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                                                                    EXHIBIT 4(K)



                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                                   AND RIGHTS
                                       OF
                      SERIES G CONVERTIBLE PREFERRED STOCK
                                       OF
                                 NCT GROUP, INC.


     NCT Group, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "CORPORATION"),

     DOES HEREBY CERTIFY

     That, pursuant to authority conferred upon the Board of Directors of
the Corporation by the Restated Certificate of Incorporation of the Corporation,
and pursuant to the provisions of Section 151 of Title 8 of the Delaware Code of
1953, as amended, said Board of Directors at a meeting duly held on February 28,
2000, adopted a resolution providing for the issuance of a total of Five
Thousand (5,000) shares of Series G Convertible Preferred Stock, and providing
for the powers, designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions thereof,
which resolution is as follows:

          RESOLVED, that pursuant to the authority expressly granted to and
     vested in the Board of Directors of the Corporation by the provisions of
     Article IV of the Restated Certificate of Incorporation of the Corporation,
     this Board of Directors hereby creates a series of the Preferred Stock of
     the Corporation with par value of $0.10 per share (the "PREFERRED STOCK")
     to consist of Five Thousand (5,000) shares of the Ten Million (10,000,000)
     authorized shares of Preferred Stock, which the Corporation now has
     authority to issue, and this Board of Directors hereby fixes the powers,
     designations, preferences and relative, participating, optional or other
     special rights and qualifications, limitations or restrictions thereof of
     the shares of such series (in addition to the powers, designations,
     preferences and relative, participating, optional or other special rights
     and qualifications, limitations or restrictions thereof, set forth in
     Article IV of the Restated Certificate of Incorporation not inconsistent
     with the terms of this resolution and which are applicable to the Preferred
     Stock) as follows:

          (1)  Designation. The designation of said series of Preferred Stock
     created by this Resolution shall be Series G Convertible Preferred Stock.
     Shares of said Series G Convertible Preferred Stock are herein collectively
     referred to as "Series G Preferred Shares" and individually as "Series G
     Preferred Share.

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          (2)  Par Value and Stated Value. Each Share of Series G Preferred
     Stock shall have a par value of $0.10 (the "PAR VALUE"), and a stated value
     (face amount) of One Thousand Dollars ($1,000.00) (the "STATED VALUE").

          (3)  Dividends. A holder of a Series G Preferred Share shall be
     entitled to receive a cumulative dividend for each full year during which
     such Series G Preferred Share is issued and outstanding, equal to four
     percent (4%) of the Stated Value of such Series G Preferred Share, which
     shall be payable by the Corporation on the date of conversion of such
     Series G Preferred Share into Common Stock of the Corporation ("Dividend
     Payment Date"). The dividend shall be payable in cash or in Common Stock at
     the Corporation's option. Such dividend shall be payable in preference to
     dividends on any Common Stock or stock of any class ranking, as to dividend
     rights, junior to Series G Preferred Stock. Such dividend on the Series G
     Preferred Share shall be fully cumulative and shall accrue (whether or not
     declared and whether or not there shall be funds legally available for the
     payment of dividends), without interest, and shall be payable on the
     Dividend Payment Date unless such payment would be in violation of the
     Delaware General Corporation Law (the "DGCL"). No interest shall accrue on
     any unpaid dividends on the Series G Preferred Stock. If such dividend is
     paid by the Corporation in Common Stock, the number of shares of Common
     Stock to be received shall be determined by dividing the dollar amount of
     the dividend by the Conversion Price on the Dividend Payment Date. If such
     dividend is paid by the Corporation in Common Stock, said Common Stock
     shall be delivered to the holder, or per holder's instructions, at the same
     time as the Conversion Certificates.

          (4)  Holder's Conversion of Series G Preferred Shares. A holder of
     Series G Preferred Shares shall have the right, at such holder's option, to
     convert the Series G Preferred Shares into shares of the Corporation's
     common stock, $.01 par value per share (the "COMMON STOCK"), on the
     following terms and conditions:

               (a)  Conversion Right. Subject to the provisions of Sections 4(f)
          and 5(a) below, at any time or times on or after one day following the
          Corporation's issuance of its Series G Preferred Stock, any holder of
          Series G Preferred Shares shall be entitled to convert any Series G
          Preferred Shares into fully paid and nonassessable shares (rounded to
          the nearest whole share in accordance with Section 4(g) below) of
          Common Stock, at the Conversion Rate (as defined below);

               provided, however, that in no event other than upon (i) a
          Mandatory Conversion pursuant to Section 4(f) hereof, (ii) a
          Redemption Conversion (as defined in Section 5(a)(ii)) pursuant to a
          Notice of Redemption at the Corporation's Election, as provided for in
          Section 5 hereof, (iii) a conversion pursuant to a Major Transaction
          pursuant to Section 4(i) hereof, or (iv) while a Tender Offer (as
          defined in Section 4(i)(iii) below) is outstanding, shall any holder
          be entitled, or shall the Corporation be entitled as to any holder, to
          convert

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          Series G Preferred Shares in excess of that number of Series G
          Preferred Shares which, upon giving effect to such conversion, would
          cause the aggregate number of shares of Common Stock beneficially
          owned by the holder and its affiliates to exceed 4.9% of the
          outstanding shares of the Common Stock following such conversion. For
          purposes of the foregoing proviso, the aggregate number of shares of
          Common Stock beneficially owned by the holder and its affiliates shall
          include the number of shares of Common Stock issuable upon conversion
          of the Series G Preferred Shares (including dividends payable in
          respect thereon) with respect to which the determination of such
          proviso is being made, but shall exclude the number of shares of
          Common Stock which would be issuable upon (i) the conversion of the
          remaining, nonconverted Series G Preferred Shares or any other Series
          of Preferred Shares beneficially owned by the holder and its
          affiliates, or (ii) the exercise of unexercised warrants or of other
          rights to acquire shares of Common Stock, as beneficially owned by the
          holder or its affiliates. Except as set forth in the preceding
          sentence, for purposes of this paragraph, beneficial ownership shall
          be calculated in accordance with Section 13(d) of the Securities
          Exchange Act of 1934, as amended, and the term "affiliate" shall have
          the meaning given in Rule 12b-2 promulgated under such Act.

