Document:

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
entered into by and between GEORGE OFF, a resident of the Commonwealth of
Pennsylvania ("Executive"), and CHECKPOINT SYSTEMS, INC., a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania
("Company") is effective January 1, 2006.

         WHEREAS, Company has an Employment Agreement with Executive commencing
on August 15, 2002 (the "Prior Agreement");

         WHEREAS, in recognition of Executive's contributions to Company's
success and accomplishments during his tenure as President and Chief Executive
Officer and Chairman of Company, the Board of Directors of Company ("Board of
Directors") wishes to have the Company retain Executive and obtain his
commitment to continue to serve as President and Chief Executive Officer of
Company on the terms set forth herein;

         NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:

1. Employment and Term. Executive hereby agrees to be employed as President and
Chief Executive Officer, and Company hereby agrees to retain Executive as
President and Chief Executive Officer. By executing this Agreement the Company
confirms that the Board of Directors has approved this Agreement and has elected
Executive Chairman of the Board of Directors effective as of the date hereof.
The term of Executive's employment as President and Chief Executive Officer
under this Agreement (the "Term") shall be the period commencing on January 01,
2006 and ending on December 31, 2008. The Prior Agreement is hereby terminated
and superseded in its entirety by this Agreement

2. Duties. During the Term, Executive will have the titles of President and
Chief Executive Officer of Company. Executive shall report to and receive
instructions from Company's Board of Directors and shall assume such duties and
responsibilities as may be reasonably assigned to Executive from time to time by
the Board of Directors provided such duties are of a nature customarily assigned
to directors, presidents and chief executive officers of public companies
similarly situated. Without limitation, Executive shall have full authority and
discretion relating to the general and day-to-day management of the affairs of
the Company including, but not limited to, finances and other financial matters,
compensation matters (other than with respect to the compensation of Executive,
himself, if any, and the other executive officers of the Company which shall be
determined by the Compensation Committee of the Board of Directors), personnel
matters (other than such matters that relate to Executive himself), budgeting,
operations, intellectual property, investor relations, retention of
professionals and strategic planning and implementation. Executive will be the
most senior executive officer of the Company and all other executives and
businesses of the Company will report to Executive or his designee. The
foregoing language shall not be construed so as to limit the duties and
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responsibilities of the Board of Directors as described in the Company's
Articles of Incorporation and Bylaws.

3. Other Business Activities. Executive shall serve Company faithfully and to
the best of his ability and shall devote his full business time, attention,
skill and efforts to the performance of the duties required by or appropriate
for his position as President and Chief Executive Officer. In furtherance of the
foregoing, and not by way of limitation, for so long as he remains President and
Chief Executive Officer of Company, Executive shall not directly or indirectly
engage in any other business activities or pursuits, except for those arising
from positions held as of August 15, 2002 as a director or otherwise with
charitable or business organizations, as identified by Executive to the Board of
Directors or such other activities as would not materially interfere with
Executive's ability to carry out his duties under this Agreement.
Notwithstanding the foregoing, Executive shall be permitted to engage in
activities in connection with (i) service as a volunteer, officer or director or
in a similar capacity of any charitable or civic organization, (ii) managing
personal investments, and (iii) serving as a director, executor, trustee or in
another similar fiduciary capacity for a non commercial entity; provided,
however, that any such activities do not materially interfere with Executive's
performance of his responsibilities and obligations pursuant to this Agreement.

4. Base Salary. The Company shall pay Executive a salary at the annual rate of
Seven Hundred and Sixty Seven Thousand, Five hundred Dollars ($767,500.00) (the
"Base Salary"), payable pursuant to the Company's normal practice, but no less
frequently than monthly. The Base Salary shall be inclusive of all applicable
income, Social Security and other taxes and charges which are required by law or
requested to be withheld by Executive and which shall be withheld and paid in
accordance with Company's normal payroll practice for its similarly-situated
executives as in effect from time to time. The Board of Directors, in
consultation with Executive, shall periodically review Executive's Base Salary
during the Term, at least annually (at times according to its customary
practice) for increases based on Executive's performance and other relevant
factors.

5. Annual Incentive Compensation. Executive shall participate in an annual
incentive compensation program(s) to be developed by the Board of Directors
which will enable Executive to earn incentive compensation up to a maximum of
One Hundred Percent (100%) of Base Salary provided specified goals and
objectives identified by the Board of Directors in consultation with Executive
are achieved. Such goals and objectives shall be identified no later than the
end of the first quarter of each calendar year and shall be consistent with the
Company's budgets and business plans which are reasonably achievable. Any
compensation payable to Executive pursuant to this Section shall be paid to
Executive no later than the date of publication of the Company's audited
financial statements for the prior fiscal year, whether or not Executive is then
employed by the Company, except as otherwise expressly limited in this
Agreement.

