Unassociated Document


    


    EXHIBIT
      4.3

    


    REGISTRATION
      RIGHTS AGREEMENT

    


    This
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of July ___, 2007, by and among Workstream Inc., a corporation existing
      pursuant to the Canada Business Corporations Act with headquarters located
      at
      495 March Road, Suite 300, Ottawa, Ontario K2K 3G1, Canada
      (the “Company”),
      and
      the undersigned buyers (each, a “Buyer”,
      and
      collectively, the “Buyers”).

    


    RECITALS

    


    A. In
      connection with the Transaction Agreement by and among the parties hereto,
      dated
      as of July 25, 2007 (the “Transaction
      Agreement”),
      the
      Company have agreed, upon the terms and subject to the conditions of the
      Transaction Agreement, to issue and sell to each Buyer (i) the Special Warrants
      (as defined in the Transaction Agreement) which will be convertible into
      Conversion Shares (as defined in the Transaction Agreement) in accordance with
      the terms of the Special Warrants and (ii) the Warrants (as defined in the
      Transaction Agreement) which will be exercisable to purchase Warrant Shares
      (as
      defined in the Transaction Agreement) in accordance with the terms of the
      Warrants.

    


    B. To
      induce
      the Buyers to execute and deliver the Transaction Agreement, the Company has
      agreed to provide certain registration rights under the Securities Act of 1933,
      as amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the “1933
      Act”),
      and
      applicable state securities laws.

    


    AGREEMENT

    


    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Buyers hereby agree as
      follows:

    


    
      	
              1.

            	
              Definitions.

            


    

     

    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Transaction Agreement. As used in this Agreement,
      the
      following terms shall have the following meanings:

    


    (a) “Business
      Day”
means
      any day other than Saturday, Sunday or any other day on which commercial banks
      in Chicago, Illinois are authorized or required by law to remain
      closed.

    


    (b) “Closing
      Date”
shall
      have the meaning set forth in the Transaction Agreement.

    


    (c) “Effective
      Date”
means
      the date that the applicable Registration Statement has been declared effective
      by the SEC.

    


    (d) “Effectiveness
      Deadline”
means
      (i) with respect to the initial Registration Statement required to be filed
      to
      cover the resale by the Investors of the Registrable Securities the
      100th
      calendar
      day after the Closing Date (or the 130th
      calendar
      day after the Closing Date in the event that such Registration Statement is
      subject to review by the SEC) and (b) with respect to any additional
      Registration Statements that may be required to be filed by the Company pursuant
      to this Agreement, the 100th
      calendar
      day following the date on which the Company was required to file such additional
      Registration Statement (or the 130th
      calendar
      day after such date in the event that such Registration Statement is subject
      to
      review by the SEC).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) “Filing
      Deadline”
means
      the (i) with respect to the initial Registration Statement required to be filed
      to cover the resale by the Investors of the Registrable Securities, the
      40th
      calendar
      day after the Closing Date and (ii) with respect to any additional Registration
      Statements that may be required to be filed by the Company pursuant to this
      Agreement, the date on which the Company was required to file such additional
      Registration Statement pursuant to the terms of this Agreement.

    


    (f) “Investor”
means
      a
      Buyer or any transferee or assignee
      of
      any Registrable Securities, Special Warrants or Warrants, as applicable, to
      whom
      a Buyer assigns its rights under this Agreement and who agrees to become bound
      by the provisions of this Agreement in accordance with Section 9
      and any
      transferee or assignee thereof to whom a transferee or assignee of any
      Registrable Securities, Special Warrants or Warrants, as applicable, assigns
      its
      rights under this Agreement and who agrees to become bound by the provisions
      of
      this Agreement in accordance with Section 9.

    


    (g) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

    


    (h) “register,”
      “registered,”
and
      “registration”
refer
      to a registration effected by preparing and filing one or more Registration
      Statements (as defined below) in compliance with the 1933 Act and pursuant
      to
      Rule 415 and the declaration of effectiveness of such Registration Statement(s)
      by the SEC.

    


    (i) “Registrable
      Securities”
means
      (i) the Conversion Shares issued or issuable upon conversion of the Special
      Warrants, (ii) the Warrant Shares issued or issuable upon exercise of the
      Warrants and (iii) any capital stock of the Company issued or issuable with
      respect to the Conversion Shares, the Warrant Shares, the Special Warrants
      or
      the Warrants, including, without limitation, (1) as a result of any share split,
      share dividend, recapitalization, exchange or similar event or otherwise and
      (2)
      shares of capital stock of the Company into which the Common Shares (as defined
      in the Transaction Agreement) are converted or exchanged and shares of capital
      stock of a Successor Entity (as defined in the Warrants) into which the Common
      Shares are converted or exchanged, in each case, without regard to any
      limitations on conversion of the Special Warrants or exercise of the
      Warrants.

    


    (j) “Registration
      Statement”
means
      a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Registrable Securities.

    


    (k) “Required
      Holders”
means
      the holders of at least a majority of the Registrable Securities.

     

    
      
        
        

      

      
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    (l) “Required
      Registration Amount”
means
      the sum of (i) the number of Conversion Shares issued and issuable pursuant
      to
      the Special Warrants and (ii) the number of Warrant Shares issued and issuable
      pursuant to the Warrants as of the Trading Day immediately preceding the
      applicable date of determination (without taking into account any limitations
      on
      the conversion of the Special Warrants or the exercise of the Warrants set
      forth
      therein), all subject to adjustment as provided in Section 2(d).

    


    (m) “Rule
      415”
means
      Rule 415 under the 1933 Act or any successor rule providing for offering
      securities on a continuous or delayed basis.

    


    (n) “SEC”
means
      the United States Securities and Exchange Commission.

     

    
      	
              2.

            	
              Registration.

            


    

     

    (a) Mandatory
      Registration.
      The
      Company shall prepare, and, as soon as practicable, but in no event later than
      the Filing Deadline, file with the SEC the Registration Statement on Form S-3
      covering the resale of all of the Registrable Securities. In the event that
      Form
      S-3 is unavailable for such a registration, the Company shall use such other
      form as is available for such a registration on another appropriate form
      reasonably acceptable to the Required Holders, subject to the provisions of
      Section 2(c).
      The
      Registration Statement prepared pursuant hereto shall register for resale at
      least the number of Common Shares equal to the Required Registration Amount
      as
      of the date the Registration Statement is initially filed with the SEC. The
      Registration Statement shall contain (except if otherwise directed by the
      Required Holders) the “Selling
      Shareholders”
and
      “Plan
      of Distribution”
      sections in substantially the form attached hereto as Exhibit
      B;
      provided that the Company may make any changes to such sections as requested
      by
      the SEC so long as none of such changes are materially inconsistent with the
      form attached hereto as Exhibit
      B or
      adversely affect any Investor (including, without limitation, any restrictions
      on the manner of disposition). The Company shall use its commercially reasonable
      efforts to have the Registration Statement declared effective by the SEC as
      soon
      as practicable, but in no event later than the Effectiveness Deadline. By 9:30
      a.m. on the Business Day immediately following the Effective Date of the
      applicable Registration Statement, the Company shall file with the SEC in
      accordance with Rule 424 under the 1933 Act the final prospectus to be used
      in
      connection with sales pursuant to such Registration Statement.
      Notwithstanding anything to the contrary contained in this Agreement, other
      than
      during an Allowable Grace Period, the Company shall ensure that, when filed
      and
      at all times while effective, each Registration Statement and the prospectus
      used in connection with such Registration Statement will disclose (whether
      directly or through incorporation by reference to other SEC filings to the
      extent permitted) all material information regarding the Company and its
      securities. In no event shall the Company include any securities other than
      Registrable Securities on any Registration Statement without the prior written
      consent of the Required Holders. The Company shall not after the date hereof
      until the Effective Date of the Registration Statement required to be filed
      pursuant to this Section 2(a)
      enter
      into any agreement providing any such right to any of its security
      holders.

    


    (b) Legal
      Counsel.
      Subject
      to Section 5
      hereof,
      Magnetar Capital Master Fund, Ltd shall have the right to select one (1) legal
      counsel to review and oversee, solely on its behalf, any registration pursuant
      to this Section 2
      (“Legal
      Counsel”),
      which
      shall be Greenberg Traurig, LLP or such other counsel as thereafter designated
      by Magnetar Capital Master Fund, Ltd.

     

    
      
        
        

      

      
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    (c) Ineligibility
      for Form S-3.
      In the
      event that Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Company shall (i) register the resale
      of
      the Registrable Securities on another appropriate form reasonably acceptable
      to
      the Required Holders and (ii) undertake to register the Registrable Securities
      on Form S-3 as soon as such form is available, provided
      that the
      Company shall maintain the effectiveness of the Registration Statement then
      in
      effect until such time as a Registration Statement on Form S-3 covering the
      Registrable Securities has been declared effective by the SEC.

     

    (d) Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a)
      is
      insufficient to cover the resale of all of the Registrable Securities required
      to be covered by such Registration Statement, the Company shall amend the
      applicable Registration Statement, or file a new Registration Statement (on
      the
      short form available therefor, if applicable), or both, so as to cover at least
      the Required Registration Amount as of the Trading Day immediately preceding
      the
      date of the filing of such amendment or new Registration Statement, in each
      case, as soon as practicable, but in any event not later than fifteen (15)
      days
      after the necessity therefor arises. The Company shall use its commercially
      reasonable efforts to cause such amendment and/or new Registration Statement
      to
      become effective as soon as practicable following the filing thereof. For
      purposes of the foregoing provision, the number of shares available under a
      Registration Statement shall be deemed “insufficient to cover all of the
      Registrable Securities” if at any time the number of Common Shares available for
      resale under the Registration Statement is less than the product determined
      by
      multiplying (i) the Required Registration Amount as of such time by (ii) 0.90.
      The calculation set forth in the foregoing sentence shall be made without regard
      to (i) any limitations on the conversion of the Special Warrants (and such
      calculation shall assume that the Special Warrants are then fully convertible
      into Common Shares at the then prevailing applicable Conversion Price) or (ii)
      any limitations on the exercise of the Warrants (and such calculation shall
      assume that the Warrants are then fully exercisable for Common Shares at the
      then prevailing applicable Exercise Price).