               (b)  Conversion Rate. The number of shares of Common Stock
          issuable upon conversion of each of the Series G Preferred Shares
          pursuant to Section 4(a) shall be determined according to the
          following formula (the "CONVERSION RATE"):

                          STATED VALUE             NUMBER OF SHARES
                       ------------------
                        CONVERSION PRICE           OF COMMON STOCK

          Notwithstanding anything contained herein to the contrary, the
          Corporation shall not be required to issue in excess of Ten Million
          (10,000,000) shares of Common Stock upon conversion of Series G
          Preferred Shares or such lesser amount as determined on a pro-rata
          basis based upon the number of Series G Preferred Shares issued and
          outstanding (the "MAXIMUM SHARE ISSUANCE AMOUNTS"). If the sum
          computed by such Conversion Rate exceeds 10,000,000 shares of Common
          Stock, the Corporation shall, within five (5) business days after
          receiving the Conversion Notice for which the conversion would exceed
          the Maximum Share Issuance Amount, either (1) redeem, in accordance
          with Section 5, the Series G Preferred Shares which may not be
          converted due to the Maximum Share Issuance Amount, as described in
          the preceding sentence, or (2) amend this Certificate of Designations
          to provide for a Maximum Shares Issuance Amount which will permit the
          conversion of all outstanding Series G Preferred Shares.

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          For purposes of this Certificate of Designations, the following terms
          shall have the following meanings:

                    (i)  "CONVERSION PRICE" means, with respect to any date of
               determination, the lower of the Fixed Conversion Price (as
               defined below) and the Variable Conversion Price (as defined
               below);

                    (ii)  "FIXED CONVERSION PRICE" means $0.71925].

                    (iii)  "VARIABLE CONVERSION PRICE" means the amount obtained
               by multiplying 0.8 by the average Closing Bid Prices (as defined
               below) for the Common Stock for the five consecutive trading days
               immediately preceding the relevant date.

                    (iv)  "CLOSING BID PRICE" means, for any security as of any
               date, the last closing bid price on the NASDAQ National Market
               System (the "NASDAQ-NM") as reported by Bloomberg Financial
               Markets ("BLOOMBERG"), or, if the NASDAQ-NM is not the principal
               trading market for such security, the last closing bid price of
               such security on the principal securities exchange or trading
               market where such security is listed or traded as reported by
               Bloomberg, or if the foregoing do not apply, the last closing bid
               price of such security in the over-the-counter market on the pink
               sheets or bulletin board for such security as reported by
               Bloomberg, or, if no closing bid price is reported for such
               security by Bloomberg, the last closing trade price of such
               security as reported by Bloomberg. If the Closing Bid Price
               cannot be calculated for such security on such date on any of the
               foregoing bases, the Closing Bid Price of such security on such
               date shall be the fair market value as reasonably determined in
               good faith by the Board of Directors of the Company (all as
               appropriately adjusted for any stock dividend, stock split or
               other similar transaction during such period);

               (c)  Adjustment to Conversion Price - Dilution and Other Events.
          In order to prevent dilution of the rights granted under this
          Certificate of Designations, the Conversion Price will be subject to
          adjustment from time to time as provided in this Section 4(c).

                    (i)  Reorganization, Reclassification, Consolidation,
               Merger, or Sale. Any recapitalization, reorganization
               reclassification, consolidation, merger, sale of all or
               substantially all of the Corporation's assets to another Person
               (as defined below) or other similar transaction, which is
               effected in such a way that holders of Common Stock are entitled
               to receive (either directly or upon subsequent liquidation)
               stock, securities or assets with respect to or in exchange for
               Common Stock, is referred to herein as an

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               "ORGANIC CHANGE." Prior to the consummation of any Organic
               Change, the Corporation will make appropriate provision (in form
               and substance reasonably satisfactory to the holders of a
               majority of the Series G Preferred Shares then outstanding) to
               insure that each of the holders of the Series G Preferred Shares
               will thereafter have the right to acquire and receive in lieu of
               or in addition to (as the case may be) the shares of Common Stock
               immediately theretofore acquirable and receivable upon the
               conversion of such holder's Series G Preferred Shares, such
               shares of stock, securities or assets as may be issued or payable
               with respect to or in exchange for the number of shares of Common
               Stock immediately theretofore acquirable and receivable upon the
               conversion of such holder's Series G Preferred Shares had such
               Organic Change not taken place. In any such case, the Corporation
               will make appropriate provision (in form and substance reasonably
               satisfactory to the holders of a majority of the Series G
               Preferred Shares then outstanding) with respect to such holder's
               rights and interests to insure that the provisions of this
               Section 4(c) and Section 4(d) below will thereafter be applicable
               to the Series G Preferred Shares. The Corporation will not effect
               any such consolidation, merger or sale, unless prior to the
               consummation thereof the successor entity (if other than the
               Corporation) resulting from such consolidation or merger assumes,
               or the entity purchasing such assets assumes, by written
               instrument (in form and substance reasonably satisfactory to the
               holders of a majority of the Series G Preferred Shares then
               outstanding), the obligation to deliver to each holder of Series
               G Preferred Shares such shares of stock, securities or assets as,
               in accordance with the foregoing provisions, such holder may be
               entitled to acquire. For purposes of this Agreement, "PERSON"
               shall mean an individual, a limited liability company, a
               partnership, a joint venture, a corporation, a trust, an
               unincorporated organization and a government or any department or
               agency thereof.

                    (ii)  Notices.

                         (A)  Immediately upon any adjustment of the Conversion
                    Price, the Corporation will give written notice thereof to
                    each holder of Series G Preferred Shares, setting forth in
                    reasonable detail and certifying the calculation of such
                    adjustment.

