Document:

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-1REGISTRATION
RIGHTS AGREEMENT 

 

This
Registration Rights Agreement (this "Agreement") is made and entered into as of
March 30, 2005, by and between EARTHFIRST TECHNOLOGIES, INCORPORATED, a Florida
corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser").

 

This
Agreement is made pursuant to (i) the Securities Purchase Agreement, dated as of
the date hereof, by and between the Purchaser and the Company (as amended,
modified or supplemented from time to time, the "Securities Purchase
Agreement"), and pursuant to the Note, the Option and the Warrants referred to
therein and (ii) the Security Agreement, dated as of the date hereof, by and
between the Purchaser, the Company and certain Subsidiaries of the Company (as
amended, modified or supplemented from time to time, the “Security Agreement”),
and pursuant to the Notes, the Option and the Warrants referred to
therein.

 

The
Company and the Purchaser hereby agree as follows: 

 

1.  Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the
Securities Purchase Agreement or the Security Agreement, as applicable, shall
have the meanings given such terms in the Securities Purchase Agreement or the
Security Agreement, as applicable. As used in this Agreement, the following
terms shall have the following meanings:

 

"Commission" means
the Securities and Exchange Commission.

 

"Common
Stock" means
shares of the Company's common stock, par value $0.01 per share.

 

"Effectiveness
Date" means
(i) with respect to the initial Registration Statement required to be filed
hereunder, a date no later than one hundred and twenty (120) days following the
date hereof and (ii) with respect to each additional Registration Statement
required to be filed hereunder, a date no later than thirty (30) days following
the applicable Filing Date.

 

"Effectiveness
Period" shall
have the meaning set forth in Section 2(a).

 

"Exchange
Act" means
the Securities Exchange Act of 1934, as amended, and any successor
statute.

 

"Filing
Date" means,
(i) with respect to the initial Registration Statement required to be filed
hereunder, a date no later than sixty (60) days following the date hereof, (ii)
with respect to each $500,000 tranche of Loans evidenced by a Minimum Borrowing
Note funded after the date hereof, the date which is thirty (30) days after such
funding of such additional $500,000 of Loans evidenced by a Minimum Borrowing
Note, (iii) with respect to shares of Common Stock issuable to the Holder as a
result of adjustments to the Fixed Conversion Price or Exercise Price made
pursuant to the Note or Section 4, the Warrant or otherwise, thirty (30) days
after the occurrence of such event or the date of the adjustment of the Fixed
Conversion Price or Exercise Price and (iv) with respect to any Warrant issued
after the date hereof, the date which is thirty (30) days after the issuance of
such Warrant.

 

"Holder" or
"Holders" means
the Purchaser or any of its affiliates or transferees to the extent any of them
hold Registrable Securities.

 

"Indemnified
Party" shall
have the meaning set forth in Section 5(c).

 

"Indemnifying
Party" shall
have the meaning set forth in Section 5(c).

 

"Option" has the
meaning set forth in the Securities Purchase Agreement.

 

"Proceeding" means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened. 

 

"Prospectus" means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus. 

 

"Registrable
Securities" means
the shares of Common Stock issued upon the conversion of any Note (as defined in
each of the Securities Purchase Agreement and the Security Agreement), issuable
upon exercise of the Option and issuable upon exercise of the Warrants.

 

"Registration
Statement" means
each registration statement required to be filed hereunder, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

 

"Rule
144" means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Rule
415" means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Rule
424" means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Securities
Act" means
the Securities Act of 1933, as amended, and any successor statute.

 

"Securities
Purchase Agreement" shall
have the meaning provided above.

 

"Security
Agreement" shall
have the meaning provided above.

 

"Trading
Market" means
any of the NASD OTCBB, NASDAQ SmallCap Market, the Nasdaq National Market, the
American Stock Exchange or the New York Stock Exchange. 

 

"Warrants" means,
collectively, the Common Stock purchase warrants issued pursuant to the
Securities Purchase Agreement and the Security Agreement. 

 

2.  Registration.

 

(a)  On or
prior to the applicable Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form SB-2 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form SB-2, in which case such
registration shall be on another appropriate form in accordance herewith). The
Company shall use its reasonable commercial efforts to cause the Registration
Statement to become effective and remain effective as provided herein. The
Company shall use its reasonable commercial efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event no later than the
Effectiveness Date. The Company shall use its reasonable commercial efforts to
keep the Registration Statement continuously effective under the Securities Act
until the date which is the earlier date of when (i) all Registrable Securities
have been sold or (ii) all Registrable Securities may be sold immediately
without registration under the Securities Act and without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness
Period").

