<PAGE>

                                                                    EXHIBIT 4.06

THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

THIS NOTE IS SUBORDINATED PURSUANT TO, AND SUBJECT TO THE TERMS AND CONDITIONS
OF, THE INTERCREDITOR AGREEMENT (AS DEFINED IN THE PURCHASE AGREEMENT REFERENCED
BELOW)

                      SUBORDINATED SECURED PROMISSORY NOTE

$__________                                                       Maturity Date:

Issue Date:  [_________], 2005                                [_________], 2007

      FOR VALUE RECEIVED, Warp Technology Holdings, Inc. (the "Company") hereby
promises to pay to the order of ________________________ or its successors,
assigns and legal representatives (the "Holder"), at
___________________________, or at such other location as the Holder may
designate from time to time, the aggregate principal sum of $______________
(___________ Dollars), in lawful money of the United States of America, together
with interest thereon at a rate of 10.0% per annum.

      1. Company Notes. This Note (the "Note") is one of a series of Notes (the
"Company Notes") of like tenor in an aggregate principal amount of up to
$4,000,000 (Four Million Dollars) issued by the Company pursuant to the terms of
the Subordinated Note and Warrant Purchase Agreement, dated of even date
herewith (the "Purchase Agreement"), among the Company and the investors party
thereto. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Purchase Agreement unless otherwise defined herein.

      2. Maturity Date. Subject to the provisions of Section 9 below, the
aggregate principal amount of this Note and accrued interest thereon shall be
due and payable on January , 2007 (the "Maturity Date").

      3. Calculation and Payment of Interest. Interest shall be payable in
registered shares of Common Stock of the Company, provided that until such
shares are registered, interest shall be payable in cash. If interest is paid in
shares of Common Stock, interest will be paid in full shares only, with an
additional share to be paid for any

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fractional share. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed. Interest shall be calculated
on a simple interest basis and shall accrue daily and be payable quarterly, in
arrears.

      4. Prepayment. Any prepayments hereunder shall be applied first, to the
payment of any expenses then owed to the Holder, second, to accrued interest on
this Note and third, to the payment of the principal amount outstanding under
this Note. The Company shall not have the right to set off or otherwise deduct
from amounts payable by it hereunder any amounts whether liquidated or
unliquidated, which the Holder or any of its Affiliates may owe to the Company,
which right is hereby expressly waived to the maximum extent permitted by
applicable law. The Company shall have no right to make any prepayment of all,
or any portion of this Note unless the Company makes a simultaneous prepayment
of the other Notes under the Purchase Agreement pari pasu. In the event of any
prepayment, a prepayment penalty in an amount equal to the remaining interest
payments through Maturity will be charged and due at the time of such
prepayment.

      5. Covenants. The Company agrees that, so long as any amount payable under
this Note remains unpaid, it will not, and will cause its Subsidiaries not to,
without the prior written consent of the Holder:

            (a) create, incur, guarantee, issue, assume or in any manner become
liable in respect of, any obligation (i) for borrowed money, other than trade
payables incurred in the ordinary course of business, (ii) evidenced by bonds,
debentures, notes, or other similar instruments, (iii) in respect of letters of
credit or other similar instruments (or reimbursement obligations with respect
thereto), except letters of credit or other similar instruments issued to secure
payment of trade payables arising in the ordinary course of business consistent
with past practices, (iv) to pay the deferred purchase price of property or
services, except trade payables arising in the ordinary course of business
consistent with past practices, (v) as lessee under capitalized leases, (vi)
secured by a Lien (as defined below) on any asset of the Company or a
Subsidiary, whether or not such obligation is assumed by the Company or such
Subsidiary and (vii) of any other person or entity, other than indebtedness for
borrowed money existing on the date of this Note or other obligations or other
liabilities incurred in connection with Liens permitted to be incurred under
Section 5(b)(vi) or 5(b)(vii) hereof;

