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                                                                   Exhibit 10.19

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Agreement") dated as of April 18, 2002
is made by Workstream, Inc, a Canadian corporation ("the Company") and Sands
Brothers Venture Capital III LLC, as Security Agent hereunder (in such capacity,
the "Security Agent"), for the holders of Company's Senior Secured Convertible
Notes (the "Holders", and each a "Holder").


                                    RECITALS

                  WHEREAS, the Holders have agreed to make a debt investment in
the Company upon the terms set forth in (a) the Note Purchase Agreement, dated
the date hereof (the "Purchase Agreement"), among the Company and the Holders,
and (b) the Senior Secured Convertible Notes, dated the date hereof, of the
Company issued pursuant to the Purchase Agreement (such notes, as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
"Notes"); and

                  WHEREAS, the Purchase Agreement and the Notes provide for the
execution and delivery by the Company of this Agreement;

                  NOW, THEREFORE, in consideration of the premises and to induce
the Holders to execute and deliver the Notes and to make such loan (the "Loan")
to the Company, the Grantor hereby agrees with Security Agent and the Holders as
follows:


         1. Definitions and Interpretation.

         1.1 Certain Defined Terms. The following terms shall have the following
meanings under this Agreement:

             "Basic Document" shall mean the Notes, the Purchase Agreement and
this Agreement.

             "Code" or "UCC" shall mean the Uniform Commercial Code as in effect
in the State of New York from time to time or, by reason of mandatory
application, any other applicable jurisdiction or the Personal Property Security
Act (Ontario) as in effect from time to time, as the context requires.







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             "Collateral" shall mean (A) Accounts Receivable, including (i) all
of the Company's present and future accounts, contract rights, general
intangibles, chattel paper and instruments, as such terms are defined in the
Uniform Commercial Code and accounts and intangibles, each as defined in the
Personal Property Security Act (Ontario), (ii) all of the Company's right, title
and interest, and all of any of the Company's rights, remedies, security and
liens, in, to and in respect of any Accounts Receivable, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to Accounts
Receivable, deposits or other security for the obligation of any account debtor,
and credit and other insurance and (iii) all of any of the Company's right,
title and interest in, to and in respect of all goods relating to, or which by
sale have resulted in, Accounts Receivable, including, without limitation, all
goods described in invoices or other documents or instruments with respect to,
or otherwise representing or evidencing, any Account Receivable, and all
returned, reclaimed or repossessed goods; (B) Documents, including all
instruments, files, records, ledger sheets and documents covering or relating to
any of the Collateral; (C) Equipment, including all of the Company's machinery,
equipment, vehicles that are owned by the Company, furniture and fixtures and
all attachments, accessories and equipment now or hereafter owned or acquired in
the Company's business or used in connection therewith, and all substitutions
and replacement thereof, whether now owned or hereafter acquired by the Company;
(D) General Intangibles, including all of the Company's present and future
general intangibles of every kind and description, including (without
limitation) patents, copyrights, trade names and trademarks and the goodwill of
the business symbolized thereby, intangible (as defined in the Personal Property
Security Act (Ontario)) and Federal, State and local tax refund claims of all
kinds due to the Company; (E) Inventory, including all raw materials, work in
process, finished goods, and all other inventory (as defined in the Code) of
whatsoever kind or nature, and all wrapping, packaging, advertising and shipping
materials, and any documents relating thereto, and all labels and other devices,
names or marks affixed or to be affixed hereto for purposes of selling or of
identifying the same or the seller or manufacturer thereof and all of the
Company's right, title and interest therein and thereto, whether now owned or
hereafter acquired by the Company; (F) Cash, including drafts, acceptances, bank
deposits, deposit accounts, checking accounts and money (as defined in the
Personal Property Security Act (Ontario)), and cash now or hereafter owned by
the Company, or in which the Company may now have or may hereafter acquire any
interest; (G) Proceeds, including any consideration received from the sale,
exchange, lease or other disposition of any asset or property which constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property which constitutes Collateral, and shall
include, without limitation, all cash and negotiable instruments received or
held by the Company, including, without limitation, cash and negotiable
instruments received or held, pursuant to any lockbox or similar arrangement
relating to the payment of Accounts Receivable, (H) Actions, including legal
proceedings or arbitration proceedings where the Company is currently or
hereinafter named as plaintiff and chases in action as contemplated in the
Personal Property Security Act (Ontario)) and (I) Securities as defined in the
Personal Property Security Act (Ontario).

