Document:

EXHIBIT 10.1

                 ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN

SECTION 1.        INTRODUCTION

         1.1 Establishment. Effective as provided in Section 17, Itec
Environmental Group, Inc., a Delaware corporation (the "Company"), hereby
establishes this plan of stock-based compensation incentives for selected
Eligible Participants of the Company and its affiliated corporations. This Plan
shall be known as the Itec Environmental Group, Inc. 2003 Stock Plan (the
"Plan").

         1.2 Purpose. The purpose of this Plan is to promote the best interest
of the Company, and its stockholders by providing a means of non-cash
remuneration to selected Eligible Participants.

SECTION 2.        DEFINITIONS

         The following definitions shall be applicable to the terms used in this
Plan:

         2.1 "Affiliated Corporation" means any corporation that is either a
parent corporation with respect to the Company or a subsidiary corporation with
respect to the Company (within the meaning of Sections 424(e) and (f),
respectively, of the Internal Revenue Code).

         2.2 "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.

         2.3 "Committee" means a committee designated by the Board of Directors
to administer this Plan or, if no committee is so designated, the Board of
Directors. Any Committee member who is also an Eligible Participant may receive
an Option or Stock Award only if he abstains from voting in favor of a grant to
himself, and the grant is determined and approved by the remaining Committee
members. The Board of Directors, in its sole discretion, may at any time remove
any member of the Committee and appoint another Director to fill any vacancy on
the Committee.

         2.4 "Common Stock" means the Company's $.001 par value common stock.

         2.5 "Company" means Itec Environmental Group, Inc., a Delaware
corporation.

         2.6 "Effective Date" means the effective date of this Plan, as set
forth in Section 17 hereof.

         2.7 "Eligible Participant" means any employee, director, officer,
consultant, or advisor of the Company who is determined (in accordance with the
provisions of Section 4 hereof) to be eligible to receive an Option or Stock
Award hereunder. Eligible Participants shall only be natural persons.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 1 OF 8

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         2.8 "Option" means the grant to an Eligible Participant of a right to
acquire shares of Common Stock.

         2.9 "Plan" means this Itec Environmental Group, Inc. 2003 Stock Plan,
dated October 29, 2002.

         2.10 "Stock Award" means the grant to an Eligible Participant of shares
of Common Stock issuable directly under this Plan rather than upon exercise of
an Option.

         Wherever appropriate, words used in this Plan in the singular may mean
the plural, the plural may mean the singular, and the masculine may mean the
feminine.

SECTION 3.        ADOPTION AND ADMINISTRATION OF THIS PLAN

         Upon adoption by the Company's Board of Directors, this Plan became
effective as of February 1, 2003. In the absence of contrary action by the Board
of Directors, and except for action taken by the Committee pursuant to Section 4
in connection with the determination of Eligible Participants, any action taken
by the Committee or by the Board of Directors with respect to the
implementation, interpretation or administration of this Plan shall be final,
conclusive and binding.

SECTION 4.        ELIGIBILITY AND AWARDS

         The Committee shall determine at any time and from time to time after
the effective date of this Plan: (i) the Eligible Participants; (ii) the number
of shares of Common Stock issuable directly or to be granted pursuant to an
Option; (iii) the price per share at which each Option may be exercised, in cash
or cancellation of fees for services for which the Company is liable, if
applicable, or the value per share if a direct issue of stock pursuant to a
Stock Award; and (iv) the terms on which each Option may be granted. Such
determination, as may from time to time be amended or altered at the sole
discretion of the Committee. Notwithstanding the provisions of Section 3 hereof,
no such determination by the Committee shall be final, conclusive and binding
upon the Company unless and until the Board of Directors has approved the same;
provided, however, that if the Committee is composed of a majority of the
persons then comprising the Board of Directors of the Company, such approval by
the Board of Directors shall not be necessary.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 2 OF 8

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SECTION 5.        GRANT OF OPTION OR STOCK AWARD

         Subject to the terms and provisions of this Plan, the terms and
conditions under which an Option or Stock Award may be granted to an Eligible
Participant shall be set forth in a written agreement (i.e., a Consulting
Agreement, Services Agreement, Fee Agreement, or Employment Agreement) or, if an
Option, a written Grant of Option in the form attached hereto as Exhibit A
(which may contain such modifications thereto and such other provisions as the
Committee, in its sole discretion, may determine).