     

    (e) Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      If (i)
      a Registration Statement covering the resale of all of the Registrable
      Securities required to be covered thereby and required to be filed by the
      Company pursuant to this Agreement is (A) not filed with the SEC on or before
      the Filing Deadline (a “Filing
      Failure”)
      (it
      being understood that if the Company files a Registration Statement without
      affording each Investor the opportunity to review and comment on the same as
      required by Section 3(c)
      hereof,
      the
      Company shall not be deemed to have satisfied this clause (i)(A) and such event
      shall be deemed to be a Filing Failure);
      or (B)
      not declared effective by the SEC on or before the applicable Effectiveness
      Deadline (an “Effectiveness
      Failure”)
      (it
      being understood that if on the Business Day immediately following the Effective
      Date the Company shall not have filed a “final” prospectus for such Registration
      Statement with the SEC under Rule 424(b) in accordance with Section 2(a)
      above
      (whether or not such a prospectus is technically required by such rule), the
      Company shall not be deemed to have satisfied this clause (i)(B) and such event
      shall be deemed to be an Effectiveness Failure) or (ii) on any day after the
      Effective Date of such Registration Statement sales of all of the Registrable
      Securities required to be included on such Registration Statement cannot be
      made
      (other than during an Allowable Grace Period (as defined in Section 3(r))
      pursuant to such Registration Statement (including, without limitation, because
      of a failure to keep such Registration Statement effective, to disclose such
      information as is necessary for sales to be made pursuant to such Registration
      Statement, a suspension or delisting of (or a failure to timely list) the Common
      Shares on its principal trading market or exchange, or to register a sufficient
      number of Common Shares) (a “Maintenance
      Failure”)
      (provided that if an Investor transfers its rights hereunder pursuant to Section
      9
      and the
      transferee requests inclusion in such Registration Statement which requires
      the
      Company under applicable law to file a post-effective amendment to such
      Registration Statement, then a Maintenance Failure shall not be deemed to have
      occurred solely with respect to the filing of such post-effective amendment
      only
      if the Company is using its commercially reasonable efforts to file such
      amendment and have such amendment declared effective as soon as practicable),
      then, as partial relief for the damages to any holder by reason of any such
      delay in or reduction of its ability to sell the underlying Common Shares (which
      remedy shall not be exclusive of any other remedies available at law or in
      equity), the Company shall pay to each holder of Registrable Securities relating
      to such Registration Statement an amount in cash equal to one percent (1%)
      of
      such Investor’s initial Conversion Amount stated in such Investor’s Special
      Warrant on the Closing Date (1) on the date of such Filing Failure,
      Effectiveness Failure or Maintenance Failure, as applicable, and (2) on every
      thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure
      is
      cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured;
      and (III) a Maintenance Failure until such Maintenance Failure is cured (in
      each
      case, pro rated for periods totaling less than thirty (30) days). The payments
      to which a holder shall be entitled pursuant to this Section 2(e)
      are
      referred to herein as “Registration
      Delay Payments.”
      Following
      the initial Registration Delay Payment for any particular event or failure
      (which shall be paid on the date of such event or failure, as set forth above),
      without limiting the foregoing, if an event or failure giving rise to the
      Registration Delay Payments is cured prior to any thirtieth (30th)
      day
      anniversary of such event or failure, then such Registration Delay Payment
      shall
      be made on the third (3rd)
      Business Day after such cure. Notwithstanding anything contained in this Section
      2(e)
      to the
      contrary, in no event shall the Registration Delay Payments exceed $5,000,000
      in
      the aggregate.

     

    
      
        
        

      

      
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    (f) Offering.
      Notwithstanding anything to the contrary contained in this Agreement, but
      subject to the payment of the Registration Delay Payments pursuant to Section
      2(e),
      in the
      event the staff of the SEC (the “Staff”)
      or the
      SEC seeks to characterize any offering pursuant to a Registration Statement
      filed pursuant to this Agreement as constituting an offering of securities
      by or on behalf of the Company, or in any other manner, such that the Staff
      or the SEC do not permit such Registration Statement to become
      effective and used for resales in a manner that does not constitute such an
      offering and that permits the continuous resale at the market by the Investors
      participating therein (or as otherwise may be acceptable to each
      Investor) without being named therein as an “underwriter,” then the Company
      shall reduce the number of shares to be included in such Registration Statement
      by all Investors until such time as the Staff and the SEC shall so permit
      such Registration Statement to become effective as aforesaid.  In making
      such reduction, the Company shall reduce the number of shares to be included
      by
      all Investors on a pro rata basis (based upon the number of Registrable
      Securities otherwise required to be included for each Investor) unless the
      inclusion of shares by a particular Investor or a particular set of Investors
      are resulting in the Staff or the SEC’s “by or on behalf of the Company”
offering position, in which event the shares held by such Investor or set of
      Investors shall be the only shares subject to reduction (and if by a set of
      Investors on a pro rata basis by such Investors or on such other basis as would
      result in the exclusion of the least number of shares by all such
      Investors).  In addition, in the event that the Staff or the SEC requires
      any Investor seeking to sell securities under a Registration Statement
      filed pursuant to this Agreement to be specifically identified as
      an “underwriter” in order to permit such Registration Statement to
      become effective, and such Investor does not consent to being so named as an
      underwriter in such Registration Statement, then, in each such case, the
      Company shall reduce the total number of Registrable Securities to be
      registered on behalf of such Investor, until such time as the
      Staff or the SEC does not require such identification or until such Investor
      accepts such identification and the manner thereof. Any reduction pursuant
      to this paragraph will first reduce all Registrable Securities other than
      those issued pursuant to the Transaction Agreement. In the event of
      any reduction in Registrable Securities pursuant to this paragraph, an
      affected Investor shall have the right to require, upon delivery of a written
      request to the Company signed by such Investor, the Company to file a
      registration statement within 30 days of such request (subject to any
      restrictions imposed by Rule 415 or required by the Staff or the SEC)
      for resale by such Investor in a manner reasonably acceptable to such Investor,
      and the Company shall following such request cause to be and keep effective
      such registration statement in the same manner as otherwise contemplated in
      this Agreement for registration statements hereunder, in each case until
      such time as: (i) all Registrable Securities held by such Investor have
      been registered and sold pursuant to an effective Registration Statement in
      a
      manner acceptable to such Investor or (ii) the Registrable Securities may
      be resold by such Investor without restriction (including volume
      limitations) pursuant to Rule 144(k) of the 1933 Act (taking account of any
      Staff position with respect to “affiliate” status) or (iii) such Investor agrees
      to be named as an underwriter in any such Registration Statement in a manner
      acceptable to such Investor as to all Registrable Securities held by such
      Investor and that have not theretofore been included in a Registration Statement
      under this Agreement (it being understood that the special demand right under
      this sentence may be exercised by an Investor multiple times and with respect
      to
      limited amounts of Registrable Securities in order to permit the resale thereof
      by such Investor as contemplated above).

     

    
      
        
        

      

      
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    (g) Piggyback
      Registrations.
      If, at
      any time during the period in which a Registration Statement is required to
      be
      kept effective, there is not an effective Registration Statement covering all
      of
      the Registrable Securities and the Company shall determine to prepare and file
      with the SEC a registration statement relating to an offering for its own
      account or the account of others under the 1933 Act of any of its equity
      securities (other than on Form S-4 or Form S-8 (each as promulgated under the
      1933 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 the Company’s stock option or other
      employee benefit plans), then the Company shall deliver to each Investor a
      written notice of such determination and, if within fifteen (15) days after
      the
      date of the delivery of such notice, any such Investor shall so request in
      writing, the Company shall include in such registration statement all or any
      part of such Registrable Securities such Investor requests to be registered;
      provided, however, that the Company shall not be required to register any
      Registrable Securities pursuant to this Section 2(g) that are eligible for
      resale pursuant to Rule 144(k) promulgated by the SEC pursuant to the 1933
      Act
      or that are the subject of a then effective Registration Statement. Any
      Registrable Securities of an Investor that are to be included in a registered
      public offering pursuant to this Section 2(g) shall be offered and sold upon
      such terms as the managing underwriters thereof determine. The managing
      underwriters may condition an Investor’s participation in such a registered
      public offering upon such Investor’s execution of an underwriting agreement
      containing customary terms and conditions which would customarily be applicable
      to selling shareholders. If the managing underwriters for a registered public
      offering determine that the number of Common Shares proposed to be sold in
      such
      offering would adversely affect the marketing of the Common Shares to be sold
      by
      the Company therein or by the Person or Persons who exercised their right to
      require the Company to register such offering under the 1933 Act, then the
      number of Common Shares to be included in such offering shall be reduced until
      the number of such shares does not exceed the number that the managing
      underwriters believe can be sold without any such adverse effects; provided
      that
      any shares to be excluded shall be so excluded in the following order of
      priority: (i) securities held by any Person or Persons other than (A) the
      Investors or (B) any Person or Persons who exercised their demand right to
      require the Company to register such offering under the 1933 Act; (ii)
      securities to be registered on behalf of the Company, if any, if such registered
      offering was initiated by any Person or Persons exercising their demand right
      to
      require the Company to register such offering under the 1933 Act and (iii)
      the
      Registrable Securities sought to be included by the Investors as determined
      on a
      pro-rata basis (based upon the aggregate number of Registrable Securities sought
      to be included in such registered offering).

