Document:

67

Exhibit  4.12

                                 PROMISSORY NOTE

FACE  AMOUNT                                     $600,000
PRICE                                            $500,000
INTEREST  RATE                                   12%  per  annum
NOTE  NUMBER                                     Janaury-2005-101
ISSUANCE  DATE                                   January  10,  2005
MATURITY  DATE                                   August  10,  2005

     FOR  VALUE  RECEIVED, FTS Group, a Nevada corporation (the "Company"), (OTC
BB:  FLIP) hereby promises to pay DUTCHESS PRIVATE EQUITIES FUND, II, L.P.  (the
"Holder") by July 10, 2005, (the "Maturity Date"), or earlier, the Amount of Six
Hundred  Thousand Dollars ($600,000) U.S., plus accrued interest, payable on the
dates  below,  ("Interest  Payment Date") at 12% per annum, compounded daily, in
such  amounts,  at  such times and on such terms and conditions as are specified
herein.

Article  1     Interest  Payment  Date

     The  Company  shall  pay  payments  in  the  amount of ninety thousand nine
hundred and thirty-nine dollars ($90,939.00) commencing on February 10, 2005 and
monthly  thereafter.  Payment  is due on the and 10h calendar date of each month
until  such  time  as the Note is paid off, if any outstanding balance is due at
time  of  first  payment.

Article  2     Method  of  Payment

     This  Note  must  be  surrendered to the Company in order for the Holder to
receive  payment  of  the  principal  amount  hereof.  The Company shall pay the
interest  on  this  Note  in United States dollars pursuant to Article 1 hereof.
The  Company  must  wire transfer funds for the payment of interest or any other
payment  due  to  the  Holder  of  this  Note  to  the  Holder's  bank.

Article  3     Balloon  Payment  Date

Upon  the  Maturity  Date, any unpaid monies, whether principle or interest, are
due  in full to the Holder.  Any unpaid amounts outstanding after Maturity shall
be  considered  an  Event  of  Default and Holder reserves the right to exercise
options  under  Article  8.

Section  3.1  Prepayment

The  Company  may make additional payments ("Prepayment") without any penalties.
After  Closing,  the  Company  must  make  a  Prepayment  to the Holder when the
aggregate  amount of any financing received by the Company is in excess of fifty
thousand  ($50,000)  or  two  hundred  thousand  dollars  ($200,000) ("Threshold
Amounts").  The Company agrees to pay 50% (fifty percent) of any proceeds raised
by  the  Company  over  the Threshold Amount of fifty thousand ($50,000) and 80%
(eighty  percent)  of any proceeds raised by the Company of the Threshold Amount
of $200,000, to the Holder (unless otherwise agreed upon by Dutchess in writing)
toward  the  Payment  of the Note until the Amount is paid in full. The Payments
shall be made to the Holder upon the Company's receipt of the financing. Failure
to  do  so  will  result  in  an  Event  of  Default.

Article  4        Collateral

The  Company  does hereby agree to issue thirty (30) Put Notices executed by the
appropriate  officer  of the Company, to the Holder before Closing.  The Company
gives  their  full  consent  for  each  Put  to  be  executed in the full amount
applicable  under  the terms of the Investment Agreement and shall do so at each
time allowed under the Investment Agreement, until such time as the Note is paid
in  full.

Article  5        Unpaid  Amounts

In  the  event  that  on  the Maturity Date, any amounts on the Note or interest
remain,  the  Company  shall be in Default, and as such, the Holder may elect to
take  actions  as  outlined  in  Article  8.

Article  6     Mergers

     The  Company  shall  not  consolidate  or  merge  into,  or transfer all or
substantially  all  of  its assets to, any person, unless such person assumes in
writing  the  obligations  of  the Company under this Note and immediately after
such  transaction  no  Event  of  Default  exists.  Any  reference herein to the
Company  shall  refer  to  such  surviving  or  transferee  corporation  and the
obligations  of  the  Company  shall  terminate  upon  such  written assumption.

