Right to
Purchase up to 24,570,668 Shares of
Common Stock of

 

EARTHFIRST
TECHNOLOGIES, INCORPORATED

 

(subject
to adjustment as provided herein)

 

COMMON
STOCK OPTION

 


	
      No.
      _________________
	
      Issue
      Date: March 30, 2005







EARTHFIRST
TECHNOLOGIES, INCORPORATED, a corporation organized under the laws of the State
of Florida (“EFTI”), hereby certifies that, for value received, LAURUS MASTER
FUND, LTD., or assigns (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company (as defined herein) from and after the
Issue Date of this Option and at any time or from time to time on or after a
respective Option Effective Date and prior to 5:00 p.m., New York time, through
the close of business March 30, 2011 (the "Expiration Date"), up to 24,570,668
fully paid and nonassessable shares of Common Stock (as hereinafter defined),
$0.0001 par
value per share at the applicable Exercise Price per share (as defined below).
The number and character of such shares of Common Stock and the applicable
Exercise Price per share are subject to adjustment as provided
herein.

 

As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings: 

 

(a) The term
"Company" shall include EFTI and any corporation which shall succeed, or assume
the obligations of, EFTI hereunder. 

 

(b) The term
"Common Stock" includes (i) the Company's Common Stock, no par value per share;
and (ii) any other securities into which or for which any of the securities
described in the preceding clause (i) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.

 

(c) The term
"Other Securities" refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Option at any time shall be entitled to receive, or shall have
received, on the exercise of the Option, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise. 

 

(d) An
“Option Effective Date” applicable under this Option shall be the 75th day
following the provision by the Holder to the Company of an Exercise Notice (as
defined below) stating that the Holder wishes to exercise its option hereunder
to purchase all or a portion of the Common Stock or Other Securities that it is
entitled to receive in accordance with this Option. The Exercise Notice shall
set forth the amount of shares of Common Stock that the Holder shall receive on
the respective Option Effective Date.

 

(e) The
"Exercise Price" applicable under this Option shall be $0.01 for each share of
Common Stock acquired hereunder.

 




















1.  Exercise
of Option.


 

1.1  Number
of Shares Issuable upon Exercise. From
and after the date hereof through and including the Expiration Date, the Holder
shall be entitled to receive, upon exercise of this Option in whole or in part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the "Exercise Notice"), shares of Common Stock of
the Company, subject to adjustment pursuant to Section 4. Each exercise of this
Option shall be deemed to have been effected immediately prior to the close of
business on the day on which this Option shall have been surrendered to the
Company as provided in Section 2.2 below.

 

1.2  Fair
Market Value. For
purposes hereof, the "Fair Market Value" of a share of Common Stock as of a
particular date (the "Determination Date") shall mean: 

 

(a)  If the
Company's Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The Nasdaq
Stock Market, Inc.("Nasdaq"), then the closing or last sale price, respectively,
reported for the last business day immediately preceding the Determination
Date.

 

(b)  If the
Company's Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board
or the “pink sheets”, then the mean of the average of the closing bid and asked
prices reported for the last business day immediately preceding the
Determination Date.

 

(c)  Except as
provided in clause (d) below, if the Company's Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be
decided.

 

(d)  If the
Determination Date is the date of a liquidation, dissolution or winding up, or
any event deemed to be a liquidation, dissolution or winding up pursuant to the
Company's charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Option are outstanding at the Determination
Date.

 

1.3  Company
Acknowledgment. The
Company will, at the time of the exercise of the Option, upon the request of the
holder hereof acknowledge in writing its continuing obligation to afford to such
holder any rights to which such holder shall continue to be entitled after such
exercise in accordance with the provisions of this Option. If the holder shall
fail to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such rights.


 







2












1.4  Trustee
for Option Holders. In the
event that a bank or trust company shall have been appointed as trustee for the
holders of the Option pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of an option or warrant agent (as
hereinafter described) and shall accept, in its own name for the account of the
Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be, on
exercise of this Option pursuant to this Section 1.