     

    
      
        
        

      

      
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              3.

            	
              Related
                Obligations.

            


    

    


    The
      Company will use its commercially reasonable efforts to effect the registration
      of the Registrable Securities in accordance with the intended method of
      disposition thereof and, pursuant thereto, the Company shall have the following
      obligations:

     

    (a) The
      Company shall promptly prepare and file with the SEC a Registration Statement
      with respect to the Registrable Securities (but in no event later than the
      Filing Deadline) and use its commercially reasonable efforts to cause such
      Registration Statement relating to the Registrable Securities to become
      effective as soon as practicable after such filing (but in no event later than
      the Effectiveness Deadline). Subject to allowable Grace Periods (as defined
      below), the Company shall keep each Registration Statement effective pursuant
      to
      Rule 415 for sale on a continuous basis in an at-the-market offering at all
      times until the earlier of (i) the date as of which all of the Investors may
      sell all of the Registrable Securities required to be covered by such
      Registration Statement without restriction pursuant to Rule 144(k) (or any
      successor thereto) promulgated under the 1933 Act or (ii) the date on which
      the
      Investors shall have sold all of the Registrable Securities covered by such
      Registration Statement (the “Registration
      Period”).
      The
      Company shall ensure that each Registration Statement (including any amendments
      or supplements thereto and prospectuses contained therein) shall not contain
      any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein, or necessary to make the statements therein (in the case
      of
      prospectuses, in the light of the circumstances in which they were made) not
      misleading. The Company shall submit to the SEC, within two (2) Business Days
      after the later of the date that (i) the Company learns that no review of a
      particular Registration Statement will be made by the staff of the SEC or that
      the staff has no further comments on a particular Registration Statement (as
      the
      case may be) and (ii) the approval of Legal Counsel pursuant to Section
3(c)
      (which
      approval is immediately sought), a request for acceleration of effectiveness
      of
      such Registration Statement to a time and date not later than 48 hours after
      the
      submission of such request. 

     

    (b) Subject
      to Section 3(r)
      of this
      Agreement, the Company shall prepare and file with the SEC such amendments
      (including post-effective amendments) and supplements to a Registration
      Statement and the prospectus used in connection with such Registration
      Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
      under the 1933 Act, as may be necessary to keep such Registration Statement
      effective at all times during the Registration Period, and, during such period,
      comply with the provisions of the 1933 Act with respect to the disposition
      of
      all Registrable Securities of the Company required to be covered by such
      Registration Statement until such time as all of such Registrable Securities
      shall have been disposed of. In the case of amendments and supplements to a
      Registration Statement which are required to be filed pursuant to this Agreement
      (including pursuant to this Section 3(b))
      by
      reason of the Company filing a report on Form 10-Q or Form 10Q-SB (as the case
      may be) or Form 10-K or Form 10-KSB (as the case may be) or any analogous report
      under the Securities Exchange Act of 1934, as amended (the “1934
      Act”),
      the
      Company shall have incorporated such report by reference into such Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the 1934 Act report is filed which created the
      requirement for the Company to amend or supplement such Registration
      Statement.

     

    
      
        
        

      

      
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    (c) The
      Company shall (A) permit Legal Counsel and legal counsel for each other Investor
      to review and comment upon (i) a Registration Statement at least five (5)
      Business Days prior to its filing with the SEC and (ii) all amendments and
      supplements to all Registration Statements (except for Annual Reports on Form
      10-K or Form 10-KSB (as the case may be), Quarterly Reports on Form 10-Q or
      Form
      10-QSB (as the case may be), Current Reports on Form 8-K, and any similar or
      successor reports) within a reasonable number of days prior to their filing
      with
      the SEC, and (B) not file any Registration Statement or amendment or supplement
      thereto in a form to which Legal Counsel or any legal counsel for any other
      Investor reasonably objects. The Company shall not submit a request for
      acceleration of the effectiveness of a Registration Statement or any amendment
      or supplement thereto without the prior approval of Legal Counsel, which consent
      shall not be unreasonably withheld. The Company shall furnish to Legal Counsel
      and legal counsel for each other Investor, without charge, (i) copies of any
      correspondence from the SEC or the staff of the SEC to the Company or its
      representatives relating to any Registration Statement, provided
      that
      such correspondence shall not contain any material, non-public information
      regarding the Company or any of its Subsidiaries, (ii) promptly after the
      same is prepared and filed with the SEC, one (1) copy of any Registration
      Statement and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference, if requested by
      an
      Investor, and all exhibits and (iii) upon the effectiveness of any
      Registration Statement, one (1) copy of the prospectus included in such
      Registration Statement and all amendments and supplements thereto. The Company
      shall reasonably cooperate with Legal Counsel and legal counsel for each other
      Investor in performing the Company’s obligations pursuant to this Section
3.

     

    (d) The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) promptly after the same
      is
      prepared and filed with the SEC, at least one (1) copy of any Registration
      Statement and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference, if requested by
      an
      Investor, all exhibits and each preliminary prospectus, (ii) upon the
      effectiveness of any Registration Statement, ten (10) copies of the prospectus
      included in such Registration Statement and all amendments and supplements
      thereto (or such other number of copies as such Investor may reasonably request
      from time to time) and (iii) such other documents, including copies of any
      preliminary or final prospectus, as such Investor may reasonably request from
      time to time in order to facilitate the disposition of the Registrable
      Securities owned by such Investor.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (e) The
      Company shall use its commercially reasonable efforts to (i) register and
      qualify, unless an exemption from registration and qualification applies, the
      resale by Investors of the Registrable Securities covered by a Registration
      Statement under such other securities or “blue sky” laws of all applicable
      jurisdictions in the United States, (ii) prepare and file in those
      jurisdictions, such amendments (including post-effective amendments) and
      supplements to such registrations and qualifications as may be necessary to
      maintain the effectiveness thereof during the Registration Period, (iii) take
      such other actions as may be necessary to maintain such registrations and
      qualifications in effect at all times during the Registration Period, and (iv)
      take all other actions reasonably necessary or advisable to qualify the
      Registrable Securities for sale in such jurisdictions; provided,
      however,
      that
      the Company shall not be required in connection therewith or as a condition
      thereto to (x) qualify to do business in any jurisdiction where it would not
      otherwise be required to qualify but for this Section 3(e),
      (y)
      subject itself to general taxation in any such jurisdiction, or (z) file a
      general consent to service of process in any such jurisdiction. The Company
      shall promptly notify Legal Counsel, legal counsel for each other Investor
      and
      each Investor who holds Registrable Securities of the receipt by the Company
      of
      any notification with respect to the suspension of the registration or
      qualification of any of the Registrable Securities for sale under the securities
      or “blue sky” laws of any jurisdiction in the United States or its receipt of
      actual notice of the initiation or threatening of any proceeding for such
      purpose.

     

    (f) The
      Company shall notify Legal Counsel, legal counsel for each other Investor and
      each Investor in writing of the happening of any event, as promptly as
      practicable after becoming aware of such event, as a result of which the
      prospectus included in a Registration Statement, as then in effect, includes
      an
      untrue statement of a material fact or omission to state a material fact
      required to be stated therein or necessary to make the statements therein,
      in
      the light of the circumstances under which they were made, not misleading
      (provided
      that in
      no event shall such notice contain any material, non-public information
      regarding the Company or any of its Subsidiaries), and, subject to Section
      3(r),
      promptly prepare a supplement or amendment to such Registration Statement to
      correct such untrue statement or omission and deliver ten (10) copies of such
      supplement or amendment to Legal Counsel, legal counsel for each other Investor
      and each Investor (or such other number of copies as Legal Counsel, legal
      counsel for each other Investor or such Investor may reasonably request). The
      Company shall also promptly notify Legal Counsel, and legal counsel for each
      other Investor and each Investor in writing (i) when a prospectus or any
      prospectus supplement or post-effective amendment has been filed, when a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to Legal Counsel, legal
      counsel for each other Investor and each Investor by facsimile or e-mail on
      the
      same day of such effectiveness and by overnight mail), and when the Company
      receives written notice from the SEC that a Registration Statement or any
      post-effective amendment will be reviewed by the SEC, (ii) of any request by
      the
      SEC for amendments or supplements to a Registration Statement or related
      prospectus or related information, and (iii) of the Company’s reasonable
      determination that a post-effective amendment to a Registration Statement would
      be appropriate.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (g) The
      Company shall use its commercially reasonable efforts to prevent the issuance
      of
      any stop order or other suspension of effectiveness of a Registration Statement,
      or the suspension of the qualification of any of the Registrable Securities
      for
      sale in any jurisdiction and, if such an order or suspension is issued, to
      obtain the withdrawal of such order or suspension at the earliest possible
      moment and to notify Legal Counsel, legal counsel for each other Investor and
      each Investor who holds Registrable Securities being sold of the issuance of
      such order and the resolution thereof or its receipt of actual notice of the
      initiation or threat of any proceeding for such purpose.

    


    (h) If
      any
      Investor may be required under applicable securities law to be described in
      the
      Registration Statement as an underwriter and such Investor consents to so being
      named an underwriter, at the request of any Investor, the Company shall furnish
      to such Investor, on the date of the effectiveness of the Registration Statement
      and thereafter from time to time on such dates as an Investor may reasonably
      request (i) a letter, dated such date, from the Company’s independent certified
      public accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      addressed to the Investors, and (ii) an opinion, dated as of such date, of
      counsel representing the Company for purposes of such Registration Statement,
      in
      form, scope and substance as is customarily given in an underwritten public
      offering, addressed to the Investors.

