EXHIBIT 4-2






 


Note:
February 18, 2014


 


NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. 


 


THIS
NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING
ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS
THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH BELOW.


 


10%
CONVERTIBLE PROMISSORY NOTE 


 OF


 INCEPTION
MINING INC.


 


Issuance
Date: February 18, 2014


Beginning
Value of this Note: $200,000


Original
Issue Discount: $20,000


Total
Face Value of Note: $220,000


 


This
Note (“Note” or “Note”) is
a duly authorized Convertible Promissory Note of INCEPTION MINING INC. a corporation duly organized and existing under the laws
of the State of Nevada (the “Company”), designated as the Company’s
10% Convertible Promissory Note Due February 18, 2015 (“Maturity Date”)
in the principal amount of Two Hundred Twenty Thousand Dollars ($220,000) (the “Note”).


 


For
Value Received, the Company hereby promises to pay to the order
of Iconic Holdings, LLC or its registered assigns or successors-in-interest (“Holder”) the principal
sum of Two Hundred Twenty Thousand Dollars ($220,000) together with all accrued but unpaid interest, if any, on the Maturity Date,
to the extent such principal amount and interest has not been repaid or converted into the Company’s Common Stock, $0.001
par value per share (the “Common Stock”), in accordance with the terms hereof.


 


The
initial Purchase Price will be fifty five thousand dollars ($55,000) of consideration upon execution of the Note Purchase Agreement
and all supporting documentation. The sum of fifty thousand dollars ($50,000.00) shall be remitted and delivered to the Company,
and five thousand dollars ($5,000) shall be retained by the Purchaser through an original issue discount for due diligence and
legal bills related to this transaction. The Holder reserves the right to pay additional consideration at any time and in any
amount it desires with prior approval from the Company. The principle sum owed by the Company shall be prorated to the amount
of consideration paid by the Holder and only the consideration received by the Company, plus prorated interest, fees and original
issue discount, shall be deemed owed by the Company. The original issue discount is set at ten percent (10%) of any consideration
paid. The Company is not responsible to repay any unfunded portion of this Note.


 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic
Holdings, LLC


 




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Interest
on any outstanding principal balance shall accrue at a rate of 10% per annum. In the Event of Default pursuant to Section 2(f),
interest will accrue at the rate equal to the lower of twenty (20%) per annum or the highest rate permitted by law (the “Default
Rate”).


 


This
Note may not be prepaid in whole or in part except as otherwise provided herein. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day.


 


For
purposes hereof the following terms shall have the meanings ascribed to them below:


 


“Business
Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York
are authorized or required by law or executive order to remain closed.


 


“Conversion
Price” shall be equal to the lower of $0.45 or sixty percent (60%) of the lowest three (3) daily VWAPs (Volume Weighted
Average Price) of the Company’s common stock during the twenty (20) consecutive trading days prior to the date on which
Holder elects to convert all or part of the Note. If the Company is placed on “chilled” status with the Depository
Trust Company (“DTC”), the discount will be increased by ten percent (10%) until such chill is remedied.


 


“Principal
Amount” shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest
hereunder, and (iii) any default payments owing under the Agreements but not previously paid or added to the Principal Amount.


 


“Trading
Day” shall mean a day on which there is trading on the Principal Market.


 


“Underlying
Shares” means the shares of common stock into which the Note is convertible (including interest or principal payments
in common stock as set forth herein) in accordance with the terms hereof.


 


The
following terms and conditions shall apply to this Note:


 


Section
1.00 Conversion.


 


(a) Conversion
Right. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at
the Holder’s option, at any time to convert the outstanding Principal Amount and Interest under this Note in whole or in
part.


 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC


 




    	2



    	 



    


 


(b)The
date of any Conversion Notice hereunder and any Payment Date shall be referred to herein as the “Conversion Date”.


 


(i)Stock
Certificates or DWAC. The Company will deliver to the Holder, or Holder’s authorized designee, no later than two (2)
Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends
and trading restrictions) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In
lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided
the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer (“FAST”)
program, upon request of the Holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically
transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s
(or such designee’s) prime broker with DTC through its Deposits and Withdrawal at Custodian (DWAC) program (provided that
the same time periods herein as for stock certificates shall apply).


 


If
the Company fails to deliver to the Holder such certificate or certificates (or shares through DTC) pursuant to this Section (free
of any restrictions on transfer or legends) prior to the third Trading Day after the Conversion Date, the Company shall pay to
the Holder as liquidated damages, in cash, an amount equal to Two Thousand Dollars ($2,000) per day, until such certificate or
certificates are delivered. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder’s
actual damages and costs resulting from a failure to deliver the Common stock and the inclusion herein of any such additional
amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Such liquidated
damages will be added to the principal value of the Note.


 


(c)Reservation
and Issuance of Underlying Securities. The Company covenants that it will at all times reserve and keep available out of its
authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note (including repayments in
stock), free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less
than three times (3x) the number of shares of Common Stock as shall be issuable (taking into account the adjustments under
this Section 1 but without regard to any ownership limitations contained herein) upon the conversion of this Note in Common Stock.
These shares shall be reserved in proportion with the Consideration actually received by the Company and the total reserve will
be increased with future payments of consideration by Holder. The Company covenants that all shares of Common Stock that shall
be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable. The Company
agrees that this is a material term of this Note.


 


(d)Conversion
Limitation. The holder will not submit a conversion to the Company that would result in the Holder owning more than 9.99%
of the total outstanding shares of the Company.


 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC


 




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Section
2.00 Defaults and Remedies.


