “without receipt of consideration” by the Company.)

     

    Dissolution
      or Liquidation.
      In the
      event of a dissolution or liquidation of the Company, then all outstanding
      Awards shall terminate immediately prior to such event.

     

    Asset
      Sale, Merger, Consolidation or Reverse Merger.
      In the
      event of a Change of Control (as defined below), any unvested Awards shall
      vest
      immediately prior to the closing of the Change of Control, and the Board
shall
      have the power and discretion to provide for the Participant’s election
      alternatives regarding the terms and conditions for the exercise of, or
      modification of, any outstanding Awards granted hereunder, provided, however,
      such alternatives shall not affect the then current exercise provisions without
      such Participant’s consent. The Board may provide that Awards granted hereunder
      must be exercised in connection with the closing of such transaction, and that
      if not so exercised such Awards will expire. Any such determinations by the
      Board may be made generally with respect to all Participants, or may be made
      on
      a case-by-case basis with respect to particular Participants. For the purpose
      of
      this Plan, a “Change of Control” shall have occurred in
      the
      event one or more persons acting individually or as a group (i) acquires
      sufficient additional stock to constitute more than 50% of (A) the total Fair
      Market Value of all Common Stock issued and outstanding or (B) the total voting
      power of all shares of capital stock authorized to vote for the election of
      directors; (ii) acquires, in a 12-month period, 35% or more of the voting power
      of all shares of capital stock authorized to vote for the election of directors,
      or alternatively a majority of the members of the board is replaced during
      any
      12-month period by directors whose appointment was not endorsed by a majority
      of
      the members of the board; or (iii) acquires, during a 12-month period, more
      than
      40% of the total gross fair market value of all of the Company’s assets.
      Notwithstanding the foregoing, the provisions of this Section 11(c) shall not
      apply to (i) any transaction involving any stockholder that individually or
      as a
      group owns more than fifty percent (50%) of the outstanding Common Stock on
      the
      date this Plan is approved by the Company’s stockholders, until such time as
      such stockholder first owns less than forty percent (40%) of the total
      outstanding Common Stock, or (ii) any
      transaction undertaken for the purpose of reincorporating the Company under
      the
      laws of another jurisdiction, if such transaction does not materially affect
      the
      beneficial ownership of the Company's capital stock.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      AMENDMENT
        OF THE PLAN
        AND AWARDS.

    

     

    Amendment
      of Plan.
      The
      Board at any time, and from time to time, may amend the Plan. However, except
      as
      provided in Section 11 relating to adjustments upon changes in Common Stock,
      no
      amendment shall be effective unless approved by the stockholders of the Company
      to the extent stockholder approval is necessary to satisfy the requirements
      of
      Section 422 of the Code, Rule 16b-3 or any applicable Toronto Stock Exchange,
      Nasdaq, or other applicable securities exchange listing requirements.

     

    Stockholder
      Approval.
      The
      Board may, in its sole discretion, submit any other amendment to the Plan for
      stockholder approval, including, but not limited to, amendments to the Plan
      intended to satisfy the requirements of Section 162(m) of the Code and the
      regulations thereunder regarding the exclusion of performance-based compensation
      from the limit on corporate deductibility of compensation paid to certain
      executive officers.

     

    Contemplated
      Amendments.
      It is
      expressly contemplated that the Board may amend the Plan in any respect the
      Board deems necessary or advisable to provide eligible Employees with the
      maximum benefits provided or to be provided under the provisions of the Code
      and
      the regulations promulgated thereunder relating to Incentive Stock Options
      and/or to bring the Plan and/or Incentive Stock Options granted under it into
      compliance therewith.

     

    No
      Impairment of Rights.
      Rights
      under any Award granted before amendment of the Plan shall not be impaired
      by
      any amendment of the Plan unless the Participant consents in
      writing.

     

    Amendment
      of Awards.
      Subject
      to Section 3(b)(iii), the Board at any time, and from time to time, may amend
      the terms of any one or more Awards; provided, however, that the rights under
      any Award shall not be impaired by any such amendment unless the applicable
      Participant consents in writing.