 

(b)  If: (i)
the Registration Statement is not filed on or prior to the Filing Date; (ii) the
Registration Statement is not declared effective by the Commission by the
Effectiveness Date; (iii) after the Registration Statement is filed with and
declared effective by the Commission, the Registration Statement ceases to be
effective (by suspension or otherwise) as to all Registrable Securities to which
it is required to relate at any time prior to the expiration of the
Effectiveness Period (without being succeeded immediately by an additional
registration statement filed and declared effective) for a period of time which
shall exceed 30 days in the aggregate per year or more than 20 consecutive
calendar days (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective); or (iv) the Common Stock is not
listed or quoted, or is suspended from trading on any Trading Market for a
period of five (5) consecutive Trading Days (provided the Company shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Trading Market); (any such failure or breach
being referred to as an "Event," and for purposes of clause (i) or (ii) the date
on which such Event occurs, or for purposes of clause (iii) the date which such
30 day or 20 consecutive day period (as the case may be) is exceeded, or for
purposes of clause (iv) the date on which such five (5) Trading Day period is
exceeded, being referred to as "Event Date"), then until the applicable Event is
cured, the Company shall pay, for each day that an Event has occurred and is
continuing, to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to one-thirtieth (1/30th) of the
product of: (A) the sum of (I) the original principal amount of the Note (as
defined in the Securities Purchase Agreement) plus (y) the
original principal amount of each applicable Minimum Borrowing Note (as defined
in the Security Agreement) multiplied by (B) 0.01. While such Event continues,
such liquidated damages shall be paid not less often than each thirty (30) days.
Any unpaid liquidated damages as of the date when an Event has been cured by the
Company shall be paid within three (3) days following the date on which such
Event has been cured by the Company.

 

(c) Within
five business days of the Effectiveness Date, the Company shall cause its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A, to
the transfer agent stating that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by the Purchaser and confirmation by the Purchaser that it has
complied with the prospectus delivery requirements, provided that the Company
has not advised the transfer agent orally or in writing that the opinion has
been withdrawn. Copies of the blanket opinion required by this Section 2(c)
shall be delivered to Laurus within the time frame set forth above.

 

3.  Registration
Procedures. If and
whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible: 

 

(a)  prepare
and file with the Commission the Registration Statement with respect to such
Registrable Securities, respond as promptly as possible to any comments received
from the Commission, and use its best efforts to cause the Registration
Statement to become and remain effective for the Effectiveness Period with
respect thereto, and promptly provide to the Purchaser copies of all filings and
Commission letters of comment relating thereto;

 

(b)  prepare
and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by the Registration Statement and to keep
such Registration Statement effective until the expiration of the Effectiveness
Period;

 

(c)  furnish
to the Purchaser such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as the
Purchaser reasonably may request to facilitate the public sale or disposition of
the Registrable Securities covered by the Registration Statement;

 

(d)  use its
commercially reasonable efforts to register or qualify the Purchaser's
Registrable Securities covered by the Registration Statement under the
securities or "blue sky" laws of such jurisdictions within the United States as
the Purchaser may reasonably request, provided, however, that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation or subject itself to taxation in any jurisdiction where
it is not so qualified or subject or to consent to general service of process in
any such jurisdiction;

 

(e)  list the
Registrable Securities covered by the Registration Statement with any securities
exchange on which the Common Stock of the Company is then listed; 

 

(f)  promptly
notify the Purchaser at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of which
the Company has knowledge as a result of which the Prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and

 

(g)  make
available for inspection by the Purchaser and any attorney, accountant or other
agent retained by the Purchaser, all publicly available, non-confidential
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
publicly available, non-confidential information reasonably requested by the
attorney, accountant or agent of the Purchaser.

 

4.  Registration
Expenses. All
expenses relating to the Company's compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the NASD, transfer taxes, fees of transfer agents and registrars, fees of, and
disbursements incurred by, one counsel for the Holders (to the extent such
counsel is required due to Company's failure to meet any of its obligations
hereunder), are called "Registration Expenses". All selling commissions
applicable to the sale of Registrable Securities, including any fees and
disbursements of any special counsel to the Holders beyond those included in
Registration Expenses, are called "Selling Expenses." The Company shall only be
responsible for all Registration Expenses.

 

5.  Indemnification.

 

(a)  In the
event of a registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, the Company will indemnify and hold harmless the
Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Purchaser, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Purchaser, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of the Purchaser or any such person in writing specifically for use in
any such document.

 

(b)  In the
event of a registration of the Registrable Securities under the Securities Act
pursuant to this Agreement, the Purchaser will indemnify and hold harmless the
Company, and its officers, directors and each other person, if any, who controls
the Company within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact which was furnished in writing by the Purchaser to the
Company expressly for use in (and such information is contained in) the
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary Prospectus
or final Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
person for any reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Purchaser will be liable in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished in writing
to the Company by or on behalf of the Purchaser specifically for use in any such
document. Notwithstanding the provisions of this paragraph, the Purchaser shall
not be required to indemnify any person or entity in excess of the amount of the
aggregate net proceeds received by the Purchaser in respect of Registrable
Securities in connection with any such registration under the Securities
Act.

