EXHIBIT 4.1

                      NOTE AND WARRANT AMENDMENT AGREEMENT


      This Note and Warrant Amendment  Agreement (this  "AGREEMENT") is made and
entered into as of January 12, 2004,  by and among  Workstream  Inc., a Canadian
corporation (the "COMPANY"),  Sands Brothers Venture Capital III LLC ("FUND I"),
Sands Brothers  Venture Capital IV LLC ("FUND II") and Sands Brothers & Co., LTD
("LTD").

                                    RECITALS:

      WHEREAS,  on April 18,  2002,  the  Company  sold to Fund I and Fund II 8%
Senior  Subordinated  Convertible  Notes dated  April 18, 2002 in the  principal
amounts of One Million Dollars  ($1,000,000),  and Five Hundred Thousand Dollars
($500,000), respectively, (hereinafter referred to as the "FUND I NOTE," and the
"FUND II NOTE," respectively, and collectively, as the "CONVERTIBLE NOTES");

      WHEREAS, in connection with the sale of the Convertible Notes, the Company
issued to each of Fund I and Fund II Common Stock Purchase  Warrants dated April
18,  2002  (hereinafter  referred  to as the "FUND I  WARRANT"  and the "FUND II
WARRANT");

      WHEREAS, in connection with the sale of the Convertible Notes, the Company
also  issued to LTD a Common  Stock  Purchase  Warrant  dated  April 18, 2002 to
purchase Fifty Thousand  (50,000) shares of the Company's Common Stock (the "LTD
I WARRANT") and a Common Stock  Purchase  Warrant dated May 14, 2002 to purchase
Twenty-Eight Thousand (28,000) shares of the Company's Common Stock (hereinafter
referred to as the "LTD II WARRANT,"  and together  with the LTD I Warrant,  the
Fund I Warrant and the Fund II Warrant, as the "WARRANTS"); and

      WHEREAS,  the parties hereto desire to amend (a) the Convertible  Notes to
provide for the automatic  conversion of the outstanding  amounts owed under the
Convertible Notes into shares of the Company's Common Stock (the "COMMON STOCK")
at a conversion  price of $1.50 per share and (b) the Warrants to adjust (i) the
number of shares of Common Stock issuable upon exercise of the Warrants and (ii)
the exercise price to $2.00 per share of Common Stock.

      NOW,  THEREFORE,  in  consideration  of the foregoing  premises and of the
mutual  agreements  and  covenants  set forth  herein,  and for  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

      1.  Amendments to Convertible  Notes.  Each of the  Convertible  Notes are
hereby amended as follows:

            (a) New Section 2.4. A new section is hereby added as follows to the
Convertible Notes:

                  "2.4. Automatic Conversion.


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                        (a)  Notwithstanding  anything  contained  herein to the
contrary,  on January 12, 2004 (the  "AUTOMATIC  CONVERSION  DATE"),  the entire
outstanding  principal of and accrued  interest on this Note as of the Automatic
Conversion Date shall automatically convert,  without any action by or on behalf
of the  Company  or the  Holder,  into that  number  of  shares of Common  Stock
determined by dividing the entire outstanding  principal of and accrued interest
on this Note as of the Automatic  Conversion  Date by $1.50 (the "NEW CONVERSION
PRICE").  No fractional  shares of Common Stock shall be issued upon conversion.
In lieu of any  fractional  shares of Common  Stock to which  the  Holder  would
otherwise be entitled,  Company  shall pay the Holder cash in an amount equal to
such fraction multiplied by the New Conversion Price.

                        (b) Promptly  following the Automatic  Conversion  Date,
the Holder shall surrender this Note to the Company for  cancellation.  Promptly
following delivery of this Note from the Holder to the Company for cancellation,
the Company shall deliver or cause to be delivered to Holder,  in Holder's name,
certificates  representing the number of fully paid and non-assessable shares of
Common  Stock into which this Note has been  converted  in  accordance  with the
provisions of Section 2.4(a).  Subject to the foregoing  provisions hereof, such
conversion shall be deemed to have occurred on the Automatic  Conversion Date so
that Holder shall be treated for all purposes as having become the record holder
of such shares of Common Stock at such time.

                        (c) On the Automatic Conversion Date, this Note shall be
deemed  paid in full and,  except as set forth in Section  2.4(b),  the  Company
shall have no further obligations hereunder.