            (b) create, incur, assume or suffer to exist any lien, claim,
pledge, charge, security interest or encumbrance of any kind ("Liens") on any
asset now owned or hereafter acquired by it, except:

                  (i) Liens existing on the date hereof;

                  (ii) Liens for taxes or assessments and similar charges either
(x) not delinquent or (y) contested in good faith by appropriate proceedings and
as to which the Company shall have set aside on its books adequate reserves;

                                      -2-
<PAGE>

                  (iii) Liens incurred or pledges and deposits in connection
with workers' compensation, unemployment insurance and other social security
benefits, or securing the performance bids, tenders, leases, contracts (other
than for the repayment of borrowed money), statutory obligations, progress
payments, surety and appeal bonds and other obligations of like nature, incurred
in the ordinary course of business;

                  (iv) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's and vendors' Liens, incurred in good faith in the
ordinary course of business;

                  (v) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor irregularities
of title incident thereto which do not in the aggregate materially detract from
the value of the property or assets of the Company and its Subsidiaries taken as
a whole or impair the use of such property in the operation of the Company's or
its Subsidiaries' businesses; and

                  (vi) other Liens incidental to the conduct of the business of
the Company or a Subsidiary or the ownership of its or their respective property
and assets which were not incurred in connection with the borrowing of money,
and which do not in the aggregate materially detract from the value of its
property or assets; or

            (c) declare or make (i) any dividend, distribution or other payment
on any capital stock (other than the payment of dividends on the Company's
Series B Preferred Stock and Series B-2 Preferred Stock, which are payable in
shares of Common Stock upon the conversion of such Series B Preferred Stock and
Series B-2 Preferred Stock, and the payment of dividends on the Company's Series
C Preferred Stock, which are payable in either cash or shares of Common Stock,
at the election of the Company) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (A) any capital stock or (B) any
option, warrant or other right to acquire capital stock.

      6. Conversion.

            (a) Method. Subject to the provisions hereof, the Holder hereof
shall have the right to convert this Note into (i) such number of fully paid and
non-assessable shares (the "Conversion Shares") of the Company's common stock,
par value $0.00001 per share (the "COMMON STOCK") equal to the aggregate
outstanding principal amount due under this Note divided by the Conversion Price
(as defined below), by the surrender of this Note (with the Notice of Conversion
attached hereto as APPENDIX A duly executed) at the principal office of the
Company, or such other office or agency of the Company as it may reasonably
designate by written notice to the Holder, during normal business hours on any
Business Day. The "Conversion Price" shall mean $1.00, subject to adjustment as
provided in Section 7 below.

            (b) Stock Certificates. On the date on which the Holder shall have
satisfied in full the Holder's obligations set forth herein regarding a
conversion of this

                                       -3-
<PAGE>

Note, the Holder (or such other person or persons as directed by the Holder,
subject to compliance with applicable securities laws) shall be treated for all
purposes as the holder of record of such Conversion Shares as of the close of
business on such date. In the event of such conversion of this Note,
certificates for the whole number of shares of Common Stock constituting the
Conversion Shares shall be delivered to the Holder (or such other person or
persons as directed by the Holder, subject to compliance with applicable
securities laws) as promptly as is reasonably practicable (but not later than
five (5) Business Days) after such conversion at the Company's expense.

            (c) Reservation of Shares; Stock Fully Paid; Listing. Upon the
effectiveness of the Amendment, the Company shall keep reserved a sufficient
number of shares of the authorized and unissued shares of Common Stock to
provide for the conversion of this Note in compliance with its terms. All
Conversion Shares issued upon conversion of this Note shall be, at the time of
delivery of the certificates for such Conversion Shares upon conversion of this
Note in accordance with the terms hereof, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company. The Company shall
during all times prior to the Maturity Date when the shares of Common Stock
issuable upon the conversion of this Note are authorized for listing or
quotation on any national securities exchange, Nasdaq (or the Over-the-Counter
Bulletin Board or the "pink sheets", as the case may be), keep the shares of
Common Stock issuable upon the conversion of this Note authorized for listing or
quotation on such national securities exchange, Nasdaq (or the Over-the-Counter
Bulletin Board or the "pink sheets", as the case may be).

