Document:

EXHIBIT 10.1

                            ASSET PURCHASE AGREEMENT

THIS AGREEMENT made as of the 10th day of June, 2004.

BETWEEN:

        WORKSTREAM USA, INC.,
        a corporation incorporated under the laws of Delaware

        (hereinafter referred to as the "Purchaser")

AND:

        WORKSTREAM INC.,
        a corporation incorporated under the laws of Canada

        (hereinafter referred to as "Workstream")

AND:

        PEOPLEBONUS.COM, LLC.,
        An LLC organized under the laws of the State of Delaware
        (hereinafter referred to as the "Vendor")

WHEREAS:

A.        The Vendor carries on the business of providing resume management
          services and software for human capital management;

B.        The Vendor wishes to sell and assign to the Purchaser, and the
          Purchaser wishes to purchase and assume from Vendor certain of the
          assets of such business on the terms and subject to the conditions
          hereinafter contained.

NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration paid by each of the parties
hereto to each of the other parties hereto (the receipt and sufficiency of which
are hereby acknowledged), it is agreed among the parties hereto as follows:

1.        INTERPRETATION

          1.1.      DEFINED TERMS. In this Agreement and in the schedules
                    hereto, unless there is something in the subject-matter or
                    context inconsistent therewith, the following terms and
                    expressions will have the following meanings:

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                    1.1.1.    "Affiliate" of any person means any corporation
                              which, directly or indirectly, is controlled by,
                              controls or is under direct or indirect common
                              control with such person;

                    1.1.2.    "Agreement", "hereto", "herein", "hereof",
                              "hereunder" and similar expressions refer to this
                              Asset Purchase Agreement and not any particular
                              paragraph or any particular portion of this
                              agreement and includes all schedules attached to
                              this agreement;

                    1.1.3.    "Assumed Contracts" means all contracts,
                              agreements, orders, commitments and other
                              engagements by or with third parties relating to
                              the Business which are included in the Purchased
                              Assets including, without limitation, the Customer
                              Contracts and the Leases all of which, including
                              amounts payable thereon, all of which are listed
                              in Schedule 1.1.3 attached hereto;

                    1.1.4.    "Business" means the business carried on by the
                              Vendor which primarily involves providing resume
                              management services and software for human capital
                              management;

                    1.1.5.    "Business Day" means a day other than a Saturday,
                              a Sunday or other day on which commercial banks in
                              Ottawa, Ontario, Canada are authorized or required
                              by law to close;

                    1.1.6.    "Closing Date" means June __, 2004, or such other
                              date as the Vendor and Purchaser may agree upon;

                    1.1.7.    "Closing Time" means 2:00 o'clock in the afternoon
                              on the Closing Date or such other time on the
                              Closing Date as the parties hereto may agree upon;

                    1.1.8.    "Commission" means the Securities and Exchange
                              Commission;

                    1.1.9.    "Commission Documents" means all of the
                              Purchaser's filings with the Commission prior to
                              the date hereof;

                    1.1.10.   "Customer Contracts" means any and all agreements
                              entered into between the Vendor and one or more
                              third parties relating to the sale or provision of
                              goods or services by the Vendor to such third
                              parties in connection with the Business, including
                              unfilled orders, commitments and other engagements
                              by or with such third parties, all of which are
                              listed in Schedule 2.1.4 attached hereto;

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                    1.1.11.   "Encumbrances" means mortgages, charges, pledges,
                              security interests, liens, encumbrances, actions,
                              claims, demands and equities of any nature
                              whatsoever or howsoever arising and any rights or
                              privileges capable of becoming any of the
                              foregoing;

                    1.1.12.   Intentionally deleted;

                    1.1.13.   "Governmental Authority" means any foreign,
                              domestic, federal, territorial, state or local
                              governmental authority, quasi-governmental
                              authority, instrumentality, court, government or
                              self-regulatory organization, commission, tribunal
                              or organization or any regulatory, administrative
                              or other agency, or any political or other
                              subdivision, department or branch of any of the
                              foregoing;

                    1.1.14.   "HSR Act" means the Hart-Scott-Rodino Antitrust
                              Improvements Act of 1976, as amended;

                    1.1.15.   "Interim Period" means the period from and
                              including the date of this Agreement to and
                              including the Closing Date;

                    1.1.16.   "License Rights" means all license and
                              distribution rights relating to the Business
                              described in Schedule 1.1.16 attached hereto;

                    1.1.17.   "Lien" means, with respect to any asset, any
                              mortgage, lien, claim, pledge, charge, security
                              interest or other encumbrance of any kind in
                              respect of such asset;

                    1.1.18.   "Material Adverse Effect" means with respect to a
                              Person or entity, a material adverse effect on the
                              assets, properties, business, operations,
                              financial condition or results of operations of
                              such Person or entity and its subsidiaries taken
                              as a whole;

                    1.1.19.   "Person" means and includes any individual,
                              corporation, general partnership, limited
                              partnership, limited liability company, limited
                              liability partnership, joint venture, syndicate,
                              association, trust, government, governmental
                              agency or board or commission or authority, and
                              any other form of entity or organization;

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                    1.1.20.   "Principal" means any manufacturer which the
                              Vendor represents in the sales and service of the
                              manufacturer's products;

                    1.1.21.   "Purchase Price" means the sum of $730,000 which
                              is the amount, subject to adjustments as herein
                              provided, payable by the Purchaser to the Vendor
                              for all of the Purchased Assets, as provided
                              herein;

                    1.1.22.   "Purchased Assets" means the undertaking and
                              assets of the Business which are to be sold by the
                              Vendor to the Purchaser pursuant to Section y2;

                    1.1.23.   "Vendor's Mediation Rights" means the vendor's
                              mediation rights as set out in section 11 of the
                              escrow agreement attached hereto as Schedule
                              1.1.23;

                    1.1.24.   "Warranty Claim" means a claim made by either the
                              Purchaser or the Vendor based on or with respect
                              to the inaccuracy or non-performance or
                              non-fulfilment or breach of any representation or
                              warranty made by the other party contained in this
                              Agreement or contained in any document or
                              certificate given in order to carry out the
                              transactions contemplated hereby.

          1.2.      BEST OF KNOWLEDGE. Any reference herein to "the best of the
                    knowledge" of the Vendor will be deemed to mean the actual
                    knowledge of the Vendor and the knowledge which it would
                    have had if it had conducted an inquiry into the relevant
                    subject matter that a reasonably prudent person would have
                    conducted under similar circumstances.

          1.3.      SCHEDULES. The Schedules which are attached to this
                    Agreement are incorporated in this Agreement by reference
                    and are deemed to be part hereof.

          1.4.      CURRENCY. Unless otherwise indicated, all dollar amounts
                    referred to in this Agreement are in lawful money of the
                    United States of America.

          1.5.      CHOICE OF LAW AND ATTORNMENT. This Agreement shall be
                    governed by and construed and enforced in accordance with
                    the laws of the Province of Ontario, Canada.

          1.6.      INTERPRETATION NOT AFFECTED BY HEADINGS OR PARTY DRAFTING.
                    The division of this Agreement into articles, sections,
                    paragraphs, subparagraphs and clauses and the insertion of
                    headings are for convenience of reference only and shall not
                    affect the construction or interpretation of this Agreement.
                    The terms "this Agreement", "herein", "hereunder" and
                    similar expressions refer to this Agreement and the
                    Schedules hereto and not to any particular article, section,
                    paragraph, subparagraph, clause or other portion and include
                    any agreement or instrument supplementary or ancillary
                    hereto. Each party hereto acknowledges that it and its legal
                    counsel have reviewed and participated in settling the terms
                    of this Agreement, and the parties hereby agree that any
                    rule of construction to the effect that any ambiguity is to
                    be resolved against the drafting party shall not be
                    applicable in the interpretation of this Agreement.

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          1.7.      NUMBER AND GENDER. In this Agreement, unless there is
                    something in the subject matter or context inconsistent
                    therewith:

                    1.7.1.    words in the singular number include the plural
                              and such words shall be construed as if the plural
                              had been used,

                    1.7.2.    words in the plural include the singular and such
                              words shall be construed as if the singular had
                              been used, and

                    1.7.3.    words importing the use of any gender shall
                              include all genders where the context or party
                              referred to so requires, and the rest of the
                              sentence shall be construed as if the necessary
                              grammatical and terminological changes had been
                              made.

                    1.8.      TIME OF ESSENCE. Time shall be of the essence.

2.        PURCHASE AND SALE

          2.1.      PURCHASED ASSETS. On the terms and subject to the fulfilment
                    of the conditions, the Vendor hereby agrees to sell,
                    transfer and assign to the Purchaser, and the Purchaser
                    hereby agrees to purchase and accept from the Vendor as of
                    the Closing Date, assets, rights and interests of the Vendor
                    listed in Schedule 2.1, as attached hereto (the "Purchased
                    Assets"), and will include the following assets:

                    2.1.1.    Accounts Receivable: all accounts receivable,
                              trade accounts, notes, receivables, book debts and
                              other debts due or accruing to the Vendor in
                              connection with the Purchased Assets and the full
                              benefit of all securities for such accounts, notes
                              or debts described in Schedule 2.1.1 (the
                              "Accounts Receivable");

                    2.1.2.    Computer Equipment: all of the Vendor's right,
                              title and interest in all computer hardware and
                              firmware used in the Business including, without
                              limitation, that described in Schedule 2.1.2
                              attached hereto;

                    2.1.3.    Customer Lists and Information: all customer
                              lists, files, data and information relating to
                              customers and prospective customers of the
                              Business as of the Closing Time including, without
                              limitation, the customer list which has been
                              delivered by the Vendor to the Purchaser prior to
                              the Closing Date described in Schedule 2.1.3
                              attached hereto;

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                    2.1.4.    Customer Contracts: all right, title and interest
                              of the Vendor in and to all Customer Contracts,
                              all of which are listed in Schedule 2.1.4 attached
                              hereto;

                    2.1.5.    Goodwill, Name, etc.: the goodwill of the
                              Business, together with the exclusive right of the
                              Purchaser to represent itself as carrying on the
                              Business in continuation of and in succession to
                              the Vendor, and all rights in and title to the
                              name "Peoplebonus.com" or any variation of same
                              (Notwithstanding the transfer of all rights in and
                              title to the name "Peoplebonus.com", the Purchaser
                              acknowledges that the Vendor's corporate name
                              shall continue to be "Peoplebonus.com, LLC" until
                              such time as the Vendor is able to change its
                              corporate name. The Vendor undertakes and agrees
                              to effect the change of its corporate name to
                              something that does not contain the name
                              "Peoplebonus" or any variation thereof, as soon as
                              practicably possible but in no event longer than
                              30 days from the Closing Date);

                    2.1.6.    Technology, Intellectual Property and Software:
                              all of its world wide right, title and interest in
                              and to any intellectual property rights including
                              but not limited to all trade secrets, research
                              data, designs, proprietary know-how, technical
                              information, specifications and materials in
                              whatever form or media recording or evidencing
                              technology or proprietary information used in or
                              relating to the Business, and all rights and
                              interests in and to all inventions, patents,
                              applications for patents, copyrights, trade marks,
                              trade mark registrations, trade names, logos,
                              industrial designs, design patents, and other
                              intellectual property used in or relating to the
                              Business, and all computer software and any
                              intellectual or industrial property of any nature
                              whatsoever which it may have in any components or
                              features of the computer software used in the
                              Business including the software products known as
                              ("Peoplebonus Resume Management Services",
                              "Peoplebonus Resume Database" and "Resume
                              Management Services with Email Deliverable") and
                              including all related codes, related source,
                              object or any application codes, specifications,
                              documentation, revisions, enhancements and
                              modifications thereto, in whatever form and media
                              to which the Vendor has any right or interest for
                              the full duration of all such rights, and any
                              renewals or extensions thereof, all of which is
                              listed in Schedule 2.1.6 attached hereto;

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                    2.1.7.    Licence Rights: all licence and distribution
                              rights relating to the Business granted to the
                              Vendor by any third party under all contracts and
                              agreements (written or oral), all of which are
                              listed in Schedule 1.1.16 attached hereto;

                    2.1.8.    Regulatory Licenses: all licenses, registrations
                              and qualifications of the Business required by any
                              governmental or regulatory authority, to the
                              extent transferable;

                    2.1.9.    Supply Contracts: the full benefit of all
                              contracts providing for the supply of goods and
                              services to the Business, subject to the
                              Purchaser's review and acceptance of such
                              contracts and agreements prior to the Closing
                              Date; and

                    2.1.10.   Warranty Rights and Maintenance Contracts: the
                              full benefit of all warranties and warranty rights
                              (express and implied) against manufacturers or
                              sellers which apply to any of the Purchased Assets
                              and all maintenance contracts on machinery,
                              equipment and the other Purchased Assets, subject
                              to the Purchaser's review and acceptance of such
                              contracts and agreements prior to the Closing
                              Date.

          2.2.      UNASSIGNABLE CONTRACTS. If any rights, benefits or remedies
                    (the "Rights") under any Assumed Contracts are not
                    assignable by the Vendor to the Purchaser without the
                    written consent of the other party thereto (the "Third
                    Party") and such consent is not obtained, then, unless the
                    Purchaser exercises its rights under Section 6.2,

                    2.2.1.    the Vendor will hold the Rights for the benefit of
                              the Purchaser,

                    2.2.2.    the Vendor will, at the request and expense and
                              under the direction of the Purchaser, in the name
                              of the Vendor or otherwise as the Purchaser shall
                              specify, take all such actions and do all such
                              things as shall, in the opinion of the Purchaser,
                              be necessary or desirable in order that the
                              obligations of the Vendor under such Assumed
                              Contracts may be performed in a manner such that
                              the value of the Rights shall be preserved and
                              shall enure to the benefit of the Purchaser and
                              such that all moneys receivable under the Assumed
                              Contracts may be received by the Purchaser,

                    2.2.3.    the Vendor will promptly pay over to the Purchaser
                              all such moneys collected by the Vendor in respect
                              of such Assumed Contracts, and

                    2.2.4.    to the extent permitted by the Third Party and
                              provided, in the Purchaser's opinion, it would not
                              be prejudicial to the Purchaser's rights to do so,
                              the Purchaser will perform the obligations under
                              such Assumed Contracts on behalf of the Vendor,
                              and will indemnify the Vendor against all
                              liabilities, costs and expenses incurred by the
                              Vendor in performing such obligations.

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          2.3.      EXCLUDED LIABILITIES AND INDEMNITY. The Purchaser will not
                    assume and will not be liable for, and the Vendor will
                    indemnify the Purchaser from and against, all obligations,
                    commitments and liabilities of and claims against the Vendor
                    (whether absolute, accrued or contingent) relating to the
                    Business. Without limiting the generality of the foregoing,
                    it is agreed that the Purchaser will have no liability for
                    any of the following obligations or liabilities:

                    2.3.1.    all liabilities in respect of all indebtedness of
                              the Vendor to all persons;

                    2.3.2.    all product liability claims and liabilities for
                              warranty or product return claims relating to any
                              product or service of the Business produced, sold,
                              performed or delivered prior to the Closing Date;

                    2.3.3.    all liabilities for all taxes, duties, levies,
                              assessments and other such charges, including any
                              penalties, interests and fines with respect
                              thereto, payable by the Vendor to any federal,
                              state, municipal or other government or
                              governmental agency, authority, board, bureau or
                              commission, domestic or foreign, including,
                              without limitation, any taxes in respect of or
                              measured by the sale, consumption or performance
                              by the Vendor of any product or service prior to
                              the Closing Date or any similar legislation in
                              respect of all remuneration payable to all persons
                              employed in the Business prior to the Closing
                              Date;

                    2.3.4.    all other liabilities of any nature whatsoever,
                              known or unknown, due or to become due, not
                              expressly assumed by Purchaser pursuant to this
                              Agreement or as indicated in Schedule 2.3.4
                              attached hereto;

          2.4.      PURCHASE PRICE. The price payable by the Purchaser to the
                    Vendor for the Purchased Assets will be the sum of
                    $730,000.00.

          2.5.      PAYMENT OF PURCHASE PRICE. Purchaser and Vendor mutually
                    agree that the Purchase Price will be paid and satisfied at
                    the Closing Time as follows:

                    2.5.1     By delivery to the Vendor of the balance of
                              $105,000.00, by way of certified check, bank draft
                              or wire transfer;

                    2.5.1(a)  By delivery to the Escrow Agent (as defined in the
                              Escrow Agreement attached hereto as Schedule
                              2.5.3) of the balance of $25,000.00 by way of
                              certified check, bank draft or wire transfer;

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                    2.5.2     By delivery to the Vendor of an unsecured note for
                              $100,000.00 in the Form set out in Schedule 2.5.2;
                              and

                    2.5.3     By delivery to the Vendor of that number of shares
                              (rounded up to a whole share) of common shares, no
                              par value (the "Shares" or the "Workstream
                              Shares"), of Workstream equal to $500,000.00 based
                              on the average last sale price per share of
                              Workstream quoted by the NASDAQ on its automated
                              quotation system for the last five (5) trading
                              days on which trading of shares of Workstream
                              actually took place immediately preceding the
                              Closing Date; provided, however, that the
                              Purchaser shall deposit that number of Workstream
                              Shares equal to $300,000.00 based on the average
                              last sale price per share of Workstream quoted by
                              the NASDAQ on its automated quotation system for
                              the last five (5) trading days on which trading of
                              shares of Workstream actually took place
                              immediately preceding the Closing Date (the
                              "Escrow Shares") into an escrow account pursuant
                              to the terms set out in the escrow agreement
                              attached hereto as Schedule 2.5.3.

          2.6.      ALLOCATION OF PURCHASE PRICE. The Vendor and the Purchaser
                    shall agree to an allocation of the Purchase Price among the
                    Purchased Assets within ninety (90) days of the Closing
                    Date. The Vendor and the Purchaser shall file their
                    respective tax returns prepared in accordance with such
                    allocation.