     

    
      
        
          TERMINATION
            OR SUSPENSION
            OF THE PLAN.

        

      

    

     

    Plan
      Term.
      The
      Board may suspend or terminate the Plan at any time. Unless sooner terminated,
      the Plan shall terminate on the day before the tenth (10th) anniversary of
      the
      date the Plan is adopted by the stockholders of the Company. No Awards may
      be
      granted under the Plan while the Plan is suspended or after it is
      terminated.

     

    No
      Impairment of Rights.
      Suspension or termination of the Plan shall not impair rights and obligations
      under any Award granted while the Plan is in effect except with the written
      consent of the Participant.

     

    Savings
      Clause.
      This
      Plan is intended to comply in all aspects with applicable laws and regulations.
      In case any one more of the provisions of this Plan shall be held invalid,
      illegal or unenforceable in any respect under applicable law or regulation,
      the
      validity, legality and enforceability of the remaining provisions shall not
      in
      any way be affected or impaired thereby and the invalid, illegal or
      unenforceable provision shall be deemed null and void; however, to the extent
      permissible by law, any provision which could be deemed null and void shall
      first be construed, interpreted or revised retroactively to permit this Plan
      to
      be construed in compliance with all applicable laws so as to foster the intent
      of this Plan.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      EFFECTIVE
        DATE
        OF PLAN.

    

     

    1. The
      Plan
      shall become effective as determined by the Board, but no Award shall be
      exercised (or, in the case of a restricted stock Award, shall be granted) unless
      and until the Plan has been approved by the stockholders of the Company, which
      approval shall be within twelve (12) months before or after the date the Plan
      is
      adopted by the Board.

     

    
      CHOICE
        OF LAW.

    

     

    The
      law
      of the State of New York shall govern all questions concerning the construction,
      validity and interpretation of this Plan, without regard to such state’s
      conflict of laws rules.

     

    
      
        
        

      

      
        12Exhibit
      10.1

    

    EMPLOYMENT
      AGREEMENT

     

    EMPLOYMENT
      AGREEMENT
      dated as
      of December 13, 2006 between AMERICAN MEDICAL ALERT CORP., a New York
      corporation (the "Company"), with offices located at 3265 Lawson Boulevard,
      Oceanside, New York 11572 and HOWARD M. SIEGEL, an individual having an address
      at 131 Montauk Highway, West Hampton, New York 11977 ("Siegel").

     

    
      WITNESSETH:

    

     

    WHEREAS,
      the
      Company desires to retain the services of Siegel upon the terms and conditions
      stated herein; and

     

    WHEREAS,
      Siegel
      desires to continue to be employed by the Company upon the terms and conditions
      stated herein. 

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants, conditions and promises contained herein,
      the parties hereby agree as follows: 

     

    1.
      Employment;
      Location.
      The
      Company hereby employs Siegel for the period beginning as of January 1, 2007
      and
      ending December 31, 2009, unless earlier terminated pursuant hereto (the
      "Employment Period"). The Company and Siegel agree that Siegel may provide
      the
      services described in Section 2 below either remotely (e.g., offsite) or at
      the
      Company's current location in Oceanside, Long Island; provided, however, that
      if
      the Company elects to vacate its Oceanside facility, it will give Siegel 6
      months notice prior to the expiration of the existing lease currently in force,
      and will arrange for a physical office for Employee to render services in Nassau
      or Suffolk County together with secretarial access.

     

    2.
      Duties;
      Authority.
      During
      the Employment Period, subject to the authority of the Board of Directors of
      the
      Company (the "Board"), Siegel shall be employed as the Company's Senior Advisor.
      Siegel will render advisory or consultative services related to the Company’s
      strategic position, plans, prospects and objectives. Such services shall be
      rendered based upon discussions and input between Siegel on the one hand, and
      the Board and/or senior management of the Company on the other hand, and may
      include, without limitation, traveling, attendance at meetings or participation
      in conference calls, all as directed by the Board or senior management. Siegel
      shall have no authority to enter into any contracts or to otherwise bind the
      Company, except as expressly agreed to between Siegel on the one hand, and
      the
      Board and/or the Chief Executive Officer of the Company on the other
      hand.