 

2.  Procedure
for Exercise.

 

2.1  Delivery
of Stock Certificates, Etc., on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Option shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Option shall have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Option in full or in part, and in
any event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

 

2.2  Exercise. Payment
may be made either (i) in cash or by certified or official bank check payable to
the order of the Company equal to the applicable aggregate Exercise Price, (ii)
by delivery of the Option, or shares of Common Stock and/or Common Stock
receivable upon exercise of the Option in accordance with the immediately
succeeding sentence and the formula contained therein, or (iii) by a combination
of any of the foregoing methods, for the number of Common Shares specified in
such Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Option) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein. Notwithstanding any provisions herein to the contrary, if the
Fair Market Value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), in lieu of exercising
this Option for cash, the Holder may elect to cancel a portion of this Option
and receive shares of Common Stock equal to the value (as determined below) of
this Option (or the portion thereof being exercised) by surrender of this Option
at the principal office of the Company together with the properly endorsed
Exercise Notice in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:

 


	 	
      X=Y
	 	
      (A-B)
	
	 	 	 	
      A
	 






Where X
= the
number of shares of Common Stock to be issued to the Holder

 

Y
= the
number of shares of Common Stock purchasable under the Option or, if only a
portion of the Option is being exercised, the portion of the Option being
exercised (at the date of such exercise)

 

A
= the Fair
Market Value of one share of the Company's Common Stock (at the date of such
exercise)

 

B
= Exercise
Price (as adjusted to the date of such exercise)

 







3












3.  Effect
of Reorganization, Etc.

 

3.1  Reorganization,
Consolidation, Merger, Etc. In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Option, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Option, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

 

3.2  Dissolution. In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder of the
Option pursuant to Section 3.1, or, if the Holder shall so instruct the Company,
to a bank or trust company specified by the Holder and having its principal
office in New York, NY as trustee for the Holder of the Option (the
“Trustee”).

 

3.3  Continuation
of Terms. Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Option shall
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property receivable on the exercise
of this Option after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Option as
provided in Section 4. In the event this Option does not continue in full force
and effect after the consummation of the transactions described in this Section
3, then the Company's securities and property (including cash, where applicable)
receivable by the Holders of the Option will be delivered to Holder or the
Trustee as contemplated by Section 3.2.

 







4












4.  Extraordinary
Events Regarding Common Stock. In the
event that the Company shall (a) issue additional shares of the Common Stock as
a dividend or other distribution on outstanding Common Stock to all of the
Company’s common stockholders, (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number of
shares of Common Stock that the holder of this Option shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Exercise Price that would otherwise (but for the provisions of this Section 4)
be in effect, and (b) the denominator is the Exercise Price in effect on the
date of such exercise.

 

5.  Certificate
as to Adjustments. In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Option, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of the
Option and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Option, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Option. The Company will forthwith mail a copy of each such certificate to the
holder of the Option and any Option agent of the Company (appointed pursuant to
Section 11 hereof).

 

6.  Reservation
of Stock, Etc., Issuable on Exercise of Option. The
Company will at all times on and after the sixtieth (60) day following the
Closing Date (as defined in the Security Agreement referred to below), reserve
and keep available, solely for issuance and delivery on the exercise of the
Option, shares of Common Stock (or Other Securities) from time to time issuable
on the exercise of the Option.

 

7.  Assignment;
Exchange of Option. Subject
to compliance with applicable securities laws, this Option, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
"Transferor") in whole or in part. On the surrender for exchange of this Option,
with the Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, the provision of a legal opinion
from the Transferor's or company counsel (at the Company’s expense) that such
transfer is exempt from the registration requirements of applicable securities
laws, and with payment by the Transferor of any applicable transfer taxes will
issue and deliver to or on the order of the Transferor thereof a new Option of
like tenor, in the name of the Transferor and/or the transferee(s) specified in
such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Option so surrendered by the
Transferor.

 







5












8.  Replacement
of Option. On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Option and, in the case of any such loss,
theft or destruction of this Option, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu thereof, a new Option
of like tenor.

 

9.  Registration
Rights. The
Holder of this Option has been granted certain registration rights by the
Company. These registration rights are set forth in a Registration Rights
Agreement entered into by the Company and the Holder dated as of even date of
this Option.