 

(c)  Promptly
after receipt by a party entitled to claim indemnification hereunder (an
"Indemnified Party") of notice of the commencement of any action, such
Indemnified Party shall, if a claim for indemnification in respect thereof is to
be made against a party hereto obligated to indemnify such Indemnified Party (an
"Indemnifying Party"), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 5(c) and shall only relieve it from any liability which it may have to
such Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action shall
be brought against any Indemnified Party and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such Indemnified Party,
and, after notice from the Indemnifying Party to such Indemnified Party of its
election so to assume and undertake the defense thereof, the Indemnifying Party
shall not be liable to such Indemnified Party under this Section 5(c) for any
legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel, then
the Indemnified Party shall pay all fees, costs and expenses of such counsel,
provided, however, that, if the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded based on the advice of counsel that there may be
reasonable defenses available to it which are different from or additional to
those available to the Indemnifying Party or if the interests of the Indemnified
Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, the Indemnified Party shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred. 

 

(d)  In order
to provide for just and equitable contribution in the event of joint liability
under the Securities Act in any case in which either (i) the Purchaser, or any
officer, director or controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or such officer, director or controlling person of the Purchaser in
circumstances for which indemnification is provided under this Section 5; then,
and in each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Purchaser is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the Registration Statement bears to
the public offering price of all securities offered by such Registration
Statement, provided, however, that, in any such case, (A) the Purchaser will not
be required to contribute any amount in excess of the public offering price of
all such securities offered by it pursuant to such Registration Statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 10(f) of the Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.

 

6.  Representations
and Warranties.

 

(a)  The
Common Stock of the Company is registered pursuant to Section 12(b) or 12(g) of
the Exchange Act and, except with respect to certain matters which the Company
has disclosed to the Purchaser on Schedule 4.21 to the Securities Purchase
Agreement, during the preceding three fiscal years of the Company, the Company
has timely filed all proxy statements, reports, schedules, forms, statements and
other documents required to be filed by it under the Exchange Act. The Company
has filed (i) its Annual Report on Form 10-KSB for its fiscal year ended
December 31, 2003 and (ii) its Quarterly Report on Form 10-QSB for the fiscal
quarters ended March 31, 2004, June 30, 2004 and September 30, 2004
(collectively, the "SEC Reports"). Each SEC Report was, at the time of its
filing, in substantial compliance with the requirements of its respective form
and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed) and fairly present in all material respects the financial
condition, the results of operations and the cash flows of the Company and its
subsidiaries, on a consolidated basis, as of, and for, the periods presented in
each such SEC Report.

 

(b)  The
Common Stock is listed for trading on the NASD OTCBB and satisfies all
requirements for the continuation of such listing. The Company has not received
any notice that its Common Stock will be delisted from the NASD OTCBB (except
for prior notices which have been fully remedied) or that the Common Stock does
not meet all requirements for the continuation of such listing.

 

(c)  Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the offering of the Securities pursuant to the Securities Purchase Agreement and
the Security Agreement to be integrated with prior offerings by the Company for
purposes of the Securities Act which would prevent the Company from selling the
Common Stock pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of such Securities to be integrated with other offerings.

 

(d)  The
Warrants, the Option, the Notes and the shares of Common Stock which the
Purchaser may acquire pursuant to the Warrants, the Option and the Notes are all
restricted securities under the Securities Act as of the date of this Agreement.
The Company will not issue any stop transfer order or other order impeding the
sale and delivery of any of the Registrable Securities at such time as such
Registrable Securities are registered for public sale or an exemption from
registration is available, except as required by federal or state securities
laws.

 

(e)  The
Company understands the nature of the Registrable Securities issuable upon the
conversion of the Notes, the exercise of the Option and the exercise of the
Warrant and recognizes that the issuance of such Registrable Securities may have
a potential dilutive effect. The Company specifically acknowledges that its
obligation to issue the Registrable Securities is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

 

(f)  Except
for agreements made in the ordinary course of business, there is no agreement
that has not been filed with the Commission as an exhibit to a registration
statement or to a form required to be filed by the Company under the Exchange
Act, the breach of which could reasonably be expected to have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material
respect.

 

(g)  The
Company will at all times on and after the sixtieth (60) day following the
Closing Date have authorized and reserved a sufficient number of shares of
Common Stock for the full conversion of the Notes, the exercise of the Option
and the exercise of the Warrants.

 

7.  Miscellaneous.

 

(a)  Remedies. In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. 