SECTION 6.        TOTAL NUMBER OF SHARES OF COMMON STOCK

         The total number of shares of Common Stock reserved for issuance by the
Company either directly as Stock Awards or underlying Options granted under this
Plan shall not be more than 2,000,000. The total number of shares of Common
Stock reserved for such issuance may be increased only by a resolution adopted
by the Board of Directors and amendment of this Plan. Such Common Stock may be
authorized and unissued or reacquired Common Stock of the Company.

SECTION 7.        AWARD OF SHARES OF COMMON STOCK OR OPTIONS

         7.1 As soon as practicable after the determination by the Committee and
approval by the Board of Directors (if necessary, pursuant to Section 4 hereof)
of the Eligible Participants and the number of shares an Eligible Participant
may be issued directly as a Stock Award or eligible to purchase pursuant to an
Option, the Committee shall give written notice thereof to each Eligible
Participant, which notice may be accompanied by the Grant of Option, if
appropriate, to be executed by such Eligible Participant.

         7.2 The negotiated cost basis of stock issued directly as a Stock Award
or the exercise price for each Option to purchase shares of Common Stock
pursuant to paragraph 7.1 shall be as determined by the Committee, it being
understood that the price so determined by the Committee may vary from one
Eligible Participant to another. In computing the negotiated direct issue price
as a Stock Award or the Option exercise price per share of Common Stock, the
Committee shall take into consideration, among other factors, the restrictions
set forth in Section 11 hereof.

SECTION 8.        TERMS AND CONDITIONS OF OPTIONS

         The Committee shall determine the terms and conditions of each Option
granted to Eligible Participants, which terms shall be set forth in writing. The
terms and conditions so set by the Committee may vary from one Eligible
Participant to another. In the event that all the Committee approves an Option
permitting deferred payments, the Eligible Participant's obligation to pay for
such Common Stock may be evidenced by a promissory note executed by such
Eligible Participant and containing such modifications thereto and such other
provisions as the Committee, in its sole discretion, may determine.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                      PAGE 3 OF 8

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SECTION 9.        DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE OF OPTION

         The Company shall deliver to each Eligible Participant such number of
shares of Common Stock as such Eligible Participant is entitled to receive
pursuant to a Stock Award or elects to purchase upon exercise of the Option.
Such shares, which shall be fully paid and nonassessable upon the issuance
thereof (unless a portion or all of the purchase price shall be paid on a
deferred basis) shall be represented by a certificate or certificates registered
in the name of the Eligible Participant and stamped with an appropriate legend
referring to the restrictions thereon, if any. Subject to the terms and
provisions of the Delaware General Corporation Law and the written agreement to
which he is a party, an Eligible Participant shall have all the rights of a
stockholder with respect to such shares, including the right to vote the shares
and to receive all dividends or other distributions paid or made with respect
thereto (except to the extent such Eligible Participant defaults under a
promissory note, if any, evidencing the deferred purchase price for such
shares), provided that such shares shall be subject to the restrictions
hereinafter set forth. In the event of a merger or consolidation to which the
Company is a party, or of any other acquisition of a majority of the issued and
outstanding shares of Common Stock of the Company involving an exchange or a
substitution of stock of an acquiring corporation for Common Stock of the
Company, or of any transfer of all or substantially all of the assets of the
Company in exchange for stock of an acquiring corporation, a determination as to
whether the stock of the acquiring corporation so received shall be subject to
the restrictions set forth in Section 11 shall be made solely by the acquiring
corporation.

SECTION 10.       RIGHTS OF EMPLOYEES; ELIGIBLE PARTICIPANTS

         10.1 Employment. Nothing contained in this Plan or in any Option or
Stock Award granted under this Plan shall confer upon any Eligible Participant
any right with respect to the continuation of his or her employment by the
Company or any Affiliated Corporation, or interfere in any way with the right of
the Company or any Affiliated Corporation, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Eligible Participant from the
rate in existence at the time of the grant of an Option or Stock Award. Whether
an authorized leave of absence, or absence in military or government service,
shall constitute termination of employment shall be determined by the Committee
at the time.