          2.7.      PAYMENT OF TAXES. The Vendor shall be liable for and shall
                    pay all applicable federal and state sales taxes, excise
                    taxes and all other taxes, duties and other like charges
                    properly payable on and in connection with the conveyance
                    and transfer of the Purchased Assets to the Purchaser. The
                    Purchaser will do and cause to be done such things as are
                    reasonably requested to enable the Vendor to comply with
                    such obligation in an efficient manner.

          2.8.      FUTURE PRICE SECURITIES LIMITATION. Notwithstanding anything
                    contained herein to the contrary, the aggregate number of
                    Workstream Shares issued to the Vendor as part of the
                    Purchase Price shall not equal or exceed 20% of the number
                    of common shares of Workstream outstanding immediately
                    before the issuance of the Workstream Shares, unless
                    Workstream has obtained prior approval from the holders of
                    its common shares for such issuance. In the event the
                    aggregate number of Workstream Shares that would be issued
                    to the Vendor at the Closing Date equals or exceeds 20% of
                    the number of common shares of Workstream then outstanding,
                    and Workstream has failed to obtain prior shareholder
                    approval for such issuance, then the number of Workstream
                    Shares that the Vendor would be entitled acquire as part of
                    the Purchase Price shall be reduced so that the aggregate
                    number of Workstream Shares issuable to the Vendor does not
                    equal or exceed 20% of the number of common shares of
                    Workstream outstanding immediately before the issuance of
                    the Workstream Shares on the Closing Date.

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3.        REPRESENTATIONS AND WARRANTIES

3.1.      REPRESENTATIONS AND WARRANTIES BY THE VENDOR. The Vendor hereby
          represents and warrants to the Purchaser and Workstream as follows,
          and confirm that the Purchaser and Workstream is relying upon the
          accuracy of each of such representations and warranties in connection
          with the purchase of the Purchased Assets and the completion of the
          other transactions hereunder:

          3.1.1.    Corporate Authority and Binding Obligation. The Vendor has
                    good right, full corporate power and absolute authority to
                    enter into this Agreement and to sell, assign and transfer
                    the Purchased Assets to the Purchaser in the manner
                    contemplated herein and to perform all of the Vendor's
                    obligations under this Agreement. The Vendor and its members
                    have taken all necessary or desirable actions, steps and
                    corporate and other proceedings to approve or authorize,
                    validly and effectively, the entering into of, and the
                    execution, delivery and performance of, this Agreement and
                    the sale and transfer of the Purchased Assets by the Vendor
                    to the Purchaser. This Agreement is a legal, valid and
                    binding obligation of the Vendor, enforceable against it in
                    accordance with its terms.

          3.1.2.    No Other Purchase Agreements. No person has any agreement,
                    option, understanding or commitment, or any right or
                    privilege (whether by law, pre-emptive or contractual)
                    capable of becoming an agreement, option or commitment, for
                    the purchase or other acquisition from the Vendor of any
                    Purchased Assets, or any rights or interest therein, other
                    than in the ordinary course of the Business.

          3.1.3.    Contractual and Regulatory Approvals. Except as specified in
                    Schedule 3.1.3 attached hereto, the Vendor is not under any
                    obligation, contractual or otherwise, to request or obtain
                    the consent of any person, and no permits, licences,
                    certifications, authorizations or approvals of, or
                    notifications to, any federal, state, municipal or local
                    government or governmental agency, board, commission or
                    authority are required to be obtained by the Vendor,

                    3.1.3.1.  in connection with the execution, delivery or
                              performance by the Vendor of this Agreement or the
                              completion of any of the transactions contemplated
                              herein,

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                                       11

                    3.1.3.2.  to avoid the loss of any permit, licence,
                              certification or other authorization relating to
                              the Purchased Assets, or

                    3.1.3.3.  in order that the authority of the Purchaser to
                              carry out the Assumed Contracts in this ordinary
                              course and in the same manner as presently carried
                              out by the Vendor.

                    Complete and correct copies of any agreements under which
                    the Vendor is obligated to request or obtain any such
                    consent have been provided to the Purchaser.

          3.1.4.    Status and Governmental Licences.

                    3.1.4.1.  The Vendor is a limited liability company duly
                              organized, validly existing and in good standing
                              in all respects under the laws of its jurisdiction
                              of incorporation. The Vendor has all necessary
                              corporate power to own, lease and operate its
                              assets, properties and business and to carry on
                              its business as it is now being conducted and is
                              in good standing in every jurisdiction in which
                              the nature of its business or the location of its
                              properties requires such qualification or
                              licensing. Schedule 3.1.4 attached hereto sets
                              forth all jurisdictions in which the Vendor is
                              qualified or licensed to do business as a
                              corporation.

                    3.1.4.2.  The Vendor holds all necessary licences,
                              registrations and qualifications in each
                              jurisdiction in which,

                              (i)       it owns or leases any of the Purchased
                                        Assets, or

                              (ii)      the nature of the Purchased Assets or
                                        any part thereof, makes such
                                        qualification necessary or desirable to
                                        enable the Purchased Assets to be owned,
                                        leased and/or operated.

                    All of the Vendor's licences, registrations and
                    qualifications are listed in Schedule 3.1.4 attached hereto
                    and are valid and subsisting. Complete and correct copies of
                    the licences, registrations and qualifications have been
                    delivered to the Purchaser. The Vendor is in compliance with
                    all terms and conditions of the licences, registrations and
                    qualifications. There are no proceedings in progress,
                    pending or, to the best of the knowledge of the Vendor,
                    threatened, which could result in the revocation,
                    cancellation or suspension of any of the licences,
                    registrations or qualifications.

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                                       12

          3.1.5.    Compliance with Constating Documents, Agreements and Laws.
                    The execution, delivery and performance of this Agreement
                    and each of the other agreements contemplated or referred to
                    herein by the Vendor, and the completion of the transactions
                    contemplated hereby, will not constitute or result in a
                    violation, breach or default, or cause the acceleration of
                    any obligations under:

                    3.1.5.1.  any term or provision of any of the articles,
                              by-laws or other constating documents of the
                              Vendor,

                    3.1.5.2.  subject to obtaining the contractual consents
                              referred to in Schedule 3.1.3 , the terms of any
                              indenture, agreement (written or oral), instrument
                              or understanding or other obligation or
                              restriction to which the Vendor is a party or by
                              which it is bound including, without limitation,
                              any of the Assumed Contracts, or

                    3.1.5.3.  subject to obtaining the regulatory consents
                              referred to in Schedule 3.1.3, any term or
                              provision of any of the Licences or any order of
                              any court, governmental authority or regulatory
                              body or any law or regulation of any jurisdiction
                              in which the Business is carried on.

                    3.1.5.4.  Absence of Undisclosed Liabilities. There are no
                              liabilities (contingent or otherwise) of the
                              Vendor of any kind whatsoever in respect of which
                              the Purchaser may become liable on or after the
                              consummation of the transactions contemplated by
                              this Agreement.

          3.1.6.    Litigation. Except for the matters referred to in Schedule
                    3.1.6 attached hereto, there are no actions, suits or
                    proceedings, judicial or administrative (whether or not
                    purportedly on behalf of the Vendor) pending or, to the best
                    of the knowledge of the Vendor, threatened, by or against or
                    affecting the Vendor which may affect the Purchased Assets,
                    at law or in equity, or before or by any court or any
                    federal, state, municipal or other governmental department,
                    commission, board, bureau, agency or instrumentality,
                    domestic or foreign. Except for the matters referred to in
                    Schedule 3.1.6 there are no grounds on which any such
                    action, suit or proceeding might be commenced with any
                    reasonable likelihood of success.

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                                       13

          3.1.7.    Title to Purchased Assets. The Vendor is the owner of and
                    has good and marketable title to all of the Purchased Assets
                    free and clear of all Liens except for matters as set forth
                    in Schedule 3.1.7 attached hereto;

          3.1.8.    Works Orders and Deficiencies. There are no outstanding work
                    orders, non-compliance orders, deficiency notices or other
                    such notices relative to the Purchased Assets which have
                    been issued by any regulatory authority, police or fire
                    department, sanitation, environment, labour, health or other
                    governmental authorities or agencies. There are no matters
                    under discussion with any such department or authority
                    relating to work orders, non-compliance orders, deficiency
                    notices or other such notices. None of the Purchased Assets
                    are being operated, in a manner which is in contravention of
                    any statute, regulation, rule, code, standard or policy.

          3.1.9.    Leases of Personal Property. Schedule 3.1.9 attached hereto
                    describes all leases of equipment and vehicles relating to
                    or included in the Purchased Assets. Complete and correct
                    copies of those leases have been provided to the Purchaser.
                    The Vendor is entitled to all rights and benefits as lessee
                    under those leases, and the Vendor has not sublet, assigned,
                    licensed or otherwise conveyed any rights in those leases or
                    in the property leased thereunder to any other person. All
                    payments and other obligations required to be paid and
                    performed by the Vendor under those leases have been duly
                    paid and performed; the Vendor is not in default of any its
                    obligations under those leases; and, to the best of the
                    knowledge of the Vendor, none of the lessors or any other
                    parties to those leases are in default of any of their
                    obligations under those leases. The Vendor is entitled to
                    assign all of its right and interest under those leases and
                    in and to the property leased thereunder to the Purchaser
                    subject to obtaining the consents referred to in Schedule
                    3.1.3 attached hereto. Subject to obtaining such consents,
                    the terms and conditions of those leases will not be
                    affected by, nor will any of those leases be in default as a
                    result of, the completion of the transaction contemplated
                    hereunder.

          3.1.10.   Intellectual Property.

                    3.1.10.1. Schedule 2.1.6 attached hereto lists and contains
                              a complete description of:

<PAGE>
                                       14

                              (i)       all patents, patent applications and
                                        registrations, trade marks, trade mark
                                        applications and registrations,
                                        copyrights, copyright applications and
                                        registrations, trade names and
                                        industrial designs, domestic or foreign,
                                        owned or used by the Vendor and included
                                        as part of the Purchased Assets,

                              (ii)      all trade secrets, know-how, inventions
                                        and other intellectual property owned or
                                        used by the Vendor and included as part
                                        of the Purchased Assets,

                              (iii)     all computer systems and application
                                        software, including without limitation
                                        all documentation relating thereto and
                                        the latest revisions of all related
                                        object and source codes therefor, owned
                                        or used by the Vendor and included as
                                        part of the Purchased Assets,

                              (all of the foregoing being collectively called
                              the "Intellectual Property").

                    3.1.10.2. The Vendor has good and valid title to all of the
                              Intellectual Property, free and clear of any and
                              all Encumbrances, except in the case of any
                              Intellectual Property licensed to the Vendor as
                              disclosed in Schedule 3.1.10.2. Complete and
                              correct copies of all agreements whereby any
                              rights in any of the Intellectual Property have
                              been granted or licensed to the Vendor have been
                              provided to the Purchaser. No royalty or other fee
                              is required to be paid by the Vendor to any other
                              person in respect of the use of any of the
                              Intellectual Property except as provided in such
                              agreements delivered to the Purchaser. The Vendor
                              has protected its rights in the Intellectual
                              Property in the manner and to the extent described
                              in Schedule 3.1.10.2. Except as indicated in
                              Schedule 3.1.10.2, the Vendor has the exclusive
                              right to use all of the Intellectual Property and
                              has not granted any licence or other rights to any
                              other person in respect of the Intellectual
                              Property. Complete and correct copies of all
                              agreements whereby any rights in any of the
                              Intellectual Property have been granted or
                              licensed by the Vendor to any other person have
                              been provided to the Purchaser. The Vendor is
                              entitled to assign all of its rights and interest
                              in and to the Intellectual Property to the
                              Purchaser subject to obtaining the consents
                              referred to in Schedule 3.1.3 attached hereto.

                    3.1.10.3. Subject to obtaining the aforesaid consents, and
                              except as disclosed in Schedule 3.1.10.2, there
                              are no restrictions on the ability of the Vendor
                              or any successor to or assignee from the Vendor to
                              use and exploit all rights in the Intellectual
                              Property. All statements contained in all
                              applications for registration of the Intellectual
                              Property were true and correct as of the date of
                              this Agreement of such applications. Each of trade
                              marks and trade names included in the Intellectual
                              Property is in use.

<PAGE>
                                       15

                    3.1.10.4. The use of the Intellectual Property does not
                              infringe, and the Vendor has not received any
                              notice, complaint, threat or claim alleging
                              infringement of, any patent, trade mark, trade
                              name, copyright, industrial design, trade secret
                              or other Intellectual Property or propriety right
                              of any other person, and the conduct of the
                              Business does not include any activity which may
                              constitute passing off.

          3.1.11.   Affiliates. None of the Purchased Assets are owned or
                    operated by any Affiliate of the Vendor.

          3.1.12.   Partnerships or Joint Ventures. The Vendor is not, in
                    relation to any part of the Purchased Assets, a partner or
                    participant in any partnership, joint venture,
                    profit-sharing arrangement or other association of any kind
                    and is not party to any agreement under which the Vendor
                    agrees to carry on any part of the Business in such manner
                    or by which the Vendor agrees to share any revenue or profit
                    relating to the Purchased Assets with any other person or as
                    set forth in Schedule 3.1.12 attached hereto;

          3.1.13.   Customers. The Vendor has delivered to the Purchaser a true
                    and complete list of all customers of the Business, as it
                    relates to the Purchased Assets, as of the date of this
                    Agreement. The Vendor is the sole and exclusive owner of,
                    and has the unrestricted right to use, such customer list.
                    Other than as set forth on Schedule 3.1.13 or pursuant to
                    Confidentiality and Non-Disclosure Agreements set forth on
                    Schedule 3.1.13, neither the customer list nor any
                    information relating to the customers of the Business, as
                    they related to the Purchased Assets, have, within three
                    years prior to the date of this Agreement, been made
                    available to any person other than the Purchaser. The Vendor
                    has no knowledge of any facts which could reasonably be
                    expected to result in the loss of any customers or sources
                    of revenue of the Business which, in the aggregate, would
                    materially affect the Purchased Assets.

          3.1.14.   Warranties and Discounts. Except as described in Schedule
                    3.1.14 attached hereto,

<PAGE>
                                       16

                    3.1.14.1. the Vendor has not given any guarantee or warranty
                              in respect of any of the products sold or the
                              services provided as part of the Purchased Assets,
                              except warranties made in the form of the standard
                              written warranty, a copy of which has been
                              provided to the Purchaser, and except for
                              warranties implied by law;

                    3.1.14.2. except as set forth on Schedule 3.1.14.2, during
                              each of the three fiscal years of the Vendor ended
                              immediately preceding the date , no claims have
                              been made against the Vendor for breach of
                              warranty or contract requirement or negligence or
                              for a price adjustment or other concession in
                              respect of any defect in or failure to perform or
                              deliver any products, services or work in
                              connection with the Purchased Assets which had, in
                              any such year, an aggregate cost in excess of
                              $1,000;

                    3.1.14.3. there are no repair contracts or maintenance
                              obligations in favor of the customers or users of
                              the Purchased Assets except obligations incurred
                              in accordance with standard terms, a copy of which
                              has been provided to the Purchaser;

                    3.1.14.4. the Vendor is not now subject to any agreement or
                              commitment, and the Vendor has not, within three
                              years prior to the date of this Agreement, entered
                              into any agreement with or made any commitment to
                              any customer of the Business in relation to the
                              Purchased Assets which would require the
                              repurchase of any products sold to such customers
                              or adjustment of any price or the granting of any
                              refund, discount or other concession to such
                              customer; and

                    3.1.14.5. the Vendor is not required to provide any letters
                              of credit, bonds or other financial security
                              arrangements in connection with any transactions
                              with any suppliers or customers of the Business
                              relating to the Purchased Assets.

          3.1.15.   Licences, Agency and Distributorship Agreements. Schedule
                    3.1.15 attached hereto lists all agreements to which the
                    Vendor is a party or by which it is bound under which the
                    right to manufacture, use or market any product, service,
                    technology, information, data, computer hardware or software
                    or other property used in or produced or sold by the
                    Business in relation to the Purchased Assets has been
                    granted, licensed or otherwise provided to the Vendor or by
                    the Vendor to any other person, or under which the Vendor
                    has been appointed or any person has been appointed by the
                    Vendor as an agent, distributor, licensee or franchisee for
                    any of the foregoing. Complete and correct copies of all of
                    the agreements relating to the License Rights have been
                    provided to the Purchaser. The Vendor is entitled to assign
                    all of its interest in the License Rights to the Purchaser
                    subject to obtaining the consents referred to in Schedule
                    3.1.3 attached hereto. None of the agreements relating to
                    the License Rights grant to any person any authority to
                    incur any liability or obligation or to enter into any
                    agreement on behalf of the Vendor.

<PAGE>
                                       17

          3.1.16.   Outstanding Agreements. The Vendor is not a party to or
                    bound by any outstanding or executory agreement, contract or
                    commitment, whether written or oral, relating to the
                    Purchased Assets, except for those agreements set out in
                    this Agreement or in the Schedules hereto. Complete and
                    correct copies of each of the contracts, leases and
                    agreements described in the Schedules attached hereto have
                    been provided to the Purchaser.

          3.1.17.   Good Standing of Agreements. The Vendor is not in material
                    default or breach of any of its obligations under any one or
                    more contracts, agreements (written or oral), commitments,
                    indentures or other instruments to which it is a party or by
                    which it is bound relating to the Purchased Assets, and
                    there exists no state of facts which, after notice or lapse
                    of time or both, would constitute such a default or breach.
                    All such contracts, agreements, commitments, indentures and
                    other instruments are now in good standing and in full force
                    and effect without amendment thereto, the Vendor is entitled
                    to all benefits thereunder and, to the best of the knowledge
                    of the Vendor, the other parties to such contracts,
                    agreements, commitments, indentures and other instruments
                    are not in material default or breach of any of their
                    obligations thereunder. There are no contracts, agreements,
                    commitments, indentures or other instruments relating to the
                    Purchased Assets under which the Vendor's rights or the
                    performance of its obligations are dependent on or supported
                    by the guarantee of or any security provided by any other
                    person.