      7. Adjustments and Distributions.

      7.1 If the Company shall, while this Note is outstanding, issue or sell
shares of its Common Stock or "Common Stock Equivalents" (as defined below)
without consideration or at a price per share or "Net Consideration Per Share"
(as defined below) less than the Conversion Price in effect immediately prior to
such issuance or sale, then in each such case the Conversion Price then in
effect at such time, except as hereinafter provided, shall be lowered so as to
be equal to the Net Consideration Per Share.

            (a) Common Stock Equivalents.

                  (i)   General. For the purposes of this Note, the issuance of
                        any warrants, options, subscription or purchase rights
                        with respect to shares of Common Stock and the issuance
                        of any securities (including, without limitation,
                        securities evidencing indebtedness) convertible into or
                        exchangeable for shares of Common Stock and the issuance
                        of any warrants, options, subscription or purchase
                        rights with respect to such convertible or exchangeable
                        securities (collectively, "Common Stock Equivalents"),
                        shall be deemed an issuance of Common Stock. Any
                        obligation, agreement or undertaking to issue Common
                        Stock Equivalents at any time

                                       -4-
<PAGE>

                        in the future shall be deemed to be an issuance at the
                        time such obligation, agreement or undertaking is made
                        or arises. No adjustment of the Conversion Price shall
                        be made under this Note upon the issuance of any shares
                        of Common Stock which are issued pursuant to the
                        exercise, conversion or exchange of any Common Stock
                        Equivalents.

                  (ii)  Adjustments for Adjustment, Cancellation or Expiration
                        of Common Stock Equivalents. Should the Net
                        Consideration Per Share of any such Common Stock
                        Equivalents be decreased from time to time other than as
                        a result of the application of anti-dilution provisions
                        substantially similar to the provisions of this Note,
                        then, upon the effectiveness of each such change, the
                        Conversion Price will be that which would have been
                        obtained (1) had the adjustments made upon the issuance
                        of such Common Stock Equivalents been made upon the
                        basis of the new Net Consideration Per Share of such
                        securities, and (2) had the adjustments made to the
                        Conversion Price since the date of issuance of such
                        Common Stock Equivalents been made to such Conversion
                        Price as adjusted pursuant to clause (1) above. Any
                        adjustment of the Conversion Price which relates to any
                        Common Stock Equivalent shall be disregarded if, as, and
                        when such Common Stock Equivalent expires or is canceled
                        without being exercised, or is repurchased by the
                        Company at a price per share at or less than the
                        original purchase price, so that the Conversion Price
                        effective immediately upon such cancellation or
                        expiration shall be equal to the Conversion Price that
                        would have been in effect (1) had the expired or
                        canceled Common Stock Equivalent not been issued, and
                        (2) had the adjustments made to the Conversion Price
                        since the date of issuance of such Common Stock
                        Equivalents been made to the Conversion Price which
                        would have been in effect had the expired or canceled
                        Common Stock Equivalent not been issued.

            (b) Net Consideration Per Share. For purposes of this Note, the "Net
Consideration Per Share" which shall be receivable by the Company for any Common
Stock issued upon the exercise or conversion of any Common Stock Equivalents
shall be determined as follows:

                  (i)   The "Net Consideration Per Share" shall mean the amount
                        equal to the total amount of consideration, if any,
                        received by the Company for the issuance of such Common
                        Stock Equivalents, plus the minimum amount of
                        consideration, if any, payable to the Company upon
                        exercise, or conversion or exchange thereof, divided by
                        the maximum aggregate number of shares of Common Stock
                        (without regard to any

                                       -5-
<PAGE>

                        provision contained therein providing for a subsequent
                        adjustment to such number) that would be issued if all
                        such Common Stock Equivalents were exercised, exchanged
                        or converted.