         10.2 Non-transferability. No right or interest of any Eligible
Participant in an Option or Stock Award shall be assignable or transferable
during the lifetime of the Eligible Participant, either voluntarily or
involuntarily, or subjected to any lien, directly or indirectly, by operation of
law, or otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. However, the Board of Directors may, in its sole discretion, permit

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                      PAGE 4 OF 8

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transfers to family members if and to the extent such transfers are permissible
under applicable securities laws. In the event of an Eligible Participant's
death, an Eligible Participant's rights and interest in an Option or Stock Award
shall be transferable by testamentary will or the laws of descent and
distribution, and delivery of any shares of Common Stock due under this Plan
shall be made to, and exercise of any Options may be made by, the Eligible
Participant's legal representatives, heirs or legatees. If in the opinion of the
Committee a person entitled to payments or to exercise rights with respect to
this Plan is unable to care for his or her affairs because of mental condition,
physical condition, or age, payment due such person may be made to, and such
rights shall be exercised by, such person's guardian, conservator or other legal
personal representative upon furnishing the Committee with evidence satisfactory
to the Committee of such status.

SECTION 11.       GENERAL RESTRICTIONS

         11.1 Representations. The Company may require any Eligible Participant
to whom an Option or Stock Award is granted, as a condition of exercising such
Option, or receiving such Stock Award, to give written assurances in substance
and form satisfactory to the Company and its counsel to the effect that such
person is acquiring the Common Stock subject to the Option or Stock Award for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.

         11.2 Restrictions on Transfer of Common Stock. The shares of Common
Stock issuable directly as a Stock Award or upon exercise of an Option may not
be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement or pursuant to an exemption from registration,
the availability of which is to be established to the satisfaction of the
Company, and any certificates representing shares of Common Stock will bear a
legend to that effect. However, the Company may, in the sole discretion of the
Board of Directors, register with the Securities and Exchange Commission some or
all of the shares of Common Stock reserved for issuance under this Plan. Special
resale restrictions may, however, continue to apply to officers, directors,
control shareholders and affiliates of the Company and such persons will be
required to obtain an opinion of counsel as regards their ability to resell
shares received pursuant to this Plan.

         11.3 Compliance with Securities Laws. Each Option or Stock Award shall
be subject to the requirement that if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to such Option or Stock Award upon any securities exchange
or under any state or federal law, or the consent or approval of any

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 5 OF 8

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governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such Option or
Stock Award may not be accepted or exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.

         11.4 Changes in Accounting Rules. Notwithstanding any other provision
of this Plan to the contrary, if, during the term of this Plan, any changes in
the financial or tax accounting rules applicable to Options or Stock Awards
shall occur that, in the sole judgment of the Committee, may have a material
adverse effect on the reported earnings, assets or liabilities of the Company,
the Committee shall have the right and power to modify as necessary, or cancel,
any then outstanding and unexercised Options.

SECTION 12.       COMPLIANCE WITH TAX REQUIREMENTS

         Each Eligible Participant shall be liable for payment of all applicable
federal, state and local income taxes incurred as a result of the receipt of a
Stock Award or an Option, the exercise of an Option, and the sale of any shares
of Common Stock received pursuant to a Stock Award or upon exercise of an
Option. The Company may be required, pursuant to applicable tax regulations, to
withhold taxes for an Eligible Participant, in which case the Company's
obligations to deliver shares of Common Stock upon the exercise of any Option
granted under this Plan or pursuant to any Stock Award, shall be subject to the
Eligible Participant's satisfaction of all applicable federal, state and local
income and other income tax withholding requirements.

SECTION 13.       PLAN BINDING UPON ASSIGNS OR TRANSFEREES

         In the event that, at any time or from time to time, any Option or
Stock Award is assigned or transferred to any party (other than the Company)
pursuant to the provisions of Section 10.2 hereof, such party shall take such
Option or Stock Award pursuant to all provisions and conditions of this Plan,
and, as a condition precedent to the transfer of such interest, such party shall
agree (for and on behalf of himself or itself, his or its legal representatives
and his or its transferees and assigns) in writing to be bound by all provisions
of this Plan.

SECTION 14.       COSTS AND EXPENSES

         All costs and expenses with respect to the adoption, implementation,
interpretation and administration of this Plan shall be borne by the Company.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 6 OF 8

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SECTION 15.       CHANGES IN CAPITAL STRUCTURE OF THE COMPANY

         Appropriate adjustments shall be made to the number of shares of Common
Stock issuable pursuant to an incomplete or pending Stock Award that has not yet
been delivered or upon exercise of any Options and the exercise price thereof in
the event of: (i) a subdivision or combination of any of the shares of capital
stock of the Company; (ii) a dividend payable in shares of capital stock of the
Company; (iii) a reclassification of any shares of capital stock of the Company;
or (iv) any other change in the capital structure of the Company.