                        (d) The shares of Common Stock issuable upon  conversion
of this Note may not be offered,  sold or otherwise  transferred unless (i) they
first shall have been registered  under the Act and applicable  state securities
laws or (ii) the  Company  shall  have been  furnished  with an opinion of legal
counsel (in form,  substance and scope reasonably  acceptable to the Company) to
the  effect  that  such  sale  or  transfer  is  exempt  from  the  registration
requirements  of the Act. Each  certificate  for shares of Common Stock issuable
upon  conversion of this Note that have not been so registered and that have not
been sold  pursuant  to an  exemption  that  permits  removal of the  applicable
legend, shall bear a legend substantially in the following form, as appropriate:

      THE  SECURITIES  REPRESENTED  HEREBY  HAVE NOT BEEN  REGISTERED  UNDER THE
      SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES  REPRESENTED HEREBY MAY
      NOT BE OFFERED,  SOLD OR OTHERWISE  TRANSFERRED UNLESS THEY ARE REGISTERED
      UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS,  SALES
      AND  TRANSFERS  ARE  MADE  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM THE
      REGISTRATION REQUIREMENTS OF THOSE LAWS."

2. Amendments to Warrants. Each of the Warrants are hereby amended as follows:

      (a) Purchase Price. The words "$3.70 per Warrant Share" contained in the
      first paragraph of the Warrants shall be replaced with the words "$2.00
      per Warrant Share".



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<PAGE>

            (b) Deleted Sections. Each of Sections 6(c)(i), 6(c)(ii),  6(c)(iv),
6(d),  6(e),  6(f) and 6(h) of the Warrants is hereby  amended by deleting  such
Section in its entirety and replacing it with "[Intentionally Omitted]."

      3. Amendment to Fund I Warrant,  Fund II Warrant, LTD I Warrant and LTD II
Warrant.

            (a) The Fund I Warrant is hereby  amended  to replace  the words and
number "Two Hundred  Thousand  (200,000)  shares" with the words and number "Two
Hundred Eleven Thousand Six Hundred Forty (211,640) shares".

            (b) The Fund II Warrant is hereby  amended to replace  the words and
number "One Hundred  Thousand  (100,000)  shares" with the words and number "One
Hundred Five Thousand Eight Hundred Twenty (105,820) shares".

            (c) The LTD I Warrant is hereby  amended  to  replace  the words and
number "Fifty  Thousand  (50,000)  shares" with the words and number  "Fifty-Two
Thousand Nine Hundred Five (52,905) shares".

            (d) The LTD II  Warrant is hereby  amended to replace  the words and
number  "Twenty-Eight  Thousand  (28,000)  shares"  with the  words  and  number
"Twenty-Nine Thousand Six Hundred Thirty-Five (29,635) shares".

      4. Acknowledgements.

            (a) Each of the Company and Fund I acknowledges  and agrees that (i)
as of the date  hereof,  the entire  outstanding  principal  amount and  accrued
interest  owed by the  Company  to Fund I under  the Fund I Note is One  Million
Dollars  ($1,000,000),  (ii) as a result of the amendments  herein to the Fund I
Note,  the  Company  will  issue Six  Hundred  Sixty-Six  Thousand  Six  Hundred
Sixty-Six  (666,666) shares of Common Stock on the Automatic  Conversion Date to
Fund I in satisfaction  of the Fund I Note and (iii) as of the date hereof,  the
aggregate  number of shares of Common Stock issuable upon exercise of the Fund I
Warrant is Two  Hundred  Eleven  Thousand  Six  Hundred  Forty  (211,640)  at an
exercise price of $2.00 per share.

            (b) Each of the Company and Fund II acknowledges and agrees that (i)
as of the date  hereof,  the entire  outstanding  principal  amount and  accrued
interest  owed by the Company to Fund II under the Fund II Note is Five  Hundred
Thousand Dollars  ($500,000),  (ii) as a result of the amendments  herein to the
Fund II Note, the Company will issue Three Hundred  Thirty-Three  Thousand Three
Hundred  Thirty-Three   (333,333)  shares  of  Common  Stock  on  the  Automatic
Conversion  Date to Fund II in  satisfaction of the Fund II Note and (iii) as of
the date hereof,  the aggregate  number of shares of Common Stock  issuable upon
exercise  of the Fund II Warrant is One  Hundred  Five  Thousand  Eight  Hundred
Twenty (105,820) at an exercise price of $2.00 per share.

            (c) Each of the Company and LTD  acknowledges and agrees that (i) as
of the date hereof, the aggregate number of shares of Common Stock issuable upon
exercise of the LTD I Warrant is Fifty-Two  Thousand  Nine Hundred Five (52,905)


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<PAGE>

at an  exercise  price of $2.00 per share  and (ii) as of the date  hereof,  the
aggregate  number of shares of Common Stock issuable upon exercise of the LTD II
Warrant is Twenty-Nine  Thousand Six Hundred Thirty-Five (29,635) at an exercise
price of $2.00.