             "Default" shall mean any default described in the Notes.

             "Event of Default" shall mean the occurrence of a Default.





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                  "Lien" shall mean, with respect to any property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such property or any agreement to give, or notice of, any of the foregoing.

                  "Majority Holders" means the Holders of a majority of the
principal amount of the outstanding Notes.

                  "Secured Obligations" shall mean any and all obligations of
the Company for the performance of its agreements, covenants and undertakings
under or in respect of the Notes, including the payment of all amounts owed
thereunder.

         1.2 Interpretation. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any such document); and references to persons or
entities including their respective permitted successors and assigns.

         2. Collateral

         2.1 Grant. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and performance
of the Secured Obligations, the Company hereby pledges, assigns and grants to
the Security Agent, for the ratable benefit of the Holders, a security interest
in all of the Company's right, title and interest in and to the Collateral.

         2.2 Perfection. Concurrently with the execution and delivery of this
Agreement, the Company shall (i) file such financing statements and other
documents in such offices as the Security Agent may reasonably request in
writing to perfect and establish the Lien granted by this Agreement, and (ii)
take all such other actions as shall be necessary or as the Security Agent may
request to perfect and establish the priority of the Lien granted by this
Agreement.

         2.3 Preservation and Protection of Security Interests

                  The Company shall:

                  (a) upon the acquisition after the date of this Agreement by
the Company of any instrument or chattel paper evidencing all or any part of the
interests constituting the Collateral, promptly deliver and pledge to the
Security Agent, for the ratable benefit of the Holders, all such instruments or
chattel paper, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Security Agent may request; and





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             (b) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any and
all governmental approvals and take any and all steps that may be necessary or
as the Security Agent may request to create, perfect, establish the priority of,
or to preserve the validity, perfection or priority of, the Lien granted by this
Agreement or to enable the Security Agent to exercise and enforce its rights,
remedies, powers and privileges under this Agreement with respect to such Lien.

         2.4 Rights and Obligations

             (a) The Company shall remain liable to perform its duties and
obligations under the contracts and agreements included in the Collateral in
accordance with their respective terms to the same extent as if this Agreement
had not been executed and delivered. The exercise by the Security Agent of any
right, remedy, power or privilege in respect of this Agreement shall not release
the Company from any of its duties and obligations under such contracts and
agreements. The Security Agent shall not have any duty, obligation or liability
under such contracts and agreements by reason of this Agreement or any other
Basic Document, nor shall the Security Agent be obligated to perform any of the
duties or obligations of the Company under any such contract or agreement or to
take any action to collect or enforce any claim under any such contract or
agreement.

             (b) No Lien granted by this Agreement in the Company's right, title
and interest in any contract or agreement shall be deemed to be a consent by the
Security Agent to any such contract or agreement.

             (c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Company to sell or otherwise
dispose of any Collateral.

             (d) The Security Agent shall not be required to take steps
necessary to preserve any rights against prior parties to any part of the
Collateral.

             (e) So long as no Default shall have occurred and be continuing,
the Company shall have the right to exercise all powers of ownership pertaining
to the Collateral for all purposes not inconsistent with the terms of this
Agreement.

             (f) If any Default shall have occurred and be continuing, and the
Security Agent exercises its right to declare any Secured Obligation due and
payable or seeks or pursues any other right, remedy, power or privilege
available to it under applicable law, this Agreement or any other Basic
Document, all payments and other distributions on the Collateral shall be paid
directly to the Security Agent and applied as set forth in Section 4.4.





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                  (g) The Security Agent shall cause the Holders to share
ratably in the distribution of benefits and any expenditures relating to this
Agreement based on the ratio of the principal amount of their respective Notes
to the total loan amount.