                  (ii)  The "Net Consideration Per Share" which shall be
                        receivable by the Company shall be determined in each
                        instance as of the date of issuance of Common Stock
                        Equivalents without giving effect to any possible future
                        upward price adjustments or rate adjustments which may
                        be applicable with respect to such Common Stock
                        Equivalents.

            (c) Stock Dividends for Holders of Capital Stock Other Than Common
Stock. In the event that the Company shall make or issue (otherwise than to
holders of Common Stock), or shall fix a record date for the determination of
holders of any capital stock of the Company other than holders of Common Stock
entitled to receive, a dividend or other distribution payable in Common Stock or
securities of the Company convertible into or otherwise exchangeable for shares
of Common Stock of the Company, then such Common Stock or other securities
issued in payment of such dividend shall be deemed to have been issued for their
fair market value as is reasonably determined in good faith by the Board of
Directors of the Company.

            (d) Consideration Other than Cash. For purposes of this Note, if a
part or all of the consideration received by the Company in connection with the
issuance of shares of Common Stock or the issuance of any of the securities
described in this Note consists of property other than cash, such consideration
shall be deemed to have a fair market value as is reasonably determined in good
faith by the Board of Directors of the Company.

            (e) Exceptions to Anti-Dilution Adjustments. This Section 7.1 shall
not apply (A) under any of the circumstances which would constitute an
Extraordinary Common Stock Event (as described below) (such circumstances being
accounted for pursuant to Section 7.2 hereof), (B) to the issuance of Common
Stock upon the conversion of the Company's Series C Preferred Stock, Series B
Preferred Stock or Series B-2 Preferred Stock, (C) to the issuance of the Series
C Preferred Stock and the warrants issued in connection therewith or (D) upon
the conversion of this Note or any Initial Warrants or Additional Warrants or
any warrants issued in connection with the Series C Preferred Stock or other
warrants or options to purchase shares of Common Stock, or other securities
convertible into shares of Common Stock, outstanding prior to the original issue
date of this Note. Further, the adjustments described in this Section 7.1 shall
not apply with respect to the issuance or sale of shares of Common Stock, or the
grant of options exercisable therefor, issued or issuable after the original
issue date of this Note to:

                  (i)   directors, officers, employees and consultants of the
                        Company or any subsidiary pursuant to any qualified or
                        non-qualified stock option plan or agreement, stock
                        purchase plan or agreement, stock restriction agreement,
                        employee stock ownership plan, consultant equity
                        compensation plan or

                                       -6-
<PAGE>

                        arrangement approved by the Board of Directors or an
                        authorized committee thereof, including any repurchase
                        or stock restriction agreement, or such other options,
                        issuances, arrangements, agreements or plans intended
                        principally as a means of providing compensation for
                        employment or services and approved by the Board of
                        Directors;

                  (ii)  capital stock, or options or warrants to purchase
                        capital stock, issued to financial institutions or
                        lessors in connection with commercial credit
                        arrangements, equipment financings, commercial property
                        lease transactions or similar transactions;

                  (iii) capital stock, or warrants or options to purchase
                        capital stock, issued in connection with bona fide
                        acquisitions, mergers or similar transactions, the terms
                        of which are approved by the Board of Directors of the
                        Company; and

                  (iv)  capital stock issued or issuable to an entity as a
                        component of any business relationship with such entity
                        for the purpose of (A) joint venture, technology
                        licensing or development activities, (B) distribution,
                        supply or manufacture of the Company's products or
                        services or (C) any other arrangements involving
                        corporate partners that are primarily for purposes other
                        than raising capital, the terms of which business
                        relationship with such entity are approved by the Board
                        of Directors.