          3.1.18.   Compliance with Laws. In relation to the Business, the
                    Vendor is not in violation of any federal, state or other
                    law, regulation or order of any government or governmental
                    or regulatory authority, domestic or foreign.

          3.1.19.   Accounts Receivable. All Accounts Receivable are bona fide
                    and good and, subject to an allowance for doubtful accounts
                    taken in accordance with generally accepted accounting
                    principles, collectible without set-off or counterclaim.

<PAGE>
                                       18

          3.1.20.   Copies of Documents. Complete and correct copies (including
                    all amendments) of all contracts, leases and other documents
                    referred to in this Agreement or any Schedule hereto or
                    required to be disclosed hereby have been delivered to the
                    Purchaser.

          3.1.21.   Disclosure. No representation or warranty contained in this
                    Section 3.1, and no statement contained in any Schedule,
                    certificate, list, summary or other disclosure document
                    provided or to be provided to the Purchaser pursuant hereto,
                    or in connection with the transactions contemplated hereby,
                    contains or will contain any untrue statement of a material
                    fact, or omits or will omit to state any material fact which
                    is necessary in order to make the statements contained
                    therein not misleading.

          3.1.22.   Recitals. The recitals set forth in the first page of this
                    Agreement are true and correct.

          3.1.23.   Antitrust. Any waiting period applicable to the transactions
                    contemplated herein under the HSR Act shall have been
                    terminated or shall have expired.

          3.1.24.   Federal Securities Act - Unregistered Shares. The Vendor
                    acknowledges that the Workstream Shares, have not and are
                    not being registered under the Securities Act of 1933 as
                    amended (the "1933 Act"), and that accordingly the
                    Workstream Shares are not fully transferable except as
                    permitted under the various exemptions contained in the 1933
                    Act and the rules of the Securities and Exchange Commission
                    interpreting the 1933 Act. The provisions contained in this
                    paragraph 3.1.24 are intended to ensure compliance with the
                    1933 Act.

          3.1.25.   No Transfers in Violation of 1933 Act. The Vendor covenants,
                    warrants and represents that none of the Securities that
                    will be issued to it pursuant to this Agreement will be
                    offered, sold, assigned, pledged, hypothecated, transferred,
                    or otherwise disposed of except after full compliance with
                    all of the applicable provisions of the 1933 Act and the
                    rules and regulations of the Securities and Exchange
                    Commission under the 1933 Act.

          3.1.26.   No Distribution of Securities to Public. The Vendors
                    represent and warrants to Workstream that it is acquiring
                    the Securities for its own account, for investment, and not
                    with a view to their resale or other distribution; that it
                    currently has no intention of selling, transferring,
                    hypothecating, or otherwise disposing of all or any part of
                    the Securities at any particular time, for any particular
                    price, or on the happening of any particular event or
                    circumstances; and that Workstream is relying on the truth
                    and accuracy of these covenants, warranties, and
                    representations in issuing the Securities without first
                    registering them under the 1933 Act.

<PAGE>
                                       19

          3.1.27.   Investment Legend on Certificates. The Vendor agrees not to
                    sell, transfer, hypothecate or otherwise dispose of any of
                    the Securities received pursuant to this Agreement unless
                    and until it has: presented Workstream with a written legal
                    opinion in form and substance satisfactory to the solicitors
                    for Workstream to the effect that the disposition is
                    permissible under the terms of the 1933 Act and regulations
                    interpreting the 1933 Act; has complied with the
                    registration and prospectus requirements of the 1933 Act
                    relating to the disposition ,or; has presented Workstream
                    satisfactory evidence that the transfer will comply with
                    Rule 144 under the 1933 Act and therefore will be exempt
                    from registration under section 4(2) of the 1933 Act. The
                    Vendor further agrees that the certificates evidencing the
                    Securities it will receive shall contain the following
                    legend:

                    "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                    BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
                    1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE
                    SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
                    REGISTRATION FOR THESE SECURITIES UNDER THE ACT OR AN
                    OPINION OF THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT
                    REQUIRED UNDER THE ACT."

                    Workstream shall also place a "stop transfer" order against
                    any transfer of the Securities until one of the conditions
                    set forth above has been met.

3.2.      REPRESENTATIONS AND WARRANTIES BY THE PURCHASER AND/OR WORKSTREAM. The
          Purchaser and/or Workstream hereby represents and warrants to the
          Vendor as follows, and confirms that the Vendor is relying on the
          accuracy of each of such representations and warranties in connection
          with the sale of the Purchased Assets and the completion of the other
          transactions hereunder:

          3.2.1.    Corporate Authority and Binding Obligation. The Purchaser is
                    a corporation duly incorporated and validly subsisting in
                    all respects under the laws of its jurisdiction of
                    incorporation. The Purchaser has good right, full corporate
                    power and absolute authority to enter into this Agreement
                    and to purchase the Purchased Assets from the Vendor in the
                    manner contemplated herein and to perform all of the
                    Purchaser's obligations under this Agreement. The Purchaser
                    and its shareholders and board of directors have taken all
                    necessary or desirable actions, steps and corporate and
                    other proceedings to approve or authorize, validly and
                    effectively, the entering into of, and the execution,
                    delivery and performance of, this Agreement and the purchase
                    of the Purchased Assets by the Purchaser from the Vendor.
                    This Agreement is a legal, valid and binding obligation of
                    the Purchaser, enforceable against it in accordance with its
                    terms.

<PAGE>
                                       20

          3.2.2.    Contractual and Regulatory Approvals. Except as specified in
                    Schedule 3.2.2 attached hereto, the Purchaser is not under
                    any obligation, contractual or otherwise to request or
                    obtain the consent of any person, and no permits, licences,
                    certifications, authorizations or approvals of, or
                    notifications to, any federal, state, municipal or local
                    government or governmental agency, board, commission or
                    authority are required to be obtained by the Purchaser in
                    connection with the execution, delivery or performance by
                    the Purchaser of this Agreement or the completion of any of
                    the transactions contemplated herein. Complete and correct
                    copies of any agreements under which the Purchaser is
                    obligated to request or obtain any such consent have been
                    provided to the Vendor.

          3.2.3.    Capitalization. The authorized capital stock of Workstream
                    and the shares thereof issued and outstanding as of the date
                    hereof are set forth on Schedule 3.2.3 hereto. All of the
                    outstanding shares of Workstream have been duly and validly
                    authorized. Workstream is not a party to, and it has no
                    knowledge of, any agreement or understanding restricting the
                    voting or transfer of any shares of the capital stock of
                    Workstream. Except as set forth on the Commission Documents
                    or Schedule 3.2.3 hereto, the offer and sale of all capital
                    stock, convertible securities, rights, warrants, or options
                    of Workstream issued prior to the Closing Date complied in
                    all material respects with all applicable federal and state
                    securities laws, and no holder of such securities has a
                    right of rescission or claim for damages with respect
                    thereto which could have a Material Adverse Effect. The
                    Purchaser has furnished or made available to the Vendor true
                    and correct copies of Workstream's Articles of Incorporation
                    as in effect on the date hereof (the "Articles"), and
                    Workstream's Bylaws as in effect on the date hereof (the
                    "Bylaws"). Workstream has provided the Vendor with copies of
                    and the Vendor has reviewed the following documents, which
                    have been filed by Workstream with the Commission pursuant
                    to the Securities Exchange Act of 1934: (i) Workstream's
                    Annual Report on Form 10-K, as amended, for the fiscal year
                    ended May 31, 2003; (ii) Workstream's Quarterly Reports on
                    Form 10-Q for the quarters ended August 31, 2003, November
                    30, 2003 and February 29, 2004; and (iii) Workstream's proxy
                    statement with respect to its 2003 annual meeting.

<PAGE>
                                       21

          3.2.4.    Issuance of Securities. The Shares to be issued on the
                    Closing Date have been duly authorized by all necessary
                    corporate action and, when paid for or issued in accordance
                    with the terms hereof, the Shares shall be validly issued
                    and outstanding, fully paid and nonassessable, and free from
                    preemptive rights, taxes upon issuance, liens and similar
                    charges caused by Workstream and entitled to all applicable
                    rights and preferences set forth in the Articles.

          3.2.5.    No Conflicts. Except as set forth in Schedule 3.2.5 attached
                    hereto, the execution, delivery and performance of this
                    Agreement by the Purchaser and Workstream and the
                    consummation by the Purchaser and Workstream of the
                    transactions contemplated herein and therein do not and will
                    not (i) violate any provision of the Purchaser or
                    Workstream's Articles or Bylaws, (ii) conflict with, or
                    constitute a default (or an event which with notice or lapse
                    of time or both would become a default) under, or give to
                    others any rights of termination, amendment, acceleration or
                    cancellation of, any agreement, mortgage, deed of trust,
                    indenture, note, bond, license, lease agreement, instrument
                    or obligation to which the Purchaser or Workstream is a
                    party or by which any of its respective properties or assets
                    are bound, (iii) create or impose a lien, mortgage, security
                    interest, charge or encumbrance of any nature whatsoever on
                    any property of the Purchaser or Workstream under any
                    agreement or any commitment to which the Purchaser or
                    Workstream is a party or by which the Purchaser or
                    Workstream is bound or by which any of its respective
                    properties or assets are bound, or (iv) result in a
                    violation of any federal, state, local or foreign statute,
                    rule, regulation, order, judgment or decree (including
                    federal and state securities laws and regulations)
                    applicable to the Purchaser or Workstream or any of its
                    subsidiaries or by which any property or asset of the
                    Purchaser or Workstream or any of its subsidiaries are bound
                    or affected, except, in all cases other than violations
                    pursuant to clause (i) above, for such conflicts, defaults,
                    terminations, amendments, acceleration, cancellations and
                    violations as would not, individually or in the aggregate,
                    have a Material Adverse Effect. The business of the
                    Purchaser or Workstream and its subsidiaries is not being
                    conducted in violation of any laws, ordinances or
                    regulations of any governmental entity, except for possible
                    violations which singularly or in the aggregate do not and
                    will not have a Material Adverse Effect. The Purchaser or
                    Workstream is not required under federal, state or local
                    law, rule or regulation to obtain any consent, authorization
                    or order of, or make any filing or registration with, any
                    court or governmental agency in order for it to execute,
                    deliver or perform any of its obligations under this
                    Agreement, or issue and sell the Shares and the Warrant
                    Shares in accordance with the terms hereof or thereof (other
                    than any filings which may be required to be made by the
                    Purchaser or Workstream with the Commission or state
                    securities administrators subsequent to a Closing, and any
                    registration statement which may be filed pursuant hereto);
                    provided that, for purposes of the representation made in
                    this sentence, the Purchaser and Workstream is assuming and
                    relying upon the accuracy of the relevant representations
                    and agreements of the Vendor herein.

<PAGE>
                                       22

          3.2.6.    Commission Documents, Financial Statements. The financial
                    statements of the Purchaser or Workstream furnished to the
                    Vendor comply as to form in all material respects with
                    applicable accounting requirements and the published rules
                    and regulations of the Commission or other applicable rules
                    and regulations with respect thereto. Such financial
                    statements have been prepared in accordance with generally
                    accepted accounting principles ("GAAP") applied on a
                    consistent basis during the periods involved (except (i) as
                    may be otherwise indicated in such financial statements or
                    the notes thereto or (ii) in the case of unaudited interim
                    statements, to the extent they may not include footnotes or
                    may be condensed or summary statements), and fairly present
                    in all material respects the financial position of the
                    Purchaser and Workstream and its subsidiaries as of the
                    dates thereof and the results of operations and cash flows
                    for the periods then ended (subject, in the case of
                    unaudited statements, to normal year-end audit adjustments).

          3.2.7.    Subsidiaries. The Commission Documents or Schedule 3.2.7
                    hereto sets forth each subsidiary of the Purchaser and
                    Workstream showing the jurisdiction of its incorporation or
                    organization and showing the percentage of the Purchaser and
                    Workstream's ownership of the outstanding stock or other
                    interests of such subsidiary. For the purposes of this
                    Agreement, "subsidiary" shall mean any corporation or other
                    entity of which at least a majority of the securities or
                    other ownership interest having ordinary voting power
                    (absolutely or contingently) for the election of directors
                    or other persons performing similar functions are at the
                    time owned directly or indirectly by the Purchaser and
                    Workstream and/or any of its other subsidiaries. All of the
                    outstanding shares of capital stock of each subsidiary have
                    been duly authorized and validly issued, and are fully paid
                    and non-assessable. Except as disclosed on Schedule 3.2.7
                    there are no outstanding preemptive, conversion or other
                    rights, options, warrants or agreements granted or issued by
                    or binding upon any subsidiary for the purchase or
                    acquisition of any shares of capital stock of any subsidiary
                    or any other securities convertible into, exchangeable for
                    or evidencing the rights to subscribe for any shares of such
                    capital stock. Neither the Purchaser, Workstream nor any
                    subsidiary is subject to any obligation (contingent or
                    otherwise) to repurchase or otherwise acquire or retire any
                    shares of the capital stock of any subsidiary or any
                    convertible securities, rights, warrants or options of the
                    type described in the preceding sentence. Neither the
                    Purchaser, Workstream nor any subsidiary is party to, nor
                    has any knowledge of, any agreement restricting the voting
                    or transfer of any shares of the capital stock of any
                    subsidiary.

<PAGE>
                                       23

          3.2.8.    No Material Adverse Change. Since February 29, 2004, the
                    date through which the most recent report of Workstream has
                    been prepared and filed with the Commission (a copy of which
                    is included in the Commission Documents) Workstream has not
                    experienced or suffered any Material Adverse Effect, except
                    as disclosed on Schedule 3.2.8 hereto.

          3.2.9.    No Undisclosed Events or Circumstances. No event or
                    circumstance has occurred or exists with respect to the
                    Purchaser, Workstream or its subsidiaries or their
                    respective businesses, properties, prospects, operations or
                    financial condition, which, under applicable law, rule or
                    regulation, requires public disclosure or announcement by
                    the Purchaser or Workstream but which has not been so
                    publicly announced or disclosed.

          3.2.10.   Actions Pending. There is no action, suit, claim,
                    investigation or proceeding pending or, to the knowledge of
                    the Purchaser or Workstream, threatened against the
                    Purchaser, Workstream or any subsidiary which questions the
                    validity of this Agreement or the transactions contemplated
                    hereby or any action taken or to be taken pursuant hereto or
                    thereto. To the knowledge of the Purchaser and Workstream,
                    there is no action, suit, claim, investigation or proceeding
                    pending or threatened, against or involving the Purchaser,
                    Workstream, any subsidiary or any of their respective
                    properties or assets, except as set forth in the Commission
                    Document or Schedule 3.2.10 hereto. There are no outstanding
                    orders, judgments, injunctions, awards or decrees of any
                    court, arbitrator or governmental or regulatory body against
                    the Purchaser, Workstream or any subsidiary or any officers
                    or directors of the Purchaser, Workstream or subsidiary in
                    their capacities as such.

          3.2.11.   Compliance with Law. The business of the Purchaser,
                    Workstream and the subsidiaries has been and is presently
                    being conducted in accordance with all applicable federal,
                    state and local governmental laws, rules, regulations and
                    ordinances, except as set forth in the Commission Documents
                    or Schedule 3.2.11 hereto or such that, individually or in
                    the aggregate, the non-compliance therewith would not have a
                    Material Adverse Effect. The Purchaser, Workstream and each
                    of its subsidiaries have all franchises, permits, licenses,
                    consents and other governmental or regulatory authorizations
                    and approvals necessary for the conduct of its business as
                    now being conducted by it unless the failure to possess such
                    franchises, permits, licenses, consents and other
                    governmental or regulatory authorizations and approvals,
                    individually or in the aggregate, could not reasonably be
                    expected to have a Material Adverse Effect.

<PAGE>
                                       24

          3.2.12.   Taxes. Except as set forth in the Commission Documents or
                    Schedule 3.2.12 hereto, the Purchaser, Workstream and each
                    of the subsidiaries has accurately prepared and filed all
                    federal, state and other tax returns required by law to be
                    filed by it, has paid or made provisions for the payment of
                    all taxes shown to be due and all additional assessments,
                    and adequate provisions have been and are reflected in the
                    financial statements of the Purchaser, Workstream and the
                    subsidiaries for all current taxes and other charges to
                    which the Purchaser, Workstream or any subsidiary is subject
                    and which are not currently due and payable. Except as
                    disclosed on Schedule 3.2.12 hereto, none of the federal
                    income tax returns of the Purchaser, Workstream or any
                    subsidiary have been audited by the Internal Revenue
                    Service. The Purchaser and Workstream has no knowledge of
                    any additional assessments, adjustments or contingent tax
                    liability (whether federal or state) of any nature
                    whatsoever, whether pending or threatened against the
                    Purchaser, Workstream or any subsidiary for any period, nor
                    of any basis for any such assessment, adjustment or
                    contingency.

          3.2.13.   Operation of Business. The Purchaser, Workstream and each of
                    the subsidiaries owns or possesses all patents, trademarks,
                    domain names (whether or not registered) and any patentable
                    improvements or copyrightable derivative works thereof,
                    websites and intellectual property rights relating thereto,
                    service marks, trade names, copyrights, licenses and
                    authorizations and all rights with respect to the foregoing,
                    which are necessary for the conduct of its business as now
                    conducted without any conflict with the rights of others
                    except as disclosed in the Commission Documents or on
                    Schedule 3.2.13.