6. Long Term Compensation. Executive shall be granted Long Term Compensation at
the discretion of the Board under the Company's Omnibus Plan and existing
compensation practices. Long Term Compensation under the Company's Omnibus Plan
can include, but is not limited to Stock Options, Long Term Incentive Program
(LTIP) awards, Restricted Stock Awards, Stock Appreciation Rights (SARS), or
other awards as determined by the Board of Directors.

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6.1. Long Term Compensation.

(a) Grants of Long Term Compensation to Executive will vest according to the
plans associated with the grants.

(b) Notwithstanding paragraph (a) of this Section 6.1, the Long Term
Compensation shall become 100% vested upon Executive's termination of employment
on account of death or Disability, termination of employment by Company Without
Cause, termination of employment by Executive For Good Reason, or upon a Change
in Control, as each such term is defined in Section 10.3.

(c) In the event of Executive's termination of employment during the Term of
this Agreement for any reason other than a termination for Cause, the Long Term
Compensation that is vested and exercisable on the date of such termination of
employment shall expire on the fifth annual anniversary of the date of such
termination of employment.

6.2. Anti-Dilution Adjustments. The number or type of shares or other property
subject to the Long Term Compensation and the exercise price of the Long Term
Compensation shall be appropriately and proportionately adjusted by the Board of
Directors if the class of securities which are subject to the Long Term
Compensation are (i) exchanged for or converted into cash, property or a
different number or kind of shares or securities as a result of a
reorganization, merger, consolidation, recapitalization, restructuring or
reclassification, or (ii) if the number of securities of the class of securities
then subject to the Long Term Compensation are increased or decreased or if
cash, property or shares or securities are distributed in respect of such
subject securities as a result of a dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split, spin-off
or the like.

6.3. Tax Withholding. Executive shall pay in cash or make other arrangements
satisfactory to the Board of Directors for the satisfaction of any withholding
tax obligations that arise by reason of exercise, vesting or payment of the Long
Term Compensation. The Long Term Compensation shall be exercisable (if
applicable), in whole or in part in cash, by surrender of shares previously
acquired or through a cashless exercise in accordance with the terms of the
Company's plan. Company shall not be required to issue shares of common stock or
to recognize the disposition of such shares until such obligations are
satisfied.

7. Other Benefits.

(a) Pension Plans. Executive shall be entitled to participate in all tax-
qualified and non-tax-qualified pension plans maintained or contributed to by
Company or for the benefit of its executives (collectively, the "Company Pension
Plans"), in accordance with the terms of such Company Pension Plans as they may
be amended from time to time in the discretion of the Company.

(b) Medical Insurance. During the Term of this Agreement, Executive shall be
entitled to participate in any medical and dental insurance plans generally
available to the senior management of Company, as such plans may be in effect
from time to time. After termination of Executive's employment with Company
other than on account of termination by Company for Cause or Executive Without
Good Reason, Executive, his spouse, and his eligible dependents or survivors

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shall be entitled to continue to participate in such plans for life on the terms
generally applied to actively employed senior management of Company, including
any employee cost-sharing provisions. To the extent the terms and conditions of
the aforesaid plans do not permit participation by Executive, his spouse, his
dependents, or his survivors, Company shall arrange to provide Executive, his
spouse, his dependents, or his survivors with the after-tax economic equivalent
of such continued coverage. In connection with such post retirement benefits, at
age 65, or whenever Medicare is available, Medicare will become the primary
insurance and the company will provide supplemental coverage so that the
coverage is equal to that of actively employed senior management of Company.

(c) Other Benefit Plans. Executive shall be entitled to receive or participate
in such further savings, deferred compensation, health or welfare benefit plans
offered to Company's senior management generally, in accordance with the terms
of such plans as they may be amended from time to time in the discretion of the
Company.

(d) Perquisites; Expenses. The Company agrees to promptly reimburse Executive
for all reasonable business expenses incurred by Executive in performing his
duties pursuant to this Agreement, in accordance with Company's reimbursement
policies generally applicable to management personnel. During the Term of this
Agreement, Company agrees to provide Executive with such perquisites as are
generally made available to management personnel from time to time, including
the perquisites provided as of the date the Board of Directors approves this
Agreement. The Company acknowledges that Executive has obtained ownership in a
fractional jet program at his own expense for personal use. In the event that
Executive uses his personal aircraft for business travel, Executive may bill the
Company for one first class, round trip airfare to the destination. In the event
that Executive's spouse accompanies Executive to the business function,
Executive can bill a second first class round trip airfare to the company.