SECTION 16.       PLAN AMENDMENT, MODIFICATION AND TERMINATION

         The Board, upon recommendation of the Committee or at its own
initiative, at any time may terminate and at any time and from time to time and
in any respect, may amend or modify this Plan, including:

                  (a) Increase the total amount of Common Stock that may be
         awarded under this Plan, except as provided in Section 15 of this Plan;

                  (b) Change the classes of persons from which Eligible
         Participants may be selected or materially modify the requirements as
         to eligibility for participation in this Plan;

                  (c) Increase the benefits accruing to Eligible Participants;
         or

                  (d) Extend the duration of this Plan.

         Any Option or other Stock Award granted to a Eligible Participant prior
to the date this Plan is amended, modified or terminated will remain in effect
according to its terms unless otherwise agreed upon by the Eligible Participant;
provided, however, that this sentence shall not impair the right of the
Committee to take whatever action it deems appropriate under Section 11 or
Section 15. The termination or any modification or amendment of this Plan shall
not, without the consent of a Eligible Participant, affect his rights under an
Option or other Stock Award previously granted to him.

SECTION 17.       EFFECTIVE DATE OF THIS PLAN

         17.1 Effective Date. This Plan is effective as of February 1, 2003, the
date it was adopted by the Board of Directors of the Company.

         17.2 Duration of this Plan. This Plan shall terminate at midnight on
January 31, 2008, which is the day before the 5th anniversary of the Effective
Date, and may be extended thereafter or terminated prior thereto by action of
the Board of Directors; and no Option or Stock Award shall be granted after such
termination. Options and Stock Awards outstanding at the time of this Plan
termination may continue to be exercised, or become free of restrictions, in
accordance with their terms.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 7 OF 8

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SECTION 18.       BURDEN AND BENEFIT

         The terms and provisions of this Plan shall be binding upon, and shall
inure to the benefit of, each Eligible Participant, his executives or
administrators, heirs, and personal and legal representatives.

         Dated as of the lst day of February, 2003.

                    ITEC ENVIRONMENTAL GROUP, INC.

                    By: /s/ Gary M. DeLaurentiis
                        ---------------------------------------------------
                        Gary M. DeLaurentiis, President and Chief Executive
                        Officer

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                       PAGE 8 OF 8

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                                    EXHIBIT A

                                     FORM OF
                         GRANT OF OPTION PURSUANT TO THE
                 ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN

         Itec Environmental Group, Inc., a Delaware corporation (the "Company"),
hereby grants to ________________________________ ("Optionee") an Option to
purchase _________ shares of common stock, $.001 par value (the "Shares") of the
Company at the purchase price of $______ per share (the "Purchase Price"), in
accordance with and subject to the terms and conditions of the Itec
Environmental Group, Inc. 2003 Stock Plan (the "Plan"). This option is
exercisable in whole or in part, and upon payment in cash or cancellation of
fees, or other form of payment acceptable to the Company, to the principal
office of the Company. This Grant of Option supersedes and replaces any prior
notice of option grant, description of vesting terms or similar documents
previously delivered to Optionee for options granted on the date stated below.

         Unless otherwise set forth in a separate written agreement, in the
event that Optionee's employee or consultant status with the Company or any of
its subsidiaries ceases or terminates for any reason whatsoever, including, but
not limited to, death, disability, or voluntary or involuntary cessation or
termination, this Grant of Option shall terminate with respect to any portion of
this Grant of Option that has not vested prior to the date of cessation or
termination of employee or consultant status, as determined in the sole
discretion of the Company. In the event of termination for cause, this Grant of
Option shall immediately terminate in full with respect to any un-exercised
options, and any vested but un-exercised options shall immediately expire and
may not be exercised. Unless otherwise set forth in a separate written
agreement, vested options must be exercised within six months after the date of
termination (other than for cause), notwithstanding the Expiration Date set
forth below.

         Subject to the preceding paragraph, this Grant of Option, or any
portion hereof, may be exercised only to the extent vested per the attached
schedule, and must be exercised by Optionee no later than _____________________
(the "Expiration Date") by (i) notice in writing, signed by Optionee; and (ii)
payment of the Purchase Price of a minimum of $1,000 (unless the Purchase Price
for the exercise of all vested options available to be exercised totals less
than $1,000) pursuant to the terms of this Grant of Option and the Plan. Any
portion of this Grant of Option that is not exercised on or before the
Expiration Date shall lapse. The notice must refer to this Grant of Option, and
it must specify the number of shares being purchased, and recite the
consideration being paid therefor. Notice shall be deemed given on the date on
which the notice is received by the Company.