      5.  Representations  and  Warranties.  Each party  hereby  represents  and
warrants to the other parties hereto as follows:

            (a) Such party has not assigned,  transferred,  conveyed, pledged or
encumbered  any of its rights or delegated any of its  obligations  under any of
the Convertible Notes or Warrants to any person or entity;

            (b) Such  party has all the power and  authority  to enter into this
Agreement  and to carry  out the  transactions  contemplated  hereunder,  and to
perform its obligations hereunder;

            (c) The execution and delivery of this Agreement and the performance
of the  obligations  of such party  hereunder  have been duly  authorized by all
corporate or other action on the part of such party;

            (d)  Neither  the  execution,   delivery  and  performance  of  this
Agreement,  nor the  consummation of the  transactions  contemplated  hereby and
thereby  does or shall  contravene,  result in a breach of, or  violate  (i) any
provision of such party's charter or other governing documents,  (ii) any law or
regulation, or any order or decree of any court or government instrumentality or
(iii)  any  indenture,  mortgage,  deed of  trust,  lease,  agreement  or  other
instrument or agreement to which such party is a party of by which such party or
any its property is bound; and

            (e) This  Agreement  has been duly  executed  and  delivered by such
party and  constitutes  a legal,  valid and  binding  obligation  of such party,
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar laws  affecting the  enforcement  of creditors'  rights  generally or by
general equitable principles.

      6. Additional Company Covenants, Agreements and Representations.

            (a) The Company  covenants  and agrees to deliver to Fund I and Fund
II certificates  representing the number of fully paid and non-assessable shares
of  Common  Stock  into  which  their  respective  Convertible  Notes  have been
converted in accordance  with the provisions of Section 1(a) hereto within seven
(7) business days of the date hereof.

            (b) The Company  covenants  and agrees that it will pay the fees and
expenses  of  counsel  to  Fund  I,  Fund  II and  LTD in  connection  with  the
preparation, execution and delivery of this Agreement in an amount not to exceed
$2,500 in the  aggregate  within  five (5)  business  days of its  receipt of an
invoice for such fees and expenses.

            (c) The Company  further  covenants and agrees to deliver to Fund I,
Fund II and LTD  within  two (2)  business  days of the date  hereof  copies  of
resolutions of the Board of Directors of the Company  approving and  authorizing


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<PAGE>

this Agreement in form and substance reasonably  satisfactory to Fund I, Fund II
and LTD.

            (d) The  Company  covenants  and agrees to use its  reasonable  best
efforts to maintain the effectiveness of its registration statement on Form F-3,
as amended,  filed with the  Securities  and Exchange  Commission on January 16,
2003 (the "F-3 Registration  Statement"),  to allow for the resale of the shares
of Common Stock  issuable  upon  conversion  of the  Convertible  Notes and upon
exercise of the Warrants, as amended hereby.

            (e)  To  the  extent  any  shares  of  Common  Stock  issuable  upon
conversion  of the  Convertible  Notes and upon  exercise  of the  Warrants,  as
amended  hereby,  are not  registered  for  resale  under  the F-3  Registration
Statement,  the Company  covenants and agrees to register such shares for resale
in the  registration  statement  it has agreed to file on or before  January 23,
2004  with  the  Securities  and  Exchange  Commission  in  connection  with the
Company's sale of $6,600,000 of Common Stock in December 2003.

            (f) The  Company  represents  and  warrants  that it has  filed  all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended  (the  "EXCHANGE  ACT",  including  pursuant  to Section  13(a) or 15(d)
thereof,  for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing  materials
being collectively referred to herein as the "SEC REPORTS") on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension.

            (g) From the date  hereof  until the earlier of (i) the date Fund I,
Fund II and LTD sell or  otherwise  dispose of all of the shares of Common Stock
issuable  upon  conversion  of the  Convertible  Notes and upon  exercise of the
Warrants,  as  amended  hereby,  or (ii)  the date  Fund I,  Fund II and LTD are
eligible to use Rule 144(k) under the  Securities  Act of 1933,  as amended,  to
sell or otherwise dispose of the shares of Common Stock issuable upon conversion
of the Convertible  Notes and upon exercise of the Warrants,  as amended hereby,
the Company  covenants  to use its  reasonable  best  efforts to timely file (or
obtain  extensions  in respect  thereof  and file  within the  applicable  grace
period)  all reports  required to be filed by the Company  after the date hereof
pursuant to the Exchange Act.

            (h) The Company  represents and warrants that  simultaneous with the
execution of this  Agreement,  Crestview  Capital Fund,  L.P. and its affiliates
(the  "CRESTVIEW  ENTITIES")  have entered  into an  agreement  with the Company
pursuant to which the entire  outstanding  principal of and accrued  interest on
the  8%  Senior  Subordinated  Convertible  Notes  sold  by the  Company  to the
Crestview Entities will be automatically  converted on the Automatic  Conversion
Date into shares of Common Stock at a conversion price of $1.50 per share.