          3.2.14.   Books and Record Internal Accounting Controls. The records
                    and documents of the Purchaser, Workstream and its
                    subsidiaries accurately reflect in all material respects the
                    information relating to the business of the Purchaser,
                    Workstream and the subsidiaries, the location and collection
                    of their assets, and the nature of all transactions giving
                    rise to the obligations or accounts receivable of the
                    Purchaser, Workstream or any subsidiary. The Purchaser,
                    Workstream and each of its subsidiaries maintain a system of
                    internal accounting controls sufficient, in the judgment of
                    the Purchaser and Workstream's board of directors, to
                    provide reasonable assurance that (i) transactions are
                    executed in accordance with management's general or specific
                    authorizations, (ii) transactions are recorded as necessary
                    to permit preparation of financial statements in conformity
                    with generally accepted accounting principles and to
                    maintain asset accountability, (iii) access to assets is
                    permitted only in accordance with management's general or
                    specific authorization and (iv) the recorded accountability
                    for assets is compared with the existing assets at
                    reasonable intervals and appropriate actions is taken with
                    respect to any differences.
<PAGE>
                                       25

          3.2.15.   Material Agreements. Except as set forth in the Commission
                    Documents or on Schedule 3.2.15 hereto, neither the
                    Purchaser, Workstream nor any subsidiary is a party to any
                    written or oral contract, instrument, agreement, commitment,
                    obligation, plan or arrangement, a copy of which would be
                    required to be filed with the Commission as an exhibit to a
                    registration statement on Form S-3 or applicable form
                    (collectively, "Material Agreements"). Except as set forth
                    in the Commission Documents or on Schedule 3.2.15 hereto,
                    the Purchaser, Workstream and each of its subsidiaries has
                    in all material respects performed all the obligations
                    required to be performed by them to date under the foregoing
                    agreements, have received no notice of default and, to the
                    best of the Purchaser and Workstream's knowledge are not in
                    default under any Material Agreement now in effect, the
                    result of which could cause a Material Adverse Effect. No
                    written or oral contract, instrument, agreement, commitment,
                    obligation, plan or arrangement of the Purchaser, Workstream
                    or of any subsidiary limits or shall limit the payment of
                    dividends on Workstream's common shares.

          3.2.16.   Securities Act of 1933. The Purchaser and Workstream have
                    complied and will comply in all material respects with all
                    applicable federal and state securities laws in connection
                    with the issuance of the Shares and the Warrants hereunder.
                    Neither the Purchaser or Workstream nor anyone acting on
                    their behalf, directly or indirectly, has or will sell,
                    offer to sell or solicit offers to buy any of the Shares, or
                    similar securities to, or solicit offers with respect
                    thereto from, or enter into any preliminary conversations or
                    negotiations relating thereto with, any person, or has taken
                    or will take any action so as to bring the issuance and sale
                    of any of the Shares under the registration provisions of
                    the Securities Act and any other applicable federal and
                    state securities laws.

<PAGE>
                                       26

          3.2.17.   Governmental Approvals. Except as set forth in the
                    Commission Documents or on Schedule 3.2.17 hereto, and
                    except for the filing of any notice prior or subsequent to
                    the Closing Date that may be required under applicable state
                    or federal securities laws (which if required, shall be
                    filed on a timely basis), no authorization, consent,
                    approval, license exemption of, filing or registration with
                    any court or governmental department, commission, board,
                    bureau, agency or instrumentality, domestic or foreign, is
                    or will be necessary for, or in connection with, the
                    execution or delivery of the Shares, or for the performance
                    by the Purchaser or Workstream of its obligations under this
                    Agreement.

          3.2.18.   Investment Company Act Status. The Purchaser and Workstream
                    is not, and as a result of and immediately upon the Closing
                    Date will not be, an "investment company" or a company
                    "controlled" by an "investment company," within the meaning
                    of the Investment Company Act of 1940, as amended.

4.        SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES

          4.1.      SURVIVAL OF WARRANTIES BY THE VENDOR. The representations
                    and warranties made by the Vendor and contained in this
                    Agreement, or contained in any document or certificate given
                    in order to carry out the transactions contemplated hereby,
                    will survive the closing of the purchase of the Purchased
                    Assets provided for herein and, notwithstanding such closing
                    or any investigation made by or on behalf of the Purchaser,
                    Workstream or any other person or any knowledge of the
                    Purchaser, Workstream or any other person, shall continue in
                    full force and effect for the benefit of the Purchaser or
                    Workstream, except that no Warranty Claim may be made or
                    brought by the Purchaser or Workstream after the date which
                    is two years following the Closing Date.

                    After the expiration of the period of time referred to in
                    this section 4.1, the Vendor will be released from all
                    obligations and liabilities in respect of the
                    representations and warranties made by the Vendor and
                    contained in this Agreement or in any document or
                    certificate given in order to carry out the transactions
                    contemplated hereby except with respect to any claims made
                    by the Purchaser and/or Workstream in writing prior to the
                    expiration of such period.

<PAGE>
                                       27

          4.2.      SURVIVAL OF WARRANTIES BY PURCHASER AND WORKSTREAM. The
                    representations and warranties made by the Purchaser and/or
                    Workstream and contained in this Agreement or contained in
                    any document or certificate given in order to carry out the
                    transactions contemplated hereby will survive the closing of
                    the purchase and sale of the Purchased Assets provided for
                    herein and, notwithstanding such closing or any
                    investigation made by or on behalf of the Vendor or any
                    other person or any knowledge of the Vendor or any other
                    person, shall continue in full force and effect for the
                    benefit of the Vendor except that no Warranty Claim may be
                    made or brought by the Vendor after the date which is two
                    years following the Closing Date.

                    After the expiration of the period of time referred to in
                    this section 4.2, the Purchaser and Workstream will be
                    released from all obligations and liabilities in respect of
                    the representations and warranties made by the Purchaser
                    and/or Workstream and contained in this Agreement or in any
                    document or certificate given in order to carry out the
                    transactions contemplated hereby except with respect to any
                    claims made by the Purchaser and/or Workstream in writing
                    prior to the expiration of such period.

          4.3.      LIMITATIONS ON WARRANTY CLAIMS.

                    4.3.1.    The Purchaser and/or Workstream shall not be
                              entitled to make a Warranty Claim if the Purchaser
                              and/or Workstream has been advised in writing or
                              otherwise has actual knowledge prior to the
                              Closing Time of the inaccuracy, non-performance,
                              non-fulfilment or breach which is the basis for
                              such Warranty Claim and the Purchaser and/or
                              Workstream completes the transactions hereunder
                              notwithstanding such inaccuracy, non-performance,
                              non-fulfilment or breach.

                    4.3.2.    The amount of any damages which may be claimed by
                              the Purchaser and/or Workstream pursuant to a
                              Warranty Claim shall be calculated to be the cost
                              or loss to the Purchaser and/or Workstream after
                              giving effect to any insurance proceeds available
                              to the Purchaser and/or Workstream in relation to
                              the matter which is the subject of the Warranty
                              Claim.

                    4.3.3.    The Purchaser and/or Workstream shall not be
                              entitled to make any Warranty Claim until the
                              aggregate amount of all damages, losses,
                              liabilities and expenses incurred by the Purchaser
                              and/or Workstream as a result of all
                              misrepresentations and breaches of warranties
                              contained in this Agreement or contained in any
                              document or certificate given in order to carry
                              out the transactions contemplated hereby, after
                              taking into account section 4.3.2 of this section,
                              is equal to $5,000. After the aggregate amount of
                              such damages, losses, liabilities and expenses
                              incurred by the Purchaser and/or Workstream
                              exceeds $5,000, the Purchaser and/or Workstream
                              shall only be entitled to make Warranty Claims to
                              the extent that such aggregate amount, after
                              taking into account the provisions of section
                              4.3.2 of this section, exceeds $5,000.

<PAGE>
                                       28

                    4.3.4.    Notwithstanding any other provisions of this
                              Agreement or of any agreement, certificate or
                              other document made in order to carry out the
                              transactions contemplated hereby, the maximum
                              aggregate liability of the Vendor together in
                              respect of all Warranty Claims by the Purchaser
                              and/or Workstream will be limited to an amount
                              equal to the Purchase Price actually received by
                              Vendor.

5.        COVENANTS

          5.1.      COVENANTS BY THE VENDOR. The Vendor covenants to the
                    Purchaser and Workstream that it will do or cause to be done
                    the following:

                    5.1.1.    Investigation of Business and Examination of
                              Documents. During the Interim Period, the Vendor
                              will provide access to and will permit the
                              Purchaser, through its representatives, to make
                              such investigation of, the operations, properties,
                              assets and records of the Business and of its
                              financial and legal condition as the Purchaser
                              deems necessary or advisable to familiarize itself
                              with such operations, properties, assets, records
                              and other matters relating to the Purchased
                              Assets. Without limiting the generality of the
                              foregoing, during the Interim Period the Vendor
                              will permit the Purchaser and its representatives
                              to have access to the premises used in connection
                              with the Business and will produce for inspection
                              and provide copies to the Purchaser of:

                              5.1.1.1.  all agreements and other documents
                                        referred to in Section 3.1 or in any of
                                        the Schedules attached hereto and all
                                        other documents of or in the possession
                                        of the Vendor relating to the Purchased
                                        Assets; and

                              5.1.1.2.  all other information which, in the
                                        reasonable opinion of the Purchaser's
                                        representatives, is required in order to
                                        make an examination of the Purchased
                                        Assets.

                    5.1.2.    such investigations and inspections shall not
                              mitigate or affect the representations and
                              warranties of the Vendor hereunder, which shall
                              continue in full force and effect.

<PAGE>
                                       29

                    5.1.3.    Transfer of Purchased Assets. At or before the
                              Closing Time, the Vendor will cause all necessary
                              steps and corporate proceedings to be taken in
                              order to permit the Purchased Assets to be duly
                              and regularly transferred to the Purchaser.

                    5.1.4.    Forms of Conveyance. At the Closing Time, the
                              Vendor will deliver to the Purchaser good and
                              marketable title to and exclusive possession of
                              the Purchased Assets, free and clear of any and
                              all Encumbrances. At the Closing Time, the Vendor
                              will execute and deliver to the Purchaser one or
                              more forms of general conveyance, or bills of
                              sale, deeds, transfers and other documents
                              reasonably requested by the Purchaser in respect
                              of the assignment, conveyance, transfer and
                              delivery of the Purchased Assets to the Purchaser
                              in form which is registrable and acceptable to the
                              Purchaser.

                    5.1.5.    Transfer of Assumed Contracts. At the Closing
                              Time, the Vendor will deliver to the Purchaser:

                              5.1.5.1.  an executed original of each of the
                                        Assumed Contracts,

                              5.1.5.2.  one or more forms of assignment of the
                                        Assumed Contracts in form acceptable to
                                        the Purchaser, and

                              5.1.5.3.  consents to the assignment of all of the
                                        Assumed Contracts under which consent is
                                        required executed by all persons whose
                                        consent is required in form acceptable
                                        to the Purchaser.

                    5.1.6.    Transmittal Letter. At the Closing Time, the
                              Vendor will deliver to the Purchaser a transmittal
                              letter for the subscription for the common shares
                              in Workstream issuable pursuant to this Agreement,
                              in a form and content acceptable to solicitors for
                              the Purchaser.

          5.2.      COVENANTS BY THE PURCHASER AND/OR WORKSTREAM. The Purchaser
                    and/or Workstream covenants to the Vendor that it will do or
                    cause to be done the following:

                    5.2.1.    Confidentiality. Prior to the Closing Time and, if
                              the transaction contemplated hereby is not
                              completed, at all times after the Closing Time,
                              the Purchaser will keep confidential all
                              information obtained by it relating to the
                              Purchased Assets and Business, except such
                              information which:

                              5.2.1.1.  prior to the date of this Agreement was
                                        already in the possession of the
                                        Purchaser, as demonstrated by written
                                        records,

<PAGE>
                                       30

                              5.2.1.2.  is generally available to the public,
                                        other than as a result of a disclosure
                                        by the Purchaser, or

                              5.2.1.3.  is made available to the Purchaser on a
                                        non-confidential basis from a source
                                        other than the Vendor, or its
                                        representatives.

                              5.2.1.4.  The Purchaser further agrees that such
                                        information will be disclosed only to
                                        those of its employees and
                                        representatives of its advisors who need
                                        to know such information for the
                                        purposes of evaluating and implementing
                                        the transaction contemplated hereby.
                                        Notwithstanding the foregoing provisions
                                        of this paragraph, the obligation to
                                        maintain the confidentiality of such
                                        information will not apply to the extent
                                        that disclosure of such information is
                                        required in connection with governmental
                                        or other applicable filings relating to
                                        the transactions hereunder, provided
                                        that, in such case, unless the Vendor
                                        otherwise agrees, the Purchaser will, if
                                        possible, request confidentiality in
                                        respect of such governmental or other
                                        filings. If the transactions
                                        contemplated hereby are not consummated
                                        for any reason, the Purchaser will
                                        return forthwith, without retaining any
                                        copies, all information and documents
                                        obtained from the Vendor.

6.        CONDITIONS

          6.1.      CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
                    Notwithstanding anything herein contained, the obligation of
                    the Purchaser and/or Workstream to complete the transactions
                    provided for herein will be subject to the fulfilment of the
                    following conditions by the Vendor at or prior to the
                    Closing Time and the Vendor covenants to ensure that such
                    conditions are fulfilled.

                    6.1.1.    Accuracy of Representations and Warranties and
                              Performance of Covenants. The representations and
                              warranties of the Vendor contained in this
                              Agreement or in any documents delivered in order
                              to carry out the transactions contemplated hereby
                              shall be true and accurate on the date and at the
                              Closing Time with the same force and effect as
                              though such representations and warranties had
                              been made as of the Closing Time (regardless of
                              the date as of which the information in this
                              Agreement or in any Schedule or other document
                              made pursuant hereto is given). In addition, the
                              Vendor shall have complied with all covenants and
                              agreements herein agreed to be performed or caused
                              to be performed by them at or prior to the Closing
                              Time. In addition, the Vendor shall have delivered
                              to the Purchaser a certificate in the form of
                              Schedule 6.1.1 attached hereto confirming that the
                              facts with respect to each of such representations
                              and warranties by the Vendor are as set out herein
                              at the Closing Time and that the Vendor has
                              performed all covenants required to be performed
                              by them hereunder.

<PAGE>
                                       31

                    6.1.2.    Material Adverse Changes. During the Interim
                              Period there will have been no change in the
                              Purchased Assets, howsoever arising, except
                              changes which have occurred in the ordinary course
                              of the Business and which, individually or in the
                              aggregate, have not affected and may not affect
                              the Purchased Assets in any material adverse
                              respect. Without limiting the generality of the
                              foregoing, during the Interim Period no damage to
                              or destruction of any material part of the
                              Purchased Assets shall have occurred, whether or
                              not covered by insurance.

                    6.1.3.    No Restraining Proceedings. No order, decision or
                              ruling of any court, tribunal or regulatory
                              authority having jurisdiction shall have been
                              made, and no action or proceeding shall be pending
                              or threatened which, in the opinion of counsel to
                              the Purchaser, is likely to result in an order,
                              decision or ruling,

                              6.1.3.1.  to disallow, enjoin, prohibit or impose
                                        any limitations or conditions on the
                                        purchase and sale of the Purchased
                                        Assets contemplated hereby or the right
                                        of the Purchaser to own the Purchased
                                        Assets; or

                              6.1.3.2.  to impose any limitations or conditions
                                        which may have a Material Adverse Effect
                                        on the Purchased Assets.

                    6.1.4.    Consents. All consents required to be obtained in
                              order to carry out the transactions contemplated
                              hereby in compliance with all laws and agreements
                              binding on the parties hereto shall have been
                              obtained, including the consents referred to in
                              Schedules 3.1.3 and 3.2.2 attached hereto.

                    6.1.5.    Opinion of Vendor's Counsel. At the Closing Time,
                              the Purchaser shall have received an opinion of
                              legal counsel for the Vendor in the form of the
                              draft opinion attached hereto as Schedule 6.1.5,
                              which opinion may rely on certificates of one or
                              more senior officers of the Vendor as to factual
                              matters and may rely upon opinions of local
                              counsel with respect to matters governed by laws
                              other than the laws of the State of Illinois and
                              the federal laws of United States applicable in
                              the State of Illinois.

<PAGE>
                                       32

                    6.1.6.    Assignment and Waiver of Intellectual Property
                              Rights. At the Closing Time, the Vendor shall have
                              delivered to the Purchaser a certificate of the
                              Vendor in the form of the draft attached hereto as
                              Schedule 6.1.6, whereby the Vendor assigns all of
                              its intellectual property rights in the assets
                              listed in Schedule 2.1.6 (the "IP Assets").

                    6.1.7.    Further Assurances. On and at any time after the
                              Closing Time, the Vendor shall furnish the
                              Purchaser at no additional charge with such
                              further written documentation in order to enable
                              the Purchaser to establish, prove or perfect the
                              Purchaser's ownership of any of the assets herein
                              conveyed. 6.1.8. Escrow Agreement. The Vendor, the
                              Purchaser and Workstream shall have entered into
                              the escrow agreement attached hereto as Schedule
                              2.5.3.

          6.2.      WAIVER OR TERMINATION BY PURCHASER AND/OR WORKSTREAM. The
                    conditions contained in Section 6.1 are inserted for the
                    exclusive benefit of the Purchaser and/or Workstream and may
                    be waived in whole or in part by the Purchaser and/or
                    Workstream at any time. The Vendor acknowledges that the
                    waiver by the Purchaser and/or Workstream of any condition
                    or any part of any condition shall constitute a waiver only
                    of such condition or such part of such condition, as the
                    case may be, and shall not constitute a waiver of any
                    covenant, agreement, representation or warranty made by the
                    Vendor herein that corresponds or is related to such
                    condition or such part of such condition, as the case may
                    be. If any of the conditions contained in Section 6.1 are
                    not fulfilled or complied with as herein provided, the
                    Purchaser and/or Workstream may, at or prior to the Closing
                    Time at its option, rescind this Agreement by notice in
                    writing to the Vendor and in such event the Purchaser and
                    Workstream shall be released from all obligations hereunder
                    and, unless the condition or conditions which have not been
                    fulfilled are reasonably capable of being fulfilled or
                    caused to be fulfilled by the Vendor, then the Vendor shall
                    also be released from all obligations hereunder.

