Document:

Exhibit 10(w)

                               AMENDMENT NO. 9 TO
                      DISTRIBUTION AND MARKETING AGREEMENT

This Amendment No. 9 to Distribution  and Marketing  Agreement  ("Amendment") is
dated as of October 14, 2004 between Artera Group, Inc., a Delaware  corporation
("Artera"), and Avaya Inc., a Delaware corporation ("Avaya").

WHEREAS, Artera and Avaya are parties to that certain Distribution and Marketing
Agreement  dated April 21, 2003,  as amended by Amendment No. 1 dated October 8,
2003,  Amendment No. 2 dated April 21, 2004, Amendment No. 3 dated May 19, 2004,
Amendment  No.  4 dated  June 4,  2004,  Amendment  No. 5 dated  June 18,  2004,
Amendment  No. 6 dated June 25,  2004,  Amendment  No. 7 dated June 30, 2004 and
Amendment  No.  8  dated  September  30,  2004  (as  so  amended,  "Distribution
Agreement");

WHEREAS,  the parties wish to amend  certain of the terms and  conditions of the
Distribution  Agreement and extend the term of the  Distribution  Agreement,  as
more fully described herein.

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

1.   Right of First Refusal. Section 2.9 of the Distribution Agreement is hereby
     deleted.

2.   Agreements of Avaya.  Section 2.4 of the  Distribution  Agreement is hereby
     amended to read in its entirety as follows:

          "Agreements of Avaya. All licenses and other agreements with
          Subscribers for the use of the Licensed  Products,  and with
          Resellers with respect to such use by Subscribers,  shall be
          entered  into solely  between  Avaya and the  Subscriber  or
          Reseller.  Artera shall not be a party to or have any rights
          or obligations under such agreements.  Such agreements shall
          sometimes  be  referred  to in this  Agreement  as  `Royalty
          Licenses.'"

3.   Renegotiation  Right.  Section 2.8 of the Distribution  Agreement is hereby
     deleted,  and is replaced with  "[DELETED]" so as to preserve the numbering
     scheme of Article 2 of the Distribution Agreement.

4.   Finder  Commissions.  Section 3.2 of the  Distribution  Agreement is hereby
     deleted,  and is replaced with  "[DELETED]" so as to preserve the numbering
     scheme of Article 3 of the Distribution Agreement.

5.   Avaya Prices.  Section 3.3 of the Distribution Agreement is hereby deleted,
     and is replaced with  "[DELETED]" so as to preserve the numbering scheme of
     Article 3 of the Distribution Agreement.

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6.   Term. Article 7 of the Distribution  Agreement is hereby amended to read in
     its entirety as follows:

          "ARTICLE 7.  TERM

          The term of this Agreement shall begin on the Effective Date
          and,  unless  extended or earlier  terminated by the written
          agreement  of the  parties or  pursuant  to Article 8 below,
          shall expire on October 14, 2005."

7.   Subscriber  License Fees and Unit  Royalties and Support Upon  Termination.
     Section 8.3 of the Distribution  Agreement is hereby amended to read in its
     entirety as follows:

          "Subscriber License Fees and Unit Royalties and Support Upon
          Termination.  If this  Agreement is terminated by expiration
          of the Term under  Article 7 or by Avaya under  Section 8.1,
          Avaya shall be  entitled  to continue to collect  Subscriber
          License Fees with respect to the specific  Royalty  Licenses
          in effect  on the date of  termination,  for the  respective
          durations  of such  Royalty  Licenses,  subject  to  Avaya's
          obligation  to pay Unit  Royalties to Artera with respect to
          the  applicable  Subscribers  and provide Level 1 Support to
          such   Subscribers  in  accordance  with  Section  6.2.  For
          purposes of this  Section  8.3,  the rules in  Sections  3.1
          regarding  Subscribers that discontinue but then, within one
          year, recommence use of the Licensed Products shall apply."

8.   Rights of  Assignment.  In Article 15 of the  Distribution  Agreement,  the
     reference  to Section 2.2 is hereby  amended to be a  reference  to Section
     2.3.  Avaya and Artera  acknowledge  that the  reference to Section 2.2 was
     inadvertent  and that,  from  Effective  Date  forward,  the  reference was
     intended to be to Section 2.3.