                  (h) The Security Agent may exercise its rights with respect to
the Collateral without resort or regard to other collateral or sources of
reimbursement for liability. The Security Agent shall not be deemed to have
waived any of its rights with respect to the Secured Obligations or the
Collateral unless such waiver be in writing and signed by the Security Agent. No
delay or omission on the part of the Security Agent in exercising any right
shall operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or any future
occasion. All rights and remedies of the Security Agent with respect to the
Secured Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised separately or
concurrently.

         3. Representations, Warranties and Covenants. As of the date of this
Agreement, the Company represents, warrants and covenants to the Security Agent
and the Holders as follows:

         3.1 Title. The Company is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and such
Collateral is free and clear of all Liens, except that the Company has
previously granted a lien on the Collateral to the Royal Bank of Canada and Bank
of Montreal (collectively the "Senior Liens"). The Security Agent agrees that
the Lien granted by this Agreement shall shall be subordinate to the Senior
Liens. The Lien granted by this Agreement in favor of the Security Agent has
attached and constitutes a perfected security interest in all of such
Collateral. The Company shall pay, when due, the Secured Obligations and any
other obligations owing under the Notes or hereunder. The Company shall defend
title to the Collateral against the claims and demands of all persons.

         3.2 Sales and Other Liens. So long as any portion of the Notes remains
unpaid, the Company shall not create or incur any Liens upon any of the
Collateral except for: (i) Liens granted to the Holders; (ii) Liens being
contested in good faith by the Company; (iii) purchase money Liens on newly
acquired assets in connection with the establishment or acquisition of, or
investment or participation in, any business, which Liens shall extend solely to
the assets so acquired; (iv) Liens on any assets of the Company granted in
connection with the purchase or lease of new capital equipment and the
incurrence of the obligations or indebtedness related thereto; and (v) Liens
junior in right to those created by this Security Agreement. Until the
occurrence of an Event of Default under this Security Agreement, the Company may
use, sell or exchange the Collateral in the ordinary course of business without
the written consent of the Security Agent, if such sales or exchanges are in
accordance with the Company's usual customary practices and if, with regard to
equipment, such transaction results (a) in the acquisition of a substitute item
of at least comparable value; or (b) from the disposition of obsolete or worn
out equipment.

         3.3 Preservation of the Collateral; Inspection. The Company shall use
reasonable care in the custody and preservation of the Collateral, and shall
comply with all legal and insurance requirements permitted with respect to its
use. The Company shall permit the Security Agent from time to time during
regular business hours, to enter upon the premises where the Collateral is
located and examine it.






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         3.4 Principal Place of Business. The Company's chief executive office
and principal place of business is located at the address set forth below.

         3.5 Further Assurances; Attorney in Fact. At any time and from time to
time, upon the written request of a Security Agent, at the sole expense of the
Company, the Company will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Security Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the UCC
in effect in any jurisdiction with respect to the liens created hereby. The
Company hereby authorizes the Security Agent to file any such financing or
continuation statement without the signature of the Company, as the case may be,
to the extent permitted by applicable law, and the Security Agent agree to use
reasonable efforts to provide the Company with a copy of any such statement
filed by them, but shall have no liability to the Company for its failure to do
so, and hereby appoints the Security Agent as the Company's attorney-in-fact for
the purpose of signing the Company's names to any such financing and
continuation statements. A carbon, photograph or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.

         3.6 Inspection Rights. The Company hereby grants to the Security Agent
and its employees, representatives and agents the right to visit, during
reasonable hours upon prior reasonable written notice to the Company, any of the
Company's properties and/or facilities holding, utilizing and/or representing
any of the Collateral, and to inspect the records relating thereto upon
reasonable written notice to the Company and as often as may be reasonably
requested.

         3.7 Additional Covenants and Warranties. The Company represents,
warrants, covenants and agrees as follows:

                  (a) Performance of this Agreement does not conflict with or
result in a breach of any agreement to which the Company is bound.