    


    (i) If
      any
      Investor may be required under applicable securities law to be described in
      the
      Registration Statement as an underwriter and such Investor consents to so being
      named an underwriter, upon the written request of such Investor, the Company
      shall make available for inspection by (i) such Investor, (ii) legal counsel
      for
      such Investor and (iii) one (1) firm of accountants or other agents retained
      by
      such Investor (collectively, the “Inspectors”),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      in
      writing to hold in strict confidence and not to make any disclosure (except
      to
      such Investor) or use of any Record or other information which the Company’s
      Board of Directors determines in good faith to be confidential, and of which
      determination the Inspectors are so notified, unless (a) the disclosure of
      such
      Records is necessary to avoid or correct a misstatement or omission in any
      Registration Statement or is otherwise required under the 1933 Act, (b) the
      release of such Records is ordered pursuant to a final, non-appealable subpoena
      or order from a court or government body of competent jurisdiction, or (c)
      the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this Agreement or any other Transaction
      Document. Such Investor agrees that it shall, upon learning that disclosure
      of
      such Records is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to the Company and
      allow
      the Company, at its expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, the Records deemed
      confidential. Nothing herein (or in any other confidentiality agreement between
      the Company and such Investor, if any) shall be deemed to limit any Investor’s
      ability to sell Registrable Securities in a manner which is otherwise consistent
      with applicable laws and regulations.

    


    (j) The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement or is otherwise required
      to be disclosed in the Registration Statement pursuant to the 1933 Act, (iii)
      the release of such information is ordered pursuant to a subpoena or other
      final, non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      Transaction Document. The Company agrees that it shall, upon learning that
      disclosure of such information concerning an Investor is sought in or by a
      court
      or governmental body of competent jurisdiction or through other means, give
      prompt written notice to such Investor and allow such Investor, at the
      Investor’s expense, to undertake appropriate action to prevent disclosure of, or
      to obtain a protective order for, such information.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (k) Without
      limiting any obligation of the Company under the Transaction Agreement, the
      Company shall use its commercially reasonable efforts either to (i) cause all
      of
      the Registrable Securities covered by a Registration Statement to be listed
      on
      each securities exchange on which securities of the same class or series issued
      by the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange, or (ii) secure
      designation and quotation of all of the Registrable Securities covered by a
      Registration Statement on The
      Nasdaq Capital Market
      and the
      Boston Stock Exchange, or (iii) if, despite the Company’s best efforts to
      satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in
      satisfying the preceding clauses (i) or (ii), without limiting the generality
      of
      the foregoing, to use its commercially reasonable efforts to arrange for at
      least two market makers to register with the National Association of Securities
      Dealers, Inc. (“NASD”)
      as
      such with respect to such Registrable Securities. The Company shall pay all
      fees
      and expenses in connection with satisfying its obligation under this Section
      3(k).

    


    (l) The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, facilitate the timely preparation and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts (as the case
      may
      be) as the Investors may reasonably request from time to time and registered
      in
      such names as the Investors may request.

    


    (m) If
      requested by an Investor, the Company shall as soon as practicable after receipt
      of notice from such Investor and subject to Section 3(r)
      hereof,
      (i) incorporate in a prospectus supplement or post-effective amendment such
      information as an Investor reasonably requests to be included therein relating
      to the sale and distribution of Registrable Securities, including, without
      limitation, information with respect to the number of Registrable Securities
      being offered or sold, the purchase price being paid therefor and any other
      terms of the offering of the Registrable Securities to be sold in such offering;
      (ii) make all required filings of such prospectus supplement or post-effective
      amendment after being notified of the matters to be incorporated in such
      prospectus supplement or post-effective amendment; and (iii) supplement or
      make
      amendments to any Registration Statement if reasonably requested by an Investor
      holding any Registrable Securities.

    


    (n) The
      Company shall use its commercially reasonable efforts to cause the Registrable
      Securities covered by a Registration Statement to be registered with or approved
      by such other governmental agencies or authorities as may be necessary to
      consummate the disposition of such Registrable Securities.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (o) The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with, and in the
      manner provided by, the provisions of Rule 158 under the 1933 Act) covering
      a
      twelve-month period beginning not later than the first day of the Company’s
      fiscal quarter next following the effective date of the Registration
      Statement.

    


    (p) The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

    


    (q) Within
      one (1) Business Day after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Investors whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      A.

     

    (r) Notwithstanding
      anything to the contrary herein (but subject to the last sentence of this
      Section 3(r)),
      at any
      time after the Effective Date of the applicable Registration Statement, the
      Company may delay the disclosure of material, non-public information concerning
      the Company or any of its Subsidiaries the disclosure of which at the time
      is
      not, in the good faith opinion of the Board of Directors of the Company, in
      the
      best interest of the Company and, in the opinion of counsel to the Company,
      otherwise required (a “Grace
      Period”);
      provided,
      that
      the Company shall promptly (i) notify the Investors in writing of the existence
      of material, non-public information giving rise to a Grace Period (provided
      that in
      each notice the Company will not disclose the content of such material,
      non-public information to the Investors) and the date on which the Grace Period
      will begin, and (ii) notify the Investors in writing of the date on which
      the Grace Period ends; and, provided
      further,
      that no
      Grace Period shall exceed ten (10) consecutive days and during any three hundred
      sixty five (365) day period such Grace Periods shall not exceed an aggregate
      of
      thirty (30) days and the first day of any Grace Period must be at least five
      (5)
      Trading Days after the last day of any prior Grace Period (each, an
“Allowable
      Grace Period”);
      provided,
      that no
      Allowable Grace Period may exist during the first sixty (60) Business Days
      after
      the Effective Date of the applicable Registration Statement. For purposes of
      determining the length of a Grace Period above, the Grace Period shall begin
      on
      and include the date the Investors receive the notice referred to in clause
      (i)
      and shall end on and include the later of the date the Investors receive the
      notice referred to in clause (ii) and the date referred to in such notice.
      The
      provisions of Section 3(g)
      hereof
      shall not be applicable during the period of any Allowable Grace Period. Upon
      expiration of the Grace Period, the Company shall again be bound by the first
      sentence of Section 3(f)
      with
      respect to the information giving rise thereto unless such material, nonpublic
      information is no longer applicable.

    


    (s) The
      Company shall use its commercially reasonable efforts to maintain eligibility
      for use of Form S-3 (or any successor form thereto) for the registration of
      the
      resale of the Registrable Securities. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              Obligations
                of the Investors.

            


    

    


    (a) At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Company shall notify each Investor in writing of
      the
      information the Company requires from each such Investor. It shall be a
      condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of a particular Investor that such Investor shall furnish to the
      Company such information regarding itself, the Registrable Securities held
      by it
      and the intended method of disposition of the Registrable Securities held by
      it,
      as shall be reasonably required to effect and maintain the effectiveness of
      the
      registration of such Registrable Securities and shall execute such documents
      in
      connection with such registration as the Company may reasonably request.


    


    (b) Each
      Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor’s election to
      exclude all of such Investor’s Registrable Securities from such Registration
      Statement.

     

    (c) Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(g)
      or the
      first sentence of 3(f),
      such
      Investor will immediately discontinue disposition of Registrable Securities
      pursuant to any Registration Statement(s) covering such Registrable Securities
      until such Investor’s receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(g)
      or the
      first sentence of Section 3(f)
      or
      receipt of notice that no supplement or amendment is required.

    


    (d) Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it in connection with sales of
      Registrable
      Securities pursuant to the Registration Statement.

    


    (e) Each
      Investor covenants and agrees to deliver a Registration Statement Questionnaire,
      in the form attached hereto as Exhibit
      C,
      no later than 15 calendar days after the date hereof (such later date, the
      “Outside
      Delivery Date”);
      provided that if such Investor fails to deliver such questionnaire by the close
      of business on the Outside Delivery Date, then such Investor’s Registrable
      Securities may be excluded from the Registration Statement by the
      Company.

     

    
      	
              5.

            	
              Expenses
                of Registration.

            


    

    


    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2
      and
3,
      including, without limitation, all registration, listing and qualifications
      fees, printers and accounting fees, and fees and disbursements of counsel for
      the Company shall be paid by the Company. Each Buyer shall be responsible for
      the fees and disbursements of its own legal counsel in connection with
      registration, filing or qualification pursuant to Sections 2
      and
3
      of this
      Agreement.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Indemnification.

            


    

    