 

(b)  No
Piggyback on Registrations. Except
as and to the extent specified in Schedule 7(b) hereto, neither the Company nor
any of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in any Registration Statement
other than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right for inclusion of shares
in the Registration Statement to any of its security holders. Except as and to
the extent specified in Schedule 7(b) hereto, the Company has not previously
entered into any agreement granting any registration rights with respect to any
of its securities to any Person that have not been fully satisfied.

 

(c)  Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

 

(d)  Discontinued
Disposition. Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of a Discontinuation
Event (as defined below), such Holder will forthwith discontinue disposition of
such Registrable Securities under the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. For purposes of this Section 7(d), a
"Discontinuation Event" shall mean (i) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders); (ii) any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.

 

(e)  Piggy-Back
Registrations. If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered to the
extent the Company may do so without violating registration rights of others
which exist as of the date of this Agreement, subject to customary underwriter
cutbacks applicable to all holders of registration rights and subject to
obtaining any required consent of any selling stockholder(s) to such inclusion
under such registration statement.

 

(f)  Amendments
and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

 

(g)  Notices. Any
notice or request hereunder may be given to the Company or the Purchaser at the
respective addresses set forth below or as may hereafter be specified in a
notice designated as a change of address under this Section 7(g). Any notice or
request hereunder shall be given by registered or certified mail, return receipt
requested, hand delivery, overnight mail, Federal Express or other national
overnight next day carrier (collectively, "Courier") or telecopy (confirmed by
mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any party to whom it is addressed,
in the case of those by mail or overnight mail, deemed to have been given three
(3) business days after the date when deposited in the mail or with the
overnight mail carrier, in the case of a Courier, the next business day
following timely delivery of the package with the Courier, and, in the case of a
telecopy, when confirmed. The address for such notices and communications shall
be as follows:

 

	
      If
      to the Company:
	
      EarthFirst
      Technologies, Incorporated

      2515
      E. Hanna Ave.

      Tampa,
      Florida 33610

      Attention: Chief
      Financial Officer

      Facsimile: (813)
      238-0203

	 	 
	 	 
	
       
	 
	
      If
      to a Purchaser:
	
      To
      the address set forth under such Purchaser name on the signature pages
      hereto.

	
       
	 
	
      If
      to any other Person who is then the registered
Holder:
	
       

      To
      the address of such Holder as it appears in the stock transfer books of
      the Company

or such
other address as may be designated in writing hereafter in accordance with this
Section 7(g) by such Person.

 

(h)  Successors
and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the the Securities Purchase Agreement, the Security Agreement and each
Note.

 

(i)  Execution
and Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

 

(j)  Governing
Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such
Proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of this Agreement, the Securities Purchase Agreement, any
Related Agreement, the Security Agreement or any Ancillary Agreement, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding. 

 

(k)  Cumulative
Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

 

(l)  Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

 

(m)  Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

 

SIGNATURE
PAGE FOLLOWS]

 

IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above. 

 

	
      EARTHFIRST
      TECHNOLOGIES, INCORPORATED
	 	
      Laurus
      Master Fund, Ltd.

	 	 	 
	 	 	 
	
      By:
	
      /s/
      John Stanton
	 	
      By:
	
      /s/
      Eugene Grin

	
      Name:
	
      John
      Stanton
	 	
      Name:
	
      Eugene
      Grin

	
      Title:
	
      President
	 	
      Title:
	
      Director

	 	 	 
	 	 	
      Address
      for Notices:

	 	 	 
	 	 	
      825
      Third Avenue − 14th
      Floor

	 	 	
      New
      York, NY 10022

	 	 	
      Attention: Eugene
      Grin

	 	 	
      Facsimile: 212-541-4434

EXHIBIT
A

 

[Month
__, 200_]

	
      [____________]

      [Insert
      Address]

      Attn:
      ]
	 

	 	
      Re:

       
	
      EarthFirst
      Technologies, Incorporated Registration Statement on Form SB-2

       

 

Ladies
and Gentlemen:

 

As
counsel to EarthFirst Technologies, Incorporated, a Florida corporation (the
“Company”), we have been requested to render our opinion to you in connection
with the resale by the individuals or entitles listed on Schedule A attached
hereto (the “Selling Stockholders”), of an aggregate of [amount]shares (the
“Shares”) of the Company’s Common Stock.

 

A
Registration Statement on Form SB-2 under the Securities Act of 1933, as amended
(the “Act”), with respect to the resale of the Shares was declared effective by
the Securities and Exchange Commission on [date]. Enclosed is the Prospectus
dated [date]. We understand that the Shares are to be offered and sold in the
manner described in the Prospectus.

 

Based
upon the foregoing, upon request by the Selling Stockholders at any time while
the registration statement remains effective, it is our opinion that the Shares
have been registered for resale under the Act and new certificates evidencing
the Shares upon their resale by the Selling Stockholders may be issued without
restrictive legend. We will advise you if the registration statement is not
available or effective at any point in the future.

 

Very
truly yours,

[Company
counsel]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}]]