(e) Vacation. Executive shall be entitled to six (6) weeks paid vacation
annually, and to cash compensation in respect of accrued but unused vacation
days if Executive is terminated under the terms hereof, for the calendar year in
which such termination occurs.

(f) Severance Upon Expiration of Term. Commencing at least nine (9) months prior
to the expiration of the Term of this Agreement, the Board of Directors and
Executive shall negotiate in good faith to extend the Term of Executives'
employment pursuant to terms and conditions similar to this Agreement. In the
event that the parties are unable to agree, then upon the expiration of the Term
of this Agreement, Executive shall receive, in one lump sum payment, an amount
equal to one (1) times the sum of the Base Salary as in effect as of the date of
the expiration of the Term of this Agreement and any other compensation received
by Executive pursuant to any bonus or incentive plan during the immediately
preceding year, in addition to any other amounts due to Executive pursuant to
the terms hereof. Any Long Term Compensation granted to the Executive in the (9)
month period referred to in the first sentence of this Section 7(f), shall
expire immediately. However, all other Long Term Compensation and Stock Options
pursuant to this Agreement shall vest immediately.

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8. Nondisclosure of Confidential Information.

(a) Executive and Company acknowledge that Executive will, in the course of his
employment, come into possession of confidential, proprietary business and
technical information, and trade secrets of Company and its Affiliates (the
"Proprietary Information"). Proprietary Information includes, but is not limited
to, the following:

o        Business  procedures.  All  information  concerning the way Company and
         its Affiliates  conduct their  business, which is not publicly
         available  or generally  known in the industry or trade in which
         Company or its  Affiliates  compete  (such as Company  contracts,
         internal  business  procedures,  controls,  plans,  licensing
         techniques and  practices, supplier, subcontractor and prime contractor
         names and contacts and other vendor information,  computer system
         passwords and other computer security  controls, financial information,
         distributor  information,  and  employee  data) and the  physical
         embodiments of such information (such as check lists,  samples, service
         and operational manuals, contracts, proposals, printouts,
         correspondence, forms, listings, ledgers, financial statements,
         financial reports, financial and operational analyses, financial and
         operational studies, management reports of every kind, databases,
         employment or personnel records, and any other written or machine-
         readable expression of such information as are filed in any tangible
         media).

o        Marketing Plans and Customer Lists. All information which is not
         publicly available or generally known in the industry or trade in
         which Company or its Affiliates compete pertaining to Company's and its
         Affiliates' marketing plans and strategies; forecasts and projections;
         marketing practices, procedures and policies; goals and objectives;
         quoting practices, procedures and policies; and customer data including
         the customer list, contracts, representatives, requirements and needs,
         specifications, data provided by or about prospective customers, and
         the physical embodiments of such information.

o        Business Ventures: All information which is not publicly available
         or generally known in the industry or trade in which Company or
         its Affiliates compete concerning new product development,
         negotiations for new business ventures, future business plans, and
         similar information and the physical embodiments of such
         information.

o        Software. All information relating to Company's and its
         Affiliates' software or hardware in operation or various stages of
         research and development, which is not publicly available or
         generally known in industry or trade in which Company or its
         Affiliates compete and the physical embodiments of such
         information.

o        Litigation. Information which is not publicly available or
         generally known in the industry or trade in which Company or its
         Affiliates compete regarding litigation and potential litigation
         matters and the physical embodiments of such information.

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o        Policy Information. Information which is not publicly available or
         generally known in the industry or trade in which the Company
         competes regarding the policies and positions that have been or
         will be advocated by Company and its Affiliates with governmental
         officials, the views of government officials toward such policies
         and positions, and the status of any communications that Company
         or its Affiliates may have with any government officials.

o        Information Not Generally Known. Any information which (a) is not
         available to the public or within the industry or trade in which
         Company or its Affiliates compete, (b) gives Company or its
         Affiliates a significant advantage over its or their competitors,
         or (c) has significant economic value or potentially significant
         economic value to Company or its Affiliates, including the
         physical embodiments of such information.

o        "Proprietary Information" does not include (i) information which
         at the time of disclosure or thereafter is in the public domain or
         is already possessed by Executive, free of any confidentiality
         obligation, (ii) information disclosed to Executive in good faith
         by a third party who has an independent right to such information
         and who discloses the same to Executive, free of any
         confidentiality obligation, (iii) information which is
         independently developed by Executive, (iv) information which the
         Company generally discloses to third parties without imposing
         obligations of confidentiality thereon, and (v) information known
         by Executive prior to entering into this Agreement.

