Document:

Exhibit 10(ej)

                          SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (the "Agreement"),  dated as of May 11, 2004,
by and between NCT GROUP, INC., a Delaware corporation, with principal executive
offices located at 20 Ketchum Street,  Westport,  Connecticut 06880 ("NCT"), and
CRAMMER ROAD LLC, a Cayman Islands Limited  Liability  Company,  with offices at
Harbour House,  Waterfront  Drive,  Road Town,  Tortola,  British Virgin Islands
(hereinafter "Purchaser").

     WHEREAS,  NCT and Purchaser are executing and delivering  this Agreement in
reliance upon the exemption  from  securities  registration  afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act");

     WHEREAS,  Purchaser  desires to purchase and NCT desires to sell,  upon the
terms and  conditions set forth in this  Agreement,  twenty seven (27) shares of
Series H  Preferred  Stock,  $10,000  stated  value  per share  (the  "Preferred
Stock"),  of NCT in  consideration  for the payment by  Purchaser  to NCT of Two
Hundred, Thirty Thousand Dollars ($230,000.00); and

     NOW THEREFORE,  in  consideration  of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. PURCHASE AND SALE OF PREFERRED STOCK.

          a. Purchase of Preferred Stock of NCT. On the Closing Date (as defined
     below),  NCT shall sell and deliver to Purchaser,  and Purchaser  agrees to
     purchase  from NCT, an aggregate  amount of twenty seven (27) shares of the
     Preferred  Stock (the  "Shares")  in  consideration  for  $230,000.00  (the
     "Purchase Price").

          b.  Closing  Date.  Subject  to the  satisfaction  (or  waiver) of the
     conditions thereto set forth in Section 5 and Section 6 below, the date and
     time of the sale of the Shares  pursuant to this  Agreement  (the  "Closing
     Date") shall be 12:00 noon Eastern  Standard  Time on or about May 11, 2004
     or such other mutually  agreed upon time.  The closing of the  transactions
     contemplated by this Agreement (the  "Closing")  shall occur on the Closing
     Date at the offices of Krieger & Prager, 39 Broadway, Suite 1440, New York,
     New York or at such other location as may be agreed to by the parties.

          c. Form of Payment.  On the Closing Date, (i) Purchaser  shall pay the
     balance due of Purchase Price in United States dollars, less commission and
     applicable  legal fees, by wire transfer of immediately  available funds to
     an account designated in writing by NCT for such purpose,  against delivery
     of the Shares,  and (ii) NCT shall deliver to Purchaser stock  certificates
     representing the Shares, which Purchaser is then purchasing,  duly executed
     on behalf of NCT, against delivery of the Purchase Price.

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     2. PURCHASER'S  REPRESENTATIONS  AND WARRANTIES.  Purchaser  represents and
warrants to NCT that:

          a. Investment Purpose.  Purchaser is purchasing the Shares for its own
     account for  investment  purposes only and not with a view towards,  or for
     resale in connection with the public sale or distribution  thereof,  except
     pursuant to sales  registered or exempted under the 1993 Act and applicable
     state   securities   laws;   provided,   however,   that  by   making   the
     representations herein,  Purchaser does not agree to hold any of the Shares
     for any minimum or other specific term and reserves the right to dispose of
     the Shares at any time in  accordance  with or pursuant  to a  registration
     statement  or  an  exemption  under  the  1933  Act  and  applicable  state
     securities laws.

          b. Reliance on Exemptions.  Purchaser  understands that the Shares are
     being offered and sold to it in reliance upon specific  exemptions from the
     registration  requirements  of United States  federal and state  securities
     laws and that  Purchaser  is relying  upon the truth and  accuracy  of, and
     Purchaser's compliance with, the representations,  warranties,  agreements,
     acknowledgments  and  understandings of Purchaser set forth herein in order
     to determine the availability of such exemptions and the eligibility of the
     Purchaser to acquire the Shares.

          c.  Information.  Purchaser  and  its  advisors,  if  any,  have  been
     furnished  with  all  materials  relating  to the  business,  finances  and
     operations  of NCT,  and  materials  relating  to the offer and sale of the
     Shares which have been  requested by Purchaser or its  advisors.  Purchaser
     and its  advisors,  if any,  have  been  afforded  the  opportunity  to ask
     questions  of NCT.  Neither  such  inquiries  nor any other  due  diligence
     investigation   conducted   by   Purchaser   or  any  of  its  advisors  or
     representatives  shall modify, amend or affect Purchaser's right to rely on
     NCT's   representations  and  warranties  contained  in  Section  3  below.
     Purchaser  understands  that  its  investment  in  the  Shares  involves  a
     significant degree of risk.