            (f) No Fractional Adjustments. No adjustment of the Conversion Price
shall be made in an amount less than one cent per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be either taken into account in any subsequent
adjustment made prior to three years from the date of the event giving rise to
the adjustment being carried forward and prior to conversion, or shall be made
at the end of three years from the date of the event giving rise to the
adjustment being carried forward.

            (g) No Increased Conversion Price. Notwithstanding any other
provisions of this Section 7, except to the limited extent provided for in
Sections 7.1(a)(ii), no adjustment of the Conversion Price pursuant to this
Section 7 shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.

      7.2 Adjustment Upon Extraordinary Common Stock Event. Upon the happening
of an Extraordinary Common Stock Event (as hereinafter defined), the Conversion
Price shall, simultaneously with the happening of such Extraordinary Common
Stock Event, be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be

                                       -7-
<PAGE>

the Conversion Price which, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive Extraordinary Common Stock Event or
Events.

      An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.

      7.3 Adjustment Upon Certain Dividends. In the event the Company shall make
or issue, or shall fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution with respect to the
Common Stock payable in (i) securities of the Company other than shares of
Common Stock, or (ii) other assets (excluding cash dividends or distributions),
then and in each such event provision shall be made so that the Holder shall
receive upon conversion of this Note in addition to the number of shares of
Common Stock receivable thereupon, the number of securities or such other assets
of the Company which they would have received had this Note been converted
immediately prior to such event.

      7.4 Adjustment Upon Capital Reorganization or Reclassification. If the
Common Stock shall be changed into the same or different number of shares of any
other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event provided for in Section 7.2, a dividend or other distribution
provided for in Section 7.3, or a merger or other transaction provided for in
Section 7.5), then and in each such event, the Holder shall have the right
thereafter to receive, upon conversion of this Note, in lieu of the number of
shares of Common Stock which the Holder would otherwise have been entitled to
receive, the kind and amount of shares of capital stock and other securities and
property receivable upon such reorganization, recapitalization, reclassification
or other change by the holders of the number of shares of Common Stock for which
this Note could have been converted immediately prior to such reorganization,
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.

      7.5 Adjustment for Merger or Reorganization, etc.

            (a) In case of any consolidation or merger of the Company with or
into another Company or the sale of all or substantially all of the assets of
the Company to another Company: if the surviving entity shall consent in writing
to the following provisions, then this Note shall thereafter be exercisable for
the kind and amount of shares of stock or other securities or property to which
a holder of the number of shares of Common Stock of the Company deliverable upon
conversion of this Note would have been entitled upon such consolidation, merger
or sale; and, in such case, appropriate adjustment (as determined in good faith
by the Board of Directors) shall be made in the application of the provisions in
this Section 7 with respect to the rights and interest thereafter of the Holder
of this Note, to the end that the provisions set forth in this Section 7
(including provisions with respect to changes in and other adjustments of the

                                       -8-
<PAGE>

Conversion Price) shall thereafter be applicable, as nearly as reasonably
possible, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of this Note.

            (b) The provision for such rights on each of this Note shall be a
condition precedent to the consummation by the Company of any such transaction.

      7.6 Certificate as to Adjustments; Notice by Company. In each case of an
adjustment or readjustment of the Conversion Price, the Company at its expense
will furnish the Holder with a certificate prepared by the Treasurer or Chief
Financial Officer of the Company, showing such adjustment or readjustment, and
stating in detail the facts upon which such adjustment or readjustment is based.

      7.7 Further Adjustments. In the event that, as a result of an adjustment
made pursuant to this Section 7, the Holder shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon conversion of this Note shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Conversion Shares contained in this Note.

      7.8 Adjustment of Number of Shares. Upon each adjustment in the Conversion
Price pursuant to this Section 7, the number of Conversion Shares issuable upon
conversion hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Conversion Shares purchasable
immediately prior to such adjustment by a fraction, (i) the numerator of which
shall be the Conversion Price immediately prior to such adjustment, and (ii) the
denominator of which shall be the Conversion Price immediately thereafter.