9.   Unit  Royalties  Schedule.  Schedule 3.1 to the  Distribution  Agreement is
     hereby amended to read in its entirety as set forth in Schedule 3.1 to this
     Amendment (including Schedule 3.1.1 referred to therein).

10.  Payment Procedures Schedule.  Schedule 3.4 to the Distribution Agreement is
     hereby amended to read in its entirety as set forth in Schedule 3.4 to this
     Amendment.

11.  Bell Nordiq.  Amendment No. 1 (dated October 8, 2003) to the April 21, 2003
     Distribution  and Marketing  Agreement,  which  Amendment No. 1 pertains to
     Bell Nordiq,  is hereby  terminated.  Amendments  subsequent  thereto shall
     retain their numerical designations.

Except as expressly amended by this Amendment,  the Distribution  Agreement will
remain in full force and effect.  This  Amendment may be executed in one or more
counterparts. Each

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<PAGE>

counterpart  will be deemed an  original,  but all  counterparts  together  will
constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized representatives.

AVAYA INC.                                       ARTERA GROUP, INC.

By:  /s/  Stephanie Phillips                     By:  /s/  Michael J. Parrella
     -----------------------                          --------------------------
      Name:  Stephanie Phillips                       Name:  Michael J. Parrella
      Title: Manager, Supplier Management             Title:  Chairman & CEO

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                                                                    SCHEDULE 3.1
                                                                    ------------

                                 UNIT ROYALTIES

Unit  Royalties are payable in United States  dollars.  The monthly Unit Royalty
amounts are as follows:

1.   Enterprise Subscribers.  The monthly Unit Royalty amount for each End User1
     of an Enterprise  Subscriber is based whether  Artera,  on the one hand, or
     Avaya or the applicable Reseller,  on the other hand, provides and operates
     the data center serving such End User, as follows:

---------------------------------------    -------------------------------------
              Artera                              Avaya or Reseller
            Data Center                               Data Center
---------------------------------------    -------------------------------------
              $.95                                       $.75
---------------------------------------    -------------------------------------

     As used in this  Agreement,  the  "data  center"  refers  to the  hardware,
     software  and  bandwidth  providing  the  Internet-side  data  optimization
     functions  for the Artera Turbo  service.  Avaya may elect  whether to have
     Artera,  on the one hand, or Avaya or the  applicable  Reseller(s),  on the
     other hand,  provide and operate the data center(s)  serving the End Users.
     The minimum  specifications  for an Avaya or  Reseller  data center are set
     forth in Schedule 3.1.1.

     Notwithstanding  the  foregoing,  the monthly  Unit  Royalty for each "Road
     Warrior"  End User  shall be two times the  applicable  amount in the table
     above.  "Road Warrior" refers to a version of the Artera Turbo service used
     with  mobile  computers  that at times  may be  connected  to the  Internet
     through a local area network (LAN),  and at other times may be connected to
     the  Internet on a standalone  basis.

2.   Small Business and Residential Subscribers.  In the event that Avaya wishes
     to  distribute  the  Licensed  Products to Small  Business  or  residential
     Subscribers,  whether  directly or via  Reseller(s),  Avaya shall so inform
     Artera.  Avaya and Artera shall then  negotiate in good faith for a written
     agreement  regarding the Unit Royalties and other terms and conditions that
     would apply to such  distribution.  Upon execution of such  agreement,  the
     License  shall extend to such  distribution  by Avaya.  Such  agreement may
     pertain to (a)  distribution to one or more specified Small Business and/or
     residential Subscribers or category(ies) thereof; (b) distribution to Small
     Business and/or residential Subscribers via one or more specified Resellers
     or  category(ies)  thereof;  or (c)  distribution  to Small Business and/or
     residential Subscribers generally.

-------------------------
1 For Unit  Royalty  calculation  purposes,  an "End User"  consists of a single
client computer, rather than all of the client computers of a single individual.

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                                                                  SCHEDULE 3.1.1
                                                                  --------------

                         AVAYA OR RESELLER DATA CENTERS

1.   Each  data  center  provided  and  operated  by  Avaya  or a  Reseller  (as
     applicable,  an "Outside Data Center")  shall be located at the premises of
     Avaya  or  such  Reseller,   respectively  (as  applicable,   the  "Outside
     Operator"), unless Artera agrees otherwise in writing in advance.

