CONVERTIBLE NOTE

Exhibit 10.01

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-05-09)

March 23, 2005 $2,001,439.22

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 Two Million One Thousand Four

Hundred Thirty-Nine Dollars and Twenty-Two Cents ($2,001,439.22) on September

23, 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 (UK) Limited ("Artera") has made an

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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 $0.0183. The Conversion Price shall 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 also be subject to equitable adjustments for stock splits, stock

dividends, combinations, reclassifications and similar events.

(b) Borrower shall promptly notify each Holder of any adjustment (and event

that requires adjustment) to the Conversion Price of Borrower, 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.

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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 business 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. 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

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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 t