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INTEGRATED ALARM SERVICES GROUP, INC.

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT made as of this 2nd day of March 2005 by and between
INTEGRATED ALARM SERVICES GROUP, INC., a Delaware corporation, having an office
at One Capital Center, 99 Pine Street, Albany, New York 12207 (hereinafter
referred to as "Employer") and Bruce Quay, an individual residing at 6 Shaker
Bay Road, Latham, New York 12110 (hereinafter referred to as "Employee");

W I T N E S S E T H:

WHEREAS, Employer desires to employ Employee as the Chief Operating Officer of
Employer; and

WHEREAS, Employee is willing to be employed as the Chief Operating Officer of
Employer in the manner provided for herein, and to perform the duties of the
Chief Operating Officer of Employer upon the terms and conditions herein set
forth;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein set
forth it is agreed as follows:

1. Employment of Chief Operating Officer. Employer hereby employs Employee as
Chief Operating Officer.

2. Term.  (a) Subject to Section 9 and Section 10 below, the term of this
Agreement shall be for a period of thirty-six (36) months commencing on a date
to be agreed upon by Employee and Employer but no later than April 4, 2005 (the
A Term@). The Term of this Agreement shall be automatically extended for
additional one (1) year periods, unless either party notifies the other in
writing at least one (1) year prior to the expiration of the then existing Term
of its intention not to extend the Term. During the Term, Employee shall devote
substantially all of his business time and efforts to Employer and its
subsidiaries and affiliates.

3. Duties. The Employee shall perform those functions generally performed by
persons of such title and position, shall attend all meetings of the
stockholders and the Board, shall perform any and all related duties and shall
have any and all powers as may be prescribed by resolution of the Board, and
shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly to the Employer=s President and Chief Executive Officer
and ultimately to the Board. Employee shall not enter into any transaction on
behalf of the Employer, except as authorized by the CEO, other than in the
ordinary course of business.

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4. Compensation.

a. (i) Employee shall be paid a minimum of $360,000 per year during the Term of
this Agreement. Employee shall be paid periodically in accordance with the
policies of the Employer during the term of this Agreement, but not less than
monthly.

(ii) Employee is eligible for an annual bonus, if any, which will be determined
and paid in accordance with policies set from time to time by the Board.

b. Employer shall include Employee in its health insurance program available to
Employer's executive officers and shall pay 100% of the premiums for such
program.

c. Employee shall have the right to participate in any other employee benefit
plans established by Employer.

d. Employee shall be issued 25,000 options to purchase the Common Stock of
Employer which options shall have an exercise price equal to the closing bid
price of the Employer=s common stock on the day prior to the date hereof. The
options shall vest 1/3 upon issuance, 1/3 one year from issuance and 1/3 two
years from issuance.

e. (i) In the event of a "Change of Control" whereby:

(A) A person (other than a person who is an officer or a Director of Employer on
the effective date hereof), including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes, or obtains the right to become,
the beneficial owner of Employer securities having 51% or more of the combined
voting power of then outstanding securities of the Employer that may be cast for
the election of directors of the Employer;

(B) At any time, a majority of the Board-nominated slate of candidates for the
Board is not elected;

(C) Employer consummates a merger in which it is not the surviving entity;

(D) Substantially all Employer's assets are sold; or

(E) Employer's stockholders approve the dissolution or liquidation of Employer;
or

(F) Timothy McGinn ceases to be CEO of Employer; then
 

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         (ii)  (A) All stock options and warrants ("Rights") granted by Employer
to Employee under any plan or otherwise prior to the effective date of the
Change of Control, shall become vested, accelerate and become immediately
exercisable.
 
    (B) If at any time within 6 months of the said Change of Control, Employee
is not retained by Employer or the surviving entity, as applicable, under terms
and conditions substantially similar to those herein, or if Employee=s duties
require employee to move to a location not acceptable to Employee, then in
addition, Employee shall be eligible to receive a one-time cash bonus, equal on
an after-tax basis to his average compensation for the three previous fiscal
years. Such compensation shall include salary, bonus, and any other compensation
pursuant hereto. Said bonus shall be paid within thirty (30) days of the Change
of Control.

5. Expenses. Employee shall be reimbursed for all of his actual out-of-pocket
expenses incurred in the performance of his duties hereunder, provided such
expenses are acceptable to Employer, which approval shall not be unreasonably
withheld, for business related travel and entertainment expenses, and that
Employee shall submit to Employer reasonably detailed receipts with respect
thereto.

6. Vacation. Employee shall be entitled to receive four (4) weeks paid vacation
time after each year of employment upon dates agreed upon by Employer. Upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at the time of employment
separation.