2.   Artera shall remotely  install its data center software on the Outside Data
     Center server (the  "Server") so that the software  functions in accordance
     with Artera's  specifications.  Artera shall  maintain such software on the
     Server  and shall  remotely  install on the  Server  any  upgrades  to such
     software as they become available.

3.   The minimum technical specifications for each Outside Data Center, based on
     an assumption of 7,000 total End Users, are as follows:

     o    Intel Pentium III, 1.3GHz or better (single processor)
     o    1GB RAM
     o    40GB hard drive
     o    CD-ROM drive
     o    Windows 2000 Server or Windows 2000 Advanced Server
     o    Dual on-board NICs (10x100)
     o    5Mb of bandwidth, burstable to 10Mb

     For an Outside  Data Center  serving  14,000  total End Users,  the minimum
     technical  specifications  are as  above,  but  with one  additional  Intel
     Pentium III,  1.3GHz or better  processor  and 1GB of  additional  RAM. For
     Outside Data Centers serving other numbers of total End Users,  the minimum
     technical  specifications  shall be as  proposed  by Artera and agreed upon
     with the applicable Outside Operator.

4.   Irrespective of its  configuration or the number of End Users served by it,
     the Outside Data Center shall  provide  performance  levels  comparable  to
     Artera's  own  data  centers  and  shall  have  the  following   additional
     characteristics:

o    Dedicated Server approved in advance by Artera
o    Server must have unrestricted outbound access to the Internet
o    End Users must have inbound access to the Server on port 8081
o    Artera must have access to the Server via PC Anywhere or Terminal Services
o    Outside Operator must provide Artera with the public Internet Protocol (IP)
     address of the Server so that Artera may provide the proper User Software
o    Artera  must have a trial  dial-up  account  from the  Outside  Operator to
     confirm proper configuration,  access and quality of service performance of
     the Server

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<PAGE>

5.   If an Outside Data Center ceases to be operational, the End Users served by
     such Outside Data Center shall be automatically  redirected to Artera's own
     data center, by which such End Users shall be served until the Outside Data
     Center is once  again  operational.  The  Outside  Operator  shall use best
     efforts to return its Outside Data Center to operational status. If this is
     not achieved  within 72 hours of the start of the outage and the outage was
     not caused by Artera's data center software, then, after the end of such 72
     hours,  for each  calendar day (or part  thereof) that an End User accesses
     Artera's data center,  the Unit Royalty payable by Avaya for such End User,
     for the applicable month, shall be increased by $.10.

6.   Any  agreement  between Avaya and a Reseller  authorizing  such Reseller to
     provide  and  operate  an  Outside  Data  Center  shall   incorporate   the
     specifications and procedures set forth herein.

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<PAGE>

                                                                    SCHEDULE 3.4
                                                                    ------------

                               PAYMENT PROCEDURES

Avaya shall pay Artera the monthly Unit Royalties due under this Agreement on or
prior to the end of the  calendar  month  following  the  calendar  month of the
Artera License to which the Unit Royalties  relate,  irrespective  of whether or
when  any  associated  Subscriber  License  Fees  are  paid  or  payable  by the
Subscriber  to Avaya or to the  Resellers,  or  whether  or when any  associated
amounts are paid or payable by the  Resellers  to Avaya.  The amount of the Unit
Royalties  shall  be based on the  number  and  categories  of  Subscribers,  as
described in this Agreement.

                                       7Exhibit 10(x)

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. CTS-04-29)

October 15, 2004                                                     $425,000.00

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  Twenty-Five  Thousand
Dollars and No Cents ($425,000.00) on April 15, 2005, 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 Group International Limited

<PAGE>

("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  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.

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<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 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:

     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; 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  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:

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

--------------------------------------------------------------------------------
Ms. Carole Salkind                           Peter Rosen, Esq.
P.O. Box 1292                                Rosen & Avigliano
Clifton, NJ  07012                           431 Route 10 East
                                             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.

     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

                                       7
<PAGE>

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/  Michael J. Parrella
                                             -----------------------------------
                                              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 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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