     

    2A. Chairman
      of the Board Position.
      The
      Company recognizes that it is the intent and spirit of this Agreement that
      Siegel shall continue to serve as Chairman of the Board. Notwithstanding the
      foregoing, Siegel recognizes that neither the Board, nor any committee thereof,
      including the Nominating Committee (collectively, the "Committees"), nor any
      officer or agent of the Company, may legally commit, agree, recommend or support
      this action due to, among other matters, principles of corporate or common
      law,
      fiduciary obligations, the applicability of current or future legislation,
      changes in the nature of the Company's business, its management, Board or
      Committee composition or otherwise. Therefore, although it is recognized that
      the Company, acting through its Board and its Committees, may consistent with
      its fiduciary and other obligations and as further set forth above, strongly
      consider nominating Siegel to the Company's Board at the annual meeting of
      the
      Company's shareholders, Siegel recognizes and acknowledges, and he has sought
      independent counsel for this and the other matters set forth in this Agreement,
      that there shall be no liability to the Company, the Board, its members, the
      Committees, their members, advisors or other agents of the Company, should
      (i)
      Siegel not be nominated to the Board or not be elected therefore even if
      nominated, or (ii) Siegel not be appointed as the Chairman of the Board, even
      if
      elected to the Board.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.
      Hourly
      Commitment.
      (a)
      From January 1, 2007 through December 31, 2007, Siegel will devote his full
      time
      and attention during regular business hours to the business and affairs of
      the
      Company; 

     

    (b)
      From
      January 1, 2008 through December 31, 2008, Siegel shall devote 80 hours per
      month to the business and affairs of the Company.

    

    (c)
      From
      January 1, 2009 through December 31, 2009, Siegel shall devote 70 hours per
      month to the business and affairs of the Company.

    

    (d) The
      foregoing shall not prevent (i) the purchase, ownership or sale by Siegel of
      investments or securities of publicly held companies and any other business
      that
      is not competitive with the Company or any subsidiary of the Company so long
      as
      such investment does not, during the time that Siegel is a full time employee,
      require active participation of Siegel in the management of the business of
      such
      publicly held companies, does not interfere or conflict with the performance
      of
      Siegel's duties hereunder and does not otherwise violate any of the provisions
      of this Agreement, or (ii) Siegel's participation in philanthropic organizations
      to the extent that such participation does not interfere or conflict with the
      performance of Siegel's duties hereunder and does not otherwise violate any
      provision of this Agreement.

    

    4.
      Compensation.
      (a) In
      consideration of the duties and services to be performed by Siegel pursuant
      to
      Section 2 hereof, the Company agrees to pay, and Siegel agrees to accept the
      amounts set forth below, to be paid on a bi-weekly basis:

     

    (i) $300,000
      per annum during the period beginning January 1, 2007 and ending
      December 31, 2007;

     

    (ii) $225,000
      per annum during the period beginning January 1, 2008 and ending
      December 31, 2008, and 

     

    (iii) $175,000
      per annum during the period beginning January 1, 2009 and ending
      December 31, 2009.

     

    (b)
      As
      additional compensation, in each case, based on the Board's assessment of
      Siegel's performance in relation to achievement of the following EBIT (as
      hereinafter defined) targets:

     