                         (B)  The Corporation will give written notice to each
                    holder of Series G Preferred Shares at least twenty (20)
                    business days prior to the date on which the Corporation
                    closes its books or takes a record (I) with respect to any
                    dividend or distribution upon the Common Stock, (II) with
                    respect to any pro rata subscription offer

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                    to holders of Common Stock, or (III) for determining rights
                    to vote with respect to any Organic Change, dissolution or
                    liquidation.

                         (C)  The Corporation will also give written notice to
                    each holder of Series G Preferred Shares at least twenty
                    (20) business days prior to the date on which any Organic
                    Change, Major Transaction (as defined in Section 4(i)
                    below), dissolution or liquidation will take place.

               (d)  Purchase Rights. If at any time the Corporation grants,
          issues or sells any Options, Convertible Securities or rights to
          purchase stock, warrants, securities or other property pro rata to all
          the record holders of any class of Common Stock (the "PURCHASE
          RIGHTS"), then the holders of Series G Preferred Shares will be
          entitled to acquire, upon the terms applicable to such Purchase
          Rights, the aggregate Purchase Rights which such holder could have
          acquired if such holder had held the number of shares of Common Stock
          acquirable upon complete conversion of the Series G Preferred Shares
          immediately before the date on which a record is taken for the grant
          issuance or sale of such Purchase Rights, or, if no such record is
          taken, the date as of which the record holders of Common Stock are to
          be determined for the grant, issue or sale of such Purchase Rights.

               (e)  Mechanics of Conversion. Subject to the Corporation's
          inability to fully satisfy its obligations under a Conversion Notice
          (as defined below) as provided for in Section 6 below:

                    (i)  Holder's Delivery Requirements. To convert Series G
               Preferred Shares into full shares of Common Stock on any date
               (the "CONVERSION DATE"), the holder thereof shall (A) deliver or
               transmit by facsimile, for receipt on or prior to 11:59 p.m.,
               Eastern Time, on such date, a copy of a fully executed notice of
               conversion in the form attached hereto as Exhibit I (the
               "CONVERSION NOTICE") to the Corporation (c/o Cy Hammond, NCT
               Group, Inc., 1025 West Nursery Road, Suite 120, Linthicum,
               MD 21090, facsimile number 410-636-2141) or its designated
               transfer agent (the "TRANSFER AGENT") (c/o Bill Galetta,
               American Stock Transfer & Trust Company, 40 Wall Street,
               New York, NY 10005, facsimile number 718-921-8328), and
               (B) surrender to a common carrier for delivery to the
               Corporation or the Transfer Agent as soon as practicable
               following such notice, the original certificates representing
               the Series G Preferred Shares being converted (or an
               indemnification undertaking with respect to such ertificates in
               the case of their loss, theft or destruction) (the "PREFERRED
               STOCK CERTIFICATES").

                    (ii)  Corporation's Response. Upon receipt by the
               Corporation of a facsimile copy of a Conversion Notice, the
               Corporation shall

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               immediately send, via facsimile, a confirmation of receipt of
               such Conversion Notice to such holder. Upon receipt by the
               Corporation or the Transfer Agent of the Preferred Stock
               Certificates (the "Date of Receipt") to be converted pursuant to
               a Conversion Notice, the Corporation or the Transfer Agent (as
               applicable) shall, within five (5) business days following the
               Date of Receipt, issue and surrender to a common carrier for
               overnight delivery to the address as specified in the Conversion
               Notice, a certificate (the "Conversion Certificate"), registered
               in the name of the holder or its designee, for the number of
               shares of Common Stock to which the holder shall be entitled.

                    (iii)  Dispute Resolution. In the case of a dispute as to
               the determination of the Closing Bid Price, the Variable
               Conversion Price or the arithmetic calculation of the Conversion
               Rate, the Corporation shall promptly issue to the holder the
               number of shares of Common Stock that is not disputed and shall
               submit the disputed determinations or arithmetic calculations to
               the holder via facsimile within three (3) business days of
               receipt of such holder's Conversion Notice. If such holder and
               the Corporation are unable to agree upon the determination of the
               Closing Bid Price, the Variable Conversion Price or arithmetic
               calculation of the Conversion Rate within two (2) business days
               of such disputed determination or arithmetic calculation being
               submitted to the holder, then the Corporation shall within one
               (1) business day submit via facsimile (A) the disputed
               determination of the Closing Bid Price and/or the Variable
               Conversion Price to an independent, reputable investment bank or
               (B) the disputed arithmetic calculation of the Conversion Rate to
               its independent, outside accountant. The Corporation shall cause
               the investment bank or the accountant, as the case may be, to
               perform the determinations or calculations and notify the
               Corporation and the holder of the results no later than
               forty-eight (48) hours from the time it receives the disputed
               determinations or calculations. Such investment bank's or
               accountant's determination or calculation, as the case may be,
               shall be binding upon all parties absent manifest error.

                    (iv)  Record Holder. The person or persons entitled to
               receive the shares of Common Stock issuable upon a conversion of
               Series G Preferred Shares shall be treated for all purposes as
               the record holder or holders of such shares of Common Stock on
               the Conversion Date.