(b) Executive acknowledges that the Proprietary Information is a valuable and
unique asset of Company and its Affiliates. Executive agrees that he will not,
at any time during his employment or for a period of two (2) years after the
termination of his employment with Company, without the prior written consent of
Company or its Affiliates, as applicable, either directly or indirectly divulge
any Proprietary Information for his own benefit or for any purpose other than
the exclusive benefit of Company and/or its Affiliates.

9. Agreement Not to Compete.

(a) Executive agrees that he shall not compete with Company or its Affiliates
for the Restricted Period. The Restricted Period is defined as the period
beginning on the date hereof and ending (i) if Executive is terminated for Cause
(as defined in Section 10.4(a)) or Executive terminates this Agreement Without
Good Reason (as defined in Section 10.2(b)), on the date which is thirty (30)
months following the date of termination, (ii) if this Agreement is terminated
by the Company for any reason other than Cause or Executive for Good Reason, on
the date of such termination, and (iii) if this Agreement terminates due to the
expiration of the Term, on the date which is twelve (12) months following the
expiration of the Term.

(b) For the purposes of this Section 9, "compete" shall mean directly or
indirectly through one or more intermediaries (i) working or serving as a
director, officer, employee, consultant, agent, representative, or in any other
capacity, with or without compensation, on behalf of one or more entities
engaged in the Company's Business (as defined below) in any country where
Company (including any Affiliate) either engages in the Company's Business at

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the time of Executive's termination or where Company, at the time of Executive's
termination, has developed a business plan or taken affirmative steps to engage
in the Company's Business, (ii) soliciting any employees of the Company other
than a general solicitation via any communication medium directed generally to
the public at large or to industry participants or if Executive's employer
solicited such employee without input or encouragement from Executive, and/or
(iii) inducing any customer or business partner of the Company to breach a
contract with the Company or otherwise cease doing business with the Company or
any principal for whom the Company acts as agent to terminate such agency
relationship. For purposes of this provision, the term "the Company's Business"
shall mean any business activity or line of business similar to the type of
business conducted by Company, and/or its Affiliates at the time of Executive's
termination of employment or which Company, and/or its Affiliates at the time of
Executive's termination of employment or within one year prior thereto have
developed a business plan or taken affirmative steps to enter into or conduct.
Executive expressly agrees that the markets served by Company and its Affiliates
extend worldwide and are not dependent on the geographic location of the
executive personnel or the businesses by which they are employed and that the
restrictions set forth in this Section 9 are reasonable and are no greater than
are required for the protection of Company, and its Affiliates. For purposes of
this Agreement, the term "Affiliate" shall be deemed to refer to Company, and
any entity (whether or not existing on the date hereof) controlling, controlled
by or under common control with Company.

10. Termination. Executive's employment hereunder may be terminated during the
Term upon the occurrence of any one of the events described in this Section 10
upon fifteen days prior written notice to Executive. Upon termination, Executive
shall be entitled only to such compensation and benefits as described in this
Section 10.

10.1.  Disability and Death.

(a) Disability. If Executive becomes physically or mentally disabled to such an
extent that he has not been able to perform the duties set forth in Section 2 of
this Agreement, with or without a reasonable accommodation, for a period of more
than 180 days, either consecutively or within any 365-day period ("Disability"),
Company may terminate Executive's employment hereunder. The determination of
whether Executive has a Disability under this Agreement shall be made by the
Board of Directors, which shall consider the information presented by
Executive's personal physician and by any other advisors, including any other
physician, which the Board of Directors determines appropriate. The
determination of the Board of Directors shall be final and binding, unless it is
determined to have been arbitrary and capricious. If the employment of Executive
terminates during the Term due to the Disability of Executive, Company shall
provide to Executive (i) whatever benefits are available to him under any
disability benefit plan(s) applicable to him at the time of such termination to
the extent Executive satisfies the requirements of such plan(s), and (ii) the
payments set forth in Section 10.1.(c).

(b) Death. If Executive dies during the Term, Company shall pay to Executive's
executors, legal representatives or administrators the payments set forth in
Section 10.1.(c). Except as specifically set forth in this Section 10.1 or under
applicable laws, Company shall have no liability or obligation hereunder to
Executive's executors, legal representatives, administrators, heirs or assigns

<PAGE>

or any other person claiming under or through him by reason of Executive's
death, except that Executive's executors, legal representatives or
administrators will be entitled to receive any death benefit payable to them as
beneficiaries under any insurance policy or other benefits plans in which
Executive participates as an employee of Company and to exercise any rights
afforded them under any benefit plan then in effect.