Article  7        Registration

     The  Company agrees not to file any registration statement (including those
on Form S-8) without the prior written approval of the Holder.  In the event the
Company  does  file a registration statement without the express written consent
of  the Holder, it shall be deemed an Event of Default, and the Holder may elect
to  take  actions  under  Article  8.  The Company must also issue the Holder an
equal  number  of Shares included in the Registration Statement as a penalty for
liquidated  damages.

Article  8     Events  of  Default  and  Remedies

Section  8.1     Events  of  Default.  An  "Event  of Default" occurs if (a) the
Company  does not make any payments of the principal of this Note within two (2)
business  days  of  the  applicable  Interest  Payment Date , Balloon Payment or
Maturity  Date, as applicable, as described above, in violation of the Threshold
Amounts  upon  redemption  or  fails to adhere to the aforementioned Articles of
this  Agreement  in  which the Holder may elect to deem an Event of Default, (b)
the  Company  pursuant  to  or  within  the  meaning  of  any Bankruptcy Law (as
hereinafter  defined):  (i)  commences  a  voluntary  case; (ii) consents to the
entry  of  an order for relief against it in an involuntary case; (iii) consents
to  the  appointment of a Custodian (as hereinafter defined) of it or for all or
substantially  all  of  its  property or (iv) makes a general assignment for the
benefit  of  its  creditors  or  (v) a court of competent jurisdiction enters an
order  or  decree  under any Bankruptcy Law that:  (A) is for relief against the
Company  in  an involuntary case; (B) appoints a Custodian of the Company or for
all  or  substantially  all of its property or (C) orders the liquidation of the
Company,  and  the order or decree remains unstayed and in effect for sixty (60)
calendar  days;  (c) the Company's Common Stock is suspended or no longer listed
on  any recognized exchange including electronic over-the-counter bulletin board
for  in  excess  of  three  (3) consecutive trading days or (d) the registration
statement  for  the  underlying shares in the Investment Agreement with Dutchess
Private  Equities Fund, LP does not remain effective for any reason.  As used in
this  Section 6.1, the term "Bankruptcy Law" means Title 11 of the United States
Code  or  any  similar federal or state law for the relief of debtors.  The term
"Custodian"  means  any  receiver,  trustee,  assignee,  liquidator  or  similar
official  under  any  Bankruptcy  Law.

     In  any  Event  of  Default,  the  Holder may elect to charge the Company a
penalty  of  one percent (1%) of the Face Amount of the Debenture for each Event
of  Default  and  for  every one (1) business days that Event of Default remains
uncured.

     In  the  Event  of Default, the Holder may elect to secure a portion of the
Company's  assets  not  to exceed 200% of the Amount of the Note, including, but
not  limited to: accounts receivable or inventory.  The Holder may also elect to
garnish  Revenue from the Company in an amount that will repay the Holder on the
schedules  outlined  in  this  Agreement.

In  the  Event  of  Default  the  Holder shall also have the right to switch the
Residual  Amount  to  a  3 Year ("Convertible Maturity Date"), 10% (ten percent)
interest  bearing  Convertible Debenture at the same terms and conditions as the
Form  of  Debenture  between  the Company and Dutchess Private Equities Fund, LP
dated  February-2003-101.  At  such  time  of default, the Convertible Debenture
shall be considered closed ("Convertible Closing Date") The Company shall file a
registration  statement  covering  an  amount  of  shares  equal  to 300% of the
Residual  Amount  payable  in  stock  within  10  business  days  and cause such
registration  statement  to  be  declared  effective under the Securities Act of
1933,  as  amended  (the  "Securities  Act"),  by  the  Securities  and Exchange
Commission  (the  "Commission")  within  60  calendar  days.    In the event the
Company  does not file such registration statement within five business days, or
such  registration  statement  is not declared by the Commission to be effective
under the Securities Act within such 60 business days, the Residual Amount shall
increase  by  $1,000  per day.  In the event the Company is given the option for
accelerated effectiveness of the registration statement, it agrees that it shall
cause  such  registration  statement  to  be  declared  by  effective as soon as
reasonably  practicable.  In  the event that the Company is given the option for
accelerated  effectiveness  of  the  registration  statement, but chooses not to
cause  such  registration statement to be declared effective on such accelerated
basis,  the  Residual  Amount shall increase by $1,000 per day commencing on the
earliest  date  as of which such registration statement could have been declared
to  be  effective.