                    (v)  Corporation's Failure to Timely Convert. If the
               Corporation shall fail to issue to a holder, within five (5)
               business days following the Date of Receipt, a certificate for
               the number of shares of Common Stock to which such holder is
               entitled upon such holder's conversion of Series G Preferred
               Shares, in addition to all other available remedies which such

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               holder may pursue hereunder and under any Securities Purchase
               Agreement between the Corporation and the holders of the Series G
               Preferred Shares (the "SECURITIES PURCHASE AGREEMENT") (including
               indemnification pursuant thereto), the Corporation shall pay
               additional damages to such holder on each day after the fifth
               (5th) business day following the Date of Receipt by the
               Corporation or the Transfer Agent of the Preferred Stock
               Certificates to be converted pursuant to the Conversion Notice,
               for which such conversion is not timely effected, an amount equal
               to 1.0% of the product of (A) the number of shares of Common
               Stock not issued to the holder and to which such holder is
               entitled and (B) the Closing Bid Price of the Common Stock on the
               business day after the fifth (5th) business day following the
               Date of Receipt. If, within five (5) days following the Date of
               Receipt, the Company fails to deliver the Conversion
               certificates, the holder of the Preferred Stock being converted
               (a "Converted Holder") purchases, in an arm's-length open market
               transaction or otherwise, shares of Common Stock (the "Covering
               Shares") in order to make delivery in satisfaction of a sale of
               Common Stock by the Converting Holder anticipated to make using
               the shares to be issued upon such conversion (a "Buy-In"), the
               Converting Holder shall have the right, to require the Company to
               pay to the Converting Holder, in lieu and instead of the amounts
               due under Section 4 hereof (but in addition to all other amounts
               contemplated in other provisions of the Transaction Agreements,
               and not in lieu of any such other amounts), the Buy-In Adjustment
               Amount (as defined below). The Company shall pay the Buy-In
               Adjustment Amount to the Company in immediately available funds
               immediately upon demand by the Converting Holder.

                    For purposes of this section, the "Buy-In Adjustment Amount"
               means the amount equal to the excess, if any, of (i) the
               Converting Holder's total purchase price (including brokerage
               commissions, if any) for the Covering Shares over (ii) the net
               proceeds (after brokerage commissions, if any) received by the
               Converting Holder from the sale of the Sold Shares. (By way of
               illustration and not in any limitation of the foregoing, if the
               Converting Holder purchases shares of Common Stock having a total
               purchase price (including brokerage commissions) of $11,000 to
               cover a Buy-In with respect to shares of Common Stock it sold for
               net proceeds of $10,000, the Buy-In Adjustment Amount which
               Company will be required to pay to Converting Holder will be
               $1,000.)

               (f)  Mandatory Conversion. If any Series G Preferred Shares
          remain outstanding on February 28, 2003, then all such Series G
          Preferred Shares shall automatically be converted as of such date in
          accordance with this Section 4 as if the holders of such Series G
          Preferred Shares had given the Conversion Notice on

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          February 28, 2003, and the Conversion Date had been fixed as of
          February 28, 2003, for all purposes of this Section 4, and all holders
          of Series G Preferred Shares shall thereupon and within two (2)
          business days thereafter surrender all Preferred Stock Certificates,
          duly endorsed for cancellation, to the Corporation or the Transfer
          Agent. No person shall thereafter have any rights in respect of Series
          G Preferred Shares, except the right to receive shares of Common Stock
          on conversion thereof as provided in this Section 4.

               (g)  Fractional Shares. The Corporation shall not issue any
          fraction of a share of Common Stock upon any conversion. All shares of
          Common Stock (including fractions thereof) issuable upon conversion of
          more than one share of the Series G Preferred Shares by a holder
          thereof shall be aggregated for purposes of determining whether the
          conversion would result in the issuance of a fraction of a share of
          Common Stock. If, after the aforementioned aggregation, the issuance
          would result in the issuance of a fraction of a share of Common Stock,
          the Corporation shall round such fraction of a share of Common Stock
          up or down to the nearest whole share.

               (h)  Taxes. The Corporation shall pay any and all transfer, stamp
          duty or other taxes of similar import which may be imposed upon it
          with respect to the issuance and delivery of Common Stock upon the
          conversion of the Series G Preferred Shares. The Corporation shall in
          no event be responsible for taxes on income or gain realized by or
          imputed to any holder of Series G Preferred Shares.

               (i)  Holder's Right to Immediately Convert.

               Any holder of Series G Preferred Shares shall be immediately
          entitled to convert all of such holder's Series G Preferred Shares
          into shares of Common Stock pursuant to this Section 4 upon (i) any
          public announcement by the Corporation stating that the Corporation
          intends to consummate, or is the subject of, a Major Transaction (as
          defined below), (ii) execution of a definitive agreement by the
          Corporation with respect to a Major Transaction, or (iii) the
          consummation of a Major Transaction. A "MAJOR TRANSACTION" shall be
          deemed to have occurred upon the occurrence of any of the following
          events:

                    (i)  the consummation of any merger, reorganization,
               restructuring, consolidation, or similar transaction by or
               involving the Corporation except (A) a merger or consolidation
               where the Corporation is a survivor or (B) pursuant to a
               migratory merger effected solely for the purpose of changing the
               jurisdiction of incorporation of the Corporation;

                    (ii)  the sale of all or substantially all of the assets of
               the Corporation or all of its material subsidiaries or any
               similar transaction or

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               related transactions which effectively results in a sale of all
               or substantially all of the assets of the Corporation and/or its
               subsidiaries; or

                    (iii)  the occurrence, after the date hereof, of the
               acquisition, or the written offer to acquire pursuant to
               Regulation 14D (promulgated under the Securities Exchange of
               1934), by any person (including any entity or association) or
               persons, of securities of the Corporation (or the power to vote
               such securities) representing 50% or more of the total voting
               power of all outstanding Common Stock or other voting securities
               of the Corporation (such offer, a "Tender Offer").

          (5)  Corporation's Right to Redeem at its Election.