(c) Payment Upon Disability or Death. Upon termination of the employment of
Executive due to Death or Disability during the Term, Company shall pay an
amount equal to all accrued but unpaid Base Salary through the date of
termination of employment, plus a portion of the Average Annual Incentive
Compensation (as defined in Section 10.2(d) below) pro-rated for the year
through the date of termination.

10.2.  Termination By Company Without Cause; Termination By Executive For
        Good Reason.

(a)    Termination By Company Without Cause. The Company may terminate
Executive's employment hereunder at any time for any reason other than Cause,
Disability or Death upon thirty (30) days written notice to Executive
("Termination Without Cause").

(b)     Termination By Executive For Good Reason. Executive may terminate his
employment hereunder at any time for Good Reason ("Termination for Good Reason")
For purposes of this Agreement, Good Reason shall mean (i) a material reduction
in the position or responsibilities of Executive, provided that a Change in
Control (including the fact that the Company's stock is not publicly held or is
held or controlled by a single stockholder as a result of a Change in Control)
shall of itself be deemed a material reduction in the position or
responsibilities of Executive; (ii) a reduction in Executive's Base Salary or a
material reduction in  Executive's  compensation  arrangements or benefits;
(iii) a  substantial failure of Company to perform any material  provision of
this Agreement; (iv) a relocation of Company's executive offices to a distance
of more than seventy-five (75) miles from its location as of the date of this
Agreement,unless such relocation  results in Company's executive offices being
closer to Executive's  then  primary residence  or does not  substantially
increase  the average commuting time of Executive; and (v) if Executive ceases
involuntarily (other than by reason of death,  disability or Termination for
Cause) to be the Chairman of the Board of Directors.

(c)    In the event of a Termination  Without Cause or a Termination  For Good
Reason,  Company  shall pay to  Executive  within  forty-five  (45)  days  after
termination  an amount  equal to all accrued but unpaid Base Salary  through the
date  of  termination  of  employment,  plus a  portion  of the  Average  Annual
Incentive  Compensation  pro-rated for the year through the date of termination,
plus the Multiplier times the Compensation  Amount (as such terms are defined in
Section 10.2(d) below). In addition,  upon Executive's Termination Without Cause
or Termination For Good Reason,  the Long Term Compensation shall fully vest and
be exercisable in accordance with Section 6.1(c).

(d)    The Multiplier is defined as two and one-half (2-1/2). The Compensation
Amount is defined as the sum of (i) the annual  Base Salary of  Executive  as in
effect immediately prior to Executive's termination of employment,  and (ii) the

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Average Annual Incentive Compensation. The Average Annual Incentive Compensation
shall be the  average of the Annual  Incentive  Compensation  earned for the two
preceding  calendar  years.  For  purposes of  determining  the  Average  Annual
Incentive  Compensation  earned by  Executive  in any past  year,  any  non-cash
compensation  awarded  to  Executive  shall  be  included  as  annual  incentive
compensation only if specifically  designated as such by the Board of Directors,
and such  non-cash  compensation  shall be valued by such method as the Board of
Directors in its discretion  shall  determine,  which may be the manner in which
such compensation is valued for proxy reporting purposes.

10.3.    Change in Control.

(a)      For purposes of this Agreement, "Change in Control" shall mean an
occurrence of one or more of the following events:

     (i) an  acquisition  of any  voting  securities  of  Company  (the  "Voting
Securities") by any "person" or "group" (within the meaning of Section  13(d)(3)
or  14(d)(2)  of the  Securities  Exchange  Act of 1934)  other than an employee
benefit  plan of Company,  immediately  after which such Person has  "Beneficial
Ownership"  (within the meaning of Rule 13d-3  under the  Exchange  Act) of more
than  fifty  percent  (50%)  of the  combined  voting  power of  Company's  then
outstanding Voting Securities; or

     (ii) within any 18-month period,  the individuals who were directors of the
Company  as of the date the Board of  Directors  approved  this  Agreement  (the
"Incumbent  Directors")  ceasing for any reason  other than  death,  disability,
retirement  or by reason of the plan  adopted by the Board of  Directors on even
date  herewith  to expand the number of  members of the Board to  constitute  at
least a majority of the Board of  Directors,  provided that any director who was
not a director as of the date the Board of  Directors  approved  this  Agreement
shall be deemed to be an Incumbent  Director if such  director was  appointed or
nominated for election to the Board of Directors by, or on the recommendation or
approval  of, at least a majority of directors  who then  qualified as Incumbent
Directors,  provided  further  that any  director  appointed or nominated to the
Board of Directors to avoid or settle a threatened or actual proxy contest shall
in no event be deemed to be an Incumbent Director;  or

     (iii)  satisfaction  of  all  conditions  to a  merger,  consolidation,  or
reorganization   involving   Company   that  results  or  would  result  in  the
stockholders  of  Company  immediately  before  such  merger,  consolidation  or
reorganization  owning,  directly  or  indirectly,  immediately  following  such
merger,  consolidation or  reorganization,  less than fifty percent (50%) of the
combined voting power of the corporation  which survives such transaction as the
ultimate parent entity,  unless such merger,  consolidation or reorganization is
not thereafter consummated.