                  (b) The Company will not (a) change the location of its chief
executive office or other places of business or remove its books and records
from such location, or (b) remove any equipment or inventory from any location
in which it may be located (except for sales in the ordinary course of
business), (c) change its identity or corporate structure to such an extent that
any financing statement filed by or on behalf of the Security Agent would become
misleading, unless, in each of the foregoing cases the Company shall have given
the Security Agent at least 30 days prior written notice thereof and shall do
all things necessary to maintain the priority status (subject only to the
holders of senior indebtedness) of the Holders' security interest.





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                  (c) If any Event of Default (as defined in the Notes) shall
occur, the Security Agent, on behalf of the Holders, may exercise any and all
rights and remedies of a secured party after default under the UCC.

                  (d) No security agreement or financing statement with respect
to all or any part of the Collateral is on file or of record in any public
office except as disclosed pursuant to Section 3.1, above. When appropriate
financing statements have been filed by or on behalf of the Security Agent
against the Company, the security interest granted pursuant to this Agreement
will constitute a perfected security interest (to the extent such liens can be
perfected by filing) on the Collateral in favor of the Security Agent (for the
benefit of the Holders), which security interest, subject to the Senior Liens],
will be prior to all other liens on the Collateral created by the Company and in
existence on the date hereof and which security interests are enforceable as
such against all creditors of the Company.

                  (e) The Company agrees to pay, and to hold the Security Agent
and the Holders harmless from, any and all liabilities, costs and expenses
(including without limitation, reasonable legal fees and expenses) (i) with
respect to fees, taxes or other costs incurred with respect to recording
financing statements under the Code and (ii) in connection with any of the
transactions contemplated by this Agreement or the enforcement of the Security
Agent's rights hereunder, except those liabilities, costs and expenses arising
out of the willful misconduct of the Security Agent. In any suit, proceeding or
action brought by the Security Agent under any account for any sum owing
thereunder, or to enforce any provisions of any account for any sum owing
thereunder, or to enforce any provisions of any account or contract, the
Security Agent shall be indemnified by the Company from and against all expense,
loss or damage suffered by the Security Agent in any such action, except for
expenses, loss or damage arising out of the willful misconduct of the Security
Agent (in the case of indemnified amounts which would otherwise be owing to the
Security Agent);

                  (f) The Company shall keep, or cause the Collateral to be
kept, insured against such risks, including fire, casualty and public liability,
as are usually insured against by persons engaged in the same or similar
business in the same location in at least such amounts as such insurance is
usually carried by persons engaged in the same or similar businesses. The
Company will cause the Security Agent, on behalf of the Holders, to be added as
an additional insured to all policies insuring the Collateral;

                  (g) The Company shall pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation; and

                  (f) All information heretofore, herein or hereafter supplied
to the Security Agent by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects.






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         4. Remedies

         4.1 Events of Default. If any Default shall have occurred and be
continuing, and upon the Majority Holders' declaration of the Secured
Obligations becoming immediately due and payable, the Security Agent may take
any of the following actions without limiting the generality of the remedies
available to it, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by
law), to or upon the Company, all and each of which demands, presentments,
protests, advertisements and notices are hereby waived:

                  (a) The Security Agent in its discretion may make any
reasonable compromise or settlement they deem desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;

                  (b) The Security Agent in its discretion may, in their name or
in the name of the Company or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for all or any part of the Collateral, but shall be under no obligation to do
so;

                  (c) The Security Agent in its discretion may with respect to
all or any part of the Collateral which shall then be or shall thereafter come
into the possession, custody or control of the Security Agent in its discretion
or any of its agents, sell, lease or otherwise dispose of all or any part of
such Collateral, at such place or places as the Security Agent in its discretion
deems best, upon such terms and conditions as they deem advisable and at such
prices as they may deem best, for cash, for credit or for future delivery
(without thereby assuming any credit risk) and at public or private sale,
without demand of performance or notice of intention to effect any such
disposition or of time or place of any such sale, and the Security Agent in its
discretion or any other person or entity may be the purchaser, lessee or
recipient of any or all of the Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Company, any such
demand, notice and right or equity being hereby expressly waived and released.
The Security Agent in its discretion may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the sale may be so adjourned (if any notice
of a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition.) The Company further agrees, at the
Security Agent's request, to assemble the Collateral and make it available to
the Security Agent, at the place which the Security Agent shall reasonably
select, whether at the Company's premises or elsewhere.