               (a)  If at any given date the Closing Bid Price of the Common
          Stock for each of the ten consecutive trading days shall be at or
          above 200% of the Fixed Conversion Price ("REDEMPTION ELECTION DATE"),
          and as long as the Corporation has not breached any of the
          representations, warranties, and covenants contained herein or in any
          related agreements, the Corporation shall have the right, in its sole
          discretion, to redeem for Common Stock or for cash ("REDEMPTION AT
          CORPORATION'S ELECTION"), on such a Redemption Election Date, any or
          all of the Series G Preferred Shares; provided the Corporation shall
          first provide no more than ten (10) days and no less than five (5)
          days advance written notice as provided in subparagraph 5(a)(ii) below
          (which can be given any time on or after a registration statement (the
          "REGISTRATION STATEMENT") covering the resale of Common Stock issued
          upon conversion of the Series G Preferred Shares and required to be
          filed by the Corporation pursuant to any Registration Rights Agreement
          between the Corporation and its initial holders of Series G Preferred
          Shares (the "REGISTRATION RIGHTS AGREEMENT") is declared effective
          (the "REGISTRATION STATEMENT EFFECTIVE DATE") by the U.S. Securities
          and Exchange Commission (the "SEC")) and remains currently effective.
          If the Corporation elects to redeem some, but not all, of the Series G
          Preferred Shares, the Corporation shall redeem a pro rata amount from
          each holder of the Series G Preferred Shares.

                    (i)  Redemption Price At Corporation's Election. The
               "REDEMPTION PRICE AT CORPORATION'S ELECTION" shall be equal to
               (I) the Liquidation Value (as defined in Section 10) as of the
               date that the Corporation pays the Redemption Price at
               Corporation's Election, divided by the Conversion Rate (as
               defined in Section 4(b) above) as of the Redemption Election
               Date, multiplied by (II) the average closing sale price as
               reported on Bloomberg (as defined in Section 4(b)(iv) above) for
               the trading days from the Redemption Election Date to the trading
               day immediately before the Corporation pays the Redemption Price
               at Corporation's Election.

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                    (ii)  Mechanics of Redemption at Corporation's Election. The
               Corporation shall effect each such redemption by giving no more
               than ten (10) days and no less than five (5) days prior written
               notice ("NOTICE OF REDEMPTION AT CORPORATION'S ELECTION"), to
               (A) the Holders of the Series G Preferred Shares selected for
               redemption at the address and facsimile number of such holder
               appearing in the Corporation's Series G Preferred Stock register,
               (B) the Transfer Agent, and (C) the Holders' attorneys, which
               Notice of Redemption at Corporation's Election shall be deemed to
               have been delivered three (3) business days after the
               Corporation's mailing (by overnight or two (2) day courier,
               with a copy by facsimile) of such Notice of Redemption at
               Corporation's Election. Such Notice of Redemption at
               Corporation's Election shall indicate (i) the number of shares of
               Series G Preferred Stock that have been selected for redemption,
               (ii) the date, which shall not be less than five (5) business
               days after the Notice of Redemption at the Corporation's Election
               is received by the Holder, that such redemption is to become
               effective (the "DATE OF REDEMPTION AT CORPORATION'S ELECTION"),
               and (iii) the applicable Redemption Price At Corporation's
               Election. Notwithstanding the above, a holder may convert into
               Common Stock, prior to the close of business on the Date of
               Redemption at Corporation's Election, any Series G Preferred
               Shares, subject to the relevant Notice of Redemption At
               Corporation's Election, where such redemption is for cash (such
               conversion by a holder, a "Redemption Conversion"). Such a notice
               by a holder to convert Common Stock prior to the close of
               business on the Date of Redemption shall take precedence over any
               Notice of Redemption at Corporation's Election.

               (b)  Corporation Must Have Immediately Available Funds or Credit
          Facilities. The Corporation shall not be entitled to send any Notice
          of Redemption at Corporation's Election and begin the redemption
          procedure under Section 5(a) unless it has:

                    (i)  the full amount of the redemption price in cash or cash
               equivalents, available in a demand or other immediately available
               account in a bank or similar financial institution; or

                    (ii)  immediately available credit facilities, in the full
               amount of the redemption price with a bank or similar financial
               institution; or

                    (iii)  an agreement with a standby underwriter willing to
               purchase from the Corporation a sufficient number of shares of
               stock to provide proceeds necessary to redeem any stock that is
               not converted prior to redemptions;

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                    (iv)  if the redemption is to be paid in Common Stock, an
               adequate number of authorized but unissued shares of Common Stock
               to pay the full amount of the redemption price; or

                    (v)  a combination of the items set forth in (i), (ii),
               (iii), and (iv) above, aggregating the full amount of the
               redemption price.

               (c)  Payment of Redemption Price. Each holder submitting Series G
          Preferred Shares being redeemed under this Section 5 shall send his
          Series G Preferred Share certificates to be redeemed to the
          Corporation or its Transfer Agent, and the Corporation shall pay the
          applicable redemption price to that holder within five (5) business
          days of the Date of Redemption at Corporation's Election. The
          Corporation's failure to pay the applicable redemption price within
          five (5) business days of the Date of Redemption at Corporation's
          Election will result in (i) the nullification of the Notice of
          Redemption and (ii) the termination of any future redemption rights of
          the Corporation.

          (6)  Inability to Fully Convert.

               (a)  Holder's Option if Corporation Cannot Fully Convert. If at
          any time after the Registration Statement Effective Date, upon the
          Corporation's receipt of a Conversion Notice, the Corporation does not
          issue shares of Common Stock which are registered for resale under the
          Registration Statement within five (5) business days of the time
          required in accordance with Section 4(e) hereof, for any reason or for
          no reason, including, without limitation, because the Corporation (x)
          does not have a sufficient number of shares of Common Stock authorized
          and available, (y) is otherwise prohibited by applicable law or by the
          rules or regulations of any stock exchange, interdealer quotation
          system or other self-regulatory organization with jurisdiction over
          the Corporation or its Securities, including without limitation The
          NASDAQ Stock Market, Inc. from issuing all of the Common Stock which
          is to be issued to a holder of Series G Preferred Shares pursuant to a
          Conversion Notice, or (z) fails to have a sufficient number of shares
          of Common Stock registered and eligible for resale under the
          Registration Statement, then the Corporation shall (i) make all
          reasonable efforts to correct any impediment as identified in Section
          6(a)(x), (y) and (z) herein to enable the Corporation to issue
          sufficient shares of Common Stock upon receipt of a Conversion Notice,
          (ii) issue as many shares of Common Stock as it is able to issue in
          accordance with such holder's Conversion Notice and pursuant to
          Section 4(e) above, and (iii) with respect to the unconverted Series G
          Preferred Shares, the holder, solely at such holder's option, can, in
          addition to any other remedies such holder may have hereunder, under a
          Securities Purchase Agreement in respect of its Series G Preferred
          Shares (including indemnification thereunder),

