I used the following procedures to jailbreak my iPhone 4.2.1 with 03.10.01 baseband.

First some prep work. Backup your phone. From iTunes, right mouse click your phone and choose Backup.

Then, you need greenpois0n from greenpois0n.com. I used version rc5.2.

Next, you need to get you phone into DFU mode. Below, I have outlined the steps that have consistently worked for me.

How to get your iPhone into DFU mode:

With device powered on and unlocked:
Hold the Power and Home buttons.
When the screen goes black, count to 2.
Then, release the Power button, and hold the Home button for 10 – 15 seconds.
You know you are in DFU mode, if the screen stays black.

Now, you need to launch greenpois0n from the Terminal application. Below is the command line I used:

sudo Desktop/JailBreak/GreenPois0n/greenpois0n-osx_rc5_2/greenpois0n.app/Contents/MacOS/greenpois0n

In my case, the Loader application did not install Cydia. I needed to use redsn0w_mac_0.9.7b6 along with 4.2.1 download from Apple. The only option I chose was to install Cydia.

After the restart, my phone was jailbroken and I had a Cydia icon installed.