 


(e)Events
of Default. An “Event of Default” is: (i) a default in payment of any amount due hereunder which default
continues for more than five (5) business days after the due date; (ii) a default in the timely issuance of underlying shares
upon and in accordance with terms hereof, which default continues for three (3) Business Days after the Company has received notice
informing the Company that it has failed to issue shares or deliver stock certificates within the third (3rd) day following
the Conversion Date; (iii) failure by the Company for three (3) days after notice has been received by the Company to comply with
any material provision of the Purchase Agreement (including without limitation the failure to issue the requisite number of shares
of Common Stock upon conversion hereof; (iv) a material breach by the Company of its representations or warranties in the Exchange
Agreement; (v) any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company
in excess of $20,000 or for money borrowed the repayment of which is guaranteed by the Company in excess of $20,000, whether such
indebtedness or guarantee now exists or shall be created hereafter; (vi) any failure of the Company to satisfy its “filing”
obligations under the rules and guidelines issued by OTC Markets News Service, OTC Markets.com and their affiliates; (vii) Any
failure of the Company to provide the Holder with information related to the corporate structure including, but not limited to,
the number of authorized and outstanding shares, public float, etc. within one (1) day of request by Holder; (viii) failure to
have sufficient number of authorized but unissued shares of the Company’s Common Stock available for any conversion; (ix)
failure of Company’s stock to maintain a bid price in its trading market which occurs for at least three (3) consecutive
days; (x) any delisting for any reason; (xi) failure by Company to pay any of its Transfer Agent fees or to maintain a Transfer
Agent of record; (xii) any trading suspension imposed by the Securities and Exchange Commission under Sections 12(j) or 12(k)
of the 1934 Act; (xiii) if the Company is subject to any Bankruptcy Event; (xiv) or failure of the Company to remain compliant
with DTC, thus incurring a “chilled” status with DTC.


 


Remedies.
If an Event of Default occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal
Amount of this Note, including any interest due thereon, to be due and payable immediately without further action or notice. In
the event of such acceleration, the amount due and owing to the Holder shall be increased to one hundred and fifty percent (150%)
of the outstanding Principal Amount of the Note held by the Holder plus all accrued and unpaid interest, fees, and liquidated
damages, if any. Additionally, this Note shall bear interest on any unpaid principal from and after the occurrence and during
the continuance of an Event of Default at a rate of twenty percent (20%). Finally, the Note will accrue liquidated damages of
one thousand dollars ($1,000) per day from and after the occurrence and during the continuance of an Event of Default. The Company
acknowledges that it would be extremely difficult or impracticable to determine the Holder’s actual damages and costs resulting
from an Event of Default and any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate
of those damages and costs. The remedies under this Note shall be cumulative and added to the principal value of the Note.





 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC


 




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Section
3.00 General.


 


(f)
Payment of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys’ fees and
expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this
Note.


 


(g)
Assignment, Etc. The Holder may assign or transfer this Note to any transferee at its sole discretion. This Note shall
be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.


 


(h)
Governing Law; Jurisdiction.


 


(i)Governing
Law. This note will be governed by and construed in accordance with the laws of the state of California without regard
to any conflicts of laws or provisions thereof that would otherwise require the application of the law of any other jurisdiction.


 


(ii)Jurisdiction.
Any dispute or claim arising to or in any way related to this Note
or the rights and obligations of each of the parties hereto shall be settled by binding arbitration in San Diego, California.
All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association (“AAA”).
AAA shall designate an arbitrator from an approved list of arbitrators following both parties’ review and deletion of those
arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.


 


(ii)No
Jury Trial. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect
to any litigation based on, or arising out of, under, or in connection with, this note.


 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC


 




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IN
WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed on the day and in the year first
above written.


  


	 	INCEPTION
    MINING INC.
	 	 	 
	 	By:	/s/ Michael
    Ahlin
	 	Name:	Michael Ahlin
	 	Title:	CEO
	 	 	 
	 	Date:	February
    18, 2014


 


This Note
is acknowledged as:Note of February 18, 2014 


 





$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC



 




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EXHIBIT
A


 


FORM
OF CONVERSION NOTICE


 


(To
be executed by the Holder in order to convert that certain $220,000 Convertible Promissory Note identified as the Note)


 


	DATE:	 	 	 
	 	 	 	 
	FROM:	 	Iconic
    Holdings, LLC	 


 


		Re:	$220,000
                                         Convertible Promissory Note (this “Note”) originally issued by INCEPTION
                                         MINING INC., a Nevada corporation, to Iconic Holdings, LLC on February 18, 2014.



 


The
undersigned on behalf of Iconic Holdings, LLC, hereby elects to convert $_______________________ of the aggregate outstanding
Principal Amount (as defined in the Note) indicated below of this Note into shares of Common Stock, $0.001 par value per share,
of INCEPTION MINING INC. (the
“Company”) according to the conditions hereof, as of the date written below. If shares are to be issued in the name
of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the holder for any conversion, except for such transfer taxes, if any. The undersigned represents as of the date hereof that,
after giving effect to the conversion of this Note pursuant to this Conversion Notice, the undersigned will not exceed the “Restricted
Ownership Percentage” contained in this Note.


 


	Conversion
    information:	 	 
	 	 	Date to
    Effect Conversion
	 	 	 
	 	 	 
	 	 	Aggregate
    Principal Amount of Note Being Converted
	 	 	 
	 	 	 
	 	 	Aggregate
    Interest on Amount Being Converted
	 	 	 
	 	 	 
	 	 	Number
    of Shares of Common Stock to be Issued
	 	 	 
	 	 	 
	 	 	Applicable
    Conversion Price
	 	 	 
	 	 	 
	 	 	Signature
    
	 	 	 
	 	 	 
	 	 	Name
	 	 	 
	 	 	 
	 	 	Address


 


$220,000.00
Convertible Note


Inception
Mining Inc.


Iconic Holdings,
LLC


 






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