          6.3.      CONDITIONS TO THE OBLIGATIONS OF THE VENDOR. Notwithstanding
                    anything herein contained, the obligations of the Vendor to
                    complete the transactions provided for herein will be
                    subject to the fulfilment of the following conditions at or
                    prior to the Closing Time, and the Purchaser and/or
                    Workstream will use its best efforts to ensure that such
                    conditions are fulfilled.

                    6.3.1.    Accuracy of Representations and Warranties and
                              Performance of Covenants. The representations and
                              warranties of the Purchaser and Workstream
                              contained in this Agreement or in any documents
                              delivered in order to carry out the transactions
                              contemplated hereby will be true and accurate on
                              the date and at the Closing Time with the same
                              force and effect as though such representations
                              and warranties had been made as of the Closing
                              Time (regardless of the date as of which the
                              information in this Agreement or any such Schedule
                              or other document made pursuant hereto is given).
                              In addition, the Purchaser and Workstream shall
                              have complied with all covenants and agreements
                              herein agreed to be performed or caused to be
                              performed by it at or prior to the Closing Time.
                              In addition, the Purchaser and Workstream shall
                              have delivered to the Vendor a certificate in the
                              form of Schedule 6.3.1 attached hereto confirming
                              that the facts with respect to each of the
                              representations and warranties of the Purchaser
                              and Workstream are as set out herein at the
                              Closing Time and that the Purchaser and Workstream
                              has performed each of the covenants required to be
                              performed by it hereunder.

<PAGE>
                                       33

                    6.3.2.    No Restraining Proceedings. No order, decision or
                              ruling of any court, tribunal or regulatory
                              authority having jurisdiction shall have been
                              made, and no action or proceeding shall be pending
                              or threatened which, in the opinion of counsel to
                              the Vendor, is likely to result in an order,
                              decision or ruling, to disallow, enjoin or
                              prohibit the purchase and sale of the Purchased
                              Assets contemplated hereby.

                    6.3.3.    Consents. All consents required to be obtained in
                              order to carry out the transactions contemplated
                              hereby in compliance with all laws and agreements
                              binding upon the parties hereto shall have been
                              obtained, including the consents referred to in
                              Schedules 3.1.3 and 3.2.2 attached hereto.

                    6.3.4.    Escrow Agreement. The Vendor, the Purchaser and
                              Workstream shall have entered into the escrow
                              agreement attached hereto as Schedule 2.5.3.

                    6.3.5.    No Suspension, Etc. From the date hereof to the
                              Closing Date, trading in Workstream's common
                              shares shall not have been suspended by the
                              Commission, and, at any time prior to the Closing
                              Date, trading in securities generally as reported
                              by Bloomberg Financial Markets ("Bloomberg") shall
                              not have been suspended or limited, or minimum
                              prices shall not have been established on
                              securities whose trades are reported by Bloomberg,
                              or on the New York Stock Exchange, nor shall a
                              banking moratorium have been declared either by
                              the United States, or New York State authorities.

<PAGE>
                                       34

                    6.3.6.    Stock and Warrant Certificates. Workstream shall
                              have executed and be prepared to deliver to the
                              Vendor, the certificates for the Workstream Shares
                              being received by the Vendor at the Closing Date.

                    6.3.7.    Resolutions. Prior to the Closing, the Board of
                              Directors of the Purchaser and Workstream shall
                              have adopted resolutions consistent with this
                              Agreement in a form reasonably acceptable to the
                              Vendor (the "Resolutions").

          6.4.      WAIVER OR TERMINATION BY VENDOR. The conditions contained in
                    Section 6.3 are inserted for the exclusive benefit of the
                    Vendor and may be waived in whole or in part by the Vendor
                    at any time. The Purchaser and Workstream acknowledges that
                    the waiver by the Vendor of any condition or any part of any
                    condition shall constitute a waiver only of such condition
                    or such part of such condition, as the case may be, and
                    shall not constitute a waiver of any covenant, agreement,
                    representation or warranty made by the Purchaser and/or
                    Workstream herein that corresponds or is related to such
                    condition or such part of such condition, as the case may
                    be. If any of the conditions contained in Section 6.3 are
                    not fulfilled or complied with as herein provided, the
                    Vendor may, at or prior to the Closing Time at their option,
                    rescind this Agreement by notice in writing to the Purchaser
                    and Workstream and in such event the Vendor shall each be
                    released from all obligations hereunder and, unless the
                    condition or conditions which have not been fulfilled are
                    reasonably capable of being fulfilled or caused to be
                    fulfilled by the Purchaser and/or Workstream, then the
                    Purchaser and Workstream shall also be released from all
                    obligations hereunder.

7.        CLOSING

          7.1.      CLOSING ARRANGEMENTS. Subject to the terms and conditions ,
                    the transactions contemplated herein shall be closed at the
                    Closing Time at the offices of Perley-Robertson, Hill &
                    McDougall LLP, 90 Sparks Street, 4th Floor, Ottawa, ON K1P
                    1E2, Canada or at such other place or places as may be
                    mutually agreed on by the Vendor and the Purchaser.

          7.2.      DOCUMENTS TO BE DELIVERED. At or before the Closing Time,
                    the Vendor shall execute, or cause to be executed, and shall
                    deliver, or cause to be delivered, to the Purchaser all
                    documents, instruments and things which are to be delivered
                    by the Vendor pursuant to the provisions of this Agreement,
                    and the Purchaser and/or Workstream shall execute, or cause
                    to be executed, and shall deliver, or cause to be delivered,
                    to the Vendor all cheques or bank drafts and all documents,
                    instruments and things which the Purchaser and/or Workstream
                    is to deliver or to cause to be delivered pursuant to the
                    provisions of this Agreement.

<PAGE>
                                       35

8.        INDEMNIFICATION AND SET-OFF

          8.1.      INDEMNITY BY THE VENDOR AND THE PURCHASER.

                    8.1.1.    The parties hereto (in this Section 8, an
                              "Indemnifying Party") covenant and agree to
                              indemnify and save each other (in this Section 8,
                              each being referred to as an "Indemnified Party")
                              harmless from and against any claims, demands,
                              actions, causes of action, damage, loss,
                              deficiency, cost, liability and expense which may
                              be made or brought against the Indemnified Party
                              or which the Indemnified Party may suffer or incur
                              as a result of, in respect of or arising out of:

                              8.1.1.1.  any non-performance or non-fulfilment of
                                        any covenant or agreement on the part of
                                        the Indemnifying Party contained in this
                                        Agreement or in any document given in
                                        order to carry out the transactions
                                        contemplated hereby;

                              8.1.1.2.  any misrepresentation, inaccuracy,
                                        incorrectness or breach of any
                                        representation or warranty made by the
                                        Indemnifying Party contained in this
                                        Agreement or contained in any document
                                        or certificate given in order to carry
                                        out the transactions contemplated
                                        hereby;

                              8.1.1.3.  any non-compliance with any federal,
                                        state, local, municipal, foreign,
                                        international or other administrative
                                        order, constitution, law, ordinance,
                                        statute, or treaty applicable to
                                        Indemnifying Party in the carrying out
                                        of the transaction contemplated herein;
                                        and

                              8.1.1.4.  all costs and expenses including,
                                        without limitation, attorney's fees,
                                        incidental to, arising from or in
                                        respect of the foregoing.

                    8.1.2.    The obligations of indemnification by the
                              Indemnifying Party pursuant to paragraph 8.1.1 of
                              this section will be:

                              8.1.2.1.  subject to the limitations referred to
                                        in Sections 4.1 and 4.2 with respect to
                                        the survival of the representations and
                                        warranties by the Indemnifying Party;

                              8.1.2.2.  subject to the limitations referred to
                                        in Section 4.3; and

                              8.1.2.3.  subject to the provisions of Section
                                        8.3.

<PAGE>
                                       36

          8.2.      INDEMNITY OF THE VENDOR.

                    8.2.1.    The Vendor hereby further agrees to indemnify and
                              save the Purchaser and Workstream (collectively,
                              in this Section 8, the "Purchaser") harmless from
                              and against any claims, demands, actions, causes
                              of action, damage, loss, deficiency, cost,
                              liability and expense which may be made or brought
                              against the Purchaser or which the Purchaser may
                              suffer or incur as a result of, in respect of or
                              arising out of:

                              8.2.1.1.  any claim for a debt, obligation or
                                        liability which is not specifically
                                        assumed by the Purchaser pursuant to
                                        this Agreement;

                              8.2.1.2.  any suit, action, proceeding, claim,
                                        investigation pending or threatened
                                        against or affecting the Purchased
                                        Assets or the Business, regardless of
                                        whether such is disclosed in a Schedule
                                        hereto, that arises from the conduct of
                                        the Business prior to the Closing Date;
                                        and

                              8.2.1.3.  all costs and expenses including,
                                        without limitation, attorney's fees,
                                        incidental to, arising from or in
                                        respect of the foregoing.

                    8.2.2.    The obligations of indemnification by the Vendor
                              pursuant to paragraph 8.2.1 of this section will
                              be:

                              8.2.2.1.  subject to the limitations referred to
                                        in Section 4.1 with respect to the
                                        survival of the representations and
                                        warranties by the Vendor;

                              8.2.2.2.  subject to the limitations referred to
                                        in Section 4.3; and

                              8.2.2.3.  subject to the provisions of Section
                                        8.3.

          8.3.      PROVISIONS RELATING TO INDEMNITY CLAIMS. The following
                    provisions will apply to any claim by the Indemnified Party
                    or the Purchaser, whatever the case may be, for
                    indemnification by the Indemnifying Party or the Vendor,
                    whatever the case may be, pursuant to Sections 8.1 and 8.2
                    (an "Indemnity Claim").

                    8.3.1.    Promptly after becoming aware of any matter that
                              may give rise to an Indemnity Claim, the
                              Indemnified Party or the Purchaser will provide to
                              the Indemnifying Party or the Vendor written
                              notice of the Indemnity Claim specifying (to the
                              extent that information is available) the factual
                              basis for the Indemnity Claim and the amount of
                              the Indemnity Claim or, if an amount is not then
                              determinable, an estimate of the amount of the
                              Indemnity Claim, if an estimate is feasible in the
                              circumstances.

<PAGE>
                                       37

                    8.3.2.    If an Indemnity Claim relates to an alleged
                              liability to any other person (a "Third Party
                              Liability"), including without limitation any
                              governmental or regulatory body or any taxing
                              authority, which is of a nature such that the
                              Indemnified Party or the Purchaser is required by
                              applicable law to make a payment to a third party
                              before the relevant procedure for challenging the
                              existence or quantum of the alleged liability can
                              be implemented or completed, then the Indemnified
                              Party or the Purchaser may, notwithstanding the
                              provisions of sections 8.3.3. and 8.3.4 of this
                              section, make such payment and forthwith demand
                              reimbursement for such payment from the
                              Indemnifying Party or the Vendor in accordance
                              with this Agreement; provided that, if the alleged
                              Third Party Liability as finally determined on
                              completion of settlement negotiations or related
                              legal proceedings is less than the amount which is
                              paid by the Indemnifying Party or the Vendor in
                              respect of the related Indemnity Claim, then the
                              Indemnified Party or the Purchaser shall forthwith
                              following the final determination pay to the
                              Indemnifying Party or the Vendor the amount by
                              which the amount of the Third Party Liability as
                              finally determined is less than the amount which
                              is so paid by the Indemnifying Party or the
                              Vendor.

                    8.3.3.    The Indemnified Party or the Purchaser shall not
                              negotiate, settle, compromise or pay (except in
                              the case of payment of a judgement) any Third
                              Party Liability as to which it proposes to assert
                              an Indemnity Claim, except with the prior consent
                              of the Indemnifying Party or the Vendor (which
                              consent shall not be unreasonably withheld or
                              delayed), unless there is a reasonable possibility
                              that such Third Party Liability may materially and
                              adversely affect the Purchased Assets or the
                              Indemnified Party or the Purchaser, in which case
                              the Indemnified Party or the Purchaser shall have
                              the right, after notifying the Indemnifying Party
                              or the Vendor, to negotiate, settle, compromise or
                              pay such Third Party Liability without prejudice
                              to its rights of indemnification hereunder. The
                              Indemnified Party or the Purchaser shall notify
                              the Indemnifying Party or the Vendor within one
                              (1) week of any third party claims being asserted.

                    8.3.4.    With respect to any Third Party Liability,
                              provided the Indemnifying Party or the Vendor
                              first admit the Indemnified Party's or the
                              Purchaser's right to indemnification for the
                              amount of such Third Party Liability which may at
                              any time be determined or settled, then, in any
                              legal, administrative or other proceedings in
                              connection with the matters forming the basis of
                              the Third Party Liability, the following
                              procedures will apply:

<PAGE>
                                       38

                              8.3.4.1.  except as contemplated by subparagraph
                                        8.3.4.3 of this section, the
                                        Indemnifying Party or the Vendor will
                                        have the right to assume carriage of the
                                        compromise or settlement of the Third
                                        Party Liability and the conduct of any
                                        related legal, administrative or other
                                        proceedings, but the Indemnified Party
                                        or the Purchaser shall have the right
                                        and shall be given the opportunity to
                                        participate in the defence of the Third
                                        Party Liability, to consult with the
                                        Indemnifying Party or the Vendor in the
                                        settlement of the Third Party Liability
                                        and the conduct of related legal,
                                        administrative and other proceedings
                                        (including consultation with counsel)
                                        and to disagree on reasonable grounds
                                        with the selection and retention of
                                        counsel, in which case counsel
                                        satisfactory to the Indemnifying Party
                                        or the Vendor and the Indemnified Party
                                        or the Purchaser shall be retained by
                                        the Indemnifying Party or the Vendor;

                              8.3.4.2.  the Indemnifying Party or the Vendor
                                        will co-operate with the Indemnified
                                        Party or the Purchaser in relation to
                                        the Third Party Liability, will keep it
                                        fully advised with respect thereto, will
                                        provide it with copies of all relevant
                                        documentation as it becomes available,
                                        will provide it with access to all
                                        records and files relating to the
                                        defence of the Third Party Liability and
                                        will meet with representatives of the
                                        Indemnified Party or the Purchaser at
                                        all reasonable times to discuss the
                                        Third Party Liability; and

                              8.3.4.3.  notwithstanding subparagraphs 8.3.4.1
                                        and 8.3.4.2 of this paragraph, the
                                        Indemnifying Party or the Vendor will
                                        not settle the Third Party Liability or
                                        conduct any legal, administrative or
                                        other proceedings in any manner which
                                        could, in the reasonable opinion of the
                                        Indemnified Party or the Purchaser, have
                                        a material adverse affect on the
                                        Purchased Assets or the Indemnified
                                        Party or the Purchaser, except with the
                                        prior written consent of the Indemnified
                                        Party or the Purchaser.

                    8.3.5.    If, with respect to any Third Party Liability, the
                              Indemnifying Party or the Vendor does not admit
                              the Indemnified Party's or the Purchaser's right
                              to indemnification or decline to assume carriage
                              of the settlement or of any legal, administrative
                              or other proceedings relating to the Third Party
                              Liability, then the following provisions will
                              apply:

<PAGE>
                                       39

                              8.3.5.1.  the Indemnified Party or the Purchaser,
                                        at its discretion, may assume carriage
                                        of the settlement or of any legal,
                                        administrative or other proceedings
                                        relating to the Third Party Liability
                                        and may defend or settle the Third Party
                                        Liability on such terms as the
                                        Indemnified Party or the Purchaser,
                                        acting in good faith, considers
                                        advisable; and

                              8.3.5.2.  any cost, lost, damage or expense
                                        incurred or suffered by the Indemnified
                                        Party or the Purchaser in the settlement
                                        or defence of such Third Party Liability
                                        or the conduct of any legal,
                                        administrative or other proceedings
                                        shall be added to the amount of the
                                        Indemnity Claim.

                    8.3.6.    No Indemnified Party shall be entitled to make any
                              Indemnity Claim under this Agreement until the
                              aggregate amount of all damages, losses,
                              liabilities and expenses incurred by the
                              Indemnified Party is equal to $10,000. After the
                              aggregate amount of such damages, losses,
                              liabilities and expenses incurred by the
                              Indemnified Party exceeds $10,000, the Indemnified
                              Party shall only be entitled to make an Indemnity
                              Claim to the extent that such aggregate amount
                              exceeds $10,000.

                    8.3.7.    In the event that the Purchaser is entitled to
                              indemnification from the Vendor pursuant to the
                              terms of this Agreement, such Indemnity Claim may
                              be recovered: (a) firstly by, subject to the terms
                              of the escrow agreement attached hereto as
                              Schedule 2.5.3, deducting the amount of such
                              Indemnity Claim from the Escrow Shares by
                              instructing the Escrow Agent to return a number of
                              Escrow Shares to the Purchaser equal to the value
                              of such Indemnity Claim based on a trailing 5-day
                              average prior to the date the Indemnity Claim is
                              paid; and (b) secondly by the Purchaser having the
                              right to satisfy the amount of such Indemnity
                              Claim by way of set-off against any amount owing
                              to the Vendor by the Purchaser. Notwithstanding
                              the aforementioned order for recovery of an
                              Indemnity Claim by the Purchaser, the Purchaser is
                              not limited to the aforementioned remedies as its
                              sole remedies for payment of an Indemnity Claim by
                              the Vendor.

9.        GENERAL PROVISIONS

          9.1.      FURTHER ASSURANCES. Each of the Vendor and the Purchaser
                    hereby covenants and agrees that at any time and from time
                    to time after the Closing Date it will, on the request of
                    the others, do, execute, acknowledge and deliver or cause to
                    be done, executed, acknowledged and delivered all such
                    further acts, deeds, assignments, transfers, conveyances and
                    assurances as may be required for the better carrying out
                    and performance of all the terms of this Agreement.

<PAGE>
                                       40

          9.2.      NOTICES

                    9.2.1.    Any notice, designation, communication, request,
                              demand or other document, required or permitted to
                              be given or sent or delivered hereunder to any
                              party hereto shall be in writing and shall be
                              sufficiently given or sent or delivered if it is:

                              9.2.1.1.  delivered personally to an officer or
                                        director of such party,

                              9.2.1.2.  sent to the party entitled to receive it
                                        by registered mail, postage prepaid, or

                              9.2.1.3.  sent by facsimile.