 

10.  Maximum
Exercise. The
Holder shall not be entitled to exercise this Option on an exercise date, in
connection with that number of shares of Common Stock which would be in excess
of the sum of (i) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates on an exercise date, and (ii) the number of shares of
Common Stock issuable upon the exercise of this Option with respect to which the
determination of this proviso is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such date. For
the purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. The exercise
limitation described in this Section 10 shall automatically become null and void
without any notice to the Company upon 75 days prior notice to the Company or
upon an Event of Default under, and as defined in, either of (x) Secured
Convertible Term Note made by the Company to the Holder dated the date hereof,
as amended, modified or supplemented from time to time and/or (y) that certain
Security Agreement, dated as of the date hereof, among the Company, certain
subsidiaries of the Company and the Holder, as amended, modified or supplemented
from time to time, the “Security Agreement”. 

 

11.  Option
Agent. The
Company may, by written notice to each Holder of this Option, appoint an agent
for the purpose of issuing Common Stock (or Other Securities) on the exercise of
this Option pursuant to Section 1, exchanging this Option pursuant to Section 7,
and replacing this Option pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.

 







6












12.  Transfer
on the Company's Books. Until
this Option is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

13.  Notices,
Etc. All
notices and other communications from the Company to the Holder of this Option
shall be mailed by first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing by such Holder
or, until any such Holder furnishes to the Company an address, then to, and at
the address of, the last Holder of this Option who has so furnished an address
to the Company.

 

14.  Miscellaneous. This
Option and any term hereof may be changed, waived, discharged or terminated only
by an instrument in writing signed by the party against which enforcement of
such change, waiver, discharge or termination is sought. This Option shall be
governed by and construed in accordance with the laws of State of New York
without regard to principles of conflicts of laws. Any action brought concerning
the transactions contemplated by this Option shall be brought only in the state
courts of New York or in the federal courts located in the state of New York;
provided, however, that the Holder may choose to waive this provision and bring
an action outside the state of New York. The individuals executing this Option
on behalf of the Company, and the Company, agree to submit to the jurisdiction
of such courts and waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Option is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Option. The headings in this
Option are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof. The Company acknowledges that legal counsel participated
in the preparation of this Option and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Option to favor any party
against the other party.

 

[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

 

SIGNATURE
PAGE FOLLOWS.]

 







7













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








	 	 	 
	 	
      EARTHFIRST
      TECHNOLOGIES, INCORPORATED

	 
 	 
 	 
 
		By:  	/s/ John
      Stanton 
	 		
      

       
	 	Name:
      	John
      Stanton
	 	 	
      

       
	 	Title:
      	
      President

	 	 	
      

       
	 	 
	WITNESS:	 
	 	 
	/s/
      Frank W. Barker, Jr. 	 
	
      

      	 











 







8













EXHIBIT
A

 

FORM
OF OPTION EXERCISE NOTICE

 

(To Be
Signed Only On Exercise Of Option)

 




TO: EARTHFIRST
TECHNOLGIES, INCORPORATED









Attention: Chief
Financial Officer




The
undersigned, pursuant to the provisions set forth in the attached Option
(No.____), hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by such Option:

 

___________

 

___________

 

___________


 

The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to ______________________________________________ whose
address is ________________________.

 

The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Option shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "Securities Act") or pursuant to an exemption from registration
under the Securities Act.

 


	
      Dated:
	 	 	 
	 	 	
      (Signature
      must conform to name of holder as specified on the face of the
      Option)

	 	 	 
	 	 	
      Address:
	 
	 	 	 	 



 







A-1














EXHIBIT
B

 

FORM
OF TRANSFEROR ENDORSEMENT

 

(To Be
Signed Only On Transfer Of Option)

 

For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Option to purchase the percentage and number of shares of Common
Stock of EARTHFIRST TECHNOLOGIES, INCORPORATED, into which the within Option
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
EARTHFIRST TECHNOLGIES, INCORPORATED with full power of substitution in the
premises.

 


	
       

      Transferees
	 	
       

      Address
	 	
      Percentage

      Transferred
	 	
      Number
      Transferred

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 










	
      Dated:
	 	 	 
	 	 	
      (Signature
      must conform to name of holder as specified on the face of the
      Option)

	 	 	 
	 	 	
      Address:
	 
	 	 	 	 










	
       
	
      SIGNED
      IN THE PRESENCE OF:

	 	 
	 	 
	 	
      (Name)

	
      ACCEPTED
      AND AGREED:
	 
	
      [TRANSFEREE]
	 
	 	 
	 	 
	 	 
	
      (Name)
	 



 







B-1