     (iv)   a sale of all or substantially all of the assets of Company.

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(b)    If, as a result of  payments  provided  for under or  pursuant  to this
Agreement  together  with all  other  payments  in the  nature  of  compensation
provided  to or for the  benefit  of  Executive  under  any other  agreement  in
connection with a Change in Control,  Executive  becomes subject to taxes of any
state,  local or federal  taxing  authority  that would not have been imposed on
such  payments  but for the  occurrence  of a Change in Control,  including  any
excise tax under Section 4999 of the Internal  Revenue Code of 1986 (the "Code")
and any  successor  or  comparable  provision,  then,  in  addition to any other
benefits  provided  under or pursuant to this  Agreement or  otherwise,  Company
(including any successor to Company) shall pay to Executive at the time any such
payments are made under or pursuant to this or the other  agreements,  an amount
equal to the amount of any such taxes imposed or to be imposed on Executive (the
amount of any such payment,  the  "Parachute Tax  Reimbursement").  In addition,
Company (including any successor to Company) shall "gross up" such Parachute Tax
Reimbursement by paying to Executive at the same time an additional amount equal
to the aggregate  amount of any additional  taxes (whether income taxes,  excise
taxes, special taxes, employment taxes or otherwise) that are or will be payable
by  Executive  as a result of the  Parachute  Tax  Reimbursement  being  paid or
payable  to  Executive  and/or as a result  of the  additional  amounts  paid or
payable to Executive pursuant to this sentence,  such that after payment of such
additional  taxes  Executive  shall have been paid on a net  after-tax  basis an
amount equal to the Parachute Tax Reimbursement. The amount of any Parachute Tax
Reimbursement  and of any such gross-up amounts shall be determined by Company's
independent auditing firm, whose determination,  absent manifest error, shall be
treated  as  conclusive  and  binding  absent  a  binding   determination  by  a
governmental  taxing  authority  that a greater  amount of taxes is  payable  by
Executive.

10.4.  Termination For Cause; Termination By Executive Without Good Reason.

(a)    Termination  for Cause.  The Company may terminate  the  employment of
Executive for Cause at any time during the Term. For purposes of this Agreement,
Cause shall mean that  Executive has committed an act of Misconduct  (as defined
below) or that there has been a willful and  continuing  failure of Executive to
perform  substantially  his obligations  under this  Agreement,  other than as a
result of  Executive's  Death or  Disability.  For  purposes of this  Agreement,
"Misconduct" shall mean: (i) embezzlement, fraud, or breach of fiduciary duty by
Executive against the Company;  (ii) personal dishonesty of Executive materially
injurious to Company;  (iii) an unauthorized  and intentional  disclosure of any
Proprietary   Information  in  breach  of  Executive's  duty  of  loyalty;  (iv)
conviction  of, or  entering  a plea of nolo  contendere  or guilty to, a felony
criminal  offense;  or (v)  competing  with the  Company  while  employed by the
Company or during the Restricted Period, in contravention of Section 9.

(b)    Termination By Executive Without Good Reason. Executive may terminate his
employment hereunder at any time Without Good Reason (as defined in Section
10.2(b)).

(c)    In the event Executive's employment with Company is terminated by Company
for Cause or by Executive Without Good Reason, Executive shall receive all
accrued but unpaid Base Salary and benefits as of the effective date of
Termination. In the event Executive's employment with Company is terminated by

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the Company for Cause or by Executive during the Term of this Agreement Without
Good Reason, Executive shall forfeit all unvested Long Term Compensation granted
under this Agreement.

11.    Other Agreements. Executive represents and warrants to Company that:

(a)    There are no restrictions,  agreements or understandings  whatsoever to
which  Executive  is a party or by which he is bound that would  prevent or make
unlawful  Executive's  execution  of this  Agreement or  Executive's  employment
hereunder,  or which  is or  would be  inconsistent  or in  conflict  with  this
Agreement or Executive's employment hereunder, or would prevent, limit or impair
in any way the performance by Executive of his obligations hereunder.