                                       79
<PAGE>   13

          under a Registration Rights Agreement in respect of its Series G
          Preferred Shares, at law or in equity, elect to:

                    (i)  require the Corporation to redeem from such holder
               those Series G Preferred Shares for which the Corporation is
               unable to issue Common Stock in accordance with such holder's
               Conversion Notice ("MANDATORY REDEMPTION") at a price per Series
               G Preferred Share (the "MANDATORY REDEMPTION PRICE") equal to the
               greater of (x) 125% of the Liquidation Value of such share or
               (y)(I) the Liquidation Value (as defined in Section 10) as of
               the date that the Corporation pays the Mandatory Redemption
               Price, divided by the Conversion Rate (as defined in
               Section 4(b) above) as of the date of the Notice in Response to
               Inability to Convert, multiplied by (II) the average closing
               sale price, as reported on Bloomberg (as defined in
               section 4(b)(iv) above) for the five trading days ending on the
               trading day before payment of the Mandatory Redemption Price;

                    (ii)  if the Corporation's inability to fully convert Series
               G Preferred Shares is pursuant to Section 6(a)(z) above, require
               the Corporation to issue restricted shares of Common Stock in
               accordance with such holder's Conversion Notice and pursuant to
               Section 4(e) above, but which will not effect the Corporation's
               obligation to register shares of Common Stock pursuant to any
               separate purchase agreement with the Holder; or

                    (iii)  void its Conversion Notice and retain or have
               returned, as the case may be, the nonconverted Series G Preferred
               Shares that were to be converted pursuant to such holder's
               Conversion Notice.

               (b)  Mechanics of Fulfilling Holder's Election. The Corporation
          shall immediately send via facsimile to a holder of Series G Preferred
          Shares, upon receipt of a facsimile copy of a Conversion Notice from
          such holder which cannot be fully satisfied as described in Section
          6(a) above, a notice of the Corporation's inability to fully satisfy
          such holder's Conversion Notice (the "INABILITY TO FULLY CONVERT
          NOTICE"). Such Inability to Fully Convert Notice shall indicate
          (i) the reason why the Corporation is unable to fully satisfy such
          holder's Conversion Notice, (ii) the number of Series G Preferred
          Shares which cannot be converted, and (iii) the applicable Mandatory
          Redemption Price. Such holder must within five (5) business days of
          receipt of such Inability to Fully Convert Notice, deliver written
          notice via facsimile to the Corporation ("NOTICE IN RESPONSE TO
          INABILITY TO CONVERT") of its election pursuant to Section 6(a) above.

               (c)  Payment of Redemption Price. If such holder shall elect to
          have its shares redeemed pursuant to Section 6(a) above, the
          Corporation shall pay the

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<PAGE>   14

          Mandatory Redemption Price in cash to such holder within thirty (30)
          business days of the Corporation's receipt of the holder's Notice in
          Response to Inability to Convert. If the Corporation shall fail to pay
          the applicable Mandatory Redemption Price to such holder on a timely
          basis as described in this Section 6(c) (other than pursuant to a
          dispute as to the determination of the Closing Bid Price, the Variable
          Conversion Price or the arithmetic calculation of the Redemption
          Rate), such unpaid amount shall bear interest at the lower of (i) a
          rate of 1.0% for the first month and a rate of 2.0% per month
          thereafter (prorated for partial months), or (ii) the maximum amount
          allowable by law (prorated for partial months), until paid in full.
          Until the full Mandatory Redemption Price is paid in full to such
          holder, such holder may rescind the Mandatory Redemption with respect
          to those Series G Preferred Shares for which the full Mandatory
          Redemption Price has not been paid and receive back, against return to
          the Corporation of the amount of any payments, such Series G Preferred
          Shares. Notwithstanding the foregoing, if the Corporation fails to pay
          the applicable Mandatory Redemption Price within such thirty business
          (30) days time period due to a dispute as to the determination of the
          Closing Bid Price, the Variable Conversion Price or the arithmetic
          calculation of the Conversion Rate, such dispute shall be resolved
          pursuant to Section 4(e)(iii) above.

               (d)  Pro-rata Conversion and Redemption. In the event the
          Corporation receives a Conversion Notice from more than one holder of
          Series G Preferred Shares on the same day and the Corporation can
          convert and redeem some, but not all, of the Series G Preferred Shares
          pursuant to this Section 6, the Corporation shall convert and redeem
          from each holder of Series G Preferred Shares electing to have Series
          G Preferred Shares converted and redeemed at such time an amount equal
          to such holder's pro-rata amount (based on the number of Series G
          Preferred Shares held by such holder relative to the number of Series
          G Preferred Shares outstanding) of all Series G Preferred Shares being
          converted and redeemed at such time.

          (7)  Reissuance of Certificates. In the event of a conversion or
     redemption pursuant to this Certificate of Designations of less than all of
     the Series G Preferred Shares represented by a particular Series G
     Preferred Share certificate, the Corporation shall promptly cause to be
     issued and delivered to the holder of such Series G Preferred Shares a
     Series G Preferred Share certificate representing the remaining Series G
     Preferred Shares which have not been so converted or redeemed.

          (8)  Reservation of Shares. The Corporation shall, so long as any of
     the Series G Preferred Shares are outstanding, reserve and keep available
     out of its authorized and unissued Common Stock, solely for the purpose of
     effecting the conversion of the Series G Preferred Shares, 125% of such
     number of shares of Common Stock as shall from time to time be sufficient
     to affect the conversion of the Series G Preferred Shares then issued and
     outstanding.

