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-05-07)

March 8, 2005 $390,000.00

FOR VALUE RECEIVED, NCT GROUP, INC., a Delaware corporation (hereinafter called

the "Borrower") hereby promises to pay to the order of Carole Salkind or

registered assigns (the "Holder") the sum of Three Hundred Ninety Thousand

Dollars and No Cents ($390,000.00) on September 8, 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 equal to the closing sale price of the Common

Stock on the Trading Day (as defined below) immediately preceding the date of

this Note; provided, however, that if, on the date of this Note and the three

Trading Days thereafter (the "Window"), neither the Holder nor any Related Party

(as defined below) sells or, whether in writing or otherwise, agrees to sell any

shares of Common Stock or any option, warrant, instrument or right to convert

into, exchange for or acquire Common Stock, then such price shall be reduced to

a price equal to the lowest closing sale price, if lower than the price

specified above in this sentence, of the Common Stock during the Window on the

principal securities exchange or market on which the Common Stock is then traded

as reported on Bloomberg Financial Markets. If any closing sale price of the

Common Stock during the Window is lower than the price specified at the

beginning of this Section 2.2(a), the Holder shall give the Borrower prompt

written notice of any sale of or agreement to sell any Common Stock or option,

warrant, instrument or right to convert into, exchange for or acquire Common

Stock made by the Holder or a Related Party during the Window. "Trading Day"

shall mean any day on which the Common Stock is traded for any period on the

NASDAQ National Market, or on the principal securities exchange or other

securities market on which the Common Stock is then being traded. "Related

Party" shall mean a member of the Holder's immediate family, including spouse

(even if separated or not residing with the Holder) and adult children (even if

not residing with the Holder), or an entity (other than the Borrower) of which

the Holder or any such immediate family member is an officer, director or

beneficial shareholder (determined under Rule 13d-3 under the Securities

Exchange Act of 1934, as amended (the "1934 Act")). The Conversion Price shall

also be subject to equitable adjustments for stock splits, stock dividends,

combinations, recapitalization, reclassifications and similar events. The Artera

and DMCI "Conversion Price" shall be equal to the initial public offering price

of such stock and shall be subject to adjustment as provided in Section 2.2(b)

hereof.

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(b) The Conversion Price for NCT, Artera and DMCI shall also be subject to

equitable adjustments for stock splits, stock dividends, combinations,

reclassifications and similar events.

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

that requires adjustment) to the Conversion Price of NCT, Artera and DMCI

pursuant to this Section 2.2.

2.3 AUTHORIZED SHARES. The Borrower covenants that during the period the

Conversion Right exists, the Borrower will use its best efforts to reserve from

its authorized and unissued Common Stock a sufficient number of shares to

provide for the issuance of Common Stock upon the full conversion of this Note.

The Borrower represents that upon issuance, such shares will be duly and validly

issued, fully paid and non-assessable. The Borrower (i) acknowledges that it

will irrevocably instruct its transfer agent as soon as practicable to issue

certificates for the Common Stock issuable upon conversion of this Note and (ii)

agrees that its issuance of this Note shall constitute full authority to its

officers and agents, who are charged with the duty of executing stock

certificates, to execute and issue the necessary certificates for shares of

Common Stock upon the conversion of this Note. In the event that a sufficient

number of shares cannot be reserved, Borrower agrees to use its best efforts to

call an annual meeting of the Borrower's shareholders and seek approval for an

increase in the authorized shares of the Borrower's Common Stock to a number of

shares sufficient to provide for the full conversion of this Note.

2.4 METHOD OF CONVERSION. Except as otherwise provided in this Note or

agreed to by the Holder, this Note may be converted by the Holder in whole at

any time or in part (provided such partial conversion is at least $50,000) from

time to time by (i) submitting to the Borrower a Conversion Notice (by facsimile

dispatched on the Conversion Date and confirmed by U.S. mail or overnight mail

service sent within two Trading Days thereafter) and (ii) surrendering this Note

with the mailed confirmation of the Conversion Notice at the principal office of

the Borrower. Upon partial exercise of the conversion rights provided hereby, a

new Note containing the same date and provisions as this Note shall be issued by

the Borrower to the Holder for the principal balance of this Note which shall

not have been converted. This Note has been issued by the Borrower pursuant to

the exemption from registration provided either by Section 4.2 or Regulation D

under the Securities Act of 1933, as amended (the "Act").

2.5 RESTRICTIONS ON SHARES. The shares of common stock issuable upon

conversion of this Note may not be sold or transferred unless (i) they first

shall have been registered under the Act and applicable state securities laws,

(ii) the Borrower shall have been furnished with an opinion of legal counsel (in

form, substance and scope reasonably acceptable to Borrower) to the effect that

such sale or transfer is exempt from the registration requirements of the Act or

(iii) they are sold pursuant to Rule 144 under the Act. Each certificate for

shares of common stock issuable upon conversion of this Note that have not been

so registered and that have not been sold pursuant to an exemption that permits

removal of the legend, shall bear a legend substantially in the following form,

as appropriate:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE

SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,

TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION

STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS

AMENDED, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE

REASONABLY ACCEPTABLE TO THE BORROWER THAT REGISTRATION IS NOT

REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID

ACT.

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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 comp