    (i) with
      respect to the fiscal year ending December 31, 2007, the following number of
      shares of the Company's common stock based on the Company's EBIT for such fiscal
      year ("2007 EBIT") meeting or exceeding the following targets: 115% of the
      Company's EBIT for the fiscal year ending December 31, 2006 ("2006 EBIT") -
      6,000 shares, and an additional 400 shares for each additional one (1%) percent
      growth in 2007 EBIT over 2006 EBIT, up to a maximum of 10,000 shares if 2007
      EBIT equals to or exceeds 125% if 2006 EBIT; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) with
      respect to the fiscal year ending December 31, 2008, the following number of
      shares of the Company's common stock based on the Company's EBIT for such fiscal
      year ("2008 EBIT") meeting or exceeding the following targets: 115% of the
      2007
      EBIT - 4,500 shares, and an additional 300 shares for each additional one (1%)
      percent growth in 2008 EBIT over 2007 EBIT, up to a maximum of 7,500 shares
      if
      2008 EBIT equals to or exceeds 125% of 2007 EBIT; and

     

    (iii) with
      respect to the fiscal year ending December 31, 2009, the following number of
      shares of the Company's common stock based on the Company's EBIT for such fiscal
      year ("2009 EBIT") meeting or exceeding the following targets: 115% of the
      Company's 2008 EBIT - 3,600 shares, and an additional 240 shares for each
      additional one (1%) percent growth in 2009 EBIT over 2008 EBIT, up to a maximum
      of 6,000 shares if 2009 EBIT equals to or exceeds 125% of 2008
      EBIT.

     

    In
      the
      event that the minimum EBIT growth percentage is not met for a particular fiscal
      year, Siegel will have the opportunity to earn back the minimum performance
      bonus grant for such fiscal year as follows: if the EBIT growth percentage
      in
      the subsequent fiscal year combined with the EBIT growth percentage of the
      prior
      fiscal year meets or exceeds 30%, then the number of percentage points needed
      to
      be added to the prior fiscal year's EBIT growth percentage to equal up to 15%,
      shall be deducted from the subsequent fiscal year EBIT growth percentage and
      added to the prior fiscal year EBIT growth percentage, and Siegel shall be
      granted such number of shares of common stock for the prior fiscal year based
      on
      such year's formula, and an additional number of shares of common stock
      determined based on the above formula and the reduced subsequent year EBIT
      growth percentage.

    

    For
      the
      sake of clarity, and as an example only, if 2006 EBIT equals $2,000,000, 2007
      EBIT equals $2,400,000, 2008 EBIT equals $2,500,000 and 2009 EBIT equals
      $3,200,000, then Siegel shall be entitled to 8,000 shares for 2007 (2007 EBIT
      =
      120% of 2006 EBIT; 6,000 shares +(5 x 400 shares)), 4,500 shares for 2008 (2008
      EBIT is 104% of 2007 EBIT, but, 2009 EBIT = 128% of 2008 EBIT, so 11% of the
      2009 EBIT growth is added to the 2008 EBIT growth, for a total of 115%), and
      4,080 shares for 2009 (3,600 shares + (2 x 240 shares) since 2009 EBIT = 117%
      of
      2008 EBIT (128% - the 11% added to 2008 EBIT)).

    

    For
      the
      purposes of this Agreement, "EBIT" shall mean for each fiscal year, the
      Company's earnings before deduction of interest and taxes, as set forth in
      the
      consolidated audited financial statements of the Company, for such fiscal year,
      and before any adjustment for the effect of the additional compensation pursuant
      to paragraph 4(b) hereof, determined in accordance with generally accepted
      accounting principles, as consistently applied by the Company.

    

    (c)
      In
      addition to the compensation provided for in Section 4(b), the Board may in
      its
      discretion grant additional shares, not to exceed an aggregate total of 50,000
      shares (inclusive of the number of shares granted pursuant to the EBIT growth
      targets set forth in Section 4(b) hereof), based on significant contributions
      made by Siegel.