      8. Transfer Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Conversion Shares issuable upon the
conversion of the this Note; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Conversion Shares
in a name other than that of the registered holder of this Note in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Conversion Shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's reasonable satisfaction that such tax has been
paid.

      9. Events of Default. Each of the following shall constitute an "Event of
Default" hereunder:

            (a) The Company shall fail to pay the principal amount of this Note
and accrued interest thereon when due and payable (whether at the Maturity Date,
upon acceleration or otherwise);

                                       -9-
<PAGE>

            (b) The Company shall fail to pay any other amount under this Note
or any amounts under the Purchase Agreement, Security Agreement or any other
Transaction Document when due and payable (whether at the maturity date
therefor, upon acceleration or otherwise) and such failure shall continue for a
period of five (5) business days;

            (c) Any "Event of Default" shall occur under any other Transaction
Document or the Company shall violate any of its duties or obligations under the
Intercreditor Agreement or the Collateral Agency Agreement;

            (e) Any representation or warranty made by the Company in the
Transaction Documents shall have been untrue or misleading in any material
respect when made;

            (f) The Company fails to make a required payment or payments on
indebtedness for borrowed money of Twenty-Five Thousand Dollars ($25,000) or
more in aggregate principal amount;

            (g) There shall have occurred an acceleration of the stated maturity
of any indebtedness for borrowed money of the Company or any Subsidiary of
Twenty-Five Thousand Dollars ($25,000) or more in aggregate principal amount
(which acceleration is not rescinded, annulled or otherwise cured within ten
(10) days of receipt by the Company or such Subsidiary of notice of such
acceleration);

            (h) Any material covenant, agreement or obligation of the Company in
any Transaction Document shall cease to be enforceable, or shall be determined
to be unenforceable in any material respect; or any of the security interests
granted pursuant to the Security Agreement shall be determined to be void,
voidable, invalid or unperfected, are subordinated or are ineffective to provide
the Holder with a perfected, first priority security interest in the collateral
covered by the Security Agreement, subject to the terms and conditions of the
Transaction Documents;

            (i) The Company shall sell, transfer, lease or otherwise dispose of
all or any substantial portion of its assets in one transaction or a series of
related transactions, participate in any share exchange, consummate any
recapitalization, reclassification, reorganization or other business combination
transaction or adopt a plan of liquidation or dissolution or agree to do any of
the foregoing;

            (j) One or more judgments in an aggregate amount in excess of Fifty
Thousand Dollars ($50,000) shall have been rendered against the Company or any
Subsidiary and such judgment or judgments remain undischarged or unstayed for a
period of sixty (60) days after such judgment or judgments become or became, as
the case may be, final and unappealable;

            (k) The Company shall have applied for or consented to the
appointment of a custodian, receiver, trustee or liquidator, or other
court-appointed

                                      -10-
<PAGE>

fiduciary of all or a substantial part of its properties; or a custodian,
receiver, trustee or liquidator or other court appointed fiduciary shall have
been appointed with or without the consent of the Company; or the Company is
generally not paying its debts as they become due by means of available assets,
or has made a general assignment for the benefit of creditors; or the Company
files a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any insolvency law, or an answer admitting the material allegations of a
petition in any bankruptcy, reorganization or insolvency proceeding or has taken
action for the purpose of effecting any of the foregoing; or if, within sixty
(60) days after the commencement of any proceeding against the Company seeking
any reorganization, rehabilitation, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Federal bankruptcy code or
similar order under future similar legislation, the appointment of any trustee,
receiver, custodian, liquidator, or other court-appointed fiduciary of the
Company or of all or any substantial part of its properties, such order or
appointment shall not have been vacated or stayed on appeal or otherwise or if,
within sixty (60) days after the expiration of any such stay, such order or
appointment shall not have been vacated (collectively, "Insolvency Events"); or

            (l) Any Insolvency Event shall have occurred with respect to any
Subsidiary.