    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    (a) To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Investor, the directors, officers, members,
      partners, employees, agents, representatives of, and each Person, if any, who
      controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
      an “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several, (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading, (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the final prospectus (as amended or supplemented,
      if
      the Company files any amendment thereof or supplement thereto with the SEC)
      or
      the omission or alleged omission to state therein any material fact necessary
      to
      make the statements made therein, in light of the circumstances under which
      the
      statements therein were made, not misleading or (iii) any violation or alleged
      violation by the Company of the 1933 Act, the 1934 Act, any other law,
      including, without limitation, any state securities law, or any rule or
      regulation thereunder relating to the offer or sale of the Registrable
      Securities pursuant to a Registration Statement (the matters in the foregoing
      clauses (i) through (iii) being, collectively, “Violations”).
      Subject to Section 6(b),
      the
      Company shall reimburse the Indemnified Persons, promptly as such expenses
      are
      incurred and are due and payable, for any legal fees or other reasonable
      expenses incurred by them in connection with investigating or defending any
      such
      Claim. Notwithstanding anything to the contrary contained herein, the
      indemnification agreement contained in this Section 6(a):
      (i)
      shall not apply to a Claim by an Indemnified Person arising out of or based
      upon
      a Violation which occurs in reliance upon and in conformity with information
      furnished in writing to the Company by such Indemnified Person for such
      Indemnified Person expressly for use in connection with the preparation of
      such
      Registration Statement or any such amendment thereof or supplement thereto
      and
      (ii) shall not be available to the extent such Claim is based on a failure
      of
      the Investor to deliver or to cause to be delivered the prospectus made
      available by the Company (to the extent applicable), including a corrected
      prospectus, if such prospectus or corrected prospectus was timely made available
      by the Company pursuant to Section 3(d)
      and then
      only if, and to the extent that, following the receipt of the corrected
      prospectus no grounds for such Claim would have existed; and (iii) shall not
      apply to amounts paid in settlement of any Claim if such settlement is effected
      without the prior written consent of the Company, which consent shall not be
      unreasonably withheld or delayed. Such indemnity shall remain in full force
      and
      effect regardless of any investigation made by or on behalf of the Indemnified
      Person and shall survive the transfer of any of the Registrable Securities
      by
      any of the Investors pursuant to Section 9.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (b) In
      connection with any Registration Statement in which an Investor is
      participating, such Investor agrees to severally and not jointly indemnify,
      hold
      harmless and defend, to the same extent and in the same manner as is set forth
      in Section 6(a),
      the
      Company, each of its directors, each of its officers who signs the Registration
      Statement and each Person, if any, who controls the Company within the meaning
      of the 1933 Act or the 1934 Act (each, an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case,
      to the extent, and only to the extent, that such Violation occurs in reliance
      upon and in conformity with written information furnished to the Company by
      such
      Investor expressly for use in connection with such Registration Statement;
      and,
      subject to Section 6(b),
      such
      Investor will reimburse any legal or other expenses reasonably incurred by
      an
      Indemnified Party in connection with investigating or defending any such Claim;
      provided,
      however,
      that
      the indemnity agreement contained in this Section 6(b)
      and the
      agreement with respect to contribution contained in Section 7
      shall
      not apply to amounts paid in settlement of any Claim if such settlement is
      effected without the prior written consent of such Investor, which consent shall
      not be unreasonably withheld or delayed; provided,
      further,
      however,
      that
      such Investor shall be liable under this Section 6(b)
      for only
      that amount of a Claim or Indemnified Damages as does not exceed the net
      proceeds to such Investor as a result of the sale of Registrable Securities
      pursuant to such Registration Statement. Such indemnity shall remain in full
      force and effect regardless of any investigation made by or on behalf of such
      Indemnified Party and shall survive the transfer of any of the Registrable
      Securities by any of the Investors pursuant to Section 9. 

    


    (c) Promptly
      after receipt by an Indemnified Person or Indemnified Party (as the case may
      be)
      under this Section 6
      of
      notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party (as the case may be) shall, if a Claim in respect thereof
      is
      to be made against any indemnifying party under this Section 6,
      deliver
      to the indemnifying party a written notice of the commencement thereof, and
      the
      indemnifying party shall have the right to participate in, and, to the extent
      the indemnifying party so desires, jointly with any other indemnifying party
      similarly noticed, to assume control of the defense thereof with counsel
      mutually satisfactory to the indemnifying party and the Indemnified Person
      or
      the Indemnified Party (as the case may be); provided,
      however,
      that an
      Indemnified Person or Indemnified Party (as the case may be) shall have the
      right to retain its own counsel with the fees and expenses of such counsel
      to be
      paid by the indemnifying party if: (i) the indemnifying party has agreed in
      writing to pay such fees and expenses; (ii) the indemnifying party shall have
      failed promptly to assume the defense of such Claim and to employ counsel
      reasonably satisfactory to such Indemnified Person or Indemnified Party (as
      the
      case may be) in any such Claim; or (iii) the named parties to any such Claim
      (including any impleaded parties) include both such Indemnified Person or
      Indemnified Party (as the case may be) and the indemnifying party, and such
      Indemnified Person or such Indemnified Party (as the case may be) shall have
      been advised by counsel that a conflict of interest is likely to exist if the
      same counsel were to represent such Indemnified Person or such Indemnified
      Party
      and the indemnifying party (in which case, if such Indemnified Person or such
      Indemnified Party (as the case may be) notifies the indemnifying party in
      writing that it elects to employ separate counsel at the expense of the
      indemnifying party, then the indemnifying party shall not have the right to
      assume the defense thereof and such counsel shall be at the expense of the
      Indemnifying Party, provided
      further,
      that in
      the case of clause (iii) above the indemnifying party shall not be responsible
      for the reasonable fees and expenses of more than one (1) separate legal counsel
      for such Indemnified Person or Indemnified Party (as the case may be). The
      Indemnified Party or Indemnified Person (as the case may be) shall reasonably
      cooperate with the indemnifying party in connection with any negotiation or
      defense of any such action or Claim by the indemnifying party and shall furnish
      to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person (as the case may be) which relates
      to
      such action or Claim. The indemnifying party shall keep the Indemnified Party
      or
      Indemnified Person (as the case may be) reasonably apprised at all times as
      to
      the status of the defense or any settlement negotiations with respect thereto.
      No indemnifying party shall be liable for any settlement of any action, claim
      or
      proceeding effected without its prior written consent, provided,
      however,
      that
      the indemnifying party shall not unreasonably withhold, delay or condition
      its
      consent. No indemnifying party shall, without the prior written consent of
      the
      Indemnified Party or Indemnified Person (as the case may be), consent to entry
      of any judgment or enter into any settlement or other compromise which does
      not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such Indemnified Party or Indemnified Person (as the case may be) of a
      release from all liability in respect to such Claim or litigation, and such
      settlement shall not include any admission as to fault on the part of the
      Indemnified Party. Following indemnification as provided for hereunder, the
      indemnifying party shall be subrogated to all rights of the Indemnified Party
      or
      Indemnified Person (as the case may be) with respect to all third parties,
      firms
      or corporations relating to the matter for which indemnification has been made.
      The failure to deliver written notice to the indemnifying party within a
      reasonable time of the commencement of any such action shall not relieve such
      indemnifying party of any liability to the Indemnified Person or Indemnified
      Party (as the case may be) under this Section 6,
      except
      to the extent that the indemnifying party is materially and adversely prejudiced
      in its ability to defend such action.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (d) No
      Person
      involved in the sale of Registrable Securities who is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
      connection with such sale shall be entitled to indemnification from any Person
      involved in such sale of Registrable Securities who is not guilty of fraudulent
      misrepresentation.

    


    (e) The
      indemnification required by this Section 6
      shall be
      made by periodic payments of the amount thereof during the course of the
      investigation or defense, as and when bills are received or Indemnified Damages
      are incurred.

    


    (f) The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.

     

    
      	
              7.

            	
              Contribution.

            


    

    


    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6
      to the
      fullest extent permitted by law; provided,
      however,
      that:
      (i) no contribution shall be made under circumstances where the maker would
      not
      have been liable for indemnification under the fault standards set forth in
      Section 6
      of this
      Agreement, (ii) no Person involved in the sale of Registrable Securities which
      Person is guilty of fraudulent misrepresentation (within the meaning of Section
      11(f) of the 1933 Act) in connection with such sale shall be entitled to
      contribution from any Person involved in such sale of Registrable Securities
      who
      was not guilty of fraudulent misrepresentation; and (iii) contribution by any
      seller of Registrable Securities shall be limited in amount to the net amount
      of
      proceeds received by such seller from the sale of such Registrable Securities
      pursuant to such Registration Statement. Notwithstanding the provisions of
      this
      Section 7, no Investor shall be required to contribute, in the aggregate, any
      amount in excess of the amount by which the net proceeds actually received
      by
      such Investor from the sale of the Registrable Securities subject to the Claim
      exceeds the amount of any damages that such Investor has otherwise been required
      to pay, or would otherwise be required to pay under Section 6(b), by reason
      of
      such untrue or alleged untrue statement or omission or alleged
      omission.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              Reports
                Under the 1934 Act.

            


    

     

    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the 1933 Act or any other similar rule or regulation of the SEC that
      may
      at any time permit the Investors to sell securities of the Company to the public
      without registration (“Rule
      144”),
      the
      Company agrees to:

    


    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144; 

    


    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements (it being understood that nothing herein shall
      limit the Company’s obligations under Section 4(c) of the Transaction Agreement)
      and the filing of such reports and other documents is required for the
      applicable provisions of Rule 144; and

    


    (c) furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company, if true, that it has
      complied with the reporting requirements of Rule 144 and the 1934 Act, (ii)
      a
      copy of the most recent annual or quarterly report of the Company and such
      other
      reports and documents so filed by the Company with the SEC if such reports
      are
      not publicly available via EDGAR, and (iii) such other information as may be
      reasonably requested to permit the Investors to sell such securities pursuant
      to
      Rule 144 without registration.

     

    
      	
              9.

            	
              Assignment
                of Registration Rights.

            


    

     

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of such Investor’s Registrable
      Securities if: (i) the Investor agrees in writing with the transferee or
      assignee to assign such rights, and a copy of such agreement is furnished to
      the
      Company within a reasonable time after such assignment; (ii) the Company is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned; (iii) immediately following such transfer or assignment
      the further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act or applicable state securities laws if so
      required; (iv) at or before the time the Company receives the written notice
      contemplated by clause (ii) of this sentence the transferee or assignee agrees
      in writing with the Company to be bound by all of the provisions contained
      herein; (v) such transfer shall have been made in accordance with the applicable
      requirements of the Transaction Agreement; and (vi) such transfer shall have
      been conducted in accordance with all applicable federal and state securities
      laws.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              Amendment
                of Registration Rights.

            


    

    


    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the Required
      Holders, provided
      that any
      Investor may give a waiver in writing as to itself. Any amendment or waiver
      effected in accordance with this Section 10
      shall be
      binding upon each Investor and the Company. No such amendment or waiver (unless
      given pursuant to the foregoing proviso) shall be effective to the extent that
      it applies to less than all of the holders of the Registrable Securities. No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

    


    
      	
              11.

            	
              Miscellaneous.