     

    Any
      shares to be issued pursuant to Sections 4(b) or 4(c) hereof, shall be issued
      pursuant to, and be subject to the terms of, the Company's 2005 Stock Incentive
      Plan. The award of shares pursuant to this Agreement shall be evidenced by
      a
      stock purchase agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)
      The
      additional compensation to be paid pursuant to paragraph 4(b) hereof shall
      be
      payable and/or issuable, as the case may be, promptly following the availability
      of the audited financial statements relating to the applicable fiscal year
      of
      Company. To the extent any such fiscal year is not entirely included in the
      Employment Period, because for example Siegel's employment ceases other than
      in
      accordance with paragraph 9(a) hereof, then subject to the determination of
      the
      Board as set forth in Section 4(b) above, Siegel may be entitled to receive
      the
      pro rata portion of such additional compensation determined by multiplying
      the
      addi-tional compensation, computed for the applicable fiscal year, by a fraction
      whose numerator is the number of days in such fiscal year included in the
      Employment Period and whose denominator is the total number of days in such
      fiscal year.

     

    (e)
      The
      compensation provided for herein shall be in addition to any retirement, profit
      sharing, insurance or similar benefit which may at any time be payable to Siegel
      pursuant to any plan or policy of the Company relating to such benefits, which
      additional benefits shall be made available to Siegel on the same basis as
      they
      are generally made available to executive officers of the Company. In the event
      Siegel is not eligible to so participate in the Company's health insurance
      plan,
      the Company will pay the cost of COBRA (up to a total of 18 months, but not
      beyond the term of this Agreement). In the event Siegel is not eligible for
      COBRA coverage or such coverage expires, then during such time through the
      end
      of the Employment Period, the Company will reimburse Siegel for the cost of
      supplemental health insurance (including prescription drug coverage) to the
      extent needed to supplement Siegel's Medicare coverage so as to provide him
      with
      coverage equivalent or as nearly equivalent as possible under the Medicare
      program, to that he would have had as a full time employee of the
      Company.

     

    (f)
      The
      Company shall reimburse Siegel in accordance with the Company's normal policies
      for all reasonable travel, hotel, meal and other expenses properly incurred
      by
      him in the performance of his duties hereunder. Any request for reimbursement
      must be submitted to and approved by, the Company's Chief Financial Officer,
      whose decision to approve or disapprove a reimbursement shall be subject to
      review by the Company's audit committee. 

     

    (g)
      The
      Company shall provide Siegel with the use of a suitable automobile leased by
      the
      Company, including any insurance costs, with all business expenses of operation
      such as, gas, oil and repair reimbursed by the Company in accordance with
      procedures set forth in sub paragraph 4(f) above.

     

    5.
      Vacation.
      Siegel
      shall be entitled to four (4) weeks vacation, in each fiscal year, to be taken
      at such time as is mutually convenient to the Company and Siegel.

     

    6.
      Death.
      In the
      event of the death of Siegel during the Employment Period, this Agreement and
      the employment of Siegel hereunder shall terminate on the date of such death.
      The estate of Siegel (or such person(s) as Siegel shall designate in writing
      in
      applicable testamentary documents) shall be entitled to receive, and the Company
      agrees to continue to pay, in accordance with the normal pay practice of the
      Company, the base salary of Siegel provided by paragraph 4(a) and the additional
      benefits (other than health insurance), if any, provided by paragraph 4(e),
      in
      each instance for a period of one (1) year following the date of death of
      Siegel.

     

    7.
      Disability.
      In the
      event that Siegel shall be unable to perform because of illness or incapacity,
      physical or mental, the duties and services to be performed by him hereunder
      for
      a period of one hundred and eighty (180) consecutive days or an aggregate period
      of one hundred and eighty (180) days in any 12 month period, the Company may
      terminate this Agreement after the expiration of such period. Upon such
      termination, Siegel shall be entitled to receive the base salary provided by
      paragraph 4(a) and the additional benefits, if any, provided by paragraph 4(e),
      in each instance for a period of one (1) year following termination due to
      disability.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.
      Non-Competition,
      Non-Solicitation and Non-Disclosure.
      (a)
      Siegel covenants and agrees that, throughout the Employment Period and for
      a
      period of twelve (12) months thereafter, he will not, directly or indirectly,
      own, manage, operate or control, or participate in the ownership, management,
      operation or control of, any business competing directly in the United States
      of
      America with the business conducted by the Company or any subsidiary of the
      Company as such business is conducted during the Employment Period; provided,
      however,
      that
      Siegel may own not more than 5% of the outstanding securities of any class
      of
      any corporation engaged in any such business, if such securities are listed
      on a
      national securities exchange or market regularly traded in the Over the Counter
      market by a member of a national securities association.