(b)    Executive shall disclose the existence and terms of the restrictive
covenants set forth in this Agreement to any employer by whom Executive may be
employed during the Term (which employment is not hereby authorized) or during
the Restricted Period as defined in the Agreement Not to Compete by and between
Executive and Company set forth in Section 9 hereof.

12.    Survival of Provisions.  The provisions of this Agreement shall survive
the  termination  of  Executive's  employment  hereunder  and the payment of all
amounts payable and delivery of all  post-termination  compensation and benefits
pursuant to this Agreement incident to any such termination of employment.

13.    Successors and Assigns.  This Agreement  shall inure to the benefit of
and be  binding  upon  Company  and its  successors  or  permitted  assigns  and
Executive and his executors,  administrators or heirs. The Company shall require
any successor or successors expressly to assume the obligations of Company under
this Agreement.  The Company's  failure to obtain the agreement of any successor
or assign to assume the obligations of this Agreement shall be considered  "Good
Reason" for purposes of Section  10.2(b).  For purposes of this  Agreement,  the
term  "successor"   shall  include  the  ultimate  parent   corporation  of  any
corporation  involved  in a merger,  consolidation,  or  reorganization  with or
including the Company that results in the  stockholders  of Company  immediately
before  such  merger,   consolidation  or  reorganization  owning,  directly  or
indirectly,  immediately following such merger, consolidation or reorganization,
securities  of  another  corporation,  regardless  of whether  any such  merger,
consolidation or  reorganization is deemed to constitute a Change in Control for
purposes  of  this  Agreement.  Executive  may not  assign  any  obligations  or
responsibilities  under this Agreement or any interest  herein,  by operation of
law or  otherwise,  without the prior  written  consent of Company.  At any time
prior to a Change in Control,  Company may  provide,  without the prior  written
consent  of  Executive,  that  Executive  shall  be  employed  pursuant  to this
Agreement by any of its  Affiliates or Company,  and in such case all references
herein to the  "Company"  shall be deemed to include any such  entity,  provided
that (i) such action  shall not  relieve  Company of its  obligation  to make or
cause an  Affiliate  to make or  provide  for any  payment  to or on  behalf  of
Executive   pursuant  to  this  Agreement,   and  (ii)  Executive's  duties  and
responsibilities shall not be significantly  diminished as a result thereof. The
Board of Directors may not assign any or all of its  responsibilities  hereunder
to any committee of the Board of Directors.

<PAGE>

14.    Executive Benefits.This Agreement shall not be construed to be in lieu of
or to the exclusion of any other rights, benefits and privileges to which
Executive may be entitled as an executive of Company under any retirement,
pension, profit-sharing, insurance, hospitalization or other plans or benefits
which may now be in effect or which may hereafter be adopted.

15.    Board of Directors Service. Subject to re-election by a vote of
stockholders, Executive shall continue to serve on the Board of Directors
through the Term and shall tender his resignation from the Board of Directors
upon expiration of the Term, or upon any earlier termination of his employment,
which resignation may or may not be accepted.

16.    Notices. All notices required to be given to any of the parties of this
Agreement shall be in writing and shall be deemed to have been sufficiently
given, subject to the further provisions of this Section 16, for all purposes
when presented personally to such party, or sent by facsimile transmission, any
national overnight delivery service, or certified or registered mail, to such
party at its address set forth below:

(a) If to Executive:

                           George Off
                           7 Horseshoe Lane
                           Paoli, PA  19301

(b) If to Company:

                           Checkpoint Systems, Inc.
                           101 Wolf Drive
                           Thorofare, NJ  08086
                           Attn:  Vice President and General Counsel

Such notice shall be deemed to be received when delivered if delivered
personally, upon electronic or other confirmation of receipt if delivered by
facsimile transmission, the next business day after the date sent if sent by a
national overnight delivery service, or three (3) business days after the date
mailed if mailed by certified or registered mail. Any notice of any change in
such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in writing
by the party entitled to receive such notice.

17. Entire Agreement; Amendments. This Agreement and any other documents,
instruments or other writings delivered or to be delivered in connection with
this Agreement as specified herein constitute the entire agreement among the
parties with respect to the subject matter of this Agreement and supersede all
prior and contemporaneous agreements, understandings, and negotiations, whether
written or oral, with respect to the terms of Executive's employment by Company.
This Agreement may be amended or modified only by a written instrument signed by
all parties hereto.

<PAGE>

18. Waiver. The waiver of the breach of any term or provision of this Agreement
shall not operate as or be construed to be a waiver of any other or subsequent
breach of this Agreement.

19. Governing Law. This Agreement shall be governed and construed as to its
validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania.

20. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

21. Section Headings. The section headings in this Agreement are for convenience
only; they form no part of this Agreement and shall not affect its
interpretation.