            


    

    


    (a) Solely
      for purposes of this Agreement, a Person is deemed to be a holder of Registrable
      Securities whenever such Person owns or is deemed to own of record such
      Registrable Securities. If the Company receives conflicting instructions,
      notices or elections from two or more Persons with respect to the same
      Registrable Securities, the Company shall act upon the basis of instructions,
      notice or election received from such record owner of such Registrable
      Securities.

    


    (b) Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      (iii) with respect to Section 3(c),
      by
      electronic mail (provided confirmation of transmission is electronically
      generated and kept on file by the sending party); or (iv) one (1) Business
      Day
      after deposit with a nationally recognized overnight delivery service with
      next
      day delivery specified, in each case, properly addressed to the party to receive
      the same. The addresses and facsimile numbers for such communications shall
      be:

     

    
      
        	
                If
                  to the Company:

              
	 
	
                Workstream
                  Inc.

              
	
                495
                  March Road

              
	
                Suite
                  300

              
	
                Ottawa,
                  Ontario, Canada K2K - 3G1

              
	
                Telephone:

              	
                (613)
                  270-0619

              
	
                Facsimile:

              	
                (613)
                  236-9819

              
	
                Attention:

              	
                CEO

              
	 	 


      

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      
        	
                With
                  a copy (for informational purposes only) to:

              
	 
	
                Cozen
                  O’Connor

              
	
                1900
                  Market Street

              
	
                Philadelphia,
                  Pennsylvania 19103

              
	
                Telephone:

              	
                (215)
                  665-4141

              
	
                Facsimile:

              	
                (215)
                  665-2013

              
	
                Attention:

              	
                Michael
                  J. Heller, Esq.

              
	 
	 
	
                If
                  to the Transfer Agent:

              
	 
	
                American
                  Stock Transfer and Trust Company

              
	
                59
                  Maiden Lane

              
	
                New
                  York, NY 10038

              
	
                Telephone:

              	
                (718) 921-8124

              
	
                Facsimile:

              	
                (718) 921-8327

              
	
                Attention:

              	
                Joseph
                  Comito

              
	 
	
                If
                  to Legal Counsel:

              
	 
	
                Greenberg
                  Traurig, LLP

              
	
                77
                  W. Wacker Drive, Suite 2400

              
	
                Chicago,
                  Illinois 60602

              
	
                Telephone:

              	
                (312)
                  456-8400

              
	
                Facsimile:

              	
                (312)
                  456-8435

              
	
                Attention:

              	
                Peter
                  H. Lieberman, Esq.

              
	 	
                Todd
                  A. Mazur, Esq.

              


      

    

    


    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of Buyers
      attached to the Transaction Agreement, with copies to such Buyer’s
      representatives as set forth on the Schedule of Buyers, or to such other address
      and/or facsimile number and/or to the attention of such other Person as the
      recipient party has specified by written notice given to each other party five
      (5) days prior to the effectiveness of such change; provided
      that
      Greenberg Traurig, LLP shall only be provided notices sent to Magnetar Capital
      Master Fund, Ltd. Written confirmation of receipt (A) given by the recipient
      of
      such notice, consent, waiver or other communication, (B) mechanically or
      electronically generated by the sender’s facsimile machine or electronic mail
      transmission containing the time, date, recipient facsimile number or electronic
      mail address and an image of the first page of such transmission or (C) provided
      by a courier or overnight courier service shall be rebuttable evidence of
      personal service, receipt by facsimile or receipt from a nationally recognized
      overnight delivery service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (c) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    


    (d) The
      parties hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5
      they have chosen that all questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be governed by the
      internal laws of the State of Illinois, without giving effect to any choice
      of
      law or conflict of law provision or rule (whether of the State of Illinois
      or
      any other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of Illinois. Each party hereby irrevocably
      submits to the exclusive jurisdiction of the state and federal courts sitting
      in
      The City of Chicago, Cook County, 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
      suit, action or proceeding, any claim that it is not personally subject to
      the
      jurisdiction of any such court, that such suit, action or proceeding is brought
      in an inconvenient forum or that the venue of such suit, action or proceeding
      is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such 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.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
      AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
      TRANSACTION CONTEMPLATED HEREBY.

    


    (e) This
      Agreement, the other Transaction Documents (as defined in the Transaction
      Agreement), the schedules and exhibits attached hereto and thereto and the
      instruments referenced herein and therein constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and thereof. There
      are no restrictions, promises, warranties or undertakings, other than those
      set
      forth or referred to herein and therein. This Agreement, the other Transaction
      Documents, the schedules and exhibits attached hereto and thereto and the
      instruments referenced herein and therein supersede all prior agreements and
      understandings among the parties hereto with respect to the subject matter
      hereof and thereof.

    


    (f) Subject
      to the requirements of Section 9,
      this
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

    


    (g) The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof. Unless the context clearly
      indicates otherwise, each pronoun herein shall be deemed to include the
      masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,”
      “includes,”
      “include”
and
      words of like import shall be construed broadly as if followed by the words
      “without limitation.” The terms “herein,”
      “hereunder,”
      “hereof”
and
      words of like import refer to this entire Agreement instead of just the
      provision in which they are found.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (h) This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event that any signature is delivered by facsimile transmission or by an
      e-mail which contains an electronic file of an executed signature page, such
      signature page shall create a valid and binding obligation of the party
      executing (or on whose behalf such signature is executed) with the same force
      and effect as if such facsimile or electronic file signature page (as the case
      may be) were an original thereof.

    


    (i) Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    


    (j) All
      consents and other determinations required to be made by the Investors pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders.

    


    (k) The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party. 

    


    (l) This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, other than the Persons
      referred to in Section 6
      and
7
      hereof.

    


    (m) The
      obligations of each Investor under this Agreement and the other Transaction
      Documents are several and not joint with the obligations of any other Investor,
      and no Investor shall be responsible in any way for the performance of the
      obligations of any other Investor under this Agreement or any other Transaction
      Document. Nothing contained herein or in any other Transaction Document, and
      no
      action taken by any Investor pursuant hereto or thereto, shall be deemed to
      constitute the Investors as a partnership, an association, a joint venture
      or
      any other kind of group or entity, or create a presumption that the Investors
      are in any way acting in concert or as a group or entity with respect to such
      obligations or the transactions contemplated by the Transaction Documents or
      any
      matters, and the Company acknowledges that the Investors are not acting in
      concert or as a group with respect to such obligations or the transactions
      contemplated by this Agreement or any of the other the Transaction Documents.
      Each Investor shall be entitled to independently protect and enforce its rights,
      including, without limitation, the rights arising out of this Agreement or
      out
      of any other Transaction Documents, and it shall not be necessary for any other
      Investor to be joined as an additional party in any proceeding for such purpose.
      The use of a single agreement with respect to the obligations of the Company
      contained was solely in the control of the Company, not the action or decision
      of any Investor, and was done solely for the convenience of the Company and
      not
      because it was required or requested to do so by any Investor. It is expressly
      understood and agreed that each provision contained in this Agreement and in
      each other Transaction Document is between the Company and an Investor, solely,
      and not between the Company and the Investors collectively and not between
      and
      among Investors.

     

    [signature
      pages follow]

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	WORKSTREAM
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              __________________
	 	
              Title:
                __________________

            


    

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	
              BUYERS:

            
	 	 
	 	MAGNETAR CAPITAL MASTER FUND,
              LTD
	 
 	 
 	 
 
	 	By:  	Magnetar
              Financial LLC 
	 	Its:	Investment Manager
	 	 	 
	 	 	 
	 	By:	Doug Litowitz
	 	Its:	Counsel


    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

    
       

      
        	 	 	 
	 	
                
                  [OTHER
                    BUYERS]

                

              
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Name:
                __________________
	 	
                Title:
                  __________________

              


      

       

      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

    

    


    SCHEDULE
      OF BUYERS

    


    

      
        	
                Buyer

              	
                Buyer
                  Address

                and
                  Facsimile Number

              	
                Buyer’s
                  Representative’s Address 

                and
                  Facsimile Number

              
	
                Magnetar
                  Capital Master Fund, Ltd

              	
                1603
                  Orrington Avenue

              	
                Greenberg
                  Traurig, LLP

              
	 	
                Evanston,
                  IL 60201

              	
                77
                  W. Wacker Drive, Suite 2400

              
	 	
                Attn:
                  

              	
                Michael
                  Balkin

              	
                Chicago,
                  Illinois 60601

              
	 	
                Facsimile:
                  

              	
                (847)
                  905-5603

              	
                Attention:

              	
                Peter
                  H. Lieberman

              
	 	
                Telephone:
                  

              	
                (847)
                  905-4832

              	
                 

              	
                Todd
                  A. Mazur

              
	 	 	 	
                Facsimile:

              	
                (312)
                  456-8435

              
	 	 	 	
                Telephone:

              	
                (312)
                  456-8400

              
	 	 	 	 	
                 

              
	
                [OTHER
                  BUYERS]

              	 	 	 	 


      

    

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      A

    


    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

    

      
        	 	 
	 	 
	 	 
	
                Attention:
                  

              	 


      

    

     

    Re: Workstream
      Inc.

    


    Ladies
      and Gentlemen:

     

    [We
      are][I am] counsel to Workstream Inc., a corporation existing pursuant to the
      Canada Business Corporations Act (the “Company”),
      and
      have represented the Company and its subsidiaries in connection with that
      certain Transaction Agreement (the “Transaction
      Agreement”)
      entered into by and among the Company and the buyers named therein
      (collectively, the “Holders”)
      pursuant to which the Company issued to the Holders special warrants (the
“Special
      Warrants”)
      convertible into the Company’s common shares, no par value
      (the “Common
      Shares”),
      and
      warrants exercisable for Common Shares (the “Warrants”).
      Pursuant to the Transaction Agreement, the Company also has entered into a
      Registration Rights Agreement with the Holders (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement),
      including the Common Shares issuable upon conversion of the Special Warrants
      and
      exercise of the Warrants, under the Securities Act of 1933, as amended (the
      “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
      on Form S-3 (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names each of the Holders as a
      selling shareholder thereunder.

