Document:

Exhibit 10.2

                                 NCT Group, Inc.
                          2001 Stock and Incentive Plan
               (as amended and restated as of September 17, 2004)

1.   Purpose.

The purpose of the NCT Group, Inc. 2001 Stock and Incentive Plan (the "Plan") is
to furnish a material  incentive to employees,  directors and consultants of the
Company and its  Subsidiaries by making available to them the benefits of Common
Stock ownership in the Company through stock options,  awards and otherwise.  It
is believed that these increased  incentives stimulate the efforts of employees,
directors and consultants  towards the continued  success of the Company and its
Subsidiaries, as well as assist in the recruitment of new employees.

2.   Administration.

The Plan shall be administered  and interpreted by the  Compensation  Committee,
consisting  of not less than two persons  appointed by the Board of Directors of
the  Company  from among its  members.  A person  may serve on the  Compensation
Committee  only if he or she (i) is a  "Non-employee  Director"  for purposes of
Rule 16b-3 under the  Securities  Exchange  Act of 1934,  as amended  (the "1934
Act"); and (ii) satisfies the requirements of an "outside director" for purposes
of Section 162(m) of the Internal Revenue Code. The Compensation  Committee may,
in its sole and absolute discretion,  and subject to the provisions of the Plan,
from time to time establish  such rules and  regulations to administer the Plan,
and delegate any or all of its  authority  to  administer  the Plan to any other
persons  or  committees  as it deems  necessary  or  appropriate  for the proper
administration  of the Plan, except that no such delegation shall be made in the
case of stock options or awards intended to be qualified under Section 162(m) of
the Internal  Revenue Code. The decisions of the  Compensation  Committee or its
authorized  designee (the "Committee") shall be final,  conclusive,  and binding
with respect to the  interpretation and administration of the Plan and any grant
made  under  it.  The  Committee  shall  make,  in  its  sole  discretion,   all
determinations arising in the administration,  construction or interpretation of
the Plan and stock  options and awards under the Plan (other than stock  options
and awards granted to non-employee directors or outside consultants, which shall
be  determined  by the Board of  Directors),  including  the  right to  construe
disputed or doubtful Plan,  stock option or award terms and provisions,  and any
such  determination  shall be conclusive  and binding on all persons,  except as
otherwise  provided by law.  No member of the  Compensation  Committee  shall be
liable for any action  taken or  determination  made  hereunder  in good  faith.
Service on the Compensation  Committee shall constitute service as a director of
the Company so that all members of the Compensation  Committee shall be entitled
to indemnification and reimbursement as directors of the Company pursuant to its
certificate of incorporation.

3.   Total Number of Shares.

Subject to the provisions of Section 8(b), the maximum amount of stock which may
be  issued  under  the Plan is  18,000,000  shares  of the  Common  Stock of the
Company.  No participant  under this Plan shall be granted (i) options or awards
which could result in such participant  receiving in any calendar year more than
20% of the maximum  number of shares  which may be issued  under the Plan as set
forth in the  previous  sentence,  (ii) any option or award if such  participant
owns more than ten  percent of the stock of the  Company  within the  meaning of
Section 422 of the Internal  Revenue Code;  or (ii) any  Incentive  Stock Option
which would  result in such  participant  receiving a grant of  Incentive  Stock
Options for stock that would have an  aggregate  fair market  value in excess of
$100,000,  determined  as of the time that the option is granted,  that would be
exercisable for the first time by such participant during any calendar year.

Any shares  which are not  purchased  or awarded  under an option or other award
which has terminated,  been surrendered back to the Company or lapsed, either by
its terms or pursuant to the exercise, in whole or in part, of an award or right
granted under the Plan, may be used for further grant of options or awards.

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4.   Participation in Plan.

(a)  Employees.  All  employees  of the  Company  or its  Subsidiaries  shall be
eligible to  participate in this Plan.  From time to time,  the Committee  shall
determine which employees shall be granted options, stock awards or other awards
under the Plan, the number of shares of Common Stock to be made subject  thereto
granted to each such  employee  and the terms and  conditions  of such  options,
consistent  with the Plan.  Upon the  selection  of an employee to be granted an
option  pursuant to the terms of this Plan,  the  Committee  shall  instruct the
Secretary  to issue such option and may impose such  conditions  on the grant of
such option as it deems appropriate.  No Incentive Stock Option shall be granted
to any person who is not an employee.  Nothing in the Plan shall  interfere with
or limit in any way the right of the Company or any  Subsidiary to terminate any
participant's  employment at any time, nor confer upon any participant any right
to continue in the employ of the Company or any  Subsidiary.  No employee  shall
have the right to be  selected  to receive an option or other  award  under this
Plan or having been so selected,  to be selected to receive a future award grant
or option.  Neither  the award nor any  benefits  arising out of this Plan shall
constitute part of a participant's  employment  contract with the Company or any
Subsidiary  and,  accordingly,  this  Plan  and the  benefits  hereunder  may be
terminated  at any time in the  sole and  exclusive  discretion  of the  Company
without  giving rise to liability  on the part of the Company or any  Subsidiary
for  severance  payments.  The  awards  under this Plan are not  intended  to be
treated as compensation for any purpose under any other Company plan, benefit or
arrangement. For any and all purposes under this Plan, the term "employee" shall
not  include  a person  hired as an  independent  contractor,  leased  employee,
consultant or a person  otherwise  designated by the Company at the time of hire
as not eligible to  participate in or receive  benefits under the Plan,  even if
such  ineligible  person is  subsequently  determined to be an "employee" by any
governmental or judicial authority.

(b)  Non-Employees.  Non-employee  directors  and  consultants  (who are natural
persons) of the Company shall be eligible to participate in this Plan. From time
to time, the Board of Directors shall determine which non-employee directors and
consultants  shall be granted  options,  stock  awards or other awards under the
Plan, the number of shares of Common Stock to be made subject  thereto,  and the
terms  and  conditions  of such  options,  consistent  with the  Plan.  Upon the
selection of a  non-employee  director or  consultant to be granted an option or
award pursuant to the terms of this Plan, the Board of Directors  shall instruct
the  Secretary to issue such option and may impose such  conditions on the grant
of such option as it deems appropriate.  Non-employee  directors and consultants
shall not be granted Incentive Stock Options.

5.   Term of Plan.

No option or stock  award with  respect to shares  shall be granted  pursuant to
this Plan after April 24, 2011, but the exercise of options or other awards, and
restrictions on options or awards, may extend beyond such date.

6.   Terms and Conditions of Options.

Except as  expressly  provided in the Plan,  all  options  under the Plan may be
granted  in  either or both  Incentive  Stock  Options  or  non-qualified  stock
options.  All options granted  hereunder shall be subject to the following terms
and conditions:

(a) Option  Price.  The option price per share shall be set by the Committee (or
the Board of Directors, in the case of options granted to non-employee directors
or  consultants);  provided,  however,  that in the case of an  Incentive  Stock
Option, the price per share shall be not less than 100% of the fair market value
of the Common  Stock on the date the option is  granted,  as  determined  by the
Committee  or the  Board  of  Directors  (as  applicable),  in  accordance  with
applicable  provisions  of the Internal  Revenue  Code and  Treasury  Department
rulings and regulations thereunder.

(b) Number of  Shares.  The  option  shall  state the number of shares of Common
Stock covered thereby.

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(c) Exercise of Option.  The granting of an option  imposes no obligation on the
optionee to exercise such option. Each option shall become exercisable according
to the terms of this Plan; provided, however, that by a resolution adopted after
an option is granted,  the Committee (or the Board of Directors,  in the case of
an  non-employee  director  or  outside  consultant)  may,  on  such  terms  and
conditions as it may determine to be  appropriate,  accelerate the time at which
such  option or any  portion  thereof  may be  exercised.  Except  as  otherwise
provided in this Plan or as expressly approved in each instance by the Committee
(or the Board of  Directors,  in the case of  options  granted  to  non-employee
directors or  consultants),  no portion of an option which is  unexercisable  at
termination of employment,  directorship  or consultancy,  as applicable,  shall
thereafter  become  exercisable.  An  option  will be  deemed  exercised  by the
optionee,  or in the event of death,  an option will be deemed  exercised by the
estate of the optionee or by a person who  acquired  the right to exercise  such
option by bequest or inheritance or by reason of the death of the optionee, upon
delivery of (i) a notice of exercise to the Company or its representative, or by
using  other  methods  of  notice  as  the  Committee  shall  adopt;   and  (ii)
accompanying payment of the option price in accordance with any restrictions the
Committee  shall  adopt.  The  notice  of  exercise,  once  delivered,  shall be
irrevocable.  (d) Term of Option.  The Committee (or the Board of Directors,  in
the case of options  granted to  non-employee  directors or  consultants)  shall
determine the option exercise  period of each stock option.  The exercise period
for  Incentive  Stock  Options shall not exceed ten years from the grant date. A
non-qualified  stock option may be  exercisable  for a period of up to ten years
and  six  months  so as to  conform  with  or  take  advantage  of  governmental
requirements, statutes or regulations.

(e) First Exercisable Date;  Partial Exercise.  No option or any portion thereof
may be exercised except as specified in the option;  provided,  however,  in the
event that the Board of  Directors of the Company  determines  that a "Change of
Control" of the Company has  occurred or will occur,  as that term is defined in
Section  8(e),  any options or awards that are not  exercisable  or vested shall
become  exercisable or vested as of the Change of Control,  and further provided
that the  Committee  may in its  discretion  make any  options  that are not yet
exercisable  immediately exercisable (i) where an optionee's employment is to be
terminated due to a divestiture or downsizing of a business; (ii) in the case of
a retiring optionee who holds options with extended vesting provisions; or (iii)
otherwise,  where the Committee  determines  that such action is  appropriate to
prevent  inequities  with respect to an  optionee.  At any time and from time to
time prior to the time when the option  becomes  unexercisable  under this Plan,
the  exercisable  portion  of an option  may be  exercised  in whole or in part;
provided,  however,  that the Company shall not be required to issue  fractional
shares  and the  Committee  (or the Board of  Directors,  in the case of options
granted to  non-employee  directors  or  consultants)  may,  by the terms of the
option,  require any partial  exercise to exceed a specified  minimum  number of
shares.

(f) Termination of Option.  All options shall  terminate upon their  expiration,
upon their surrender, upon breach by the optionee of any provision of the option
or in accordance with any other rules and procedures incorporated into the terms
and  conditions  governing  the  options  as the  Committee  (or  the  Board  of
Directors,  in  the  case  of  options  granted  to  non-employee  directors  or
consultants) shall deem advisable or appropriate.

(g)  Incorporation  by Reference.  The option shall contain a provision that all
the applicable  terms and conditions of this Plan are  incorporated by reference
therein.

(h) Other  Provisions.  The option shall also be subject to such other terms and
conditions as the  Committee (or the Board of Directors,  in the case of options
granted to  non-employee  directors  or  consultants)  shall deem  advisable  or
appropriate,  consistent with the provisions of the Plan as herein set forth. In
addition, the Incentive Stock Options shall contain such other provisions as may
be necessary to meet the  requirements of the Internal Revenue Code and Treasury
Department  rulings and regulations  issued thereunder with respect to Incentive
Stock  Options.  An  Incentive  Stock  Option  which  fails  to meet  any of the
requirements  set forth in this Plan,  the option or Section 422 of the Internal
Revenue Code shall be a non-qualified stock option.

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7.   Stock Awards.

Stock  awards will  consist of shares of Common  Stock of the Company  issued to
participants.  Each stock award to a  participant  may  provide  that the shares
subject to such award may not be  transferred  or  otherwise  disposed of by the
participant  prior to the  expiration of a period or periods  specified  therein
(except  that the award or the  Committee  may permit the earlier  lapse of such
restriction in the event of the  participant's  death,  disability or retirement
pursuant to any pension or retirement  plan  maintained by the Company or any of
its Subsidiaries). Any stock award containing any such restriction shall provide
that the Company shall have the right to reacquire such shares upon  termination
of the  participant's  employment with the Company while such  restriction is in
effect,  such reacquisition to be upon the terms and conditions  provided in the
award.  Stock awards shall also be subject to such other terms and conditions as
the Committee shall deem advisable or appropriate consistent with the provisions
of the Plan as herein set forth.  Notwithstanding  anything  in this Plan to the
Contrary,  the maximum  amount of stock  awards  which may be issued  under this
Section 7 shall not  exceed  15% of the  maximum  number of shares  which may be
issued under the Plan as set forth in the first sentence of Section 3 above.

8.   Conditions Applicable to All Options and Awards.

(a) Issuance of Stock  Certificates.  The Company shall not be required to issue
or deliver any  certificate or  certificates  for shares of stock purchased upon
the  exercise of any option or portion  thereof or upon any stock award prior to
fulfillment of all of the following conditions:

     (i) The admission of such shares to listing on any and all stock  exchanges
on which such class of stock is then listed;

     (ii) The  completion of any  registration  or other  qualification  of such
shares under any state or Federal law or under the rulings or regulations of the
Securities and Exchange  Commission or any other  governmental  regulatory body,
which the Committee (or Board of  Directors,  in the case of options  granted to
non-employee  directors or  consultants)  shall,  in its sole  discretion,  deem
necessary or advisable;

     (iii) The  obtaining  of any  approval  other  clearance  from any state or
Federal  governmental agency which the Committee (or the Board of Directors,  in
the case of options granted to an non-employee  directors or consultants) shall,
in its sole discretion, determine to be necessary or advisable; and

     (iv) If  applicable,  the payment in cash by the optionee to the Company of
all amounts which the Company is required to withhold  under  Federal,  state or
local law in  connection  with the  exercise  of an option  upon  request by the
Company.

(b)  Recapitalization.  In the  event of any  change  in the  number  or kind of
outstanding   shares  of   Common   Stock  of  the   Company   by  reason  of  a
recapitalization,    merger,    consolidation,    reorganization,    separation,
liquidation,  stock split,  stock  dividend,  combination of shares or any other
change  in the  corporate  structure  or  shares  of  stock of the  Company,  an
appropriate adjustment will be made, in accordance with applicable provisions of
the  Internal  Revenue  Code and  Treasury  Department  rulings and  regulations
thereunder, in the number and kind of shares for which any options or awards may
thereafter be granted both in the aggregate and as to each optionee,  as well as
in the number and kind of shares theretofore  granted and the price payable.  In
no event  may any  change  be made in an  Incentive  Stock  Option  which  would
constitute a  "modification"  under  Section  424(h)(3) of the Internal  Revenue
Code.  The  Committee  may adjust  awards to preserve  the benefits or potential
benefits of the awards  otherwise in a manner not  inconsistent  with applicable
provisions  of the Internal  Revenue Code and  Treasury  Department  rulings and
regulations thereunder. Action by the Committee may include, without limitation:
(i) adjustment of the number and of kind of shares which may be delivered  under
the  Plan;  (ii)  adjustments  of the  number  and  kind of  shares  subject  to
outstanding  awards;  (iii)  adjustment  of the  exercise  price of  outstanding
options;  and  (iv)  any  other  adjustments  the  Committee  determines  to  be
equitable. Any such determination shall be final and binding on all parties.

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(c) Transferability.  Options and awards shall not be transferable other than by
will or the laws of descent and  distribution  and shall be exercisable,  during
the optionee's or grantee's lifetime, only by the optionee or grantee; provided,
however,  that the Committee (or the Board of Directors,  in the case of options
granted to  non-employee  directors or  consultants) in its discretion may grant
(or sanction by way of an amendment to an existing  grant)  non-qualified  stock
options which may be  transferred  by the  optionee,  solely as gifts during the
optionee's  lifetime,  to any member of the optionee's  immediate family or to a
trust  established  for the  exclusive  benefit  of one or more  members  of the
optionee's  immediate  family,  in which case the terms of such option  shall so
state.  As used in this  subsection,  immediate  family  shall mean any  spouse,
child,  stepchild or  grandchild  of an optionee,  and shall  include any of the
foregoing relationships arising from legal adoption.

(d) Leave of Absence.  If approved by the  Committee,  an employee's  absence or
leave because of military or  governmental  service,  disability or other reason
shall not be considered  an  interruption  of employment  for any purpose of the
Plan.

(e) Change of Control. Change of Control shall mean the occurrence of any of the
following  events:  (i) at any time during the  two-year  period  following  the
Effective Date, or the beginning of a renewal term, as the case may be, at least
a  majority  of the  Company's  Board of  Directors  shall  cease to  consist of
"Continuing  Directors"  (meaning  directors  of the  Company  who  either  were
directors at the beginning of such two-year  period or who  subsequently  became
directors  and whose  election,  or  nomination  for  election by the  Company's
stockholders,  was approved by a majority of the then Continuing Directors);  or
(ii) any "person" or "group" (as determined for purposes of Section  13(d)(3) of
the 1934  Act),  except  any  majority-owned  Subsidiary  of the  Company or any
employee  benefit  plan of the  Company  or any  trust  thereunder,  shall  have
acquired,  directly or indirectly,  more than 50% of either (A) the  outstanding
shares of the Common  Stock of the Company or (B) the  combined  voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors; or (iii) a merger or consolidation occurs to which
the Company is a party, whether or not the Company is the surviving corporation,
in which  outstanding  shares of Common Stock of the Company are converted  into
shares of another  company (other than a conversion into shares of voting Common
Stock of the successor  corporation or a holding  company  thereof  representing
more than 50% of the  voting  power of all  capital  stock  thereof  outstanding
immediately  after the merger or  consolidation)  or other securities (of either
the Company or another  company) or cash or other property;  or (iv) the sale of
all,  or  substantially  all,  of  the  Company's  assets  occurs;  or  (v)  the
stockholders  of the  Company  approve  a plan of  complete  liquidation  of the
Company.

(f) Applicable  Law. Any option or other award shall contain a provision that it
may not be  exercised  at a time when the  exercise  thereof or the  issuance of
shares  thereunder  would  constitute a violation of any Federal or state law or
listing requirements of the New York Stock Exchange, the NASDAQ Stock Market, or
other principal market on which the Company's Common Stock is listed for trading
for  such  shares  or  a  violation  of  the  applicable  laws  of  any  foreign
jurisdiction  where  options or other  awards  are or will be granted  under the
Plan. The provisions of the Plan shall be construed,  regulated and administered
according  to the  laws of the  State  of  Delaware  without  giving  effect  to
principles  of  conflicts  of  laws,  except  to the  extent  superseded  by any
controlling Federal statute.

(g)  Performance  Based Awards.  The  Committee may designate  whether any award
under   Section  7  being   granted  to  any   employee   is   intended   to  be
"performance-based  compensation"  as that term is used in Section 162(m) of the
Internal  Revenue  Code.  Any such awards  designated  to be  "performance-based
compensation" shall be conditioned on the achievement of one or more performance
measures,  to the extent required by Internal  Revenue Code Section 162(m).  The
performance measurers that may be used by the Committee for such awards shall be
based on any one or more of the  following as selected by the  Committee:  Total
shareholder return,  earnings per share growth, increase in revenue, share price
appreciation,  return on assets, return on equity, inventory utilization,  total
asset  utilization and operating  income growth.  For such awards intended to be
"performance-based compensation," the grant of the awards and the established of
the performance measures shall be made during the period required under Internal
Revenue Code Section 162(m).

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(h) Tax Withholding. The Company shall have the right to deduct applicable taxes
from any  option or award  payment  and  withhold,  at the time of  delivery  or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes  required by law or to take such other  actions as may be  necessary in
the opinion of the Company to satisfy all  obligations  for  withholding of such
taxes. The Committee may also permit withholding to be satisfied by the transfer
to the Company of shares of Common Stock  theretofore owned by the holder of the
option or award with  respect to which  withholding  is  required.  If shares of
Common  Stock are used to satisfy tax  withholding,  such shares shall be valued
based on the  Common  Stock's  fair  market  value when the tax  withholding  is
required to be made.

(i) Rights as  Stockholders.  The holder of an option shall not be, nor have any
of the rights or privileges  of, a stockholder  of the Company in respect of any
shares  purchasable  upon the exercise of any part of an option unless and until
such holder has entered into a stockholder's  agreement with the Company, if and
as may be required by the Company,  and  certificates  representing  such shares
have been issued by the Company to such holder.

9.   Definitions.

(a) Board of Directors.  The term "Board of  Directors"  shall mean the Board of
Directors of the Company.

(b) Committee.  The term "Committee"  shall mean the  Compensation  Committee or
such other  persons or  committee as referred to in Section 2 hereof to which it
has delegated any authority, as may be appropriate.

(c) Common Stock.  The term "Common  Stock" shall mean the $.01 par value Common
Stock of the Company,  authorized but unissued,  or issued and reacquired by the
Company  and held as  treasury  stock,  or held by any  trust or in any  reserve
established  by  the  Company  for  the  purpose  of  satisfying  the  Company's
obligations for the issuance of Common Stock under the Plan.

(d)  Company.  The  term  "Company"  shall  mean NCT  Group,  Inc.,  a  Delaware
corporation, or any successor corporation.

(e) Effective Date. The effective date shall be April 25, 2001.

(f) Compensation  Committee.  The term  "Compensation  Committee" shall mean the
Compensation  Committee of the Company as constituted by resolution of the Board
of Directors.  (g) Incentive  Stock Option.  The term  "Incentive  Stock Option"
shall mean an option which qualifies  under Section 422 of the Internal  Revenue
Code and is designated an Incentive Stock Option by the Committee.

(h) Internal  Revenue  Code.  The term  "Internal  Revenue  Code" shall mean the
Internal Revenue Code of 1986, as it may be amended from time to time.

(i) Subsidiary. The term "Subsidiary" shall mean a subsidiary corporation of the
Company as determined by the Committee,  provided,  however, that in the case of
Incentive Stock Options,  such term shall be as defined in Section 424(f) of the
Internal Revenue Code.

10.  Use of Proceeds.

The proceeds received by the Company from the sale of stock under the Plan shall
be  added  to the  general  funds  of the  Company  and  shall  be used for such
corporate purposes as the Board of Directors shall direct.

11.  Amendment and Revocation.

The  Compensation  Committee shall have the right to alter,  amend or revoke the
Plan or any part thereof at any time and from time to time;  provided,  however,
that without the consent of the participants  affected,  unless required by law,
no change  may be made in any  option or award  theretofore  granted  which will

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impair  the  rights  of  such  participants,  and  provided  further,  that  the
Compensation  Committee  may not,  without  the  approval  of the  holders  of a
majority of the  outstanding  Common Stock  present in person or by proxy at any
duly called meeting of the stockholders, make any alteration or amendment to the
Plan which  increases the maximum  number of shares of Common Stock which may be
issued  under the Plan or the number of shares of such stock which may be issued
to any one participant,  extends the term of the Plan,  reduces the option price
below that now provided for in the Plan,  materially modifies the eligible class
of employees or effects a change  relating to Incentive  Stock  Options which is
inconsistent  with Section 422 of the Internal  Revenue Code.  The  Compensation
Committee may delegate to another committee, as it may appoint, the authority to
take any action consistent with the terms of the Plan, either before or after an
option or award has been granted,  which such other committee deems necessary or
advisable to comply with any  government  laws or regulatory  requirements  of a
foreign  country,  including  but not limited to modifying or amending the terms
and conditions governing any options or awards or establishing any local country
plans as  sub-plans  to this Plan,  each of which may be attached as an Appendix
hereto.

12.  Compliance with Section 16.

With respect to participants  subject to Section 16 of the 1934 Act ("Members"),
all grants,  awards,  exercises of options and any other  transactions under the
Plan are intended to comply with all applicable  conditions of Rule 16b-3 or its
successors  under the 1934 Act.  To the  extent  that  compliance  with any Plan
provision  applicable  solely to  Members  is not  required  in order to bring a
transaction by Member into  compliance  with Rule 16b-3 or any successor rule or
regulation,  it shall be  deemed  null and void as to such  transaction,  to the
extent permitted by law and deemed advisable by the Committee. To the extent any
provision of the Plan or action by the Committee involving Members is deemed not
to comply with an applicable  condition of Rule 16b-3 or any  successor  rule or
regulation,  it shall be null and void as to Members, to the extent permitted by
law and deemed advisable by the Committee.

13.  Effect of Plan Upon Other Option and Compensation Plans.

The adoption of this Plan shall not affect any other  compensation  or incentive
plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company or any  Subsidiary  (a) to establish
any other forms of  incentives  or  compensation  for  directors,  employees  or
consultants  of the  Company  (or any  Subsidiary);  or (b) to grant  or  assume
options  otherwise than under this Plan in connection  with any proper  purpose,
including,  but not by way of limitation,  the grant or assumption of options in
connection with the acquisition by purchase,  lease,  merger,  consolidation  or
otherwise  of the  business,  stock  or  assets  of  any  corporation,  firm  or
association.

14.  Approval of Plan by Stockholders.

This Plan will be  submitted  for the  approval  of the  Company's  stockholders
within twelve months after the date of the Board of Directors'  initial adoption
of this Plan and the Plan and the options  granted  hereunder  will be effective
upon approval by such stockholders as contemplated by Section  280G(b)(5)(A)(ii)
of the  Internal  Revenue  Code and  regulations  thereunder  as if a "change in
control"  occurred  immediately  following  such  approval.  No  option  may  be
exercised  to any extent by anyone  unless and until the Plan is so  approved by
the stockholders,  and if such approval has not been obtained by the end of said
twelve-month  period,  the  Plan  and  all  options  theretofore  granted  shall
thereupon be cancelled and become null and void.

15.  Titles.

Titles are provided herein for convenience  only and are not to serve as a basis
for interpretation or construction of the Plan.

                                       7
<PAGE>

16.  Severability.

In the event any portion of the Plan or any action taken  pursuant  hereto shall
be held illegal or invalid for any reason,  the  illegality or invalidity  shall
not affect the remaining  parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provisions had not been included,  and the
illegal or invalid action shall be null and void.

                                       8Exhibit 10.8(a)

THE SECURITIES  REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
CONVERSION  HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THE SECURITIES  HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED  OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT
FOR THE SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR AN OPINION
OF COUNSEL IN FORM,  SUBSTANCE AND SCOPE  REASONABLY  ACCEPTABLE TO THE BORROWER
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT. ANY SUCH SALE,  ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS.

                            SECURED CONVERTIBLE NOTE
                                     (No. )

                                                                     $

FOR VALUE RECEIVED, NCT GROUP, INC., a Delaware corporation  (hereinafter called
the  "Borrower")  hereby  promises  to pay to the  order of  Carole  Salkind  or
registered       assigns       (the       "Holder")       the       sum       of
____________________________________________ ($______) on __________, and to pay
interest on the unpaid principal  balance hereof at eight percent (8%) per annum
(the "Ordinary Interest Rate") from the date hereof (the "Issue Date") until the
same  becomes  due and  payable,  whether at maturity  or upon  acceleration  or
otherwise. Any amount of principal of or interest on this Note which is not paid
when due shall bear interest at the rate of five percent (5%) above the Ordinary
Interest Rate (the "Default  Interest Rate") from the due date thereof until the
same is paid.  Interest  shall  commence  accruing on the Issue Date and, to the
extent not  converted in  accordance  with the  provisions  of Article II below,
shall be payable in arrears on the date the principal amount in respect of which
it has  accrued  is  paid,  whether  at  maturity  or  upon  acceleration  or by
prepayment or  otherwise.  All payments of principal and interest (to the extent
not converted in accordance with the terms hereof) shall be made in lawful money
of the United States of America.  All payments  shall be made at such address as
the Holder  shall  hereafter  give to the  Borrower  by written  notice  made in
accordance with the provisions of this Note.

The following terms shall apply to this Note:

                                    ARTICLE I

                                  NO PREPAYMENT

     1.1  PREPAYMENT.  This  Note is not  subject  to  prepayment.  This Note is
subject to optional conversion in accordance with Section 2.7 below.

                                   ARTICLE II

            CONVERSION AND PURCHASE RIGHTS; PAYMENT OF EXERCISE PRICE

     2.1  CONVERSION  RIGHT.  The Holder  shall have the right (the  "Conversion
Right") at any time on or prior to the day this Note is paid in full, to convert
at any time all or from  time to time any  part of the  outstanding  and  unpaid
principal  amount of this Note of at least  $50,000,  or such  lesser  amount as
shall remain unpaid at the time of the conversion,  into, at Holder's  election,
(i) fully paid and  non-assessable  shares of common  stock,  par value $.01 per
share, of the Borrower ("Common  Stock"),  at the conversion price determined by
Section  2.2(a)  hereof;  (ii) if Artera  (UK)  Limited  ("Artera")  has made an

<PAGE>

initial public  offering of its common stock,  par value  (pound)1.00 per share,
fully paid and non-assessable  shares of such stock owned by the Borrower,  at a
conversion price equal to the initial public offering price of such stock; (iii)
if  Distributed  Media  Corporation  International  Limited  ("DMCI") has made a
public offering of its common stock, par value (pound)1.00 per share, fully paid
and non-assessable  shares of such stock owned by the Borrower,  at a conversion
price equal to the initial public offering price of such stock;  and (iv) if any
other subsidiary of the Borrower (other than Pro Tech Communications,  Inc.) has
made a public offering of its common stock, fully paid and non-assessable shares
of such stock owned by the Borrower,  at a conversion price equal to the initial
public  offering  price  of  such  stock.  Upon  the  surrender  of  this  Note,
accompanied  by a Notice of Conversion of Secured  Convertible  Note in the form
attached hereto as Exhibit 1, properly completed and duly executed by the Holder
(a "Conversion Notice"),  the Borrower shall issue and, within five (5) business
days after such surrender of this Note with the Conversion Notice, deliver to or
upon the order of the Holder (x) that  number of shares of common  stock for the
portion of the Note converted as shall be determined in accordance  herewith and
(y) a new  Note in the form  hereof  for the  balance  of the  principal  amount
hereof, if any.

     The number of shares of common stock to be issued upon each  conversion  of
this Note shall be determined by dividing (i) the sum of (A) that portion of the
principal  amount  of the Note to be  converted  plus (B) the  "Conversion  Date
Interest" (as defined below), by (ii) the Conversion Price (as defined below) in
effect on the date the  Conversion  Notice is  delivered  to the Borrower by the
Holder.  Conversion Date Interest means the product of (i) the principal  amount
of the Note to be converted,  multiplied by (ii) a fraction (A) the numerator of
which is the number of days elapsed  since the date of issuance of this Note and
(B) the  denominator of which is 365,  multiplied by the Ordinary  Interest Rate
(iii) or, a  fraction  (A) the  numerator  of which is the number of days in the
period  of  time  after  the  occurrence  of an  Event  of  Default  and (B) the
denominator of which is 365, multiplied by the Default Interest Rate.

     2.2 CONVERSION PRICE.

     (a) The per share  "Conversion  Price" for conversion of this Note into the
Borrower's  Common  Stock shall be equal to the closing sale price of the Common
Stock on the Trading Day (as defined  below)  immediately  preceding the date of
this Note;  provided,  however,  that if, on the date of this Note and the three
Trading Days thereafter (the "Window"), neither the Holder nor any Related Party
(as defined below) sells or, whether in writing or otherwise, agrees to sell any
shares of Common Stock or any option,  warrant,  instrument  or right to convert
into,  exchange for or acquire Common Stock, then such price shall be reduced to
a price  equal  to the  lowest  closing  sale  price,  if lower  than the  price
specified  above in this sentence,  of the Common Stock during the Window on the
principal securities exchange or market on which the Common Stock is then traded
as reported on  Bloomberg  Financial  Markets.  If any closing sale price of the
Common  Stock  during  the  Window  is lower  than the  price  specified  at the
beginning of this  Section  2.2(a),  the Holder  shall give the Borrower  prompt
written  notice of any sale of or  agreement to sell any Common Stock or option,
warrant,  instrument  or right to convert into,  exchange for or acquire  Common
Stock made by the Holder or a Related  Party  during the Window.  "Trading  Day"
shall  mean any day on which the  Common  Stock is traded  for any period on the
NASDAQ  National  Market,  or on the  principal  securities  exchange  or  other
securities  market on which the  Common  Stock is then  being  traded.  "Related
Party" shall mean a member of the Holder's  immediate  family,  including spouse
(even if separated or not residing with the Holder) and adult  children (even if
not residing  with the Holder),  or an entity (other than the Borrower) of which
the  Holder or any such  immediate  family  member is an  officer,  director  or
beneficial  shareholder  (determined  under  Rule  13d-3  under  the  Securities
Exchange Act of 1934, as amended (the "1934 Act")).  The Conversion  Price shall
also be subject to equitable  adjustments  for stock  splits,  stock  dividends,
combinations, recapitalization, reclassifications and similar events. The Artera
and DMCI "Conversion  Price" shall be equal to the initial public offering price
of such stock and shall be subject to adjustment  as provided in Section  2.2(b)
hereof.

                                       2
<PAGE>

     (b) The Conversion  Price for NCT, Artera and DMCI shall also be subject to
equitable   adjustments  for  stock  splits,   stock  dividends,   combinations,
reclassifications and similar events.

     (c) Borrower shall promptly notify each Holder of any adjustment (and event
that  requires  adjustment)  to the  Conversion  Price of NCT,  Artera  and DMCI
pursuant to this Section 2.2.

     2.3 AUTHORIZED  SHARES.  The Borrower  covenants that during the period the
Conversion Right exists,  the Borrower will use its best efforts to reserve from
its  authorized  and  unissued  Common  Stock a  sufficient  number of shares to
provide for the issuance of Common Stock upon the full  conversion of this Note.
The Borrower represents that upon issuance, such shares will be duly and validly
issued,  fully paid and  non-assessable.  The Borrower (i) acknowledges  that it
will  irrevocably  instruct its transfer  agent as soon as  practicable to issue
certificates for the Common Stock issuable upon conversion of this Note and (ii)
agrees that its  issuance of this Note shall  constitute  full  authority to its
officers  and  agents,  who  are  charged  with  the  duty  of  executing  stock
certificates,  to execute  and issue the  necessary  certificates  for shares of
Common Stock upon the  conversion  of this Note.  In the event that a sufficient
number of shares cannot be reserved,  Borrower agrees to use its best efforts to
call an annual meeting of the Borrower's  shareholders  and seek approval for an
increase in the authorized  shares of the Borrower's Common Stock to a number of
shares sufficient to provide for the full conversion of this Note.

     2.4 METHOD OF  CONVERSION.  Except as  otherwise  provided  in this Note or
agreed to by the Holder,  this Note may be  converted  by the Holder in whole at
any time or in part (provided such partial  conversion is at least $50,000) from
time to time by (i) submitting to the Borrower a Conversion Notice (by facsimile
dispatched on the  Conversion  Date and confirmed by U.S. mail or overnight mail
service sent within two Trading Days thereafter) and (ii) surrendering this Note
with the mailed confirmation of the Conversion Notice at the principal office of
the Borrower.  Upon partial exercise of the conversion rights provided hereby, a
new Note containing the same date and provisions as this Note shall be issued by
the  Borrower to the Holder for the  principal  balance of this Note which shall
not have been converted.  This Note has been issued by the Borrower  pursuant to
the exemption from  registration  provided either by Section 4.2 or Regulation D
under the Securities Act of 1933, as amended (the "Act").

     2.5  RESTRICTIONS  ON SHARES.  The  shares of common  stock  issuable  upon
conversion  of this Note may not be sold or  transferred  unless  (i) they first
shall have been registered  under the Act and applicable  state securities laws,
(ii) the Borrower shall have been furnished with an opinion of legal counsel (in
form, substance and scope reasonably  acceptable to Borrower) to the effect that
such sale or transfer is exempt from the registration requirements of the Act or
(iii) they are sold  pursuant to Rule 144 under the Act.  Each  certificate  for
shares of common stock issuable upon  conversion of this Note that have not been
so registered  and that have not been sold pursuant to an exemption that permits
removal of the legend,  shall bear a legend substantially in the following form,
as appropriate:

     THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
     REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED.  THE
     SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
     TRANSFERRED   OR  ASSIGNED   IN  THE  ABSENCE  OF  AN   EFFECTIVE
     REGISTRATION  STATEMENT FOR THE  SECURITIES  UNDER THE SECURITIES
     ACT OF 1933,  AS  AMENDED,  OR AN  OPINION  OF  COUNSEL  IN FORM,
     SUBSTANCE  AND SCOPE  REASONABLY  ACCEPTABLE TO THE BORROWER THAT
     REGISTRATION  IS NOT  REQUIRED  UNDER  SAID  ACT OR  UNLESS  SOLD
     PURSUANT TO RULE 144 UNDER SAID ACT.

                                       3
<PAGE>

     ANY SUCH SALE,  ASSIGNMENT  OR  TRANSFER  MUST ALSO  COMPLY  WITH
     APPLICABLE STATE SECURITIES LAWS.

     Upon the request of a holder of a  certificate  representing  any shares of
common stock  issuable upon  conversion of this Note,  the Borrower shall remove
the  foregoing  legend  from  the  certificate  or  issue  to such  holder a new
certificate  therefor free of any transfer legend, if (i) with such request, the
Borrower  shall  have  received   either  an  opinion  of  counsel,   reasonably
satisfactory  to the Borrower in form,  substance and scope,  to the effect that
any such legend may be removed  from such  certificate,  or (ii) a  registration
statement under the Act covering such  securities is in effect.  Nothing in this
Note shall affect in any way the Holder's  obligations to comply with applicable
securities laws upon the resale of the securities referred to herein.

     Borrower agrees to use its best efforts to register with the Securities and
Exchange  Commission,  no later  than the end of the term of this  Note  (unless
legally  prohibited  from doing so), a number of shares of Common Stock equal to
the  principal  amount  of this  Note  outstanding  at the time of  registration
divided by the  Conversion  Price with  respect to  Borrower.  Such Common Stock
shall not be used, without permission from the Holder, for any other purposes.

     2.6 EFFECT OF MERGER, CONSOLIDATION,  ETC. If at any time when this Note is
issued and outstanding,  there shall be any merger,  consolidation,  exchange of
shares, recapitalization, reorganization, or other similar event, as a result of
which shares of Common Stock of the Borrower shall be changed into the same or a
different number of shares of another class or classes of stock or securities of
the Borrower or another  entity,  or in case of any sale or conveyance of all or
substantially  all of the assets of the Borrower other than in connection with a
plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter  have the right to receive  upon  conversion  of this Note,  upon the
bases and upon the  terms and  conditions  specified  herein  and in lieu of the
shares of Common Stock then issuable upon  conversion of this Note (assuming the
occurrence of the Amendments whether or not that has then occurred), such stock,
securities  or assets  which the Holder  would have been  entitled to receive in
such  transaction  had  this  Note  been  converted  immediately  prior  to such
transaction,  and in any such  case  appropriate  provisions  shall be made with
respect to the rights and  interests  of the Holder of this Note to the end that
the provisions hereof (including, without limitation,  provisions for adjustment
of the Conversion  Price and of the number of shares issuable upon conversion of
this Note) shall  thereafter be  applicable,  as nearly as may be practicable in
relation to any securities or assets  thereafter  deliverable  upon the exercise
hereof. The Borrower shall not effect any transaction  described in this Section
2.6 unless the  resulting  successor or acquiring  entity (if not the  Borrower)
assumes by written  instrument  the  obligations of this Section 2.6. The Holder
will have the right if a merger or consolidation  occurs to force the payment in
full of this Note.

     2.7 CONVERSION  AFTER EVENT OF DEFAULT.  The Holder's right to convert this
Note into stock as  described  above shall apply even if an Event of Default (as
defined in Article III below) shall have occurred.

                                   ARTICLE III

                                EVENTS OF DEFAULT

     If of any of the following  events of default (each, an "Event of Default")
shall occur:

     3.1 FAILURE TO PAY PRINCIPAL OR INTEREST. The Borrower fails (i) to pay the
principal hereof when due, whether at maturity or upon acceleration or otherwise
or (ii) to pay any

                                       4
<PAGE>

installment  of  interest  hereon  when due and, in the case of this clause (ii)
only,  such failure  continues  for a period of five (5) days after the due date
thereof;

     3.2  CONVERSION.  The Borrower fails to issue shares of common stock to the
Holder  upon  exercise by the Holder of the  conversion  rights of the Holder in
accordance  with the terms of this Note,  and any such  failure  shall  continue
uncured for five (5) business  days after the Borrower  shall have been notified
thereof in writing by the Holder;

     3.3 BREACH OF  COVENANT.  The Borrower  breaches  any material  covenant or
other  material  term or  condition  of this Note  (other  than as  specifically
provided in Sections 3.1 and 3.2 hereof), and such breach continues for a period
of ten (10) business days after written  notice thereof to the Borrower from the
Holder;

     3.4  BREACH  OF  REPRESENTATIONS  AND  WARRANTIES.  Any  representation  or
warranty  of  the  Borrower  made  herein  or in  any  agreement,  statement  or
certificate given in writing pursuant hereto or in connection  herewith shall be
false or  misleading  in any material  respect when made and the breach of which
would have a material  adverse  effect on the  Borrower or the  prospects of the
Borrower or a material  adverse effect on the Holder or the rights of the Holder
with respect to this Note or the shares of common stock issuable upon conversion
of this Note;

     3.5  RECEIVER OR TRUSTEE.  The Borrower or any  subsidiary  of the Borrower
shall make an assignment  for the benefit of creditors,  or apply for or consent
to the appointment of a receiver or trustee for it or for a substantial  part of
its  property or  business;  or such a receiver or trustee  shall  otherwise  be
appointed;

     3.6 JUDGMENTS. Any money judgment, writ or similar process shall be entered
or filed  against the Borrower or any  subsidiary  of the Borrower or any of its
property or other assets for more than  $250,000,  and shall  remain  unvacated,
unbonded or unstayed for a period of twenty (20) days unless otherwise consented
to by the Holder;

     3.7  BANKRUPTCY.  Bankruptcy,  insolvency,  reorganization  or  liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors  shall be instituted by or against the Borrower or any
subsidiary of the Borrower;

     3.8 MATERIAL LOSS OR THEFT.  Material loss or theft,  substantial damage or
destruction or unauthorized  sale or encumbrance of any material  portion of the
Collateral  (as defined in Article IV hereof) in excess of  reasonably  expected
recoveries under insurance policies, or the making of any levy on, or seizure or
attachment  of or  entry  of a  judgment  against  a  material  portion  of  the
Collateral; or

     3.9 REPORTS.  A material  omission or misstatement in any of the Borrower's
previously or hereafter filed reports  pursuant to the  requirements of the 1934
Act or the rules and regulations promulgated thereunder.

     Then,  upon the  occurrence  and  during the  continuation  of any Event of
Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.8 or 3.9 hereof, at the
option of the Holder  hereof,  and upon the  occurrence  of any event of default
specified in Sections 3.5 or 3.7 hereof,  the Borrower  shall pay to the Holder,
in  satisfaction of its obligation to pay the  outstanding  principal  amount of
this Note and accrued and unpaid interest thereon, an amount equal to the sum of
(i) the  product  of (x) the then  outstanding  principal  amount  of this  Note
multiplied  by (y) 110% plus (ii)  accrued  and  unpaid  interest  on the unpaid
principal amount of this Note to the date of payment (the "Default  Amount") and
such Default Amount, together with all other ancillary amounts payable hereunder
shall  immediately  become due and payable,

                                       5
<PAGE>

all without  demand,  presentment  or notice,  all of which hereby are expressly
waived, together with all costs, including,  without limitation,  legal fees and
expenses of  collection,  and the Holder shall be entitled to exercise all other
rights and remedies available at law or in equity.

     If the Borrower  fails to pay the Default  Amount  within five (5) business
days of written  notice  that such  amount is due and  payable,  then the Holder
shall have the right at any time, so long as the Borrower remains in default, to
require the Borrower,  upon written notice,  to immediately issue (in accordance
with the terms of Article II hereof),  in lieu of the Default Amount, the number
of shares of Common Stock of the Borrower equal to the Default Amount divided by
the Conversion Price then in effect.

                                   ARTICLE IV

                                   COLLATERAL

     Borrower  hereby  grants to Holder a security  interest  in all  inventory,
machinery,  equipment,  stocks, bonds, notes, accounts receivable, any rights or
claims that they may have against any other  person,  firm, or  corporation  for
monies, choses in action, any bank accounts, checking accounts,  certificates of
deposit or any financial instrument, patents and intellectual property rights or
any  other  assets  owned  by  Borrower  as of the  date of this  agreement,  or
hereafter acquired.

     Borrower hereby represents that none of the collateral encumbered hereunder
has been sold or  assigned  since the  original  promissory  note of Borrower to
Holder  of  January  26,  1999 and that the lien of the  holder  of this note is
uninterrupted  from January 26, 1999 and shall  continue until this note is paid
or otherwise disposed of in accordance with its terms and conditions.

     All  collateral  rights in  intellectual  property is  subordinated  to the
Borrower's current licenses and future licenses  provided,  that with respect to
future  licenses,  the consent of the Holder must be obtained,  but such consent
will not be unreasonably  withheld.  The patents and intellectual property which
are licensed under the cross license  agreement dated September 27, 1997,  among
NXT plc, New Transducers Limited, being related companies,  the Borrower and NCT
Audio Products,  Inc. (or any successor  agreements) are  specifically  excluded
from the collateral.  There are approximately 20 pieces of intellectual property
in which,  under the cross license  agreement,  Borrower may not, and hence does
not herein, grant a security interest.  In addition,  all agreements between NCT
Audio  Products,  Inc. and the Borrower that relate to such  agreement,  and the
stock of NCT Audio  Products,  Inc.  owned by the Borrower,  shall  similarly be
excluded from the security interest granted in this Note.

     If Borrower does not pay the debt or other obligations under this Note when
due, the  collateral may be sold in order to pay such debt and  obligations,  or
same may be transferred  to the name of the Holder,  as Holder in her discretion
decides.  Holder may inspect the  collateral at all reasonable  times.  Borrower
further agrees that it will do anything reasonably  requested by Holder in order
to make Holder's security interest in the collateral legally effective including
the execution of a UCC-1.

                                    ARTICLE V

                                  MISCELLANEOUS

5.1   FAILURE OR INDULGENCY NOT  WAIVER.  No failure or delay on the part of the
Holder in the exercise of any power, right or privilege  hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege  preclude other or further  exercise  thereof or

                                       6
<PAGE>

of any other  right,  power or  privilege.  All  rights  and  remedies  existing
hereunder  are  cumulative  to, and not  exclusive  of,  any rights or  remedies
otherwise available.