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                          PAGE A-1

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         This Option shall be considered validly exercised once payment therefor
has cleared the banking system or the Company has issued a credit memo for
services in the appropriate amount, or receives a duly executed acceptable
promissory note, if the Option is granted with deferred payment, and the Company
has received written notice of such exercise. If payment is not received within
two business days after the date the notice is received, the Company may deem
the notice to be invalid.

         If Optionee fails to exercise this Option in accordance with this Grant
of Option, then this Grant of Option shall terminate and have no force and
effect, in which event the Company and Optionee shall have no liability to each
other with respect to this Grant of Option.

         This Option may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

         The validity, construction and enforceability of this Grant of Option
shall be construed under and governed by the laws of the State of Colorado,
without regard to its rules concerning conflicts of laws, and any action brought
to enforce this Grant of Option or resolve any controversy, breach or
disagreement relative hereto shall be brought only in a court of competent
jurisdiction within the State of Colorado.

         The shares of common stock issuable upon exercise of the Option (the
"Underlying Shares") may not be sold, exchanged, assigned, transferred or
permitted to be transferred, whether voluntarily, involuntarily or by operation
of law, delivered, encumbered, discounted, pledged, hypothecated or otherwise
disposed of until (i) the Underlying Shares have been registered with the
Securities and Exchange Commission pursuant to an effective registration
statement on Form S-8, or such other form as may be appropriate, in the
discretion of the Company; or (ii) an Opinion of Counsel, satisfactory to the
Company, has been received, which opinion sets forth the basis and availability
of any exemption for resale or transfer from federal or state securities
registration requirements.

         This Grant of Option relates to options granted on _____________,
--------.

                             ITEC ENVIRONMENTAL GROUP, INC.

                             BY THE BOARD OF DIRECTORS
                             OR A SPECIAL COMMITTEE THEREOF

                                NOT FOR EXECUTION

                        By: ----------------------------

OPTIONEE:

NOT FOR EXECUTION

--------------------------------

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                          PAGE A-2

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GRANT OF OPTION PURSUANT TO THE
ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN.

OPTIONEE:                ___________________
OPTIONS GRANTED:         ___________________
PURCHASE PRICE:          $______per Share
DATE OF GRANT:           ___________________
EXERCISE PERIOD:         ________ to _______

<TABLE>
<CAPTION>
VESTING SCHEDULE:           OPTION ON           DATE VESTED
                            #SHARES             (ASSUMING CONTINUED EMPLOYMENT, ETC.)
                            ---------           -----------
<S>                    <C>                      <C>
                       ------------------       ---------------

                       ------------------       ---------------

                       ------------------       ---------------

                       ------------------       ---------------

                       ------------------       ---------------
</TABLE>

EXERCISED TO DATE:                     INCLUDING THIS EXERCISE
                           ---------
BALANCE TO BE EXERCISED:
                           ---------

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                          PAGE A-3

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================================================================================

                               NOTICE OF EXERCISE
                 (TO BE SIGNED ONLY UPON EXERCISE OF THE OPTION)

TO:      Itec Environmental Group, Inc. ("Optionor")

         The undersigned, the holder of the Option described above, hereby
irrevocably elects to exercise the purchase rights represented by such Option
for, and to purchase thereunder, _________ shares of the Common Stock of Itec
Environmental Group, Inc., and herewith makes payment of _______________________
therefor. Optionee requests that the certificates for such shares be issued in
the name of Optionee and be delivered to Optionee at the address of
_____________________________________________, and if such shares shall not be
all of the shares purchasable hereunder, represents that a new Notice of
Exercise of like tenor for the appropriate balance of the shares, or a portion
thereof, purchasable under the Grant of Option pursuant to the Itec
Environmental Group, Inc. 2003 Stock Plan, be delivered to Optionor when and as
appropriate.

                                    OPTIONEE:

                                           NOT FOR EXECUTION
Dated:
       ------------------------            -------------------------------------

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ITEC ENVIRONMENTAL GROUP, INC. 2003 Stock PLAN                          PAGE A-4<PAGE>

                      INTEGRATED ALARM SERVICES GROUP, INC.