                  (d) The Security Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Code (whether or not the Code is in
effect in the jurisdiction where such rights, remedies, powers and privileges
are asserted) and such additional rights, remedies, powers and privileges to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights, remedies, powers and privileges in respect of this Agreement
or the Collateral may be asserted, including the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Security Agent were the sole
and absolute owner of the Collateral (and the Company agrees to take all such
action as may be appropriate to give effect to such right).





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The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 4.1 shall be applied in accordance with
Section 4.4.

         4.2 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 4.1 are
insufficient to cover the costs and expenses of such exercise and the payment in
full of the other Secured Obligations, the Company shall remain liable for any
deficiency.

         4.3 Private Sale

                  (a) The Security Agent shall incur no liability as a result of
the sale, lease or other disposition of all or any part of the Collateral at any
private sale pursuant to Section 4.1 conducted in a commercially reasonable
manner. The Company hereby waives any claims against the Security Agent and the
Holders arising by reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Security Agent accepts the first offer received
and does not offer the Collateral to more than one offeree.

                  (b) The Company recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws, the Security Agent may be compelled, with respect to any sale
of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to distribution or resale. The Company
acknowledges that any such private sales may be at prices and on terms less
favorable to the Security Agent than those obtainable through a public sale
without such restrictions, and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Security Agent shall have no obligation to engage
in public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit a public sale.

         4.4 Application of Proceeds. Except as otherwise expressly provided in
this Agreement and except as provided below in this Section 4.1, the proceeds
of, or other realization upon, all or any part of the Collateral by virtue of
the exercise of remedies under Section 4.1 and any other cash at the time held
by the Security Agent under this Agreement, shall be applied as follows:






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                  First, to the payment of the costs and expenses of such
exercise of remedies, including reasonable out-of-pocket costs and expenses of
the Security Agent, the fees and expenses of its agents and counsel and all
other expenses incurred and advances made by the Security Agent in that
connection, as provided in this Agreement and/or the Note;

                  Next, to the payment in full of the remaining Secured
Obligations in such manner as the Security Agent may determine; and

                  Finally, to the payment to the Company, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.

         As used in this Section 4, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor on, any of the Collateral.

         5. Duty of the Security Agent; Powers.

                     (a) The Security Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Security Agent deals with similar property for its
own account. None of the Security Agent, the Holders nor any of their respective
officers, directors, employees or Security Agent shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Company or any other person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Security Agent hereunder are solely to protect the
Security Agent's and the Holders' interest in the Collateral and shall not
impose any duty upon the Security Agent to exercise any such power. The Security
Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither the Security Agent nor the
Holders nor any of their respective officers, directors, employees shall be
responsible to the Company for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.

                     (b) The Security Agent shall only be obligated to take
action and shall act as directed by the Majority Holders neither the Security
Agent, nor any of its officers, directors, employees or affiliates shall be
responsible to Holders for any losses that any of such Holders may incur
hereunder. The Security Agent shall be entitled to conclusively rely on any such
direction or consent from the holders of the Majority Holders. In addition, the
Security Agent may act in reliance upon any signature believed by it to be
genuine, and may assume that any person who has been designated by the Holders
to give any written instructions, notice or receipt, or make any statements in
connection with the provisions hereof has been duly authorized to do so.
Security Agent shall have no duty to make inquiry as to the genuineness,
accuracy or validity of any statements or instructions or any signatures on
statements or instructions.







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                     (c) The Security Agent may resign at any time by giving
written notice ("Notice") to the Company and the Holders, which resignation
shall be effective 30 days from the date of the Notice ("Effective Resignation
Date"). Upon the earlier of (i) the Effective Resignation Date or (ii) the
appointment of a successor Security Agent by the Requisite Holders, the Security
Agent shall have no further obligations hereunder. In the event a successor
Security Agent is not appointed by the Majority Holders on or before the
Effective Resignation Date, then Security Agent shall have the right to deliver
any Collateral held by it with a clerk of a court of competent jurisdiction or a
third party escrow provider pending the appointment of a successor Security
Agent by the Majority Holders.