          d. Governmental  Review.  Purchaser  understands that no United States
     federal or state agency or any other government or governmental  agency has
     passed upon or made any recommendation or endorsement of the Shares.

          e.  Transfer  or Resale.  Purchaser  understands  that (i) the sale or
     resale of the  Shares  has not been and is not being  registered  under the
     1933 Act or any applicable state securities laws, and the Shares may not be
     transferred  unless  (a) the  Shares  are  sold  pursuant  to an  effective
     registration  statement  under the 1933  Act,  (b) the  Shares  are sold or
     transferred pursuant to an exemption from such registration, (c) the Shares
     are  sold  or  transferred  to an  "affiliate"  (as  defined  in  Rule  144
     promulgated  under  the 1933 Act (or a  successor  rule)  ("Rule  144")) of
     Purchaser  who agrees to sell or  otherwise  transfer  the  Shares  only in
     accordance  with this Section 2(f) and who is an Accredited  Purchaser,  or
     (d) the Shares are sold  pursuant to Rule 144,  if such Rule is  available;
     (ii) any sale of such  Shares made in reliance on Rule 144 may be made only
     in accordance with the terms of said Rule and further,  if said Rule is not
     applicable,  any resale of such  Shares  under  circumstances  in which the
     seller (or the person through whom the sale is made) may be deemed to be an
     underwriter  (as  that  term  is  defined  in the  1933  Act)  may  require
     compliance  with some other  exemption  under the 1933 Act or the rules and
     regulations of the SEC thereunder.

<PAGE>

          f.  Legends.  Purchaser  understands  that  the  Shares  shall  bear a
     restrictive legend in the following form (and a stop-transfer  order may be
     placed against transfer of the certificates for such Shares):

          "[FOR SHARES]  NEITHER THESE  SECURITIES  NOR THE SECURITIES
          INTO  WHICH  THESE  SECURITIES  ARE  CONVERTIBLE  HAVE  BEEN
          REGISTERED  WITH THE SECURITIES  AND EXCHANGE  COMMISSION OR
          THE SECURITIES  COMMISSION OF ANY STATE, IN RELIANCE UPON AN
          EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES  ACT OF
          1933, AS AMENDED (THE "SECURITIES  ACT"), AND,  ACCORDINGLY,
          MAY NOT BE OFFERED OR SOLD EXCEPT  PURSUANT TO AN  EFFECTIVE
          REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
          TO AN AVAILABLE  EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT
          SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES
          ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

          [ONLY FOR UNDERLYING SHARES TO THE EXTENT THE RESALE THEREOF
          IS NOT COVERED BY AN EFFECTIVE REGISTRATION STATEMENT AT THE
          TIME  OF  CONVERSION,   ISSUANCE  OR  EXERCISE]  THE  SHARES
          REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN  REGISTERED
          WITH  THE   SECURITIES   AND  EXCHANGE   COMMISSION  OR  THE
          SECURITIES  COMMISSION  OF ANY STATE,  IN  RELIANCE  UPON AN
          EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES  ACT OF
          1933, AS AMENDED (THE "SECURITIES  ACT"), AND,  ACCORDINGLY,
          MAY NOT BE OFFERED OR SOLD EXCEPT  PURSUANT TO AN  EFFECTIVE
          REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
          TO AN AVAILABLE  EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT
          SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES
          ACT  AND IN  ACCORDANCE  WITH  APPLICABLE  STATE  SECURITIES
          LAWS."

          g.  Authorization;  Enforcement.  This  Agreement  has  been  duly and
     validly authorized by Purchaser.  This Agreement has been duly executed and
     delivered on behalf of Purchaser,  and this  Agreement  constitutes a valid
     and binding  agreement  of Purchaser  enforceable  in  accordance  with its
     terms,   except  as  such  enforceability  may  be  limited  by  applicable
     bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar
     laws relating to, or affecting  generally,  the  enforcement  of creditors'
     rights  and  remedies  or  by  other   equitable   principles   of  general
     application.

     3. REPRESENTATIONS AND WARRANTIES OF NCT. NCT represents and

<PAGE>

warrants to NCT that:

          a.  Authorization;  Enforcement.  (i) NCT has all requisite  corporate
     power  and  authority  to enter  into and  perform  this  Agreement  and to
     consummate the transactions  contemplated hereby and to sell the Shares, in
     accordance  with the terms hereof,  (ii) the execution and delivery of this
     Agreement  by  NCT  and  the   consummation  by  it  of  the   transactions
     contemplated hereby (including without  limitation,  the sale of the Shares
     to Purchaser)  have been duly  authorized by NCT and no further  consent or
     authorization of NCT or its directors is required, (iii) this Agreement has
     been  duly  executed  and  delivered  by  NCT,  and  (iv)  this   Agreement
     constitutes  a legal,  valid  and  binding  obligation  of NCT  enforceable
     against NCT in accordance with its terms, except as such enforceability may
     be   limited  by   applicable   bankruptcy,   insolvency,   reorganization,
     moratorium,   liquidation   or  similar  laws  relating  to,  or  affecting
     generally,  the  enforcement of creditors'  rights and remedies or by other
     equitable principles of general application

          b. [INTENTIONALLY OMITTED]

          c. No  Conflicts.  The  execution,  delivery and  performance  of this
     Agreement  by  NCT  and  the   consummation  by  NCT  of  the  transactions
     contemplated hereby (including,  without limitation, the sale of the Shares
     to  Purchaser)  will not (i) conflict  with or result in a violation of any
     provision   of  its   certificate   of   incorporation,   bylaws  or  other
     organizational  documents, or (ii) violate or conflict with, or result in a
     breach of any provision of, or constitute a default (or an event which with
     notice or lapse of time or both could become a default)  under,  or give to
     others any rights of termination,  amendment,  acceleration or cancellation
     of, any agreement,  note, bond,  indenture or other instrument to which NCT
     is a party,  or (iii) result in a violation of any law,  rule,  regulation,
     order,  judgment or decree (including federal and state securities laws and
     regulations and regulations of any  self-regulatory  organizations to which
     NCT is subject)  applicable  to NCT or by which any  property of NCT or the
     Shares are bound or affected.  Except as specifically  contemplated by this
     Agreement and as required under the 1933 Act and any applicable federal and
     state  securities  laws,  NCT  is  not  required  to  obtain  any  consent,
     authorization  or order of, or make any filing or  registration  with,  any
     court, governmental agency, regulatory agency, self regulatory organization
     or stock  market or any third party in order for it to execute,  deliver or
     perform any of its obligations  under this Agreement in accordance with the
     terms  hereof.  Except for filings  that may be required  under  applicable
     federal and state  securities laws in connection with the issuance and sale
     of  the  Shares,  all  consents,   authorizations,   orders,   filings  and
     registrations  which NCT is  required to obtain  pursuant to the  preceding
     sentence have been obtained or effected on or prior to the date hereof.

          d. No  Brokers.  NCT has taken no action  which would give rise to any
     claim by any person for  brokerage  commissions,  finder's  fees or similar
     payments  relating  to  this  Agreement  or the  transactions  contemplated
     hereby,  except for dealings with Greenfield  Capital Partners,  LLC, whose
     commissions and fees in the amount of Eleven Thousand, Five Hundred Dollars
     ($11,500.00) will be paid for by NCT.

     4. COVENANTS.

          a. Best  Efforts.  The parties shall use their best efforts to satisfy
     timely each of the

<PAGE>

     conditions described in Section 5 and Section 6 of this Agreement.

          b. Registration  Rights.  The Company  acknowledges that the Purchaser
     shall be entitled to all the rights granted under that certain Registration
     Rights Agreement (the "Registration  Rights Agreement") dated June 21, 2002
     between the Company and  Purchaser  as if fully set forth herein and made a
     part hereof.

     5. CONDITIONS TO NCT'S  OBLIGATION TO SELL. The obligation of NCT hereunder
to sell and deliver the  certificate(s)  representing the Shares to Purchaser at
the Closing is subject to the  satisfaction,  at or before the  Closing  Date of
each of the following conditions thereto, provided that these conditions are for
NCT's sole benefit and may be waived by NCT at any time in its sole discretion:

          a. NCT shall have  executed  this  Agreement and delivered the same to
     Purchaser.

          b.  Purchaser  shall have  delivered the Purchase  Price in accordance
     with Section 1(c) above.

          c. The representations and warranties of NCT shall be true and correct
     in all  material  respects  as of the date when made and as of the  Closing
     Date as though made at that time (except for representations and warranties
     that speak as of a specific date), and NCT shall have performed,  satisfied
     and complied in all material  respects with the  covenants,  agreements and
     conditions  required  by  this  Agreement  to be  performed,  satisfied  or
     complied with by NCT at or prior to the Closing Date.

          d. No litigation, statute, rule, regulation,  executive order, decree,
     ruling or  injunction  shall have been  enacted,  entered,  promulgated  or
     endorsed  by or  in  any  court  or  governmental  authority  of  competent
     jurisdiction or any self-regulatory  organization having authority over the
     matters  contemplated hereby which prohibits the consummation of any of the
     transactions contemplated by this Agreement.

     6.  CONDITIONS TO  PURCHASER'S  OBLIGATION TO PURCHASE.  The  obligation of
Purchaser  hereunder  to  purchase  the Shares at the  Closing is subject to the
satisfaction, at or before the Closing Date of each of the following conditions,
provided  that these  conditions  are for  Purchaser's  sole  benefit and may be
waived by Purchaser at any time in its sole discretion.

          a.  Purchaser  shall have executed this  Agreement,  and delivered the
     same to NCT.

          b. NCT shall have delivered to Purchaser duly executed  certificate(s)
     representing   the  Shares  (in  such   denominations  as  Purchaser  shall
     reasonably request) in accordance with Section 1(c) above and an opinion of
     Counsel in the form annexed hereto.

          c. The  representations  and warranties of Purchaser shall be true and
     correct  in all  material  respects  as of the date when made and as of the
     Closing  Date as though made at such time

<PAGE>

     (except  for  representations  and  warranties  that speak as of a specific
     date) and  Purchaser  shall have  performed,  satisfied and complied in all
     material respects with the covenants, agreements and conditions required by
     this Agreement to be performed,  satisfied or complied with by Purchaser at
     or prior to the Closing Date.

          d. No litigation, statute, rule, regulation,  executive order, decree,
     ruling or  injunction  shall have been  enacted,  entered,  promulgated  or
     endorsed  by or  in  any  court  or  governmental  authority  of  competent
     jurisdiction or any self-regulatory  organization having authority over the
     matters  contemplated hereby which prohibits the consummation of any of the
     transactions contemplated by this Agreement.

     7. GOVERNING LAW; MISCELLANEOUS.

          a. Governing  Law;  Jurisdiction.  THIS  AGREEMENT  SHALL BE ENFORCED,
     GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
     YORK APPLICABLE TO AGREEMENTS  MADE AND TO BE PERFORMED  ENTIRELY WITH SUCH
     STATE,  WITHOUT  REGARD TO THE  PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
     HERETO  HEREBY SUBMIT TO THE  EXCLUSIVE  JURISDICTION  OF THE UNITED STATES
     FEDERAL  COURTS  LOCATED IN THE CITY OF NEW YORK,  NEW YORK WITH RESPECT TO
     ANY DISPUTE  ARISING UNDER THIS AGREEMENT,  THE AGREEMENTS  ENTERED INTO IN
     CONNECTION  HEREWITH OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY.
     BOTH PARTIES  IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
     MAINTENANCE  OF SUCH SUIT OR  PROCEEDING.  BOTH PARTIES  FURTHER AGREE THAT
     SERVICE OF PROCESS  UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
     IN EVERY  RESPECT  EFFECTIVE  SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH
     SUIT OR PROCEEDING.  NOTHING HEREIN SHALL AFFECT ANY PARTY'S RIGHT TO SERVE
     PROCESS IN ANY OTHER  MANNER  PERMITTED  BY LAW.  THE PARTIES  AGREE THAT A
     FINAL  NON-APPEALABLE  JUDGMENT  IN ANY SUCH  SUIT OR  PROCEEDING  SHALL BE
     CONCLUSIVE  AND MAY BE  ENFORCED  IN  OTHER  JURISDICTIONS  BY SUIT ON SUCH
     JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTIES HEREBY WAIVE A TRIAL BY
     JURY IN ANY ACTION,  PROCEEDING  OR  COUNTERCLAIM  BROUGHT BY EITHER OF THE
     PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR
     IN CONNECTION WITH THIS AGREEMENT.

          b.  Counterparts;  Signatures  by  Facsimile.  This  Agreement  may be
     executed  in one or more  counterparts,  each of which  shall be  deemed an
     original but all of which shall  constitute  one and the same agreement and
     shall become effective when counterparts have been signed by each party and
     delivered to the other party. This Agreement, once executed by a party, may
     be delivered to the other party hereto by facsimile  transmission of a copy
     of this  Agreement  bearing the signature of the party so  delivering  this
     Agreement.

          c.  Headings.  The headings of this  Agreement are for  convenience of
     reference only and shall not form part of, or affect the interpretation of,
     this Agreement.

<PAGE>

          d. Severability.  In the event that any provision of this Agreement is
     invalid or enforceable  under any  applicable  statute or rule of law, then
     such  provision  shall be  deemed  inoperative  to the  extent  that it may
     conflict  therewith  and  shall be deemed  modified  to  conform  with such
     statute or rule of law. Any  provision  hereof  which may prove  invalid or
     unenforceable under any law shall not affect the validity or enforceability
     of any other provision hereof.

          e. Entire  Agreement;  Amendments.  This Agreement and the instruments
     referenced  herein  contain the entire  understanding  of the parties  with
     respect  to  the  matters   covered  herein  and  therein  and,  except  as
     specifically  set forth  herein or  therein,  NCT makes no  representation,
     warranty,  covenant  or  undertaking  with  respect  to  such  matters.  No
     provision  of this  Agreement  may be waived or  amended  other  than by an
     instrument in writing signed by the party to be charged with enforcement.

          f.  Notices.  Any notices  required or permitted to be given under the
     terms of this  Agreement  shall be sent by  certified  or  registered  mail
     (return receipt requested) or delivered personally or by courier (including
     a  recognized  overnight  delivery  service) or by  facsimile  and shall be
     effective  five days after being  placed in the mail,  if mailed by regular
     United States mail, or upon receipt, if delivered  personally or by courier
     (including a recognized  overnight  delivery  service) or by facsimile,  in
     each case addressed to a party. The addresses for such communications shall
     be:

                         If to NCT:

                              NCT Group, Inc.
                              20 Ketchum Street
                              Westport, CT 06880
                              Attn:  General Counsel
                              Telephone No.:  (203) 226-4447, ext. 3572
                              Telecopier No.: (203) 226-4338

                         With a copy to:

                         If to Purchaser, to:

                         Crammer Road LLC
                         Harbour House, 2nd Floor
                         Waterfront Drive
                         PO Box 972
                         Road Town
                         Tortola, British Virgin Islands

                         With a copy to:

<PAGE>

                         Krieger & Prager LLP
                         39 Broadway, Suite 1440
                         New York, NY  10006
                         Attention:  Samuel Krieger
                         Telephone:  212-363-2900
                         Facsimile:  212-363-2999

     Each party  shall  provide  notice  to the  other  party of any  change  in
     address.

          g.  Successors and Assigns.  This Agreement  shall be binding upon and
     inure to the  benefit of the  parties  and their  successors  and  assigns.
     Neither NCT nor  Purchaser  shall  assign this  Agreement  or any rights or
     obligations  hereunder  without  the prior  written  consent  of the other.
     Notwithstanding  the  foregoing,  subject to Section  2(e),  Purchaser  may
     assign  its  rights  hereunder  to any person  that  purchases  Shares in a
     private  transaction from Purchaser or to any of its  "affiliates," as that
     term is defined under the 1934 Act, without the consent of NCT.

          h. Third Party  Beneficiaries.  This  Agreement  is  intended  for the
     benefit of the parties hereto and their respective permitted successors and
     assigns,  and is not for the  benefit of, nor may any  provision  hereof be
     enforced by, any other person.

          i.  Survival.  The  representations  and  warranties  of NCT  and  the
     agreements  and  covenants  set forth in Sections 4 and 7 shall survive the
     closing hereunder notwithstanding any due diligence investigation conducted
     by or on behalf  of  Purchaser.  Purchaser  agrees  to  indemnify  and hold
     harmless NCT and all their  officers,  directors,  employees and agents for
     loss or damage  arising  as a result of or related to any breach or alleged
     breach by NCT of any of its  representations,  warranties and covenants set
     forth in Sections 2 and 3 hereof or any of its  covenants  and  obligations
     under  this  Agreement,  including  advancement  of  expenses  as they  are
     incurred (except in the case of gross  negligence or willful  misconduct by
     NCT).

          j. Further Assurances. Each party shall do and perform, or cause to be
     done and performed, all such further acts and things, and shall execute and
     deliver all such other agreements, certificates, instruments and documents,
     as the other party may reasonably  request in order to carry out the intent
     and accomplish the purposes of this Agreement and the  consummation  of the
     transactions contemplated hereby.

          k. Fees and  Expenses.  The Company  shall pay $13,000 of the fees and
     expenses  of  the  Investor's   counsel,   incident  to  the   negotiation,
     preparation,  execution,  delivery and performance of this  Agreement.  The
     Company shall pay all stamp and other taxes and duties levied in connection
     with the issuance of the Shares  pursuant  hereto.  The  Investor  shall be
     responsible  for its own tax  liability  that may  arise as a result of the
     investment  hereunder or the  transactions  contemplated by this Agreement.

          l. No Strict Construction. The language used in this Agreement will be
     deemed to be the  language  chosen by the parties to express  their  mutual
     intent,  and no rules of strict  construction  will be applied  against any
     party.

<PAGE>

          IN WITNESS  WHEREOF,  NCT and  Purchaser  have caused this  Securities
     Purchase Agreement to be duly executed as of the date first above written.

NCT GROUP, INC.                               CRAMMER ROAD LLC

By: /s/  Cy E. Hammond                    By: /s/ Arlene DeCastro & Tracy Primus
    --------------------------------          ----------------------------------
    Name:   Cy Hammond                        Name:
    Title:  Senior Vice President,            Title:  Navigator Management Ltd.
            Chief Financial Officer                          Director
            and DirectorExhibit 10(ek)

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 DEMAND NOTE
                                 (No. CTS-04-10)

May 21, 2004                                                         $400,000.00

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 Four Hundred  Thousand Dollars and
No Cents ($400,000.00), upon demand, 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 upon demand or acceleration or otherwise. Any such payment demand by the
Holder shall be via written  notice to the Borrower.  Such demand may be for all
or any part of the principal amount then outstanding under this Note. Payment of
the amount so demanded shall be made by the Borrower  within one business day of
such  demand.  Any amount of  principal of or interest on this Note which is not
paid when due and payable  shall bear  interest at the rate of five percent (5%)
above the Ordinary  Interest Rate (the "Default Interest Rate") from the date it
is due and payable 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 upon demand
or  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 instructs in its demand for payment or, if no
address for payment is provided  therein,  then at the address of the Holder for
written notices under 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

<PAGE>

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 Group
International  Limited  ("Artera")  has made an 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  Demand 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

                                       2
<PAGE>

     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.

          (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 Borrowers  shareholders  and seek approval for an
increase in the authorized  shares of the Borrowers  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

                                       3
<PAGE>

         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.

     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 six months from the date 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 anytime 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:

                                       4
<PAGE>

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

     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.

     3.9 REPORTS.  A material  omission or  misstatement  in any of the Debtor'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

                                       5
<PAGE>

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,
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

                                       6
<PAGE>

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 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:

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

--------------------------------------------------------------------------------
Ms. Carole Salkind                             Peter Rosen, Esq.
c/o Sills Cummis Epstein & Gross P.C.          Rosen & Avigliano
One Riverfront Plaza                           431 Route 10 East
Newark NJ 07102                                Randolph, NJ 07689
--------------------------------------------------------------------------------
Facsimile:  973-643-6500                       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.

                                       7
<PAGE>

     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
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:  /s/  Irene Lebovics
                                                --------------------------------
                                                Irene Lebovics
                                                President

                                       8
<PAGE>

                                                                       EXHIBIT 1
                                                                       ---------

             NOTICE OF CONVERSION OF SECURED CONVERTIBLE DEMAND NOTE

TO:  NCT Group, Inc.

     (1) Pursuant to the terms of the attached Secured  Convertible  Demand 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 Group International 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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