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                   -----------------------------------------

                  AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of this 31st
day of January, 2003 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 Timothy M.
McGinn, an individual residing at 15 Marion Avenue, Albany, New York 12203
(hereinafter referred to as "Employee");

                              W I T N E S S E T H:

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

                  WHEREAS, Employee is willing to be employed as the Chairman
and Chief Executive Officer of Employer in the manner provided for herein, and
to perform the duties of the Chairman and Chief Executive 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 Chairman and Chief Executive Officer.
Employer hereby employs Employee as Chairman and Chief Executive 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 January 31, 2003. 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 ninety (90) days 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

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<PAGE>

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 and solely to
the Board.

                  4. Compensation.

                           a. (i) Employee shall be paid a minimum of $380,000
per year in salary and $100,000 guaranteed bonus per year during the Term of
this Agreement. The $100,000 guaranteed bonus shall be paid to the Employee in
full, by the Employer prior to December 31st of each year. 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, in addition to the guaranteed bonus described in Section 4, a, (i),if
any, which will be determined and paid in accordance with policies set from time
to time by the Board.

                           b. Employee shall receive a leased car of his choice
paid for by the Employer, at a cost not to exceed $1,200 per month.

                           c. 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.

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

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

         (A) A person, 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 50% 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;

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<PAGE>

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

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

         (ii) (A) All stock options and warrants, including any restricted
Shares, ("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 two years 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 Employees 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 three times his average compensation
for the three previous fiscal years. Such compensation shall include salary, any
guaranteed bonuses, any other declared bonuses, and any other compensation
pursuant hereto. Said bonus shall be paid within thirty(30) days of the change
of Employee's employment conditions.

                  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 per year, commencing in the first year of this
Agreement, 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.

                                      -3-
<PAGE>

                  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.

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

Notwithstanding the foregoing, the provisions of this paragraph 8 (a) and (b)
shall not apply to any existing Trusts which have previously been created by
Employee and/or his affiliates, to provide financing within the security alarm
industry.

                  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 willful misconduct which actually results in a material adverse
effect on the business and affairs of Employer, (B) the Employee's willful
disregard of lawful instructions of Employer's Board of Directors consistent
with Employee's position relating to the business of Employer or willful neglect
of duties or failure to act, which, actually results in a material adverse
effect on the business and affairs of Employer,(C) engaging by the Employee in
conduct that constitutes activity in competition with Employer; (D) the
conviction of Employee for the commission of a felony; and/or (E) the habitual
abuse of alcohol or controlled

                                      -4-
<PAGE>

substances. 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 30 days from the date Employee receives the notice from
the Board), and such greater time as may be reasonable required to cure if
Employee is diligently pursuing the cure to completion, to correct the acts or
omissions so complained of. In no event shall alleged incompetence of Employee
in the performance of Employee's duties be deemed grounds for termination for
Cause. Further, termination shall in no way be based on any subjective standard
of job satisfaction or performance.

                                    (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) and Section 6.

                           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 (G):

         (A) Employee is not elected or retained as Chairman and Chief Executive
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. For purposes of this
Agreement, the Albany, New York area shall be deemed to be the area within 30
miles of the current address of the Employer as set forth above.

                                      -5-
<PAGE>

         (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 the greater of A) the full salary
that the Employee would have been entitled to for the remaining number of months
in the then existing term of the agreement or B)24 months, but in no case shall
it be less than 24 months salary plus payment for any unused vacation in
accordance with Section 6 above. Salary, as used in this Section shall mean to
include base salary plus guaranteed bonuses. Other than the payment in
accordance with Section 9, b, (iii) to 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).

                  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
36 months salary plus guaranteed bonuses; 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.

                                      -6-
<PAGE>

                  11. Remedies

                           Employer recognizes that because of Employee's
special talents, stature and opportunities in the Security 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 (ii), 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
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to

                                      -7-
<PAGE>

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 4,5,6,7,8,9(a)(ii), 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: Mary Ann McGinn

                                           Telefax: (518) 449-4894
                                           Telephone: (518) 449-5131

                                           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

                                      -8-
<PAGE>

                                    (ii) if to the Employee:

                                           Timothy M. McGinn
                                           15 Marion Avenue
                                           Albany, New York, 12203

                  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.

                                      -9-
<PAGE>

         IN WITNESS WHREROF, the undersigned have executed this agreement as of
the day and year first above written.

                                          INTEGRATED ALARM SERVICES GROUP, INC.

                                          By: /s/ Thomas J. Few, Sr.
                                              ----------------------------------
                                              Thomas J. Few, Sr.
                                              Chief Operating Officer

                                              /s/ Timothy M. McGinn
                                              ----------------------------------
                                              Timothy M. McGinn

                                      -10-

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