      7. Additional Covenants and Agreements of Fund I and Fund II.

            (a) Each of Fund I and Fund II covenants and agrees to deliver their
respective  Convertible Notes to the Company for cancellation in accordance with
the provisions of Section 1(a) hereof within seven (7) business days of the date
hereof.



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<PAGE>

            (b)  Each  of Fund I and  Fund II  authorizes  the  Company,  at the
Company's  sole cost and  expense,  to execute or cause the  execution of one or
more  termination  statements  terminating  and  removing  any  liens,  security
interests or other  encumbrances that Fund I, Fund II or their agent may have on
the assets of the Company or any of its subsidiaries. Each of Fund I and Fund II
covenants  and agrees to execute or cause the execution of any and all documents
necessary  to  terminate  and  remove  any liens,  security  interests  or other
encumbrances  that Fund I, Fund II or their  agent may have on the assets of the
Company or any of its subsidiaries.

      8.  Confirmation  of Convertible  Notes and Warrants.  Except as expressly
amended by this Agreement, each Convertible Note and each Warrant shall continue
in full  force  and  effect  in  accordance  with the  provisions  thereof.  All
references in the Convertible Notes to this Agreement or words of similar import
shall  refer  to the  Convertible  Notes  as  amended  by  this  Agreement.  All
references  in the Warrants to this  Agreement or words of similar  import shall
refer to the Warrants as amended by this Agreement.

      9. Governing Law. This Agreement shall be governed by the internal laws of
the State of New York, without regard to conflicts of law principles. Each party
hereto (1) agrees that any legal suit,  action or  proceeding  arising out of or
relating to this  Agreement  shall be instituted  exclusively  in New York State
Supreme  Court,  County of New York, or in the United States  District Court for
the Southern District of New York, (2) waives any objection which such party may
have now or hereafter to the venue of any such suit,  action or proceeding,  and
(3)  irrevocably  consents  to the  jurisdiction  of the New York State  Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit,  action or proceeding.  Each party hereto
further  agrees to accept and  acknowledge  service of any and all process which
may be  served in any such  suit,  action or  proceeding  in the New York  State
Supreme  Court,  County of New York, or in the United States  District Court for
the  Southern  District of New York and agrees that service of process upon such
party mailed by certified mail to such party's  address shall be deemed in every
respect  effective  service of process upon such party, in any such suit, action
or proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR  RESPECTIVE  RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

      10.  Severability.  In case any  provision of this  Agreement is held by a
court of competent  jurisdiction to be invalid or unenforceable,  such provision
shall be adjusted rather than voided, if possible,  so that it is enforceable to
the  maximum  extent  possible,  and  the  validity  and  enforceability  of the
remaining  provisions  of this  Agreement  will  not in any way be  affected  or
impaired thereby.

      11.  Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together 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,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.



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<PAGE>

      12. Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
all of the parties hereto or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent  default or a
waiver of any other provision,  condition or requirement  hereof,  nor shall any
delay or omission of either party to exercise any right  hereunder in any manner
impair the exercise of any such right.

      13.  Headings.  The  headings  herein  are for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

      14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  Any
attempted assignment of this Agreement in violation of the terms of this Section
shall be void without legal effect.  None of the parties  hereto may assign this
Agreement  or any rights or  obligations  hereunder  without  the prior  written
consent of the other parties hereto.






































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<PAGE>

      IN WITNESS  WHEREOF and intending to be legally bound hereby,  the parties
hereto have  executed this Note and Warrant  Amendment  Agreement as of the date
first written above.

                                 WORKSTREAM INC.




                                 By: /s/ Michael Mullarkey
                                    ------------------------------------------
                                     Name:  Michael Mullarkey
                                     Title: Chief Executive Officer


                                 SANDS BROTHERS VENTURE CAPITAL IV LLC


                                 By:  SB VENTURE CAPITAL MANAGEMENT IV
                                      LLC, manager



                                      By: /s/ Steven Sands
                                         --------------------
                                          Name:  Steven Sands
                                          Title: Manager

                                 SANDS BROTHERS VENTURE CAPITAL III LLC


                                 By:  SB VENTURE CAPITAL MANAGEMENT III
                                      LLC, manager



                                      By:  Steven Sands
                                         -------------------------
                                           Name:  Steven Sands
                                           Title: Manager

                                 SANDS BROTHERS & CO., LTD


                                      By: /s/ Steven Sands
                                         --------------------
                                          Name:  Steven Sands
                                          Title: C-Chairman




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