Article  9  Additional  Financing

     The  company  will  not  enter  into  any security that is convertible into
common  stock  at  a discount to market price.  Any other financing completed by
the  Company,  while  any outstanding balances are due on this Note or any other
Notes  with  Dutchess  Private  Equities  Fund, (collectively "Dutchess Notes"),
shall be considered an Event of Default and remedies discussed above can be take
by  the  Holder.

Article  10     No  Assignment
     This  Note  shall  not  be  assignable.

Article  11     Rules  of  Construction.

     In  this Note, unless the context otherwise requires, words in the singular
number  include the plural, and in the plural include the singular, and words of
the  masculine gender include the feminine and the neuter, and when the sense so
indicates,  words of the neuter gender may refer to any gender.  The numbers and
titles  of  sections  contained  in  the  Note  are  inserted for convenience of
reference  only,  and  they  neither form a part of this Note nor are they to be
used  in  the  construction or interpretation hereof.  Wherever, in this Note, a
determination of the Company is required or allowed, such determination shall be
made by a majority of the Board of Directors of the Company and if it is made in
good  faith,  it shall be conclusive and binding upon the Company and the Holder
of  this  Note.

Article  12     Governing  Law

     The  validity,  terms,  performance  and  enforcement of this Note shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely  in  the  State  of
Massachusetts.

Article  13     Litigation

The  parties  to  this  agreement  will  submit  all disputes arising under this
agreement  to arbitration in Boston, Massachusetts before a single arbitrator of
the  American Arbitration Association ("AAA").  The arbitrator shall be selected
by  application  of the rules of the AAA, or by mutual agreement of the parties,
except that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth  of  Massachusetts.  No  party to this agreement will challenge the
jurisdiction  or  venue  provisions  as  provided  in  this  section.

Article  14      Conditions  to  Closing

The  Company  shall  have  delivered  the proper Collateral to the Holder before
Closing.

Article  15       Indemnification

     In  consideration  of the Holder's execution and delivery of this Agreement
and  the  acquisition  and  funding  by  the Holder of the Note hereunder and in
addition  to  all  of  the  Company's  other  obligations  under  the  documents
contemplated  hereby,  the  Company  shall  defend,  protect, indemnify and hold
harmless  the  Holder  and  all  of  their  shareholders,  officers,  directors,
employees,  counsel,  and  direct or indirect investors and any of the foregoing
person's  agents  or other representatives (including, without limitation, those
retained  in  connection  with  the transactions contemplated by this Agreement)
(collectively,  the  "INDEMNITEES") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Indemnitee  is  a  party  to  the  action for which indemnification hereunder is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"INDEMNIFIED  LIABILITIES'),  incurred  by  any  Indemnitee  as  a result of, or
arising  out  of,  or  relating  to  (i)  any misrepresentation or breach of any
representation  or  warranty  made  by  the  Company  in  the Note, or any other
certificate,  instrument  or  document  contemplated  hereby or thereby (ii) any
breach  of any covenant, agreement or obligation of the Company contained in the
Note  or  any  other certificate, instrument or document  contemplated hereby or
thereby,  except  insofar  as  any  such misrepresentation, breach or any untrue
statement,  alleged  untrue  statement,  omission or alleged omission is made in
reliance  upon  and  in  conformity  with  written  information furnished to the
Company  by,  or on behalf of, the Holder or based on illegal or alleged illegal
trading  of  the  Shares  by  the  Holder.  To  the  extent  that  the foregoing
undertaking  by  the  Company  may  be unenforceable for any reason, the Company
shall  make  the maximum contribution to the payment and satisfaction of each of
the  Indemnified  Liabilities  which  is  permissible  under applicable law. The
indemnity  provisions  contained  herein  shall  be  in addition to any cause of
action or similar rights the Holder may have, and any liabilities the Holder may
be  subject  to.