    


    In
      connection with the foregoing, [we][I] advise you that a member of the SEC’s
      staff has advised [us][me] by telephone that the SEC has entered an order
      declaring the Registration Statement effective under the 1933 Act at
[ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and
      [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
      staff, that any stop order suspending its effectiveness has been issued or
      that
      any proceedings for that purpose are pending before, or threatened by, the
      SEC
      and the Registrable Securities are available for resale under the 1933 Act
      pursuant to the Registration Statement.

    


    This
      letter shall serve as our standing opinion to you that the Common Shares
      underlying the Special Warrants and Warrants are freely transferable by the
      Holders pursuant to the Registration Statement, subject to the prospectus
      delivery requirements of the 1933 Act, which the selling
      stockholders
      have agreed to comply with to the extent applicable and which we have assumed
      compliance with in issuing this letter. You need not require further letters
      from us to effect any future legend-free issuance or reissuance of such Common
      Shares to the Holders as contemplated by the Company’s Irrevocable Transfer
      Agent Instructions dated _________ __, 200_. 

    


    Very
      truly yours,

    


    [ISSUER’S
      COUNSEL]

    


    By:_____________________

    CC: [LIST
      NAMES OF HOLDERS]

    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    


    SELLING
      SHAREHOLDERS

    


    The
      common shares being offered by the selling shareholders are those issuable
      to
      the selling shareholders upon conversion of the special warrants and exercise
      of
      the warrants. For additional information regarding the issuance of the special
      warrants and the warrants, see “Private Placement of Special Warrants and
      Warrants” above. We are registering the common shares in order to permit the
      selling shareholders to offer the shares for resale from time to time. Except
      for the ownership of the special warrants and the warrants issued pursuant
      to
      the Transaction Agreement, the selling shareholders have not had any material
      relationship with us within the past three years.

    


    The
      table
      below lists the selling shareholders and other information regarding the
      beneficial ownership of the common shares by each of the selling shareholders.
      The second column lists the number of common shares beneficially owned by each
      selling shareholder, based on its ownership of common shares, the special
      warrants and the warrants, as of ________, 2007, assuming conversion of the
      special warrants and exercise of the warrants held by the selling shareholders
      on that date, taking account of any limitations on conversion or
      exercise.

    


    The
      third
      column lists the common shares being offered by this prospectus by the selling
      shareholders.

    


    In
      accordance with the terms of a registration rights agreement with the holders
      of
      the special warrants and the warrants, this prospectus generally covers the
      resale of the sum of (i) the number of common shares issuable upon conversion
      of
      the related special warrants and (ii) the number of common shares issuable
      upon
      exercise of the related warrants, determined as if the outstanding special
      warrants and warrants were converted or exercised, as applicable, in full
      (without regard to any limitations on conversion or exercise contained therein),
      in each case, as of the trading day immediately preceding the date this
      registration statement was initially filed with the SEC. Because the conversion
      price of the special warrants and the exercise price of the warrants may be
      adjusted, the number of shares that will actually be issued may be more or
      less
      than the number of shares being offered by this prospectus. The fourth column
      assumes the sale of all of the shares offered by the selling shareholders
      pursuant to this prospectus.

    


    Under
      the
      terms of the special warrants and the warrants, a selling shareholder may not
      convert the special warrants or exercise the warrants, to the extent such
      conversion or exercise would cause such selling shareholder, together with
      its
      affiliates, to beneficially own a number of common shares which would exceed
      4.99% or 9.99% (as applicable) of our then outstanding common shares following
      such conversion or exercise, as applicable, excluding for purposes of such
      determination common shares issuable upon conversion of the special warrants
      and/or exercise of the warrants which have not been converted or exercised.
      The
      number of shares in the second column reflects these limitations. The selling
      shareholders may sell all, some or none of their shares in this offering. See
      “Plan of Distribution.”

    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    
      	
              Name
                of Selling Shareholder

            	
              Number
                of Common 
Shares of Owned 
Prior to
                Offering

            	
              Maximum
                Number of 
Common Shares to be Sold 
Pursuant to this
                Prospectus

            	
              Number
                of Common 
Shares of Owned 
After
                Offering

            
	 	 	 	 
	
              Magnetar
                Capital Master Fund, Ltd. (1)

            	 	 	
              0

            
	 	 	 	 
	
              [Other
                Buyers]

            	 	 	 


    

    


    (1)
      Magnetar Financial LLC is the investment advisor of Magnetar Capital Master
      Fund, Ltd. (“Magnetar Master Fund”) and consequently has voting control and
      investment discretion over securities held by Magnetar Master Fund. Alec
      Litowitz has voting control over Supernova Management LLC, the general partner
      of Magnetar Capital Partners LP, the sole managing member of Magnetar Financial
      LLC. As a result, Mr. Litowitz may be deemed to have beneficial ownership (as
      determined under Section 13(d) of the Securities Exchange Act of 1934, as
      amended) of any shares deemed to be beneficially owned by Magnetar Financial
      LLC.

    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    PLAN
      OF DISTRIBUTION

    


    We
      are
      registering the common shares issuable upon conversion of the special warrants
      and exercise of the warrants to permit the resale of these common shares by
      the
      holders of the special warrants and warrants from time to time after the date
      of
      this prospectus. We will not receive any of the proceeds from the sale by the
      selling shareholders of the common shares. We will bear all fees and expenses
      incident to our obligation to register the common shares.

    


    The
      selling shareholders may sell all or a portion of the common shares beneficially
      owned by them and offered hereby from time to time directly or through one
      or
      more underwriters, broker-dealers or agents. If the common shares are sold
      through underwriters or broker-dealers, the selling shareholders will be
      responsible for underwriting discounts or commissions or agent’s commissions.
      The common shares may be sold in one or more transactions at fixed prices,
      at
      prevailing market prices at the time of the sale, at varying prices determined
      at the time of sale, or at negotiated prices. These sales may be effected in
      transactions, which may involve crosses or block transactions, 

    


    · on
      any
      national securities exchange or quotation service on which the securities may
      be
      listed or quoted at the time of sale;

    


    · in
      the
      over-the-counter market;

    


    · in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

    


    · through
      the writing of options, whether such options are listed on an options exchange
      or otherwise;

    


    · ordinary
      brokerage transactions and transactions in which the broker-dealer solicits
      purchasers;

    


    · block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but
      may position and resell a portion of the block as principal to facilitate the
      transaction;

    


    · purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

    


    · an
      exchange distribution in accordance with the rules of the applicable
      exchange;

    


    · privately
      negotiated transactions;

    


    · short
      sales made after the date the Registration Statement is declared effective
      by
      the SEC, subject to any applicable limitations on short sales contained in
      any
      agreement between a selling shareholder and the Company;

    


    · sales
      pursuant to Rule 144;

    


    · broker-dealers
      may agree with the selling securityholders to sell a specified number of such
      shares at a stipulated price per share;

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    · a
      combination of any such methods of sale; and

    


    · any
      other method permitted pursuant to applicable law.

    


    If
      the
      selling shareholders effect such transactions by selling common shares to or
      through underwriters, broker-dealers or agents, such underwriters,
      broker-dealers or agents may receive commissions in the form of discounts,
      concessions or commissions from the selling shareholders or commissions from
      purchasers of the common shares for whom they may act as agent or to whom they
      may sell as principal (which discounts, concessions or commissions as to
      particular underwriters, broker-dealers or agents may be in excess of those
      customary in the types of transactions involved). In connection with sales
      of
      the common shares or otherwise, the selling shareholders may enter into hedging
      transactions with broker-dealers, which may in turn engage in short sales of
      the
      common shares in the course of hedging in positions they assume. The selling
      shareholders may also sell common shares short and deliver common shares covered
      by this prospectus to close out short positions and to return borrowed shares
      in
      connection with such short sales. The selling shareholders may also loan or
      pledge common shares to broker-dealers that in turn may sell such
      shares.

    


    The
      selling shareholders may pledge or grant a security interest in some or all
      of
      the special warrants, warrants or common shares owned by them and, if they
      default in the performance of their secured obligations, the pledgees or secured
      parties may offer and sell the common shares from time to time pursuant to
      this
      prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
      applicable provision of the Securities Act of 1933, as amended, amending, if
      necessary, the list of selling shareholders to include the pledgee, transferee
      or other successors in interest as selling shareholders under this prospectus.
      The selling shareholders also may transfer and donate the common shares in
      other
      circumstances in which case the transferees, donees, pledgees or other
      successors in interest will be the selling beneficial owners for purposes of
      this prospectus.

    


    The
      selling shareholders and any broker-dealer participating in the distribution
      of
      the common shares may be deemed to be “underwriters” within the meaning of the
      Securities Act, and any commission paid, or any discounts or concessions allowed
      to, any such broker-dealer may be deemed to be underwriting commissions or
      discounts under the Securities Act. At the time a particular offering of the
      common shares is made, a prospectus supplement, if required, will be distributed
      which will set forth the aggregate amount of common shares being offered and
      the
      terms of the offering, including the name or names of any broker-dealers or
      agents, any discounts, commissions and other terms constituting compensation
      from the selling shareholders and any discounts, commissions or concessions
      allowed or reallowed or paid to broker-dealers.

    


    Under
      the
      securities laws of some states, the common shares may be sold in such states
      only through registered or licensed brokers or dealers. In addition, in some
      states the common shares may not be sold unless such shares have been registered
      or qualified for sale in such state or an exemption from registration or
      qualification is available and is complied with.

    


    There
      can
      be no assurance that any selling shareholder will sell any or all of the common
      shares registered pursuant to the shelf registration statement, of which this
      prospectus forms a part.