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<PAGE>   15

          (9)  Voting Rights. Holders of Series G Preferred Shares shall have no
     voting rights, except as required by law, including but not limited to the
     General Corporation Law of the State of Delaware and as expressly provided
     in this Certificate of Designations.

          (10)  Liquidation, Dissolution, Winding-Up. In the event of any
     voluntary or involuntary liquidation, dissolution, or winding up of the
     Corporation, the holders of the Series G Preferred Shares shall be entitled
     to receive in cash out of the assets of the Corporation, whether from
     capital or from earnings available for distribution to its stockholders
     (the "PREFERRED FUNDS"), after all amounts payable to the holders of the
     Corporation's Series C, D, E and F Convertible Preferred Stock and before
     any amount shall be paid to the holders of any of the capital stock of the
     Corporation of any class junior in rank to the Series G Preferred Shares in
     respect of the preferences as to the distributions and payments on the
     liquidation, dissolution and winding up of the Corporation, an amount per
     Series G Preferred Share equal to the sum of (i) $1,000 and (ii) an amount
     equal to the product of (.04) (N/365) ($1,000) (such sum being referred to
     as the "LIQUIDATION VALUE") (where N equals the number of days, through and
     including the Conversion Date, such Series G Preferred Share was issued and
     outstanding, not counting the date of issuance); provided that, if the
     Preferred Funds are insufficient to pay the full amount due to the holders
     of Series G Preferred Shares, then each holder of Series G Preferred Shares
     shall receive a percentage of the Preferred Funds equal to the full amount
     of Preferred Funds payable to such holder as a liquidation preference, in
     accordance with their respective Certificate of Designations, Preferences
     and Rights as a percentage or the full amount of Preferred Funds payable to
     all holders of Series G Preferred Shares. The purchase or redemption by the
     Corporation of stock of any class in any manner permitted by law, shall not
     for the purposes hereof, be regarded as a liquidation, dissolution, or
     winding up of the Corporation. Neither the consolidation or merger of the
     Corporation with or into any other Person, nor the sale or transfer by the
     Corporation of less than substantially all of its assets, shall, for the
     purposes hereof, be deemed to be a liquidation, dissolution, or winding up
     of the Corporation. No holder of Series G Preferred Shares shall be
     entitled to receive any amounts with respect thereto upon any liquidation,
     dissolution or winding up of the Corporation other than the amounts
     provided for herein.

                                       82
<PAGE>   16

          (11)  Preferred Rank. Except for the Corporation's Series C
     Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E
     Convertible Preferred Stock and Series F Convertible Preferred Stock, all
     shares of Series G Convertible Preferred Stock shall be of senior rank and
     all shares of Common Stock shall be of junior rank to all Series G
     Preferred Shares in respect to the preferences as to distributions and
     payments upon the liquidation, dissolution, and winding up of the
     Corporation. The rights of the shares of Common Stock shall be subject to
     the Preferences and relative rights of the Series G Preferred Shares.
     Except for the Corporation's Series C Convertible Preferred Stock, Series D
     Convertible Preferred Stock, Series E Convertible Preferred Stock and
     Series F Convertible Preferred Stock, the Series G Preferred Shares shall
     be of greater rank than any Series of Common or Preferred Stock hereinafter
     issued by the Corporation. Without the prior express written consent of the
     holders of not less than two-thirds (2/3) of the then outstanding Series G
     Preferred Shares, the Corporation shall not hereafter authorize or issue
     additional or other capital stock that is of senior or equal rank to the
     Series G Preferred Shares in respect of the preferences as to distributions
     and payments upon the liquidation, dissolution and winding up of the
     Corporation. Without the prior express written consent of the holders of
     not less than two-thirds (2/3) of the then outstanding Series G Preferred
     Shares, the Corporation shall not hereafter authorize or make any amendment
     to the Corporation's Certificate of Incorporation or bylaws, or file any
     resolution of the board of directors with the Delaware Secretary of State
     containing any provisions that would adversely affect or otherwise impair
     the rights or relative priority of the holders of the Series G Preferred
     Shares relative to the holders of the Common Stock or the holders of any
     other class of capital stock in respect of the preferences as to
     distributions and payments upon the liquidation, dissolution and winding up
     of the Corporation. In the event of the merger or consolidation of the
     Corporation with or into another corporation, the Series G Preferred Shares
     shall maintain their relative powers, designations, and preferences
     provided for herein and no merger shall result inconsistent therewith.

          (12)  Restriction on Dividends. If any Series G Preferred Shares are
     outstanding, without the prior express written consent of the holders of
     not less than two-thirds (2/3) of the then outstanding Series G Preferred
     Shares, the Corporation shall not directly or indirectly declare, pay or
     make any dividends or other distributions upon any of the Common Stock
     unless written notice thereof has been given to holders of the Series G
     Preferred Shares at least thirty (30) days prior to the earlier of (a) the
     record date taken for, or (b) the payment of any such dividend or other
     distribution. Notwithstanding the foregoing, this Section 12 shall not
     prohibit the Corporation from declaring and paying a dividend in cash or
     cash equivalents with respect to the Common Stock so long as the
     Corporation: (i) pays simultaneously to each holder of Series G Preferred
     Shares an amount in cash or cash equivalents equal to the amount such
     holder would have received had all of such holder's Series G Preferred
     Shares been converted to Common Stock pursuant to Section 4 hereof one (1)
     business day prior to the record date for any such dividend, and (ii) after
     giving effect to the payment of any dividend and any other payments
     required in connection therewith including to the holders of the Series G
     Preferred Shares under clause 12(a)(i) hereof, the Corporation has in cash
     or cash

                                       83
<PAGE>   17

     equivalents an amount equal to the aggregate of: (A) all of its liabilities
     reflected on its most recently available balance sheet, (B) the amount of
     any indebtedness incurred by the Corporation or any of its subsidiaries
     since its most recent balance sheet, and (C) 125% of the amount payable to
     all holders of any shares of any class of preferred stock of the
     Corporation assuming a liquidation of the Corporation as of the date of its
     most recently available balance sheet.