Article  16      Investor  Shares

     The  Company  shall deliver 500,000 shares of common stock to the holder as
an inducement to entering into the financing. These shares shall carry piggyback
registration  rights.

Article  17     Legal

     The  Company shall pay $10,000 directly from Closing for preparation of the
documents.

Article  18     Senior  Obligation

     The  Company  shall  cause  this  Note  and  all  other  existing Notes and
Debentures with the Holder ("Holder's Debt") to be senior in right of payment to
all  other  Indebtedness  of  the  Company.

Article  19     Use  of  Proceeds

     The  Company  shall  use  the  proceeds to immediately pay off the Dutchess
October-2004-101  Note  in  full.  The remaining funds shall be used for general
working  capital

IN WITNESS WHEREOF, the Company has duly executed this Note as of the date first
written  above.

                         FTS  GROUP,  INC.

                         By:  /s/  Scott  D.  Gallagher
                         Name:       Scott  D.  Gallagher
                         Title:      President  and  Chief  Executive  Officer

                         DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
                         BY  ITS  GENERAL  PARTNER  DUTCHESS
                         CAPITAL  MANAGEMENT,  LLC

                         By:  /s/  Douglas  H.  Leighton
                         Name:  Douglas  H.  Leighton
                         Title:  A  Managing  Member

CONSENT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM

We  consent to the incorporation by reference in this Registration Statement and
related Prospectus of FTS Group, Inc. ("the Company") Form SB-2, File No.      ,
of  our report dated March 7, 2005, except for Note 15, which is dated March 31,
2005,  relating  to the consolidated financial statements of the Company for the
year  ended  December  31,  2004, appearing in the Annual Report on Form 10-KSB,
filed  on  April  5,  2005.

/s/WithumSmith+Brown,  P.C.
Princeton,  New  Jersey
June  14,  2005Exhibit 10.39

 

THIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE “SECURITIES”), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S AND/OR REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO REGULATION S AND/OR REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTION INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

DEBENTURE

UNICO, INCORPORATED

8% Convertible Debenture

Due July 11, 2005

No. 12

$250,000.00

This Debenture is issued by Unico, Incorporated, an Arizona corporation (the “Company”), and Kentan Limited Corp. (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.

ARTICLE I.

Section 1.01

Principal and Interest.  For value received on January 11, 2005, the Company hereby promises to pay to the order of Holder in lawful money of the United States of America and in immediately available funds the principal sum of $250,000.00, together with interest on the unpaid principal of this Debenture at the rate of eight percent (8%) per year (computed on the basis of the 365-day year and the actual days elapsed) from the date of this Debenture until paid.  At the Company’s option, the entire principal amount and all accrued interest shall be either (a) paid to the Holder on or before the due date of this Debenture or (b) converted in accordance with Section 1.02 herein.

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Section 1.02

Optional Conversion.  The Holder is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of this Debenture, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s common stock, par value $0.10 per share (“Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company receives notice of conversion, or the lowest price available in the Company’s 1-E Offering Circular, whichever is lower. To convert this debenture, the Holder shall deliver written notice (the “Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Company at its address set forth herein.  The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.

The Company is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of this Debenture, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s common stock, par value $0.10 per share (“Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company issues such notice of conversion, or the lowest price available in the Company’s 1-E Offering Circular, whichever is lower. To convert this debenture, the Company shall deliver written notice (the “Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Holder at its address set forth herein.  The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.

Section 1.03

Reservation of Common Stock.  The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Debenture, such number of shares of Common Stock as shall from time to time be sufficient to effect such conversion, based on the Conversion Price.  If at any time the Company does not have a sufficient number of Conversion Shares authorized and available, then the Company shall call and hold a special meeting of its stockholders within sixty (60) days of that time for the sole purpose of increasing the number of authorized shares of Common Stock.

Section 1.04

Registration Rights.  The Company is obligated to register the resale of the Conversion Shares under the Securities Act of 1933, as amended, or provide Holder with an appropriate exemption from registration.