                    9.2.2.    Notices shall be sent to the following addresses
                              or facsimile numbers:

                    in the case of the Vendor:

                    900 North Franklin, Suite 708
                    Chicago, Illinois 60610

                    Attention:  *
                    Facsimile: *

                    With a copy to:
                    *
                    Attention:  *
                    Fax:  *

                    in the case of the Purchaser or Workstream:

                    495 May Road, Suite 300
                    Ottawa, ON  K2K 3G1

                    Attention:  Michael F. Mullarkey
                    Facsimile: 613-270-0774

<PAGE>
                                       41

                    With a copy to:
                    Perley-Robertson, Hill & McDougall LLP
                    90 Sparks Street, 4th Floor
                    Ottawa, ON  K1P 1E2

                    Attention: Michael A. Gerrior
                    Facsimile: 613-238-8775

                    or to such other address or facsimile number as the party
                    entitled to or receiving such notice, designation,
                    communication, request, demand or other document shall, by a
                    notice given in accordance with this section, have
                    communicated to the party giving or sending or delivering
                    such notice, designation, communication, request, demand or
                    other document.

                    9.2.3.    Any notice, designation, communication, request,
                              demand or other document given or sent or
                              delivered as aforesaid shall:

                              9.2.3.1.  if delivered as aforesaid, be deemed to
                                        have been given, sent, delivered and
                                        received on the date of delivery;

                              9.2.3.2.  if sent by mail as aforesaid, be deemed
                                        to have been given, sent, delivered and
                                        received (but not actually received) on
                                        the fourth Business Day following the
                                        date of mailing, unless at any time
                                        between the date of mailing and the
                                        fourth Business Day thereafter there is
                                        a discontinuance or interruption of
                                        regular postal service, whether due to
                                        strike or lockout or work slowdown,
                                        affecting postal service at the point of
                                        dispatch or delivery or any intermediate
                                        point, in which case the same shall be
                                        deemed to have been given, sent,
                                        delivered and received in the ordinary
                                        course of the mails, allowing for such
                                        discontinuance or interruption of
                                        regular postal service; and

                              9.2.3.3.  if sent by facsimile machine, be deemed
                                        to have been given, sent, delivered and
                                        received on the date the sender receives
                                        the telecopy answer back confirming
                                        receipt by the recipient.

          9.3.      COUNTERPARTS. This Agreement may be executed in several
                    counterparts, including by way of facsimile, each of which
                    so executed shall be deemed to be an original, and such
                    counterparts together shall constitute but one and the same
                    instrument.

<PAGE>
                                       42

          9.4.      EXPENSES OF PARTIES. Each of the parties hereto shall bear
                    all expenses incurred by it in connection with this
                    Agreement including, without limitation, the charges of
                    their respective counsel, accountants, financial advisors
                    and finders.

          9.5.      BROKERAGE AND FINDER'S FEES. The Vendor agrees to indemnify
                    the Purchaser and hold it harmless in respect of any claim
                    for brokerage or other commissions relative to this
                    Agreement or the transactions contemplated hereby which is
                    caused by actions of the Vendor. The Purchaser will
                    indemnify the Vendor and hold them harmless in respect of
                    any claim for brokerage or other commissions relative to
                    this Agreement or to the transactions contemplated hereby
                    which is caused by actions of the Purchaser.

          9.6.      ANNOUNCEMENTS. No announcement with respect to this
                    agreement will be made by any party hereto without the prior
                    approval of the other parties. The foregoing will not apply
                    to any announcement by any party required in order to comply
                    with laws pertaining to timely disclosure, provided that
                    such party consults with the other parties before making any
                    such announcement.

          9.7.      ASSIGNMENT. The rights of the Vendor hereunder shall not be
                    assignable without the written consent of the Purchaser. The
                    Purchaser may assign this contract without the written
                    consent of the Vendor.

          9.8.      SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
                    and enure to the benefit of the parties hereto and their
                    respective successors and permitted assigns. Nothing herein,
                    express or implied, is intended to confer on any person,
                    other than the parties hereto and their respective
                    successors and assigns, any rights, remedies, obligations or
                    liabilities under or by reason of this Agreement.

          9.9.      ENTIRE AGREEMENT. This Agreement and the Schedules referred
                    to herein constitute the entire agreement between the
                    parties hereto and supersede all prior agreements,
                    representations, warranties, statements, promises,
                    information, arrangements and understandings, whether oral
                    or written, express or implied, with respect to the
                    subject-matter . None of the parties hereto shall be bound
                    or charged with any oral or written agreements,
                    representations, warranties, statements, promises,
                    information, arrangements or understandings not specifically
                    set forth in this Agreement or in the Schedules, documents
                    and instruments to be delivered on or before the Closing
                    Date pursuant to this Agreement. The parties hereto further
                    acknowledge and agree that, in entering into this Agreement
                    and in delivering the Schedules, documents and instruments
                    to be delivered on or before the Closing Date, they have not
                    in any way relied, and will not in any way rely, on any oral
                    or written agreements, representations, warranties,
                    statements, promises, information, arrangements or
                    understandings, express or implied, not specifically set
                    forth in this Agreement or in such Schedules, documents or
                    instruments.

<PAGE>
                                       43

          9.10.     WAIVER. Any party hereto which is entitled to the benefits
                    of this Agreement may, and has the right to, waive any term
                    or condition at any time on or prior to the Closing Time;
                    provided, however, that such waiver shall be evidenced by
                    written instrument duly executed on behalf of such party.

          9.11.     AMENDMENTS. No modification or amendment to this Agreement
                    may be made unless agreed to by the parties hereto in
                    writing.

          9.12.     GOVERNING LAW. This Agreement shall be governed by and
                    construed in accordance with the internal laws of the
                    Province of Ontario, without giving effect to the choice of
                    law provisions.

10.       CONFIDENTIAL INFORMATION

          10.1      DEFINITION

                    (a)       As used in this Article 10, the term "Confidential
                              Information" includes any and all of the following
                              information of Vendor, Purchaser or Workstream
                              that has been or may hereafter be disclosed in any
                              form, whether in writing, orally, electronically
                              or otherwise, or otherwise made available by
                              observation, inspection or otherwise by either
                              party (Vendor on the one hand or Purchaser and
                              Workstream, collectively, on the other hand) or
                              its representatives (collectively, a "Disclosing
                              Party") to the other party or its representatives
                              (collectively, a "Receiving Party"):

                              (i)       all information that is a trade secret
                                        under applicable trade secret or other
                                        law;

                              (ii)      all information concerning product
                                        specifications, data, know-how,
                                        formulae, compositions, processes,
                                        designs, sketches, photographs, graphs,
                                        drawings, samples, inventions and ideas,
                                        past, current and planned research and
                                        development, current and planned
                                        manufacturing or distribution methods
                                        and processes, customer lists, current
                                        and anticipated customer requirements,
                                        price lists, market studies, business
                                        plans, computer hardware, software and
                                        computer software and database
                                        technologies, systems, structures and
                                        architectures;

                              (iii)     all information concerning the business
                                        and affairs of the Disclosing Party
                                        (which includes historical and current
                                        financial statements, financial
                                        projections and budgets, tax returns and
                                        accountants' materials, historical,
                                        current and projected sales, capital
                                        spending budgets and plans, business
                                        plans, strategic plans, marketing and
                                        advertising plans, publications, client
                                        and customer lists and files, contracts,
                                        the names and backgrounds of key
                                        personnel and personnel training
                                        techniques and materials, however
                                        documented), and all information
                                        obtained from review of the Disclosing
                                        Party's documents or property or
                                        discussions with the Disclosing Party
                                        regardless of the form of the
                                        communication; and

<PAGE>
                                       44

                              (iv)      all notes, analyses, compilations,
                                        studies, summaries and other material
                                        prepared by the Receiving Party to the
                                        extent containing or based, in whole or
                                        in part, upon any information included
                                        in the foregoing.

                    (b)       Any trade secrets of a Disclosing Party shall also
                              be entitled to all of the protections and benefits
                              under applicable trade secret law and any other
                              applicable law, if any information that a
                              Disclosing Party deems to be a trade secret is
                              found by a court of competent jurisdiction not to
                              be a trade secret for purposes of this Article 10,
                              such information shall still be considered
                              Confidential Information of that Disclosing Party
                              for purposes of this Article 10 to the extent
                              included within the definition. In the case of
                              trade secrets, each of Vendor, Purchaser and
                              Workstream hereby waives any requirement that the
                              other party submit proof of the economic value of
                              any trade secret or post a bond or other security.

          10.2      RESTRICTED USE OF CONFIDENTIAL INFORMATION

                    (a)       Each Receiving Party acknowledges the confidential
                              and proprietary nature of the Confidential
                              Information of the Disclosing Party and agrees
                              that such Confidential Information (i) shall be
                              kept confidential by the Receiving Party; (ii)
                              shall not be used for any reason or purpose other
                              than to evaluate and consummate the transactions
                              contemplated hereby; and (iii) without limiting
                              the foregoing, shall not be disclosed by the
                              Receiving Party to any Person, except in each case
                              as otherwise expressly permitted by the terms of
                              this Agreement or with the prior written consent
                              of any authorized representative of Purchaser with
                              respect to Confidential Information of Purchaser
                              (each, a "Purchaser Contact") or an authorized
                              representative of Vendor with respect to
                              Confidential Information of Vendor (each, a
                              "Vendor Contact"). Each of Vendor and Purchaser
                              and Workstream shall disclose the Confidential
                              Information of the other party only to its
                              representatives who require such material for the
                              purpose of evaluating the transactions
                              contemplated herein and are informed by Vendor,
                              Purchaser or Workstream as the case may be, of the
                              obligations of this Article 10 with respect to
                              such information. Each of Vendor, Purchaser and
                              Workstream shall (iv) enforce the terms of this
                              Article 10 as to its respective representatives;
                              (v) take such action to the extent necessary to
                              cause its representatives to comply with the terms
                              and conditions of this Article 10; and (vi) be
                              responsible and liable for any breach of the
                              provisions of this Article 10 by it or its
                              representatives.

<PAGE>
                                       45

                    (b)       Unless and until this Agreement is terminated,
                              Vendor shall maintain as confidential any
                              Confidential Information (including for this
                              purpose any information of Vendor of the type
                              referred to in Sections 10.2 (a) (i), (ii) and
                              (iii), whether or not disclosed to Purchaser) of
                              the Vendor relating to any of the Purchased
                              Assets. Notwithstanding the preceding sentence,
                              Vendor may use any Confidential Information of
                              Vendor before the Closing in the ordinary course
                              of the Business of the Vendor.

                    (c)       From and after the Closing, the provisions of
                              Section 10.2 (a) above shall not apply to or
                              restrict in any manner Purchaser's use of any
                              Confidential Information of the Vendor relating to
                              any of the Assets.

          10.3      EXCEPTIONS. Sections 10.2 (a) and (b) do not apply to that
                    part of the Confidential Information of a Disclosing Party
                    that a Receiving Party demonstrates (as) was, is or becomes
                    generally available to the public other than as a result of
                    a breach of this Article 10 or the Confidentiality Agreement
                    by the Receiving Party or its representatives; (b) was or is
                    developed by the Receiving Party independently of and
                    without reference to any Confidential Information of the
                    Disclosing Party; or (c) was, is or becomes available to the
                    Receiving Party on non-confidential basis from Third Party
                    not bound by a confidentiality agreement or any legal,
                    fiduciary or other obligation restricting disclosure. The
                    Vendor shall not disclose any Confidential Information of
                    Purchaser or Workstream relating to any of the Assets in
                    reliance on the exceptions in clauses (b) or (c).

          10.4      LEGAL PROCEEDINGS. If a Receiving Party becomes compelled in
                    any proceeding or is requested by a Governmental Authority
                    having regulatory jurisdiction over the transactions
                    contemplated herein to make any disclosure that is
                    prohibited or otherwise constrained by this Article 10, that
                    Receiving Party shall provide the Disclosing Party with
                    prompt notice of such compulsion or request so that it may
                    seek an appropriate protective order or other appropriate
                    remedy or waive compliance with the provisions of this
                    Article 10. In the absence of a protective order or other
                    remedy, the Receiving Party may disclose that portion (and
                    only that portion) of the Confidential Information of the
                    Disclosing Party that, based upon advice of the Receiving
                    Party's counsel, the Receiving Party is legally compelled to
                    disclose or that has been requested by such Governmental
                    Authority, provided, however, that the Receiving Party shall
                    use reasonable efforts to obtain reliable assurance that
                    confidential treatment will be accorded by any Person to
                    whom any Confidential Information is so disclosed. The
                    provisions of this Section 10.4 do not apply to any
                    proceedings between the parties to this Agreement.

<PAGE>
                                       46

          10.5      RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. If this
                    Agreement is terminated, each Receiving Party shall (a)
                    destroy all Confidential Information of the Disclosing Party
                    prepared or generated by the Receiving Party without
                    retaining a copy of any such material; (b) promptly deliver
                    to the Disclosing Party all other Confidential Information
                    of the Disclosing Party, together with all copies thereof,
                    in the possession, custody or control of the Receiving Party
                    or, alternatively, with the written consent of a Vendor
                    Contact or a Purchaser Contact (whichever represents the
                    Disclosing Party) destroy all such Confidential Information;
                    and (c) certify all such destruction in writing to the
                    Disclosing Party, provided, however, that the Receiving
                    Party may retain a list that contains general descriptions
                    of the information it has returned or destroyed to
                    facilitate the resolution of any controversies after the
                    Disclosing Party's Confidential Information is returned.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>
                                       47

      IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
under seal as of the day and year first above written.

                                        WORKSTREAM USA, INC.

                                        Per: /s/ Michael Mullarkey
                                            ------------------------------------
                                            Name:  Michael Mullarkey
                                            Title: CEO and President

I have authority to bind the corporation.

                                        WORKSTREAM INC.

                                        Per: /s/  Michael Mullarkey
                                            ------------------------------------
                                            Name:  Michael Mullarkey
                                            Title: CEO and President

I have authority to bind the corporation.

                                        PEOPLEBONUS.COM, LLC

                                        Per: /s/ Michael Maher
                                            ------------------------------------
                                            Name: Michael Maher
                                            Title:

I have authority to bind the corporation.

<PAGE>

                                    SCHEDULESEXHIBIT 10.3

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "Agreement") is dated as of July
16, 2004, among Workstream Inc., a Canadian corporation (the "Company"), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers"); and

      WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company in the aggregate, up to $10,000,000 of shares of Common Stock
on the Closing Date.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:

            "Action" shall have the meaning ascribed to such term in Section
      3.1(j).

            "Affiliate" means any Person that, directly or indirectly through
      one or more intermediaries, controls or is controlled by or is under
      common control with a Person as such terms are used in and construed under
      Rule 144. With respect to a Purchaser, any investment fund or managed
      account that is managed on a discretionary basis by the same investment
      manager as such Purchaser will be deemed to be an Affiliate of such
      Purchaser.

            "Closing" means the closing of the purchase and sale of the Common
      Stock pursuant to Section 2.1.

            "Closing Date" means the Trading Day when all of the Transaction
      Documents have been executed and delivered by the applicable parties
      thereto, and all conditions precedent to (i) the Purchasers' obligations
      to pay the Subscription Amount and (ii) the Company's obligations to
      deliver the Securities have been satisfied or waived.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common shares of the Company, no par value,
      and any securities into which such common shares may hereafter be
      reclassified.

            "Common Stock Equivalents" means any securities of the Company or
      the Subsidiaries which would entitle the holder thereof to acquire at any
      time Common Stock, including without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

                                       1

            "Company Counsel" means Perley-Robertson, Hill & McDougall LLP or,
      with respect to United States securities law matters, Cozen O'Connor.

            "Disclosure Schedules" means the Disclosure Schedules attached
      hereto.

            "Effective Date" means the date that the Registration Statement is
      first declared effective by the Commission.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            "FW" means Feldman Weinstein LLP with offices located at 420
      Lexington Avenue, Suite 2620, New York, New York 10170-0002.

            "Intellectual Property Rights" shall have the meaning ascribed to
      such term in Section 3.1(o).

            "Liens" means a lien, charge, security interest, encumbrance, right
      of first refusal, preemptive right or other restriction.

            "Material Adverse Effect" shall have the meaning ascribed to such
      term in Section 3.1(b).

            "Material Permits" shall have the meaning ascribed to such term in
      Section 3.1(m).

            "Per Share Purchase Price" equals $2.25, subject to adjustment for
      reverse and forward stock splits, stock dividends, stock combinations and
      other similar transactions of the Common Stock that occur after the date
      of this Agreement through the Closing Date.

            "Person" means an individual or corporation, partnership, trust,
      incorporated or unincorporated association, joint venture, limited
      liability company, joint stock company, government (or an agency or
      subdivision thereof) or other entity of any kind.

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the date of this Agreement, among the Company and
      each Purchaser, in the form of Exhibit A hereto.

            "Registration Statement" means a registration statement meeting the
      requirements set forth in the Registration Rights Agreement and covering
      the resale by the Purchasers of the Securities.

                                       2

            "Required Approvals" shall have the meaning ascribed to such term in
      Section 3.1(e).

            "Rule 144" means Rule 144 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

            "SEC Reports" shall have the meaning ascribed to such term in
      Section 3.1(h).

            "Securities" means the shares of Common Stock issued to each
      Purchaser pursuant to this Agreement.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Subscription Amount" means, as to each Purchaser, the amounts set
      forth below such Purchaser's signature block on the signature page hereto,
      in United States dollars and in immediately available funds.

            "Subsidiary" shall mean the subsidiaries of the Company, if any, set
      forth on Schedule 3.1(a).

            "Trading Day" means a day on which the Common Stock is traded on a
      Trading Market.

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the Nasdaq SmallCap Market, the American Stock Exchange, the New York
      Stock Exchange or the Nasdaq National Market.