     

    (b)
      Siegel
      covenants and agrees that, throughout the Employment Period and for a period
      of
      twelve (12) months thereafter, he will not directly or indirectly solicit,
      entice or induce any person who on the date of termination of employment of
      Siegel is, or within the last three months of Siegel's employment by the Company
      was, associated with or employed by the Company or any subsidiary of the Company
      to leave the employ of or terminate his association with the Company, or any
      subsid-iary of the Company, solicit the employment of any such person on his
      own
      behalf or on behalf of any other business enterprise.

     

    (c)
      Siegel
      covenants and agrees that, throughout the Employment Period and at all times
      thereafter, he will not use, or disclose to any third party, trade secrets
      or
      confidential information of the Company, including, but not limited to,
      confidential information or trade secrets belonging or relating to the Company,
      its subsidiaries, affiliates, customers and clients or proprietary processes
      or
      procedures of the Company, its subsidiaries, affiliates, customers and clients.
      Proprietary processes and procedures shall include, but shall not be limited
      to,
      all information which is known or intended to be known only by employees of
      the
      Company, its respective subsidiaries and affiliates or others in a confidential
      relationship with the Company or its respective subsidiaries and affiliates
      which relates to business matters.

     

    (d)
      If
      any
      term of this paragraph 8 is found by any court having jurisdiction to be too
      broad, then and in that case, such term shall nevertheless remain effective,
      but
      shall be considered amended (as to the time or area or otherwise, as the case
      may be) to a point considered by said court as reason-able, and as so amended
      shall be fully enforceable.

     

    (e)
      In
      the
      event that Siegel shall violate any provision of this Agreement (including
      but
      not limited to the provisions of this paragraph 8), then Siegel hereby consents
      to the granting of a temporary or permanent injunction against him by a court
      of
      competent jurisdiction prohibiting him from violating any provision of this
      Agreement. In any proceeding for an injunction and upon any motion for a
      temporary or permanent injunction, Siegel agrees that his ability to answer
      in
      damages shall not be a bar or interposed as a defense to the granting of such
      temporary or permanent injunction against Siegel. Siegel further agrees that
      the
      Company will not have an adequate remedy at law in the event of any breach
      by
      Siegel hereunder and that the Company will suffer irreparable damage and injury
      if Siegel breaches any of the provisions of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f)
      The
      provisions of this Paragraph 8 shall survive the expiration or termination
      of
      this Agreement.

     

    9.
      Termination.
      (a) The
      Company may terminate this Agreement without liability (other than for the
      base
      salary pro-vided in paragraph 4(a) accrued to the date of termination) in the
      event of (i) a material breach by Siegel of the provisions of this Agreement,
      which breach shall not have been cured by Siegel within thirty (30) days, or
      such shorter period as determined by the Board in emergency situations,
      following notice thereof by the Company to Siegel, (ii) the commission of gross
      negligence or bad faith by Siegel in the course of his employment hereunder,
      (iii) the commission by Siegel of a criminal act of fraud, theft or dishonesty
      (iv) failure by Siegel to obey the reasonable and lawful directions of the
      Board, (v) Siegel shall be convicted of (or plead nolo contendere
      to) any
      felony, or misdemeanor involving moral turpitude if such misdemeanor results
      in
      material financial harm to or materially adversely affects the goodwill of
      the
      Company, or (vi) any violation by Siegel of the Company’s Code of Business
      Conduct and Ethics or the Company’s sexual harassment and other forms of
      harassment policy or drug and alcohol abuse policy, as set forth in the
      Company’s employee handbook.