Section 1.05

Interest Payments.  The interest so payable will be paid at the time of maturity or conversion to the person in whose name this Debenture is registered.  At the time such interest is payable, the Company, in its sole discretion, may elect to pay interest in cash or in the form of Common Stock.  If paid in Common Stock, the amount 

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of stock to be issued shall be calculated in accordance with the formula and procedure set forth in Section 1.02 above. 

Section 1.06

Right of Redemption.  The Company shall have the right to redeem, with thirty (30) business days advance notice to the Holder, any or all outstanding Debentures remaining in its sole discretion (“Right of Redemption”).  The redemption price shall be equal to 100% of the face amount of the Debenture redeemed plus all accrued interest (“Redemption Price”).   

Section 1.07

Subordinated Nature of Debenture.  This Debenture and all payments hereon, including principal or interest, shall be subordinated and junior in right of payment to all accounts payable of the Company incurred in the ordinary course of business and/or bank debt of the Company not to exceed $30,000.

ARTICLE II.

Section 2.01

Amendments and Waiver of Default.  The Debenture may be amended with the consent of Holder.  Without the consent of Holder, the Debenture may be amended to cure any ambiguity, defect or inconsistency, to provide assumption of the Company obligations to the Holder or to make any change that does not adversely affect the rights of the Holder.

ARTICLE III.

Section 3.01

Events of Default.  An Event of Default is defined as follows: (a) failure by the Company to pay amounts due hereunder within fifteen (15) days of the date of maturity of this Debenture; (b) failure by the Company for thirty (30) days after notice to it to comply with any of its other agreements in the Debenture; (c) events of bankruptcy or insolvency; (d) a breach by the Company of its obligations under the Registration Rights Agreement which is not cured by the Company within ten (10) days after receipt of written notice thereof.  The Holder may not enforce the Debenture except as provided herein.

Section 3.02

Failure to Issue Unrestricted Common Stock. As indicated above, a breach by the Company under its obligation under the Registration Rights Agreement shall be deemed an Event of Default, which if not cured with ten (10) days, shall entitle the Holder accelerated full payment of all debentures outstanding.  The Company acknowledges that failure to honor a Notice of Conversion shall cause hardship to the Holder.

ARTICLE IV.

Section 4.01

Anti-dilution.  In the event that the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on the outstanding Common Stock, the Conversion Price in effect immediately prior to such 

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subdivision of the issuance of such dividend shall be proportionately decreased and, in the event that the Company shall at any time combine the outstanding shares of Common stock, the Conversion price in effect immediately prior to such combination shall be proportionally increased, effective at the close of business on the date of such subdivision, dividend or combination as the case may be.

ARTICLE V.

Section 5.01

Notice.  Notices regarding this debenture shall send to the parties at the following addresses, unless a party notifies the other parties, in writing, of a change of address:

If to the Company:

Unico, Incorporated

8880 Rio San Diego Drive, 8th Floor

San Diego, CA 92108

Telephone: (619) 209-6124 

Attn:  Mark A. Lopez, CEO

If to the Holder:

Kentan Limited Corp.

BCM Cape Building

Leeward Highway

Providenciales

Turks and Caicos, BWI

Attn:  Hugh O’Neill

Section 5.02

Governing Law.  This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of California without giving effect to the principals of conflict of the laws thereof.  Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of California or the state courts of the State of California sitting in Riverside in connection with any dispute arising under this debenture and hereby waives, to the maximum extent permitted by law, any objection, including the objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

Section 5.03

Severability.  The invalidity of any of the provisions of this Debenture shall not invalidate or otherwise affect any of the other provisions of this Debenture, which shall remain in full force effect.

Section 5.04

Entire Agreement and Amendments.  This Debenture represents the entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as set forth herein.  This Debenture may be amended only by an instrument in writing executed by the parties hereto.

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Section 5.05

Counterparts.  This Debenture may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute an instrument.

IN WITNESS WHEREOF, with the intent to legally bound hereby, the Company has executed this Debenture as of the date first written above.

UNICO, INCORPORATED

By:/s/ Mark A. Lopez

Name: Mark A. Lopez

Title: Chief Executive Officer

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