22. Counterparts. This Agreement may be executed in any number of counterparts,
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute one and the same instrument.

23. Specific Enforcement; Extension of Period. Executive acknowledges that the
restrictions contained in Sections 8 and 9 hereof are reasonable and necessary
to protect the legitimate interests of Company and its Affiliates and that
Company would not have entered into this Agreement in the absence of such
restrictions. Executive also acknowledges that any breach by him of Sections 8
or 9 hereof will cause continuing and irreparable injury to Company for which
monetary damages would not be an adequate remedy. Executive shall not, in any
action or proceeding by Company to enforce Sections 8 or 9 of this Agreement,
assert the claim or defense that an adequate remedy at law exists. In the event
of such breach by Executive, Company shall have the right to enforce the
provisions of Sections 8 and 9 of this Agreement by seeking injunctive or other
relief in any court, and this Agreement shall not in any way limit remedies at
law or in equity otherwise available to Company. In the event that the
provisions of Sections 8 or 9 hereof should ever be adjudicated to exceed the
time, geographic, or other limitations permitted by applicable law in any
applicable jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, or other limitations permitted by
applicable law.

24. Arbitration. Any dispute or claim other than those referred to in Section
23, arising out of or relating to this Agreement or otherwise relating to the
employment relationship between Executive and Company (including but not limited
to any claims under Title VII of the Civil Rights Act of 1964, as amended; the
Americans with Disabilities Act; the Age Discrimination in Employment Act; the
Family Medical Leave Act; and the Employee Income Retirement Security Act) shall
be submitted to Arbitration, in Philadelphia County, Commonwealth of
Pennsylvania, and except as otherwise provided in this Agreement shall be
conducted in accordance with the rules of, but not under the auspices of, the
American Arbitration Association. The arbitration shall be conducted before an
arbitration tribunal comprised of three individuals, one selected by Company,
one selected by Executive, and the third selected by the first two. The parties
and the arbitrators selected by them shall use their best efforts to reach

<PAGE>

agreement on the identity of the tribunal within ten (10) business days of
either party to this Agreement submitting to the other party a written demand
for arbitration. The proceedings before the tribunal shall take place within
twenty (20) business days of the selection thereof. Executive and Company agree
that such arbitration will be confidential and no details, descriptions,
settlements or other facts concerning such arbitration shall be disclosed or
released to any third party without the specific written consent of the other
party, unless required by law or court order or in connection with enforcement
of any decision in such arbitration. The parties shall equally divide the costs
of the arbitrators, and each party shall bear his or its attorneys' fees and
other costs, except that the arbitrators may specifically direct one party to
bear a greater portion or the entire cost of the arbitration, including all
attorneys fees, if the arbitrators determine that such party acted in bad faith.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first written above.

Attest:                                       CHECKPOINT SYSTEMS, INC.

/s/  Jack W. Partridge                        By:/s/R. Keith Elliott
------------------------------------             -----------------------------
                                                 Lead Outside Director

                                                 /s/George Off
                                                 -----------------------------Exhibit 10.1(a)

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

                            SECURED CONVERTIBLE NOTE
                                 (No. CTS-____)

[Date]                                                        $

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

The following terms shall apply to this Note:

                                    ARTICLE I

                                  NO PREPAYMENT

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

                                   ARTICLE II

            CONVERSION AND PURCHASE RIGHTS; PAYMENT OF EXERCISE PRICE

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

<PAGE>

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

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

     2.2 CONVERSION PRICE.

     (a) The per share  "Conversion  Price" for conversion of this Note into the
Borrower's  Common  Stock shall be equal to the greater of: (i) 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; and (ii)
the par value of the Common Stock on the date the Conversion Notice is delivered
to the  Borrower by the Holder.  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

                                       2
<PAGE>

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 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

                                       3
<PAGE>

       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 the end of the term of this  Note  (unless
legally  prohibited  from doing so), a number of shares of Common Stock equal to
the  principal  amount  of this  Note  outstanding  at the time of  registration
divided by the  Conversion  Price with  respect to  Borrower.  Such Common Stock
shall not be used, without permission from the Holder, for any other purposes.

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

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

                                   ARTICLE III

                                EVENTS OF DEFAULT

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

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

                                       4
<PAGE>

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;

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

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

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

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

                                       5
<PAGE>

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

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

                                   ARTICLE IV

                                   COLLATERAL

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

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

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

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

                                    ARTICLE V

                                  MISCELLANEOUS

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       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:
                                            ------------------------------------
                                            Michael J. Parrella
                                            Chairman and Chief Financial Officer

                                       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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