            "Transaction Documents" means this Agreement and the Registration
      Rights Agreement and any other documents or agreements executed in
      connection with the transactions contemplated hereunder.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest preceding date) on the Trading
      Market on which the Common Stock is then listed or quoted as reported by
      Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern
      Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then
      listed or quoted on a Trading Market and if prices for the Common Stock
      are then quoted on the OTC Bulletin Board, the volume weighted average
      price of the Common Stock for such date (or the nearest preceding date) on
      the OTC Bulletin Board; (c) if the Common Stock is not then listed or
      quoted on the OTC Bulletin Board and if prices for the Common Stock are
      then reported in the "Pink Sheets" published by the National Quotation
      Bureau Incorporated (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (c) in all other cases, the fair market value
      of a share of Common Stock as determined by an independent appraiser
      selected in good faith by the Purchasers and reasonably acceptable to the
      Company.

                                       3

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing. On the Closing Date, each Purchaser shall purchase from the
Company, severally and not jointly with the other Purchasers, and the Company
shall issue and sell to each Purchaser, a number of Securities equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price. The
aggregate Subscription Amounts for Securities sold hereunder shall be up to
$10,000,000. Upon satisfaction of the conditions set forth in Section 2.2, the
Closing shall occur at the offices of FW, or such other location as the parties
shall mutually agree.

      2.2 Deliveries.

            (a) On the Closing Date, the Company shall deliver or cause to be
      delivered to each Purchaser the following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a certificate evidencing a number of Securities equal to
            such Purchaser's Subscription Amount divided by the Per Share
            Purchase Price, registered in the name of such Purchaser;

                  (iii) the Registration Rights Agreement duly executed by the
            Company; and

                  (iv) a legal opinion of Company Counsel, in the form of
            Exhibit B attached hereto.

            (b) On the Closing Date, each Purchaser shall deliver or cause to be
      delivered to the Company the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's Subscription Amount by wire transfer to
            the account as specified in writing by the Company; and

                  (iii) the Registration Rights Agreement duly executed by such
            Purchaser.

      2.3 Closing Conditions.

            (a) The obligations of the Company hereunder in connection with the
      Closing are subject to the following conditions being met:

                  (i) the accuracy in all material respects when made and on the
            Closing Date of the representations and warranties of the Purchasers
            contained herein;

                                       4

                  (ii) all obligations, covenants and agreements of the
            Purchasers required to be performed at or prior to the Closing Date
            shall have been performed; and

                  (iii) the delivery by the Purchasers of the items set forth in
            Section 2.2(b) of this Agreement.

            (b) The respective obligations of the Purchasers hereunder in
      connection with the Closing are subject to the following conditions being
      met:

                  (i) the accuracy in all material respects on the Closing Date
            of the representations and warranties of the Company contained
            herein;

                  (ii) all obligations, covenants and agreements of the Company
            required to be performed at or prior to the Closing Date shall have
            been performed;

                  (iii) the delivery by the Company of the items set forth in
            Section 2.2(a) of this Agreement;

                  (iv) there shall have been no Material Adverse Effect with
            respect to the Company since the date hereof; and

                  (v) from the date hereof to the Closing Date, trading in the
            Common Stock shall not have been suspended by the Commission (except
            for any suspension of trading of limited duration agreed to by the
            Company, which suspension shall be terminated prior to the Closing),
            and, at any time prior to the Closing Date, trading in securities
            generally as reported by Bloomberg Financial Markets shall not have
            been suspended or limited, or minimum prices shall not have been
            established on securities whose trades are reported by such service,
            or on any Trading Market, nor shall a banking moratorium have been
            declared either by the United States or New York State authorities
            nor shall there have occurred any material outbreak or escalation of
            hostilities or other national or international calamity of such
            magnitude in its effect on, or any material adverse change in, any
            financial market which, in each case, in the reasonable judgment of
            each Purchaser, makes it impracticable or inadvisable to purchase
            the Securities at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser:

            (a) Subsidiaries. All of the majority owned direct and indirect
      subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
      owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the
      issued and outstanding shares of capital stock of each Subsidiary are
      validly issued and are fully paid, non-assessable and free of preemptive
      and similar rights to subscribe for or purchase securities. If the Company
      has no subsidiaries, then references in the Transaction Documents to the
      Subsidiaries will be disregarded.

                                       5

            (b) Organization and Qualification. Each of the Company and the
      Subsidiaries is an entity duly incorporated or otherwise organized,
      validly existing and in good standing under the laws of the jurisdiction
      of its incorporation or organization (as applicable), with the requisite
      power and authority to own and use its properties and assets and to carry
      on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its
      respective certificate or articles of incorporation, bylaws or other
      organizational or charter documents. Each of the Company and the
      Subsidiaries is duly qualified to conduct business and is in good standing
      as a foreign corporation or other entity in each jurisdiction in which the
      nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good standing, as the case may be, could not have or reasonably be
      expected to result in (i) a material adverse effect on the legality,
      validity or enforceability of any Transaction Document, (ii) a material
      adverse effect on the results of operations, assets, business or financial
      condition of the Company and the Subsidiaries, taken as a whole, or (iii)
      a material adverse effect on the Company's ability to perform in any
      material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a "Material Adverse Effect") and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or curtailing or seeking to revoke, limit or curtail such power and
      authority or qualification.

            (c) Authorization; Enforcement. The Company has the requisite
      corporate power and authority to enter into and to consummate the
      transactions contemplated by each of the Transaction Documents and
      otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no
      further action is required by the Company in connection therewith other
      than in connection with the Required Approvals. Each Transaction Document
      has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute
      the valid and binding obligation of the Company enforceable against the
      Company in accordance with its terms except (i) as limited by general
      equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors' rights generally, (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other equitable remedies, and (iii) insofar as indemnification and
      contribution may be limited by applicable law.

            (d) No Conflicts. The execution, delivery and performance of the
      Transaction Documents by the Company, the issuance and sale of the
      Securities and the consummation by the Company of the other transactions
      contemplated thereby do not and will not (i) conflict with or violate any
      provision of the Company's or any Subsidiary's certificate or articles of
      incorporation, bylaws or other organizational or charter documents, or
      (ii) conflict with, or constitute a default (or an event that with notice
      or lapse of time or both would become a default) under, result in the
      creation of any Lien upon any of the properties or assets of the Company
      or any Subsidiary, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or
      both) of, any agreement, credit facility, debt or other instrument
      (evidencing a Company or Subsidiary debt or otherwise) to which the
      Company or any Subsidiary is a party or by which any property or asset of
      the Company or any Subsidiary is bound or affected, or (iii) subject to
      the Required Approvals, conflict with or result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of any court or governmental authority to which the Company or a
      Subsidiary is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a
      Subsidiary is bound or affected, or (iv) conflict with or violate the
      terms of any agreement by which the Company or any Subsidiary is bound or
      to which any property or asset of the Company or any Subsidiary is bound
      or affected; except in the case of each of clauses (ii), (iii) and (iv),
      such as could not have or reasonably be expected to result in a Material
      Adverse Effect.

                                       6

            (e) Filings, Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any filing or registration with, any court or other federal,
      state, local or other governmental authority or other Person in connection
      with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4 of this Agreement, (ii) the filing with the Commission of the
      Registration Statement and any amendments thereto, (iii) application(s) to
      each applicable Trading Market for the listing of the Securities for
      trading thereon in the time and manner required thereby, and (iv) the
      filing of Form D with the Commission and such filings as are required to
      be made under applicable state securities laws (collectively, the
      "Required Approvals").

            (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable,
      free and clear of all Liens imposed by the Company other than restrictions
      on transfer provided for in the Transaction Documents. The Company has
      reserved from its duly authorized capital stock the maximum number of
      shares of Common Stock issuable pursuant to this Agreement.

            (g) Capitalization. The capitalization of the Company is as
      described in Schedule 3.1(g). Except as set forth in Schedule 3.1(g), the
      Company has not issued any capital stock since the date of its most recent
      SEC Report other than pursuant to the exercise of employee stock options
      under the Company's stock option plans, the issuance of shares of Common
      Stock to employees pursuant to the Company's employee stock purchase plan
      and pursuant to the conversion or exercise of outstanding Common Stock
      Equivalents. No Person has any right of first refusal, preemptive right,
      right of participation, or any similar right to participate in the
      transactions contemplated by the Transaction Documents. Except as a result
      of the purchase and sale of the Securities and as set forth on Schedule
      3.1(g), there are no outstanding options, warrants, script rights to
      subscribe to, calls or commitments of any character whatsoever relating
      to, or securities, rights or obligations convertible into or exchangeable
      for, or giving any Person any right to subscribe for or acquire, any
      shares of Common Stock, or contracts, commitments, understandings or
      arrangements by which the Company or any Subsidiary is or may become bound
      to issue additional shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. The issue and
      sale of the Securities will not obligate the Company to issue shares of
      Common Stock or other securities to any Person (other than the Purchasers)
      and will not result in a right of any holder of Company securities to
      adjust the exercise, conversion, exchange or reset price under such
      securities. All of the outstanding shares of capital stock of the Company
      are validly issued, fully paid and nonassessable, have been issued in
      compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or
      similar rights to subscribe for or purchase securities. No further
      approval or authorization of any stockholder, the Board of Directors of
      the Company or others is required for the issuance and sale of the
      Securities. Except as disclosed in the SEC Reports, there are no
      stockholders agreements, voting agreements or other similar agreements
      with respect to the Company's capital stock to which the Company is a
      party or, to the knowledge of the Company, between or among any of the
      Company's stockholders.

                                       7

            (h) SEC Reports; Financial Statements. The Company has filed all
      reports required to be filed by it under the Securities Act and 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, including the exhibits thereto, 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. As of their respective dates, the
      SEC Reports complied in all material respects with the requirements of the
      Securities Act and the Exchange Act and the rules and regulations of the
      Commission promulgated thereunder, and none of the SEC Reports, when
      filed, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order
      to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company
      included in the SEC Reports comply in all material respects with
      applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis
      during the periods involved ("GAAP"), except as may be otherwise specified
      in such financial statements or the notes thereto and except that
      unaudited financial statements may not contain all footnotes required by
      GAAP, and fairly present in all material respects the financial position
      of the Company and its consolidated subsidiaries as of and for the dates
      thereof and the results of operations and cash flows for the periods then
      ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

            (i) Material Changes. Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically
      disclosed in the SEC Reports, (i) there has been no event, occurrence or
      development that has had or that could reasonably be expected to result in
      a Material Adverse Effect, (ii) the Company has not incurred any
      liabilities (contingent or otherwise) other than (A) trade payables and
      accrued expenses incurred in the ordinary course of business consistent
      with past practice and (B) liabilities not required to be reflected in the
      Company's financial statements pursuant to GAAP or required to be
      disclosed in filings made with the Commission or incurred in connection
      with acquisitions disclosed in the SEC Reports, (iii) the Company has not
      altered its method of accounting, (iv) the Company has not declared or
      made any dividend or distribution of cash or other property to its
      stockholders or purchased, redeemed or made any agreements to purchase or
      redeem any shares of its capital stock and (v) the Company has not issued
      any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans. The Company does not have
      pending before the Commission any request for confidential treatment of
      information.

                                       8

            (j) Litigation. Except as set forth on Schedule 3.1(j), there is no
      action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against the
      Company, any Subsidiary or any of their respective properties before or by
      any court, arbitrator, governmental or administrative agency or regulatory
      authority (federal, state, county, local or foreign) (collectively, an
      "Action") which (i) adversely affects or challenges the legality, validity
      or enforceability of any of the Transaction Documents or the Securities or
      (ii) could, if there were an unfavorable decision, have or reasonably be
      expected to result in a Material Adverse Effect. Neither the Company nor
      any Subsidiary, nor, to the knowledge of the Company, any director or
      officer thereof, is or has been the subject of any Action involving a
      claim of violation of or liability under federal or state securities laws
      or a claim of breach of fiduciary duty. There has not been, and to the
      knowledge of the Company, there is not pending or contemplated, any
      investigation by the Commission involving the Company or, to the knowledge
      of the Company, any current or former director or officer of the Company.
      The Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act.

            (k) Labor Relations. No material labor dispute exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which could reasonably be expected to result in a Material
      Adverse Effect.

            (l) Compliance. Neither the Company nor any Subsidiary (i) is in
      default under or in violation of (and no event has occurred that has not
      been waived that, with notice or lapse of time or both, would result in a
      default by the Company or any Subsidiary under), nor has the Company or
      any Subsidiary received notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its properties is bound (whether or not such default or violation has
      been waived), (ii) is in violation of any order of any court, arbitrator
      or governmental body, or (iii) is in violation of any statute, rule or
      regulation of any governmental authority, including without limitation all
      foreign, federal, state and local laws applicable to its business except
      in each case as could not have a Material Adverse Effect.

            (m) Regulatory Permits. The Company and the Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to
      conduct their respective businesses as described in the SEC Reports,
      except where the failure to possess such permits could not have or
      reasonably be expected to result in a Material Adverse Effect ("Material
      Permits"), and neither the Company nor any Subsidiary has received any
      notice of proceedings relating to the revocation or modification of any
      Material Permit.

                                       9

            (n) Title to Assets. Except as set forth in Schedule 3.1(n), the
      Company and the Subsidiaries have good and marketable title in fee simple
      to all real property owned by them that is material to the business of the
      Company and the Subsidiaries and good and marketable title in all personal
      property owned by them that is material to the business of the Company and
      the Subsidiaries, in each case free and clear of all Liens, except for
      Liens as do not materially affect the value of such property and do not
      materially interfere with the use made and proposed to be made of such
      property by the Company and the Subsidiaries and Liens for the payment of
      federal, state or other taxes, the payment of which is neither delinquent
      nor subject to penalties. Any real property and facilities held under
      lease by the Company and the Subsidiaries are held by them under valid,
      subsisting and enforceable leases of which the Company and the
      Subsidiaries are in compliance, except as could not have a Material
      Adverse Effect.

            (o) Patents and Trademarks. The Company and the Subsidiaries have,
      or have rights to use, all patents, patent applications, trademarks,
      trademark applications, service marks, trade names, copyrights, licenses
      and other similar rights necessary or material for use in connection with
      their respective businesses as described in the SEC Reports and which the
      failure to so have could have a Material Adverse Effect (collectively, the
      "Intellectual Property Rights"). Neither the Company nor any Subsidiary
      has received a written notice that the Intellectual Property Rights used
      by the Company or any Subsidiary violates or infringes upon the rights of
      any Person. To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable and there is no existing infringement by
      another Person of any of the Intellectual Property Rights of others.

            (p) Insurance. The Company and the Subsidiaries are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as are prudent and customary in the businesses
      in which the Company and the Subsidiaries are engaged. To the best of
      Company's knowledge, such insurance contracts and policies are accurate
      and complete. Neither the Company nor any Subsidiary has any reason to
      believe that it will not be able to renew its existing insurance coverage
      as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business without a
      significant increase in cost.

            (q) Transactions With Affiliates and Employees. Except as set forth
      in the SEC Reports, to the knowledge of the Company, none of the officers
      or directors of the Company and none of the employees of the Company are
      presently a party to any transaction with the Company or any Subsidiary
      (other than for services as employees, officers and directors), including
      any contract, agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer, director
      or such employee or, to the knowledge of the Company, any entity in which
      any officer, director, or any such employee has a substantial interest or
      is an officer, director, trustee or partner, in each case in excess of
      $60,000 other than (i) for payment of salary or consulting fees for
      services rendered, (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits, including stock option
      agreements under any stock option plan of the Company.

                                       10

            (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
      material compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are applicable to it as of the Closing Date. The Company and the
      Subsidiaries maintain a system of internal accounting controls sufficient
      to provide reasonable assurance that (i) transactions are executed in
      accordance with management's general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain asset accountability,
      (iii) access to assets is permitted only in accordance with management's
      general or specific authorization, and (iv) the recorded accountability
      for assets is compared with the existing assets at reasonable intervals
      and appropriate action is taken with respect to any differences. The
      Company has established disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
      such disclosure controls and procedures to ensure that material
      information relating to the Company, including its subsidiaries, is made
      known to the certifying officers by others within those entities,
      particularly during the period in which the Company's most recently filed
      periodic report under the Exchange Act, as the case may be, is being
      prepared. The Company's certifying officers have evaluated the
      effectiveness of the Company's disclosure controls and procedures as of
      the date prior to the filing date of the most recently filed periodic
      report under the Exchange Act (such date, the "Evaluation Date"). The
      Company presented in its most recently filed periodic report under the
      Exchange Act the conclusions of the certifying officers about the
      effectiveness of the disclosure controls and procedures based on their
      evaluations as of the Evaluation Date. Since the Evaluation Date, there
      have been no significant changes in the Company's internal controls (as
      such term is defined in Item 307(b) of Regulation S-K under the Exchange
      Act) or, to the Company's knowledge, in other factors that could
      significantly affect the Company's internal controls.

            (s) Certain Fees. No brokerage or finder's fees or commissions are
      or will be payable by the Company to any broker, financial advisor or
      consultant, finder, placement agent, investment banker, bank or other
      Person with respect to the transactions contemplated by this Agreement.
      The Purchasers shall have no obligation (other than with respect to their
      own actions) with respect to any fees or with respect to any claims made
      by or on behalf of other Persons for fees of a type contemplated in this
      Section that may be due in connection with the transactions contemplated
      by this Agreement.

            (t) Private Placement. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, no registration
      under the Securities Act is required for the offer and sale of the
      Securities by the Company to the Purchasers as contemplated hereby. The
      issuance and sale of the Securities hereunder does not contravene the
      rules and regulations of the Trading Market.

            (u) Investment Company. The Company is not, and is not an Affiliate
      of, and immediately after receipt of payment for the Securities, will not
      be or be an Affiliate of, an "investment company" within the meaning of
      the Investment Company Act of 1940, as amended. The Company shall conduct
      its business in a manner so that it will not become subject to the
      Investment Company Act.