         6. Miscellaneous

         6.1 Waiver. No failure on the part of the Security Agent to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Agreement preclude any other
or further exercise of any such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

         6.2 Notices. All notices and communications to be given under this
Agreement shall be given or made in writing to the intended recipient at the
address specified below or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 6.2:

         To the Company:            Workstream Inc.
                                    495 March Road, Suite 300,
                                    Ottawa, Ontario, Canada K2K-3G1
                                    Attn:  Chairman

         With a copy to:            Perley-Robertson, Hill & McDougall LLP
                                    90 Sparks Street
                                    Ottawa, Ontario K1P1E2
                                    Attn. Michael Gerrior, Esq.

         To the Security Agent:

                                    Sands Brothers Venture Capital III LLC
                                    90 Park Avenue
                                    New York, New York 10016
                                    Fax No.: (212) 297-0670
                                    Attn: Steven Sands

         With a copy to:            Littman, Krooks & Roth, P.C.
                                    655 Third Avenue, 20th Floor
                                    New York, New York 10017
                                    Fax No.: (212) 490-2990
                                    Attn: Steven Uslaner, Esq.







<PAGE>

         6.3 Expenses. The Company agrees to pay or to reimburse the Security
Agent for all costs and expenses (including reasonable attorney's fees and
expenses) that may be incurred by the Security Agent in any effort to enforce
any of the provisions of Section 4 or any of the obligations of the Company in
respect of the Collateral or in connection with (a) the preservation of the Lien
of, or the rights of the Security Agent under this Agreement or (b) any actual
or attempted sale, lease, disposition, exchange, collection, compromise,
settlement or other realization in respect of, or care of, the Collateral,
including all such costs and expenses (and reasonable attorney's fees and
expenses) incurred in any bankruptcy, reorganization, workout or other similar
proceeding relating to the Company.

         6.4 Amendments. Any provision of this Agreement may be modified,
supplemented or waived only by an instrument in writing duly executed by the
Company and the Security Agent which shall only be authorized by the Majority
Holders. Any such modification, supplement or waiver shall be for such period
and subject to such conditions as shall be specified in the instrument effecting
the same and shall be binding upon the Security Agent on behalf of the Holders
and the Company, and any such waiver shall be effective only in the specific
instance and for the purposes for which given.

         6.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Security Agent and each holder of any
of the Secured Obligations and their respective successors and permitted
assigns. The Company shall not assign or transfer its rights under this
Agreement without the prior written consent of the Security Agent.

         6.6 Survival. All representations and warranties made in this Agreement
or in any certificate or other document delivered pursuant to or in connection
with this Agreement shall survive the execution and delivery of this Agreement
or such certificate or other document (as the case may be) or any deemed
repetition of any such representation or warranty.

         6.7 Agreements Superseded. This Agreement and the Notes and the
Purchase Agreement, supersede all prior agreements and understandings, written
or oral, among the parties with respect to the subject matter of this Agreement.

         6.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.






<PAGE>

         6.9 Continuing Effect. All agreements, representations and warranties
herein made by Debtor shall be continuing as long as the Notes remains
outstanding and unpaid.

         6.10 Headings. Section headings are for reference purposes only.

         6.11 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute but one agreement, and shall become effective
when copies which, when taken together, bear the signature of each of the
parties hereto shall have been delivered to Security Agent and Debtor.

         6.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAW. THE COMPANY HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



















<PAGE>



         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

                                                     Workstream Inc.


                                                     By /s/ Michael Mullarkey
                                                        ------------------------
                                                          Michael Mullarkey
                                                          Chairman and CEO






























<PAGE>



THE SECURITY AGENT:

Sands Brothers Venture Capital III LLC
By: SB Venture Capital Management III LLC

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


THE HOLDERS:

Sands Brothers Venture Capital III LLC
By: SB Venture Capital Management III LLC, Manager


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



Sands Brothers Venture Capital IV LLC
By: SB Venture Capital Management IV LLC, Manager

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



[insert name of new purchaser]


__________________________________________
By:
Title: