INTERCREDITOR AND SUBORDINATION AGREEMENT

(1)

WARP TECHNOLOGY HOLDINGS, INC ., a Nevada corporation (the Borrower );

(2)

THE SUBSIDIARIES OF THE BORROWER listed in Part 1 of Schedule 1 (the Subsidiaries and collectively with the Borrower, the Credit Parties );

(3)

THE FINANCIAL INSTITUTIONS listed in Part 2 of Schedule 1 (the Senior Lenders );

(4)

THE HOLDERS OF SUBORDINATED NOTES listed in Part 3 of Schedule 1 (the Subordinated Noteholder and together with the Senior Lenders, the Lenders ); and

(5)

FORTRESS CREDIT CORP. as collateral agent (the Collateral Agent ) for the Senior Lenders pursuant to a Collateral Agency Agreement dated as of August 2, 2005 (the Collateral Agency Agreement ).

(A)

the Borrower, the Subsidiaries and the Senior Lenders have entered into a US$50,000,000 credit agreement dated August 2, 2005 (as amended, modified or supplemented, the Senior Credit Agreement );

(B)

as collateral security for the payment and performance of the Borrower’s obligations under the Finance Documents (as defined in the Credit Agreement) (i) the Borrower has granted to the Collateral Agent, for the benefit of the Senior Lenders, a security interest in certain Collateral (as defined below) pursuant to the terms and conditions of that certain Security Agreement and certain Pledge Agreements (as defined in the Senior Credit Agreement) entered into (or to be entered into) between the Borrower and the Collateral Agent (the Company Security Agreements ) and (ii) each Subsidiary has executed or is executing a guaranty of the Borrower’s obligations under the Finance Documents and granting to the Collateral Agent, for the benefit of the Senior Lenders, a security interest in certain Collateral pursuant to the terms and conditions of those certain Security Documents (as defined in the Senior Credit Agreement) entered into (or to be entered into) between each Subsidiary and the Collateral Agent (the Senior Subsidiary Security Agreements and, collectively with the Company Security Agreements, the Senior Security Agreements ); and

(C)

the Borrower, the Subordinated Noteholder and others have entered into a merger agreement dated as of September 11, 2005 (the Subordinated Merger Agreement ) and in connection with the Subordinated Merger Agreement, in that certain promissory note dated October 26, 2005 (the Subordinated Promissory Note ) the Borrower has agreed to pay the Subordinated Noteholder the aggregate principal sum of US$1,750,000 together with accrued interest.

1.

DEFINITIONS

(a)

Unless otherwise defined herein, terms defined in the Senior Credit Agreement and used herein shall have the meanings given to them in the Senior Credit Agreement.

(b)

The following terms shall have the following meanings:

(c)

The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section and paragraph references are to this Agreement unless otherwise specified.

(d)

The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(e)

The words (i)“includes” and “including” are not limiting; (ii) “or” is not exclusive; (iii) “all” includes “any” and “any” includes “all” and means “any one or more”; (iv) references to any instrument, document, mortgage, assignment or agreement of any kind includes any amendments, restatements or modifications; (v) headings are for convenience only, and do not affect the meaning of any provision; and (vi) references to the consent, satisfaction, acceptance, discretion, judgment, option, requirement or approval (or variations of those terms) of Collateral Agent or any Senior Noteholder are, unless otherwise specifically indicated, to be interpreted as if followed by the phrase “in its absolute discretion”.

2.

SUBORDINATION

(a)

Each Credit Party and the Subordinated Noteholder agrees, for itself and each future holder of the Subordinated Obligations, that the Subordinated Obligations are expressly “subordinate and junior in right of payment” (as that phrase is defined in paragraph 2(b)) to all Senior Obligations.

(b)

“Subordinate and junior in right of payment” means, for purposes of paragraph 2(a), that (i) no part of the Subordinated Obligations shall have any claim to the assets of any Credit Party on a parity with or prior to the claim of the Senior Obligations; and (ii) unless and until the Senior Obligations have been paid in full, then, without the express prior written consent of the Collateral Agent, no Subordinated Noteholder will take, demand or receive from any Credit Party, and no Credit Party will make, give or permit, directly or indirectly, by setoff, redemption, purchase or in any other manner, any payment of (of whatever kind or nature, whether in cash, property, securities or otherwise) the Subordinated Obligations provided, however, that so long as an Event of Default has not occurred and is continuing, (i) the Borrower may make, and the Subordinated Noteholder may receive, regularly scheduled payments (not prepayments) of interest on the Subordinated Promissory Note in accordance with the terms thereof determined on a non-accelerated basis (without giving effect to any default rate of interest thereunder) and (ii) the Borrower may prepay the Subordinated Obligations in full out of the proceeds of any new equity contributions made in the Borrower which were not intended to be used in connection with the financing of an Acquisition to the extent such equity contributions are sufficient to prepay the Subordinated Obligations and may partially prepay the Subordinated Obligations if such proceeds are not sufficient to pay the Subordinated Obligations in full.

(c)

The expressions “prior payment in full,” “payment in full,” “paid in full” and any other similar terms or phrases when used in this Agreement shall mean the irrevocable and indefeasible payment in full, in immediately available funds, of all of the Senior Obligations. The phrase “equity contributions” shall mean any capital raise that is not a Senior Obligation or required as a condition to any Advance under the Senior Credit Agreement.

3.

ADDITIONAL PROVISIONS CONCERNING SUBORDINATION

(a)

The Subordinated Noteholder and each Credit Party agree that upon the occurrence of any Insolvency Event:

(i)

all Senior Obligations shall be paid in full before any payment or distribution of whatever kind or nature is made with respect to the Subordinated Obligations; and

(ii)

any payment or distribution of assets of any Credit Party, whether in cash, property or securities (other than as permitted under clause (a)(1) of this Section 3), to which the Subordinated Noteholder would be entitled except for the provisions hereof, shall be paid or delivered by such Credit Party, or any receiver, trustee in bankruptcy, liquidating trustee, disbursing agent or other Person making such payment or distribution, directly to the Collateral Agent, to the extent necessary to pay in full all Senior Obligations, before any payment or distribution of any kind or nature shall be made to the Subordinated Noteholder.

(b)

Upon the occurrence of any Insolvency Event:

(i)

the Subordinated Noteholder irrevocably authorizes and empowers the Collateral Agent (A) to demand, sue for, collect and receive every payment or distribution on account of the Subordinated Obligations payable or deliverable in connection with such event or proceeding and give acquittance therefor, (B) to file claims and proofs of claim in any statutory or non-statutory proceeding if the Subordinated Noteholder has not demonstrated to the satisfaction of the Collateral Agent, no later than 30 days prior to the applicable bar date, that such Subordinated Noteholder has filed an appropriate claim or proof of claim, and (C) to take such other actions, in its own name as Collateral Agent, or in the name of the Subordinated Noteholder or otherwise, as the Collateral Agent may deem necessary or advisable for the enforcement of the provisions of this Agreement; provided, however, that the foregoing authorization and empowerment imposes no obligation on the Collateral Agent to take any such action;

(ii)

the Subordinated Noteholder shall take such action, duly and promptly, as the Collateral Agent may request from time to time (A) to collect the Subordinated Obligations for the account of the Collateral Agent and (B) to file appropriate proofs of claim in respect of the Subordinated Obligations; and

(iii)

the Subordinated Noteholder shall execute and deliver such powers of attorney, assignments or proofs of claim or other instruments as the Collateral Agent may request to enable the Collateral Agent to enforce any and all claims in respect of the Subordinated Obligations and to collect and receive any and all payments and distributions which may be payable or deliverable at any time upon or in respect of the Subordinated Obligations.

(c)

If any payment or distribution, whether consisting of money, property or securities, shall be collected or received by the Subordinated Noteholder in respect of the Subordinated Obligations, except payments permitted to be made at the time of payment as provided in paragraph 2(b), such Subordinated Noteholder shall forthwith deliver the same to the Collateral Agent, in the form received, duly indorsed to the Collateral Agent, if required, to be applied to the payment or prepayment of the Senior Obligations until the Senior Obligations are paid in full. Until so delivered, such payment or distribution shall be held in trust by such Subordinated Noteholder as the property of the Collateral Agent, segregated from other funds and property held by the Subordinated Noteholder. Following payment in full of the Senior Obligations, Collateral Agent will remit to the Subordinated Noteholder as promptly as practicable, to the extent of the Subordinated Noteholder’s interest therein, all payments or distributions paid (by the Subordinated Noteholder) to and held by Collateral Agent in excess of the Senior Obligations as provided in Section 4(e) of this Agreement.

(d)

Until the Senior Obligations are paid in full, the Subordinated Noteholder shall not take any Collection Action or Collateral Enforcement Action with respect to the Subordinated Obligations.

4.

RIGHTS IN COLLATERAL

(a)

Notwithstanding anything to the contrary contained in any Finance Document or any Subordinated Transaction Document and irrespective of:

(i)

the time, order or method of attachment or perfection of the security interests created by any Senior Security Document;

(ii)

the time or order of filing or recording of financing statements or other documents filed or recorded to perfect security interests in any Collateral;

(iii)

anything contained in any filing or agreement to which the Collateral Agent or the Subordinated Noteholder now or hereafter may be a party; and

(iv)

the rules for determining perfection or priority under the Uniform Commercial Code or any other law governing the relative priorities of secured creditors;

(b)

So long as the Senior Obligations have not been paid in full and any Senior Security Document remains in effect, whether or not any Insolvency Event has occurred,

(i)

the Subordinated Noteholder will not take any Collateral Enforcement Action; and

(ii)

the Collateral Agent (or behalf of the Senior Lenders) and, subject to the Collateral Agency Agreement, any Senior Lenders shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral and Collateral Agent shall not be required to marshal any Collateral.

(c)

In exercising rights and remedies with respect to the Collateral, the Collateral Agent (on behalf of the Senior Lenders) and, subject to the Collateral Agency Agreement, the Senior Lenders may enforce the provisions of the Senior Security Documents and exercise remedies thereunder and under any other Finance Documents, all in such order and in such manner as it or they may determine in the exercise of its or their sole business judgment. Such exercise and enforcement shall include the rights to sell or otherwise dispose of Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code of any applicable jurisdiction. In conducting any public or private sale under the Uniform Commercial Code, the Collateral Agent shall give the Subordinated Noteholder such notice of such sale as may be required by the applicable Uniform Commercial Code; provided, however, that 10 days’ notice shall be deemed to be commercially reasonable notice.

(d)

When all Senior Obligations have been paid in full and the Senior Security Documents no longer are in effect, subject to the requirements of the Collateral Agency Agreement, the Subordinated Noteholder shall have the right to enforce the provisions of the Subordinated Promissory Note and exercise remedies thereunder.

(e)

Any money, property or securities realized upon the sale, disposition or other realization by the Collateral Agent upon all or any part of the Collateral, or otherwise received by Collateral Agent under any provision of this Agreement shall be applied by the Collateral Agent in the following order:

(i)

first, to the payment of any and all expenses incurred by the Collateral Agent on and after the date of this Agreement in connection with the performance of its duties under this Agreement for which reimbursement has not been made by the Company;

(ii)

second, to the Senior Lenders in an amount equal to each such Lender’s pro-rata share of accrued but unpaid interest on the Senior Obligations;

(iii)

third, to the Senior Lenders in an amount equal to each such Lender’s pro-rata share of the unpaid principal balance of the Senior Obligations and any other unpaid Senior Obligations;

(iv)

fourth, to each Senior Lender in an amount equal to all other amounts then owing to each such Senior Lender under any Finance Document; and

(v)

fifth, any sums remaining after such applications and disbursements shall be paid to such Persons entitled thereto or as a court of competent jurisdiction shall direct.

(f)

The Collateral Agent’s rights with respect to the Collateral include the right to release any or all of the Collateral from the liens under any Senior Security Document in connection with any sale of all or any portion of the Collateral notwithstanding that the net proceeds of any such sale may not be used to permanently prepay any Senior Obligations or Subordinated Obligations. The Subordinated Noteholder is hereby deemed to have consente