                                       11

            (v) Registration Rights. Except as set forth on Schedule 3.1(v), no
      Person has any right to cause the Company to effect the registration under
      the Securities Act of any securities of the Company.

            (w) Listing and Maintenance Requirements. The Company's Common Stock
      is registered pursuant to Section 12(g) of the Exchange Act, and the
      Company has taken no action designed to, or which to its knowledge is
      likely to have the effect of, terminating the registration of the Common
      Stock under the Exchange Act nor has the Company received any notification
      that the Commission is contemplating terminating such registration. The
      Company has not, in the 12 months preceding the date hereof, received
      notice from any Trading Market on which the Common Stock is or has been
      listed or quoted to the effect that the Company is not in compliance with
      the listing or maintenance requirements of such Trading Market. The
      Company is, and has no reason to believe that it will not in the
      foreseeable future continue to be, in compliance with all such listing and
      maintenance requirements.

            (x) Application of Takeover Protections. The Company and its Board
      of Directors have taken all necessary action, if any, in order to render
      inapplicable any control share acquisition, business combination, poison
      pill (including any distribution under a rights agreement) or other
      similar anti-takeover provision under the Company's Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a
      result of the Purchasers and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including without
      limitation the Company's issuance of the Securities and the Purchasers'
      ownership of the Securities.

            (y) Disclosure. The Company confirms that, neither the Company nor
      any other Person acting on its behalf has provided any of the Purchasers
      or their agents or counsel with any information that constitutes or might
      constitute material, non-public information. The Company understands and
      confirms that the Purchasers will rely on the foregoing representations
      and covenants in effecting transactions in securities of the Company. All
      disclosure provided to the Purchasers regarding the Company, its business
      and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company with
      respect to the representations and warranties made herein are true and
      correct with respect to such representations and warranties and do not
      contain any untrue statement of a material fact or omit to state any
      material fact necessary in order to make the statements made therein, in
      light of the circumstances under which they were made, not misleading. The
      Company acknowledges and agrees that no Purchaser makes or has made any
      representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in Section 3.2
      hereof.

            (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, neither the
      Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances
      that would cause this offering of the Securities to be integrated with
      prior offerings by the Company for purposes of the Securities Act or any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and regulations of any exchange or automated quotation
      system on which any of the securities of the Company are listed or
      designated.

                                       12

            (aa) Solvency. Based on the financial condition of the Company as of
      the Closing Date after giving effect to the receipt by the Company of the
      proceeds from the sale of the Securities hereunder, (i) the Company's fair
      saleable value of its assets exceeds the amount that will be required to
      be paid on or in respect of the Company's existing debts and other
      liabilities (including known contingent liabilities) as they mature; (ii)
      the Company's assets do not constitute unreasonably small capital to carry
      on its business for the current fiscal year as now conducted and as
      proposed to be conducted including its capital needs taking into account
      the particular capital requirements of the business conducted by the
      Company, and projected capital requirements and capital availability
      thereof; and (iii) the current cash flow of the Company, together with the
      proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would
      be sufficient to pay all amounts on or in respect of its debt when such
      amounts are required to be paid. The Company does not intend to incur
      debts beyond its ability to pay such debts as they mature (taking into
      account the timing and amounts of cash to be payable on or in respect of
      its debt).

            (bb) Form S-3 Eligibility. The Company is eligible to register the
      resale of its Common Stock by the Purchasers under Form S-3 promulgated
      under the Securities Act and the Company hereby covenants and agrees to
      use its best efforts to maintain its eligibility to use Form S-3 until the
      Registration Statement covering the resale of the Securities shall have
      been filed with, and declared effective by, the Commission.

            (cc) Taxes. Except for matters that would not, individually or in
      the aggregate, have or reasonably be expected to result in a Material
      Adverse Effect, the Company and each Subsidiary have filed all necessary
      federal, state and foreign income and franchise tax returns and have paid
      or accrued all taxes shown as due thereon, and the Company has no
      knowledge of a tax deficiency which has been asserted or threatened
      against the Company or any Subsidiary.

            (dd) General Solicitation. Neither the Company nor any person acting
      on behalf of the Company has offered or sold any of the Securities by any
      form of general solicitation or general advertising. The Company has
      offered the Securities for sale only to the Purchasers and certain other
      "accredited investors" within the meaning of Rule 501 under the Securities
      Act.

            (ee) Foreign Corrupt Practices. Neither the Company, nor to the
      knowledge of the Company, any agent or other person acting on behalf of
      the Company, has (i) directly or indirectly, used any corrupt funds for
      unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or
      made by any person acting on its behalf of which the Company is aware)
      which is in violation of law, or (iv) violated in any material respect any
      provision of the Foreign Corrupt Practices Act of 1977, as amended.

                                       13

            (ff) Accountants. The Company's accountants are set forth on
      Schedule 3.1(ff) of the Disclosure Schedule. To the Company's knowledge,
      such accountants, who the Company expects will express their opinion with
      respect to the financial statements to be included in the Company's Annual
      Report on Form 10-K for the year ended May 31, 2004 are independent
      accountants as required by the Securities Act.

            (gg) Acknowledgment Regarding Purchasers' Purchase of Securities.
      The Company acknowledges and agrees that each of the Purchasers is acting
      solely in the capacity of an arm's length purchaser with respect to the
      Transaction Documents and the transactions contemplated hereby. The
      Company further acknowledges that no Purchaser is acting as a financial
      advisor or fiduciary of the Company (or in any similar capacity) with
      respect to this Agreement and the transactions contemplated hereby and any
      advice given by any Purchaser or any of their respective representatives
      or agents in connection with this Agreement and the transactions
      contemplated hereby is merely incidental to the Purchasers' purchase of
      the Securities. The Company further represents to each Purchaser that the
      Company's decision to enter into this Agreement has been based solely on
      the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

      3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

            (a) Organization; Authority. Such Purchaser is an entity duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization with full right, corporate or partnership
      power and authority to enter into and to consummate the transactions
      contemplated by the Transaction Documents and otherwise to carry out its
      obligations thereunder. The execution, delivery and performance by such
      Purchaser of the transactions contemplated by this Agreement have been
      duly authorized by all necessary corporate or similar action on the part
      of such Purchaser. Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in accordance with the terms hereof, will constitute the valid and legally
      binding obligation of such Purchaser, enforceable against it in accordance
      with its terms, except (i) as limited by general equitable principles and
      applicable bankruptcy, insolvency, reorganization, moratorium and other
      laws of general application affecting enforcement of creditors' rights
      generally, (ii) as limited by laws relating to the availability of
      specific performance, injunctive relief or other equitable remedies and
      (iii) insofar as indemnification and contribution provisions may be
      limited by applicable law.

            (b) Purchaser Representation. Such Purchaser understands that the
      Securities are "restricted securities" and have not been registered under
      the Securities Act or any applicable state securities law and is acquiring
      the Securities as principal for its own account and not with a view to or
      for distributing or reselling such Securities or any part thereof, has no
      present intention of distributing any of such Securities and has no
      arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not
      limiting such Purchaser's right to sell the Securities pursuant to the
      Registration Statement or otherwise in compliance with applicable federal
      and state securities laws). Such Purchaser is acquiring the Securities
      hereunder in the ordinary course of its business. Such Purchaser does not
      have any agreement or understanding, directly or indirectly, with any
      Person to distribute any of the Securities.

                                       14

            (c) Purchaser Status. At the time such Purchaser was offered the
      Securities, it was, and at the date hereof it is, an "accredited investor"
      as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
      Securities Act. Such Purchaser is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act.

            (d) Experience of Such Purchaser. Such Purchaser, either alone or
      together with its representatives, has such knowledge, sophistication and
      experience in business and financial matters so as to be capable of
      evaluating the merits and risks of the prospective investment in the
      Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of
      such investment.

            (e) General Solicitation. Such Purchaser is not purchasing the
      Securities as a result of any advertisement, article, notice or other
      communication regarding the Securities published in any newspaper,
      magazine or similar media or broadcast over television or radio or
      presented at any seminar or any other general solicitation or general
      advertisement.

            (f) Securities Filings. The Purchasers acknowledge that they have
      been provided with copies of and have reviewed the following documents,
      which have been filed by the Company with the Commission pursuant to the
      Exchange Act (collectively, the "DISCLOSURE REPORTS" and, and, together
      with this Agreement and the Disclosure Schedule to this Agreement, the
      "DISCLOSURE MATERIALS"): (i) the Company's Annual Report on Form 10-K, as
      amended, for the fiscal year ended May 31, 2003; (ii) the Company's
      Quarterly Reports on Form 10-Q for the quarters ended August 31, 2003,
      November 30, 2003 and February 29, 2004; and (iii) the Company's proxy
      statement with respect to its 2003 annual meeting.

            (g) Offering Exemption. The Purchasers understand that the
      Securities are being offered and sold in reliance upon specific exemptions
      from the registration requirements of United States federal and state
      securities laws and that the Company is relying upon the truth and
      accuracy of the representations, warranties, agreements, acknowledgements
      and understandings set forth herein in order to determine the
      applicability of such exemptions and the suitability of the Purchasers to
      acquire the Securities.

                                       15

            (h) Access to Information. The Purchasers acknowledge that they have
      reviewed the Disclosure Materials and have been afforded (i) the
      opportunity to ask such questions as they have deemed necessary of, and to
      receive answers from, representatives of the Company concerning the terms
      and conditions of the offering of the Securities and the merits and risks
      of investing in the Securities; (ii) access to information about the
      Company and the Subsidiaries and their respective financial condition,
      results of operations, business, properties, management and prospects
      sufficient to enable it to evaluate its investment; and (iii) the
      opportunity to obtain such additional information that the Company
      possesses or can acquire without unreasonable effort or expense that is
      necessary to make an informed investment decision with respect to the
      investment.

      The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The Securities may only be disposed of in compliance with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement, pursuant to
      Rule 144 (subject to the Company's receipt of routine backup documentation
      from the Purchaser) or to the Company, the Company may require the
      transferor thereof to provide to the Company an opinion of counsel
      selected by the transferor and reasonably acceptable to the Company, the
      form and substance of which opinion shall be reasonably satisfactory to
      the Company, to the effect that such transfer does not require
      registration of such transferred Securities under the Securities Act. As a
      condition of transfer, any such transferee shall agree in writing to be
      bound by the terms of this Agreement and shall have the rights of a
      Purchaser under this Agreement and the Registration Rights Agreement.

            (b) The Purchasers agree to the imprinting, so long as is required
      by this Section 4.1(b), of a legend on any of the Securities in the
      following form:

            THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, HAVE BEEN TAKEN FOR
            INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS A
            REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
            AMENDED, OR UNDER THE SECURITIES LAWS OF ANY APPLICABLE STATE WITH
            RESPECT TO THESE SHARES, IS THEN IN EFFECT OR AN EXEMPTION FROM THE
            REGISTRATION REQUIREMENTS OF THE ACT OR THE APPLICABLE STATE
            SECURITIES LAWS ARE THEN IN FACT APPLICABLE TO THE OFFER OR SALE.

            The Company acknowledges and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin agreement with a registered
      broker-dealer or grant a security interest in some or all of the
      Securities to a financial institution that is an "accredited investor" as
      defined in Rule 501(a) under the Securities Act and who agrees to be bound
      by the provisions of this Agreement and the Registration Rights Agreement
      and, if required under the terms of such arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer would not be subject to approval of the Company
      and no legal opinion of legal counsel of the pledgee, secured party or
      pledgor shall be required in connection with the pledge. Further, no
      notice shall be required of such pledge. At the appropriate Purchaser's
      expense, the Company will execute and deliver such reasonable
      documentation as a pledgee or secured party of Securities may reasonably
      request in connection with a pledge or transfer of the Securities,
      including, if the Securities are subject to registration pursuant to the
      Registration Rights Agreement, the preparation and filing of any required
      prospectus supplement under Rule 424(b)(3) under the Securities Act or
      other applicable provision of the Securities Act to appropriately amend
      the list of Selling Stockholders thereunder.

                                       16

            (c) Certificates evidencing the Securities shall not contain any
      legend (including the legend set forth in Section 4.1(b)), (i) while a
      registration statement (including the Registration Statement) covering the
      resale of such security is effective under the Securities Act, or (ii)
      following any sale of such Securities pursuant to Rule 144, or (iii) if
      such Securities are eligible for sale under Rule 144(k) (subject to
      receipt of routine backup documentation demonstrating eligibility for such
      rule), or (iv) if such legend is not required under applicable
      requirements of the Securities Act (including judicial interpretations and
      pronouncements issued by the Staff of the Commission). The Company shall
      cause its counsel to issue a legal opinion to the Company's transfer agent
      promptly after the Effective Date if required by the Company's transfer
      agent to effect the removal of the legend hereunder. The Company agrees
      that following the Effective Date or at such time as such legend is no
      longer required under this Section 4.1(c), it will, no later than five
      Trading Days following the delivery by a Purchaser to the Company or the
      Company's transfer agent of a certificate representing Securities issued
      with a restrictive legend (such date, the "Legend Removal Date"), deliver
      or cause to be delivered to such Purchaser a certificate representing such
      Securities that is free from all restrictive and other legends. Unless
      required under applicable law, the Company may not make any notation on
      its records or give instructions to any transfer agent of the Company that
      enlarge the restrictions on transfer set forth in this Section.

            (d) In addition to such Purchaser's other available remedies, the
      Company shall pay to a Purchaser, in cash, as partial liquidated damages
      and not as a penalty, for each $1,000 of Securities (based on the VWAP of
      the Common Stock on the date such Securities are submitted to the
      Company's transfer agent) subject to Section 4.1(c), $10 per Trading Day
      (increasing to $20 per Trading Day five (5) Trading Days after such
      damages have begun to accrue) for each Trading Day after the Legend
      Removal Date until such certificate is delivered. Nothing herein shall
      limit such Purchaser's right to pursue actual damages for the Company's
      failure to deliver certificates representing any Securities as required by
      the Transaction Documents, and such Purchaser shall have the right to
      pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief.

            (e) Each Purchaser, severally and not jointly with the other
      Purchasers, agrees that the removal of the restrictive legend from
      certificates representing Securities as set forth in this Section 4.1 is
      predicated upon the Company's reliance that the Purchaser will sell any
      Securities pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery requirements,
      or an exemption therefrom, which Purchaser hereby covenants to do.

                                       17

            (f) Until the date that each Purchaser holds less than 20% of the
      Securities initially purchased hereunder by such Purchaser, the Company
      shall not undertake a reverse or forward stock split or reclassification
      of the Common Stock without the prior written consent of the Purchasers
      holding a majority in interest of the Securities, except in connection
      with seeking to satisfy listing and maintenance requirements of the
      Trading Market.

      4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants 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. As long as any
Purchaser owns Securities and until the Purchaser is eligible to use Rule
144(k), if the Company is not required to file reports pursuant to the Exchange
Act, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

      4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

      4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a press release
or file a Current Report on Form 8-K, in each case reasonably acceptable to each
Purchaser disclosing the material terms of the transactions contemplated hereby.
The Company and each Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by other law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under
subclause (i) or (ii).

                                       18

      4.5 Shareholders Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

      4.6 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade payables in the ordinary course of
the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.

      4.8 Indemnification of Purchasers. Subject to the provisions of this
Section 4.8, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser's representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.

                                       19

      4.9 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Securities pursuant to this
Agreement.

      4.10 Listing of Common Stock. The Company hereby agrees to use best
efforts to maintain the listing of the Common Stock on the Trading Market, and
as soon as reasonably practicable following the Closing (but not later than the
earlier of the Effective Date and the first anniversary of the Closing Date) to
list all of the Securities on the Trading Market. The Company further agrees, if
the Company applies to have the Common Stock traded on any other Trading Market,
it will include in such application all of the Securities, and will take such
other action as is necessary to cause the Securities to be listed on such other
Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.

      4.11 Equal Treatment of Purchasers. 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 the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat for the Company the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

      4.12 Delivery of Securities After Closing. The Company shall deliver, or
cause to be delivered, the respective Securities purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 Fees and Expenses. The Company shall reimburse Crestview Capital
Partners LLC ("Crestview") the sum of $5,000 for its legal fees. The Company
shall deliver, prior to the Closing, a completed and executed copy of the
Closing Statement, attached hereto as Annex A. Except as otherwise set forth in
this Agreement, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Securities.

                                       20

      5.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

      5.3 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
the Company and each Purchaser 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.

      5.4 Construction. 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. 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.

      5.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".

      5.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

                                       21

      5.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), 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 improper or inconvenient venue for such
proceeding. 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 via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

      5.8 Survival. The representations and warranties herein shall survive for
three years following the Closing and delivery of the Securities.

      5.9 Execution. 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.

      5.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.11 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time
prior to the Company's performance upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

                                       22

      5.12 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

      5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

      5.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

      5.15 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only Crestview. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.

                                       23

      5.16 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

                            (Signature Page Follows)

                                       24

      IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

WORKSTREAM INC.                                          Address for Notice:

By: /s/ Michael Mullarkey
   --------------------------------                      2600 Lake Lucien Drive
     Name: Michael Mullarkey                             Suite 410
     Title:  CEO and President                           Maitland, Florida 32751

With a copy to (which shall not constitute notice):

Perley-Robertson, Hill and McDougall LLP
90 Sparks Street, 4th Floor
Ottawa, Ontario
K1P 1E2
Attention: Michael Gerrior
Facsimile:  (613) 238-8775

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                         ANNEX A

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $____________ of Common Stock from
Workstream, Inc. (the "Company"). All funds will be wired into a trust account
maintained by ____________, counsel to the Company. All funds will be disbursed
in accordance with this Closing Statement.

DISBURSEMENT DATE:                           July ____, 2004

I.   PURCHASE PRICE

                    GROSS PROCEEDS TO BE RECEIVED IN TRUST      $

II.   DISBURSEMENTS

                                                                $
                                                                $
                                                                $
                                                                $
                                                                $

TOTAL AMOUNT DISBURSED:                                         $

WIRE INSTRUCTIONS:

To: ____________________________________

To: ____________________________________

                                       27

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