7. Secrecy. At no time shall Employee disclose to anyone any confidential or
secret information (not already constituting information available to the
public) concerning the internal affairs, business operations, and trade secrets
of Employer.

8. Covenant Not to Compete.

(a) Subject to, and limited by, Section 10(b), Employee will not, at any time,
during the term of this Agreement, and for one (1) year thereafter, either
directly or indirectly, engage in, with or for any enterprise, institution,
whether or not for profit, business, or company, competitive with the business
(as identified herein) of Employer as such business may be conducted on the date
thereof, as a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, or otherwise of or through any
corporation, partnership, association, sole proprietorship or other entity;
provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange, the NASDAQ
Stock Market, or the over-the-counter bulletin board or any successor thereto.
As used in this Agreement, the business of Employer shall be deemed to include
wholesale monitoring and related support services, and financing solutions and
products, within the security alarm industry.

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(b) For a period one year from the date of termination of this agreement
Employee shall not contact or solicit any of the Employers dealers, customers,
employees or suppliers.

9. Termination.

a. Termination by Employer 

(i) Employer may terminate this Agreement upon written notice for Cause. For
purposes hereof, "Cause" shall mean (A) Employee's failure or refusal to perform
his/her duties and responsibilities as set forth in paragraph 3 hereof, or the
failure of Employee to devote all of his/her business time and attention
exclusively to the business and affairs of the Employer in accordance with the
terms hereof, in each case if such failure or refusal is not cured (if curable)
within 10 days after receipt of written notice thereof to Employee by the
Employer; (B) the willful misappropriation of the funds or property of the
Employer (except for immaterial amounts of office supplies); (C) the use of
alcohol or illegal drugs, interfering with the performance of Employees
obligations under this Agreement; (D) the conviction in a court of law of, or
entering a plea of guilty or nolo contendere, to a charge that either Employee
committed a felony or any crime involving moral turpitude, dishonesty or theft;
(E) the commission in bad faith by Employee of any act which injures the
reputation, business or business relationships of the Employer, or the
commission of an act which constitutes a nonconformance with the Employer=s
policies against racial or sexual discrimination or harassment; (F) the gross or
habitual misconduct or gross or habitual negligence by Employee in the
performance of his/her duties, continuing after warning; (G) Employee=s
engagement in any activity which constitutes a conflict of interest with the
Employer; and (H) any breach (not covered by any of the classes (a) through (a)
above) of any provision of this Agreement not cured within ten (10) days after
written notice thereof; Notwithstanding anything to the contrary in this Section
9(a)(i), Employer may not terminate Employee's employment under this Agreement
for Cause unless Employee shall have first received notice from the Board
advising Employee of the specific acts or omissions alleged to constitute Cause,
and such acts or omissions continue after Employee shall have had a reasonable
opportunity (at least 10 days from the date Employee receives the notice from
the Board) to correct the acts or omissions so complained of. However, Employee
shall have the right at any time during such notice periods, to relieve the
Employee of his office duties and responsibilities and to place Employee on a
paid leave of absence status.
 
            (ii) This agreement automatically shall terminate upon the death of
Employee, except that Employee's estate shall be entitled to receive any amount
accrued under Section 4(a).

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b. Termination by Employee

(i) Employee shall have the right to terminate his employment under this
Agreement upon 30 days' notice to Employer given within 90 days following the
occurrence of any of the following events (A) through (F) or within six month
following the occurrence of event (G):
 
    (A) Employee is not elected or retained as Chief Operating Officer.
 
    (B) Employer acts to materially reduce Employee's duties and
responsibilities hereunder. Employee's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
Employer is (or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have the same
duties and responsibilities with respect to Employer's business, and Employee
shall report directly to the chief executive officer and/or board of directors
of the entity (or individual) that acquires Employer or its assets.
 
    (C) Employer acts to change the geographic location of the performance of
Employee's duties from the Albany, New York area, subject to necessary travel
requirements of his position and duties hereunder. For purposes of this
Agreement, the Albany, New York area shall be deemed to be the area within 60
miles of the current address of the Employer as set forth above.
 
    (D) A Material Reduction (as hereinafter defined) in Employee's rate of base
compensation, or Employee's other benefits. "Material Reduction" shall mean a
ten percent (10%) differential;
 
    (E) A failure by Employer to obtain the assumption of this Agreement by any
successor;
 
    (F) A material breach of this Agreement by Employer, which is not cured
within thirty (30) days of written notice of such breach by Employer;
 
    (G) A Change of Control.