     

    (b)
      Employee may terminate this Agreement at anytime without liability to the
      Company, upon ninety (90) days prior written notice to the Company. Upon such
      termination, (i) the Company shall have no liability or obligations pursuant
      to
      this Agreement, other than with respect to the base salary provided in Paragraph
      4(a) accrued to the date of termination and any additional compensation, if
      any,
      to be paid pursuant to Paragraph 4(b), subject to the provision of Paragraph
      4(d), and (ii) this Agreement shall terminate and shall be of no further force
      or effect, except with respect to the provisions hereof which expressly state
      that they survive the expiration or termination of this Agreement.

     

    10.
      No
      Impediments.
      Siegel
      warrants and represents that he is free to enter into this Agreement and to
      perform the services contemplated thereby and that such actions will not
      constitute a breach of, or default under, any existing agreement.

     

    11.
      No
      Waiver.
      The
      failure of any of the parties hereto to enforce any provision hereof on any
      occasion shall not be deemed to be a waiver of any preceding or succeeding
      breach of such provision or of any other provision.

     

    12.
      Entire
      Agreement.
      This
      Agreement constitutes the entire agreement and understanding of the parties
      hereto and no amendment, modification or waiver of any provision herein shall
      be
      effective unless in writing, executed by the party charged
      therewith.

     

    13.
      Governing
      Law.
      This
      Agreement shall be con-strued, interpreted and enforced in accordance with
      and
      shall be governed by the laws of the State of New York applicable to agreements
      to be wholly performed therein without giving effect to principles of conflicts
      of law.

     

    14.
      Binding
      Effect.
      This
      Agreement shall bind and inure to the benefit of the parties, their successors
      and assigns.

     

    15.
      Assignment
      and Delegation of Duties.
      This
      Agreement may not be assigned by the parties hereto except that the Company
      shall have the right to assign this Agreement to any successor in connection
      with a sale or transfer of all or sub-stantially all of its assets, a merger
      or
      consolidation. This Agreement is in the nature of a personal services contract
      and the duties imposed hereby are nondelegable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    16.
      Paragraph
      Headings.
      The
      paragraph headings herein have been inserted for convenience of reference only
      and shall in no way modify or restrict any of the terms or provi-sions
      hereof.

     

    17.
      Notices.
      Any
      notice under the provisions of this Agreement shall be in writing, shall be
      sent
      by one of the following means, directed to the address set forth on the first
      page of this Agreement or to such other address as shall be designated hereunder
      by notice to the other party, effective upon actual receipt and shall be deemed
      conclusively to have been given: (i) on the first business day following the
      day
      timely deposited for overnight delivery with Federal Express (or other
      equivalent national overnight courier service) or United States Express Mail,
      with the cost of delivery prepaid or for the account of the sender; (ii) on
      the
      fifth business day following the day duly sent by certified or registered United
      States mail, postage prepaid and return receipt requested; or (iii) when
      otherwise actually received by the addressee on a business day (or on the next
      business day if received after the close of normal business hours or on any
      nonbusiness day).

     

    18.
      Unenforceability;
      Severability.
      If any
      provision of this Agreement is found to be void or unenforceable by a court
      of
      competent jurisdiction, the remaining provisions of this Agreement shall,
      nevertheless, be binding upon the parties with the same force and effect as
      though the unenforceable part has been severed and deleted.

     

    19.
      Advice
      of Independent Advisors.
      Employee acknowledges that he has had the opportunity to review the terms of
      this Agreement with his independent advisors, including attorneys, accountants
      and compensation consultants.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      as
      of the date first above writ-ten. 

     

    
      	 	 	 
	 	EMPLOYEE:
	 
 	 
 	 
 
	 	By:  	/s/ Howard
              M.
              Siegel  
	 	
              
Howard
              M. Siegel

    

     

    
      
        	 	 	 
	 	COMPANY:
	 	 
	 	AMERICAN
                MEDICAL
                ALERT CORP.
	 
 	 
 	 
 
	 	By:  	/s/ Richard
                Rallo  
	 	
                

                Name: Richard
                  Rallo

                Title: Chief
                  Financial Officer

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