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    The
      selling shareholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, to the extent applicable, Regulation M of the Exchange Act, which
      may limit the timing of purchases and sales of any of the common shares by
      the
      selling shareholders and any other participating person. To the extent
      applicable, Regulation M may also restrict the ability of any person engaged
      in
      the distribution of the common shares to engage in market-making activities
      with
      respect to the common shares. All of the foregoing may affect the marketability
      of the common shares and the ability of any person or entity to engage in
      market-making activities with respect to the common shares.

    


    We
      will
      pay all expenses of the registration of the common shares pursuant to the
      registration rights agreement, estimated to be $[     ]
      in total, including, without limitation, Securities and Exchange Commission
      filing fees and expenses of compliance with state securities or “blue sky” laws;
provided,
      however,
      that a
      selling shareholder will pay all underwriting discounts and selling commissions,
      if any. We will indemnify the selling shareholders against liabilities,
      including some liabilities under the Securities Act, in accordance with the
      registration rights agreements, or the selling shareholders will be entitled
      to
      contribution. We may be indemnified by the selling shareholders against civil
      liabilities, including liabilities under the Securities Act, that may arise
      from
      any written information furnished to us by the selling shareholder specifically
      for use in this prospectus, in accordance with the related registration rights
      agreements, or we may be entitled to contribution.

     

    Once
      sold
      under the shelf registration statement, of which this prospectus forms a part,
      the common shares will be freely tradable in the hands of persons other than
      our
      affiliates.

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      C

    


    WORKSTREAM
      INC.

    (the
      “Company”)

    


    QUESTIONNAIRE
      TO THE SELLING SHAREHOLDERS

    
 

    This
      Questionnaire is to be completed, signed and faxed to Scott Brucker, Esquire
      at
      (215) 701-2410 by no later than five (5) Business Days after receipt, by the
      person or entity indicated on the cover of this Questionnaire (the “Selling
      Shareholder”) whose common shares of the Company are being registered pursuant
      to a Registration Statement on Form S-3. Retain a duplicate copy for your files.
      If you do not return the Questionnaire by the foregoing deadline, your shares
      may not be included in the Registration Statement.

    


    If
      you
      are uncertain about any of the following questions as they apply to your
      situation, please supply all relevant facts. Include separate sheets with
      details if necessary. If you have any questions, please call Workstream’s
      counsel, Scott Brucker, Esquire, at (215) 665-3710.

    


    Please
      notify me immediately if any of the information disclosed in your answers
      changes. Please answer all questions. Indicate “none” or “not applicable” when
      appropriate. Information should be given as of the date of this Questionnaire,
      even if previously reported to the Company.

    


    IN
      ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT THE BEGINNING
      OF
      THIS QUESTIONNAIRE.

    


     

    Name
      of
      Selling Shareholder: _________________________________

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    
Instructions
      and Definitions

    


    The
      following instructions and definitions are furnished to aid you in preparing
      your answers to this Questionnaire.

    


    
      	 	
              1.

            	
              For
                purposes of this Questionnaire the term “Company” means Workstream
                Inc.

            


    

    


    
      	 	
              2.

            	
              “Beneficial”
                ownership.
                Beneficial ownership shall have the meaning ascribed to it in Section
                13(d) of the Securities Exchange Act of 1934, as amended. The SEC
                has
                taken the position that if you have sole or shared voting power or
                dispositive power or the ability to acquire either sole or shared
                voting
                or dispositive power of a security within 60 days, you are the beneficial
                owner of that security, even though that security is not registered
                in
                your name. Thus, for example, you could be the beneficial owner of
                securities in a trust or estate of which you are a trustee or executor,
                or
                of which you are one of the trustees or executors, or you could be
                the
                beneficial owner of securities which you have a right to
                purchase.

            


    

    


    
      	 	
              3.

            	
              The
                term “affiliate” for purposes of this Questionnaire means any person
                directly or indirectly controlling, controlled by, or under common
                control
                with the Selling Shareholder.

            


    

    


    
      	 	
              4.

            	
              An
                example response has been provided to assist you in preparing your
                response.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1. Broker-Dealer
      Status.
      

    


    (a) Are
      you,
      or are you an affiliate of, a broker-dealer registered under the Securities
      Exchange Act of 1934?

     

    
      
        	
                Yes
                  

              	 	
                ____

              	
                No
                  

              	 	
                ____

              


      

    

    


    If
“yes,”
      please give details below.

     

    (b) Please
      confirm the following statement: The Company’s equity securities that are being
      issued to you were acquired in the ordinary course of your business, and at
      the
      time the securities were issued to you, you did not have any agreement or
      understanding, directly or indirectly, with any person to distribute the
      securities.

    
      
         

        
          
            	
                    Confirmed

                  	 	
                    ____

                  	
                    Cannot
                      Confirm

                  	 	
                    ____

                  


          

        

         

      

    

    If
      “cannot confirm,” please give details below.

     

    2.
       Relationships
      with the Company.

    


    (a) Have
      you
      held any position or office with the Company, its predecessors or affiliates
      within the last three years? 

    
       

      
        
          	
                  Yes
                    

                	 	
                  ____

                	
                  No
                    

                	 	
                  ____

                


        

      

       

    

    If
“yes,”
      please give details below.

     

    (b)
       Have
      you
      had any other material relationship with the Company, its predecessors or
      affiliates within the last three years?

    
       

      
        
          	
                  Yes
                    

                	 	
                  ____

                	
                  No
                    

                	 	
                  ____

                


        

      

    

    


    If
“yes,”
      please give details below.

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    3. Equity
      Securities Beneficially Owned By You.

    


    (a) Please
      state the number and type of equity securities of the Company beneficially
      owned
      (please see instructions and definitions on page 2) by you as of the date
      of this Questionnaire, including securities which are exercisable or convertible
      into equity securities within 60 days of the date of this
      Questionnaire.

     

    
      
        
          	
                  Class

                  of
                    Security

                	 	
                  Number
                    of Shares

                  Beneficially
                    Owned  

                
	
                   

                	 	
                   

                
	 	 	 
	
                   

                	 	
                   

                


        

      

       

    

    (b) If
      any
      natural person or entity other than you holds or shares voting power or
      dispositive power with respect to the Company’s equity securities listed in
      response to Question 3(a), please provide the names of the natural persons
      (including titles) or entities that hold or share such voting power or
      dispositive power and indicate the number of the Company’s equity securities
      covered thereby.

     

    (c) With
      respect to the Company’s equity securities listed in response to
      Questions 3(a) and 3(b) for which an entity holds or shares voting power or
      dispositive power, please provide the names of the natural persons (including
      titles) or entities that control the entity or entities listed in response
      to
      Questions 3(a) and 3(b).

     

    (d) Please
      continue to list the natural persons or entities that control the entities
      listed in response to Question 3(c) and the entities listed in response to
      this Question 3(d) until you have listed only natural persons (including
      titles) that control the applicable entity or entities.

     

    (e) If
      any
      person or entity disclaims beneficial ownership of any of the equity securities
      you have listed in response to Question 3, please so indicate:

    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    EXAMPLE
      RESPONSE

    


    The
      following is an example of a response to items 1 through 3. Please assume ABC
      Corporation is the Selling Shareholder for purposes of this
      example.

    


    1. Broker-Dealer
      Status.

     

    ABC
      Corporation is an affiliate of a broker-dealer because its sole shareholder,
      DEF
      Corporation, is a broker-dealer.

     

    2.
       Relationships
      with the Company.

    


    (a) ABC
      Corporation has not held any position or office with the Company, its
      predecessors or affiliates within the last three years. 

    


    (b)
       ABC
      Corporation provided consulting services to the Company in March 2002.


     

    3.  Equity
      Securities Beneficially Owned By You.
      

    


    Question
      3(a).

     

    
      
        	
                Class

                of
                  Security

              	 	
                Number
                  of Shares

                Owned
                  Beneficially  

              
	
                Common
                  Shares

              	 	
                100,000

              
	 	 	 
	
                Warrants
                  to purchase Common Shares

              	 	
                200,000

              


      

    

     

    Question
      3(b).

    


    Not
      applicable

    


    Question
      3(c).

    


    ABC
      Corporation is controlled by DEF Corporation, ABC Corporation’s sole
      shareholder.

    


    Question
      3(d).

    


    DEF
      Corporation is controlled by XYZ Corporation, DEF Corporation’s sole
      shareholder. XYZ Corporation is controlled by John Doe, XYZ Corporation’s sole
      shareholder and its President and Chief Executive Officer.

    


    Question
      3(e).

    


    John
      Doe
      disclaims beneficial ownership of the 100,000 Common Shares and the Warrants
      to
      purchase 200,000 Common Shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    The
      undersigned hereby acknowledges that the information contained herein is true
      to
      the best of his knowledge and will notify the Company immediately of any changes
      in such information.

    

      
        	
                DATED:
                  __________, 2007

              	
                FOR
                  INDIVIDUALS:

              	 
	 	 	 
	 	 	 
	 	 	 
	 	
                Name
                  of Selling Shareholder [please print]

              	 
	 	 	 
	 	 	 
	 	
                Signature

              	 
	 	 	 
	 	 	 
	 	
                FOR
                  CORPORATIONS, PARTNERSHIPS OR TRUSTS:

              	 
	 	 	 
	 	 	 
	 	 	 
	 	
                Name
                  of Selling Shareholder [please print]

              	 
	 	 	 
	 	 	 
	 	
                By:
                  

              	 	 
	 	 	
                Signature

              	 
	 	 	 	 
	 	 	 	 	 
	 	 	
                Name:

              	 	 
	 	 	 	
                [please
                  print]

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                Title:

              	 	 
	 	 	 	
                [please
                  print]