          (13) Vote to Change the Terms of Series G Preferred Shares. The
     affirmative vote at a meeting duly called for such purpose or the written
     consent without a meeting, of the holders of not less than two-thirds (2/3)
     of the then outstanding Series G Preferred Shares, shall be required for
     any change to this Certificate of Designations or the Corporation's
     Certificate of Incorporation which would amend, alter, change or repeal any
     of the powers, designations, preferences and rights of the Series G
     Preferred Shares.

          (14) Lost or Stolen Certificates. Upon receipt by the Corporation of
     evidence satisfactory to the Corporation of the loss, theft, destruction or
     mutilation of any certificates representing the Series G Preferred Shares,
     and, in the case of loss, theft or destruction, of any indemnification
     undertaking by the holder to the Corporation and, in the case of
     mutilation, upon surrender and cancellation of the Series G Preferred Share
     certificate(s), the Corporation shall execute and deliver new Series G
     Preferred Share certificate(s) of like tenor and date; provided, however,
     the Corporation shall not be obligated to reissue Series G Preferred Share
     certificates if the holder contemporaneously requests the Corporation to
     convert such Series G Preferred Shares into Common Stock.

          (15) Withholding Tax Obligations. Notwithstanding anything herein to
     the contrary, to the extent that the Corporation receives advice in writing
     from its counsel that there is a reasonable basis to believe that the
     Corporation is required by applicable Federal laws or regulations and
     delivers a copy of such written advice to the holders of the Series G
     Preferred Shares so effected, the Corporation may reasonably condition the
     making of any distribution (as such term is defined under applicable
     federal tax law and regulations) in respect of any Series G Preferred
     Shares on the holder of such Series G Preferred Shares depositing with the
     Corporation an amount of cash sufficient to enable the Corporation to
     satisfy its withholding tax obligations (the "WITHHOLDING TAX") with
     respect to such distribution. Notwithstanding the foregoing or anything to
     the contrary, if any holder of the Series G Preferred Shares so effected
     receives advice in writing from its counsel, reasonably acceptable to the
     Corporation, that there is a reasonable basis to believe that the
     Corporation is not so required by applicable federal laws or regulations
     and delivers a copy of such written advice to the Corporation, the
     Corporation shall not be permitted to condition the making of any such
     distribution in respect of any Series G Preferred Shares on the holder of
     such Series G Preferred Shares depositing with the Corporation any
     Withholding Tax with respect to such distribution; provided, however, the
     Corporation may reasonably condition the making of any such distribution in
     respect of any Series G Preferred Shares on the holder of such Series G
     Preferred Shares executing and delivering to the Corporation, at the
     election of the holder, either (i) if applicable, a properly completed
     Internal Revenue Service Form 4224, or (ii) an

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<PAGE>   18

     indemnification agreement in reasonably acceptable form, with respect to
     any federal tax liability, penalties and interest that may be imposed upon
     the Corporation by the Internal Revenue Service as a result of the
     Corporation's failure to withhold in connection with such distribution to
     such holder. If the conditions in the preceding two sentences are fully
     satisfied, the Corporation shall not be required to pay any additional
     damages set forth in Section 4(e)(v) of this Certificate of Designations if
     its failure to timely deliver any Conversion Shares results solely from the
     holder's failure to deposit any withholding tax hereunder or provide to the
     Corporation an executed indemnification agreement in the form reasonably
     satisfactory to the Corporation.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Cy E. Hammond, its Senior Vice President and Chief
Financial Officer, as of the sixth day of March, 2000.


                                            NCT GROUP, INC.


                                            By: /s/ CY E. HAMMOND
                                                -------------------------
                                                Cy E. Hammond
                                                Senior Vice President and
                                                Chief Financial Officer

                                       85
<PAGE>   19


                                    EXHIBIT I

                                 NCT GROUP, INC.
                                CONVERSION NOTICE

     Reference is made to the Certificate of Designations, Preferences and
Rights of Series G Convertible Preferred Stock of NCT Group, Inc. (the
"CERTIFICATE OF DESIGNATIONS"). In accordance with and pursuant to the
Certificate of Designations, the undersigned hereby elects to convert the number
of shares of Series G Convertible Preferred Stock, $.10 par value per share (the
"SERIES G PREFERRED SHARES"), of NCT Group, Inc., a Delaware corporation (the
"CORPORATION"), indicated below into shares of Common Stock, $.01 par value per
share (the "COMMON STOCK"), of the Corporation, by tendering the stock
certificate(s) representing the share(s) of Series G Preferred Shares specified
below as of the date specified below.

     The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon conversion of the Series G Preferred
Shares shall be made only pursuant to (i) a registration statement effective
under the Securities Act of 1933, as amended (the "ACT"), or (ii) an opinion of
counsel in form and content reasonably satisfactory to the Corporation that such
sale is exempt from registration required by Section 5 of the Act.

                                            Date of Conversion:

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

                                            Number of Series G
                                            Preferred Shares to be converted:

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

                                            Stock certificate no(s). of Series G
                                            Preferred Shares to be converted:

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

Please confirm the following information:

                                            Conversion Price:

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

                                            Number of shares of Common Stock
                                            to be issued:

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

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<PAGE>   20

Please issue the Common Stock into which the Series G Preferred Shares are being
converted in the following name and to the following address:

                                            Issue to:  1

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

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

                                            Facsimile Number:

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

                                            Authorization:

                                            ------------------------------------
                                            By:
                                                --------------------------------
                                            Title:
                                                   -----------------------------

                                            Dated:
                                                   -----------------------------


ACKNOWLEDGED AND AGREED:

NCT GROUP, INC.

By:
    --------------------------------------
Name:
      ------------------------------------
Title:
       -----------------------------------

Date:
      ------------------------------------


----------
         1 If other than to the record holder of the Series G Preferred Shares,
any applicable transfer tax must be paid by the undersigned.

                                       87