            Upon the occurrence of any Event of Default, the Holder may, at its
option, declare all amounts due hereunder to be due and payable immediately and,
upon any such declaration, the same shall become and be immediately due and
payable. If an Insolvency Event occurs with respect to the Company or any
Subsidiary, then all amounts due hereunder shall become immediately due and
payable without any declaration or other act on the part of the Holder. Upon the
occurrence of any Event of Default, the Holder may, in addition to declaring all
amounts due hereunder to be immediately due and payable, pursue any available
remedy, whether at law or in equity, including, without limitation, exercising
its rights under the Security Agreement. If an Event of Default occurs, the
Company shall pay to the Holder the reasonable attorneys' fees and disbursements
and all other reasonable out-of-pocket costs incurred by the Holder in order to
collect amounts due and owing under this Note or otherwise to enforce the
Holder's rights and remedies hereunder and under the Security Agreement.

      10. Secured Obligation. This Note is one of the Notes referred to in the
Security Agreement and is secured by the collateral described therein
(collectively, the "Collateral"). The Security Agreement grants the Holder
certain rights with respect to the Collateral upon an Event of Default.

      11. Waiver of Presentment, Demand and Dishonor. The Company hereby waives
presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Note, and waives and renounces
all rights to the benefit of any statute of limitations or any moratorium,
appraisement, exemption or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the

                                      -11-
<PAGE>

Federal Bankruptcy Code, both as to itself and as to all of its property,
whether real or personal, against the enforcement and collection of the
obligations evidenced by this Note and any and all extensions, renewals and
modifications hereof.

      No failure on the part of the Holder hereof to exercise any right or
remedy hereunder with respect to the Company, whether before or after the
happening of an Event of Default, shall constitute a waiver of any future Event
of Default or of any other Event of Default. No failure to accelerate the debt
of the Company evidenced hereby by reason of an Event of Default or indulgence
granted from time to time shall be construed to be a waiver of the right to
insist upon prompt payment thereafter; or shall be deemed to be a novation of
this Note or a reinstatement of such debt evidenced hereby or a waiver of such
right of acceleration or any other right, or be construed so as to preclude the
exercise of any right the Holder may have, whether by the laws of the state
governing this Note, by agreement or otherwise; and the Company hereby expressly
waives the benefit of any statute or rule of law or equity that would produce a
result contrary to or in conflict with the foregoing.

      12. Amendment; Waiver. Any term of this Note may be amended or waived upon
the written consent of the Company and the Holder hereof. No such waiver or
consent on any one instance shall be construed to be a continuing waiver or a
waiver in any other instance unless it expressly so provides.

      13. Transfers. The Holder shall have the right to transfer this Note or
any interest herein in any transaction meeting the requirements of applicable
securities laws.

      14. Intercreditor Agreement. This note is subject to the terms and
conditions of the Intercreditor Agreement and Collateral Agency Agreement.

      15. Governing Law; Consent to Jurisdiction. This Note shall be binding
upon the Company and its successors, assigns and legal representatives. The
validity, construction and interpretation of this Note will be governed, and
construed in accordance with, the laws of the State of New York. EACH OF THE
COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS NOTE AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

      Each of the Company and, by its acceptance of this Note, the Holder
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York located in New York County and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Note and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on the Company and the Holder anywhere in the world
by the same methods as are specified for the giving of notices under the
Purchase Agreement. Each of the Company and, by its acceptance of this Note, the
Holder irrevocably consents to the jurisdiction of any such court in any such
suit,

                                      -12-
<PAGE>

action or proceeding and to the laying of venue in such court. Each of the
Company and, by its acceptance of this Note, the Holder irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

ATTEST:                                        WARP TECHNOLOGY HOLDINGS, INC.

_____________________                          By: _____________________________
Name:                                          Name:
                                               Title:

Dated: [_______________], 2005

                                      -13-