(ii) Anything herein to the contrary notwithstanding, Employee may terminate
this Agreement upon thirty (30) days written notice.

(iii) If Employee shall terminate this Agreement under Section 9(b)(i), Employee
shall be entitled to receive twelve months salary. Other than the payment of
twelve months salary to Employee and the immediate vesting of all options of
Employee, Employer shall have no further obligation to compensate Employee
pursuant to Section 4 above. If Employee shall terminate this Agreement pursuant
to Section 9(b)(ii), Employee shall only be entitled to any accrued and unpaid
compensation as of the date of termination as provided in Section 4(a)(i).

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10. Consequences of Breach by Employer; Employment Termination

a. If this Agreement is terminated pursuant to Section 9(b)(i) hereof, or if
Employer shall terminate Employee's employment under this Agreement in any way
that is a breach of this Agreement by Employer, the following shall apply:

(i) Employee shall be entitled to payment of twelve months salary; and

(ii) Employee shall be entitled to payment of any previously declared bonus as
provided in Section 4(a) above.

b. In the event of termination of Employee's employment pursuant to Section
9(b)(i) of this Agreement, the provisions of Section 8 shall not apply to
Employee.

11. Remedies. Employer recognizes that because of Employee's special talents,
stature and opportunities in the alarm industry, and because of the special
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on the Company's results of operations,
in the event of termination by Employer hereunder (except under Section 9(a)(i)
or (iii), or in the event of termination by Employee under Section 9(b)(i)
before the end of the agreed term), the Employer acknowledges and agrees that
the provisions of this Agreement regarding further payments of base salary,
bonuses and the exercisability of rights constitute fair and reasonable
provisions for the consequences of such termination, do not constitute a
penalty, and such payments and benefits shall not be limited or reduced by
amounts' Employee might earn or be able to earn from any other employment or
ventures during the remainder of the agreed term of this Agreement.

12. Excise Tax. In the event that any payment or benefit received or to be
received by Employee in connection with a termination of his employment with
Employer would constitute a "parachute payment" within the meaning of Code
Section 280G or any similar or successor provision to 280G and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.

13. Attorneys' Fees and Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which he may be entitled.

14. Entire Agreement; Survival. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated herein and
supersedes, effective as of the date hereof any prior agreement or understanding
between Employer and Employee with respect to Employee's employment by Employer.
The unenforceability of any provision of this Agreement shall not effect the
enforceability of any other provision. This Agreement may not be amended except
by an agreement in writing signed by the
 

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Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future rights.
 
b. The provisions of Sections 4, 7, 8, 9(a)(ii), 9(c), 10, 11, 12, 14, 16, 17
and 18 shall survive the termination of this Agreement.

15. Assignment. This Agreement shall not be assigned to other parties.

16. Governing Law. This Agreement and all the amendments hereof, and waivers and
consents with respect thereto shall be governed by the internal laws of the
State of New York, without regard to the conflicts of laws principles thereof.

17. Notices. All notices, responses, demands or other communications under this
Agreement shall be in writing and shall be deemed to have been given when

a. delivered by hand;

b. sent be telex or telefax, (with receipt confirmed), provided that a copy is
mailed by registered or certified mail, return receipt requested; or

c. received by the addressee as sent be express delivery service (receipt
requested) in each case to the appropriate addresses, telex numbers and telefax
numbers as the party may designate to itself by notice to the other parties:

(i) if to the Employer:   
           Integrated Alarm Services Group, Inc.
99 Pine Street, 5th Floor
Albany, New York
Attention: Timothy McGinn
Telefax: (518) 426-1515
Telephone:(518) 426-0953

Gersten, Savage, Kaplowitz,
Wolf & Marcus LLP
101 East 52nd Street
9th Floor
New York, New York 10022
Attention: Arthur S. Marcus, Esq.
Telefax: (212) 980-5192
Telephone: (212) 752-9700

(ii) if to the Employee:
                Bruce Quay
6 Shaker Bay Road
Latham, New York 12110

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18. Severability of Agreement. Should any part of this Agreement for any reason
be declared invalid by a court of competent jurisdiction, such decision shall
not affect the validity of any remaining portion, which remaining provisions
shall remain in full force and effect as if this Agreement had been executed
with the invalid portion thereof eliminated, and it is hereby declared the
intention of the parties that they would have executed the remaining portions of
this Agreement without including any such part, parts or portions which may, for
any reason, be hereafter declared invalid.
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.

INTEGRATED ALARM SERVICES GROUP, INC.

By: /s/ Timothy M. McGinn___________________    
Timothy M. McGinn
Co-Chief Executive Officer

/s/ Bruce Quay                            
Bruce Quay
 

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