5.2   NOTICES.  Notices, demands and other communications  given under this Note
shall be in writing  and shall be deemed to have been given when  delivered  (if
personally  delivered),  on the  scheduled  date of delivery (if  delivered  via
commercial  courier),  three  days  after  mailed  (if  mailed by  certified  or
registered mail, return receipt requested) or when sent by facsimile (if sent by
facsimile  with  evidence of  successful  transmission  retained by the sender);
provided, however, that failure to give proper and timely notice as set forth in
the "with a copy to" provisions below shall not invalidate a notice properly and
timely given to the associated party. Unless another address or facsimile number
is specified by notice hereunder, all notices shall be sent as follows:

--------------------------------------------------------------------------------
Ms. Carole Salkind                            Peter Rosen, Esq.
18911 Collins Ave., Apt. 2403                 Rosen & Avigliano
Sunny Isles Beach, FL 33160                   431 Route 10 East
                                              Randolph, NJ  07689
--------------------------------------------------------------------------------
Facsimile:  305-932-2425                      Facsimile:  973-361-1644
--------------------------------------------------------------------------------

If to the Borrower:                           with a copy to:
------------------                            --------------

--------------------------------------------------------------------------------
NCT Group, Inc.                               NCT Group, Inc.
20 Ketchum Street                             20 Ketchum Street
Westport, CT  06880                           Westport, CT  06880
Attention:  Chief Financial Officer           Attention:  General Counsel
--------------------------------------------------------------------------------
Facsimile:  203-226-4338                      Facsimile:  203-226-4338
--------------------------------------------------------------------------------

     5.3 AMENDMENT  PROVISION.  This Note and any  provision  hereof may only be
amended by an instrument in writing  signed by the Borrower and the Holder.  The
term "Note" and all references  thereto,  as used  throughout  this  instrument,
shall  mean this  instrument  as  originally  executed,  or if later  amended or
supplemented, then as so amended or supplemented.

     5.4  ASSIGNABILITY.  This Note shall be binding  upon the  Borrower and its
successors  and  assigns and shall inure to be the benefit of the Holder and its
successors and assigns;  PROVIDED,  HOWEVER, that so long as no Event of Default
has occurred,  this Note shall only be transferable in whole or in increments of
$100,000 to "Accredited Investors" (as defined in Rule 501(a) under the Act).

     5.5 COST OF COLLECTION. If default is made in the payment of this Note, the
Borrower shall pay the Holder hereof costs of collection,  including  reasonable
attorneys' fees.

     5.6  GOVERNING  LAW AND  JURISDICTION.  This Note shall be  governed by the
internal  laws of the State of  Delaware,  without  regard to  conflicts of laws
principles.  The parties hereto hereby submit to the exclusive  jurisdiction  of
the United States Federal Courts located in the state of New Jersey with respect
to any dispute arising under this Note.

     5.7 DAMAGES SHARES.  The shares of Common Stock that may be issuable to the
Holder  pursuant to Article III hereof  ("Damages  Shares")  shall be treated as
Common Stock issuable upon  conversion of this Note for all purposes  hereof and
shall be subject to all of the limitations and afforded all of the rights of the
other shares of Common Stock  issuable  hereunder.  For purposes of  calculating
interest payable on the outstanding principal amount hereof, amounts convertible

                                       7
<PAGE>

into Damages  Shares  ("Damages  Amounts")  shall not bear  interest but must be
converted  prior to the conversion of any outstanding  principal  amount hereof,
until the outstanding  Damages Amount is zero. Damaged Shares can only be issued
after Borrower has received the written notice that the Holder wishes to receive
such shares.

     5.8  DENOMINATIONS.  At the request of the Holder,  upon  surrender of this
Note, the Borrower  shall promptly issue new Notes in the aggregate  outstanding
principal amount hereof, in the form hereof,  in such  denominations of at least
$50,000 as the Holder shall request.

     IN WITNESS WHEREOF,  Borrower has caused this Note to be signed in its name
by its duly authorized officer as of the date first written above.

                                         NCT GROUP, INC.

                                         By:
                                              ----------------------------------
                                              Michael J. Parrella
                                              Chairman & Chief Executive Officer

                                       8
<PAGE>

                                                                       EXHIBIT 1
                                                                       ---------

                NOTICE OF CONVERSION OF SECURED CONVERTIBLE NOTE

TO:  NCT Group, Inc.

     (1) Pursuant to the terms of the  attached  Secured  Convertible  Note (the
"Note"),  the undersigned hereby elects to convert $________ principal amount of
the Note into shares of common stock of:

     _____ NCT Group, Inc., a Delaware corporation

     _____ Distributed Media Corporation International Limited, a UK corporation

     _____ Artera (UK) Limited, a UK corporation

     _____ Other public subsidiary identify: _________________________________)1

     Capitalized  terms used herein and not  otherwise  defined  herein have the
     respective meanings provided in the Note.

     (2) Please issue a certificate or certificates  for the number of shares of
common stock into which such principal  amount of the Note is convertible in the
name(s) specified immediately below or, if additional space is necessary,  on an
attachment hereto:

Name:    Carole Salkind                   Name:
         ----------------------------             ------------------------------

Address:                                  Address:
         ----------------------------             ------------------------------

SS or Tax ID Number:                      SS or Tax ID Number:
                    -----------------                         ------------------

     (3) In the event of partial  exercise,  please reissue an appropriate  Note
for the principal balance which shall not have been converted.

     (4) If the shares of common stock issuable upon conversion of the Note have
not been  registered  under the  Securities Act of 1933, as amended (the "Act"),
the undersigned represents and warrants that (i) such shares of common stock are
being acquired for the account of the undersigned for investment, and not with a
present view to, or for resale in connection with, the distribution thereof, and
that the undersigned has no present  intention of distributing or reselling such
securities,  in each case, other than pursuant to a registration statement under
the Act and (ii) the  undersigned  is an  "Accredited  Investor"  as  defined in
Regulation  D under  the  Act.  The  undersigned  further  agrees  that (A) such
securities  shall not be sold or transferred  unless either (i) they first shall
have been registered  under the Act and applicable state securities laws or (ii)
the Borrower first shall have been furnished with either (x) an opinion of legal
counsel (in form,  substance and scope  reasonably  satisfactory to Borrower) to
the  effect  that  such  sale  or  transfer  is  exempt  from  the  registration
requirements of the Act or (y) satisfactory representations from the undersigned
that the undersigned may immediately  sell all of such securities (to the extent
such  securities  are deemed to have been acquired on the same date) pursuant to
Rule 144 under the Act (or a successor thereto) and (B) the Borrower may place a
legend on the certificate(s) for such securities to that effect and place a stop
transfer restriction in its records relating to such securities.

Date
     ---------------       -----------------------------------------------------
                           Signature of Registered Holder

                           (must be signed  exactly as name appears in the Note.
                           The signature  must be  guaranteed  by a member firm
                           of the New York  Stock   Exchange  or  the  National
                           Association of Securities  Dealers or by a commercial
                           bank or trust having an office in the United States)

--------
1 May not be Pro Tech Communications, Inc.

                                       9

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