Document:

Exhibit
      4.2

     

    AMENDED
      AND RESTATED REGISTRATION RIGHTS AGREEMENT

     

    This
      AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of August 29, 2008, is by and among Workstream Inc., a corporation existing
      pursuant to the Canada Business Corporations Act with headquarters located
      at
      495 March Road, Suite 300, Ottawa, Ontario K2K 3G1, Canada
      (the “Company”),
      and
      the undersigned buyers (each, a “Buyer”,
      and
      collectively, the “Buyers”).

     

    RECITALS

     

    A. The
      Company and the Buyers entered into that certain Transaction Agreement, dated
      as
      of July 25, 2007 (the “Existing Transaction
      Agreement”).

     

    B. Simultaneously
      with the consummation of the transactions contemplated by the Existing
      Transaction Agreement, the Company issued and sold to each Buyer (i) a Special
      Warrant (as defined in the Existing Transaction Agreement) which is convertible
      into Conversion Shares (as defined in the Existing Transaction Agreement) in
      accordance with the terms thereof and (ii) a Warrant (as defined in the Existing
      Transaction Agreement) which is exercisable to purchase Warrant Shares (as
      defined in the Existing Transaction Agreement) in accordance with the terms
      thereof.

     

    C. Simultaneously
      with the consummation of the transactions contemplated by the Existing
      Transaction Agreement, the Company and the Buyers executed and delivered the
      Registration Rights Agreement, dated as of August 3, 2007 (the “Existing
      Registration Rights Agreement”),
      pursuant to which the Company agreed to provide certain registration rights
      under the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      the rules and regulations promulgated thereunder, and applicable state
      securities laws.

     

    D. To
      induce
      each of the Buyers to consummate the transactions contemplated by the separate
      Exchange Agreements (as defined below), the Company agreed to provide amended
      registration rights under the 1933 Act and applicable state securities laws
      with
      respect to the Registrable Securities (as defined below).

     

    AGREEMENT

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Buyers hereby agree to amend
      and restate the Existing Registration Rights Agreement in its entirety as
      follows:

     

    
      	
              1.

            	
              Definitions

            

    

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (d) “Exchange
      Agreements”
means,
      collectively, the separate Exchange Agreements, each dated as of August 29,
      2008, entered into between the Company and each of the Buyers.

     

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

     

    (f) “Investor”
means
      a
      Buyer or any transferee or assignee
      of
      any Registrable Securities or 2008 Warrants (as defined in the Transaction
      Agreement), as applicable, to whom a Buyer assigns its rights under this
      Agreement and who agrees to become bound by the provisions of this Agreement
      in
      accordance with Section 9
      and any
      transferee or assignee thereof to whom a transferee or assignee of any
      Registrable Securities or 2008 Warrants, as applicable, assigns its rights
      under
      this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9.

     

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

     

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

     

    (i) “Registrable
      Securities”
means
      (i) the 2008 Warrant Shares (as defined in the Transaction Agreement)
      issued or issuable upon exercise of the 2008 Warrants and (ii) any capital
      stock
      of the Company issued or issuable with respect to the 2008 Warrant Shares or
      the
      2008 Warrants, including, without limitation, (1) as a result of any share
      split, share dividend, recapitalization, exchange or similar event or otherwise
      and (2) shares of capital stock of the Company into which the Common Shares
      (as
      defined in the Transaction Agreement) are converted or exchanged and shares
      of
      capital stock of a Successor Entity (as defined in the 2008 Warrants) into
      which
      the Common Shares are converted or exchanged, in each case, without regard
      to
      any limitations on exercise of the 2008 Warrants.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (l) “Required
      Registration Amount”
means
      the number of 2008 Warrant Shares issued and issuable pursuant to the 2008
      Warrants as of the Trading Day (as defined in the 2008 Warrants) immediately
      preceding the applicable date of determination (without taking into account
      any
      limitations on the exercise of the 2008 Warrants set forth therein), all subject
      to adjustment as provided in Section 2(d).

     

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

     

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

     

    (o) “Transaction
      Agreement”
means
      the Existing Transaction Agreement, as amended and modified by the Exchange
      Agreements.

     

    (p) “Trigger Date”
means
      the first date on which any of the Investors are unable to sell any Registrable
      Securities without restriction under Rule 144 (as defined below) (including,
      without limitation, volume restrictions).

     

    
      	
              2.

            	
              Registration.

            

    

     

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

     

    
      
        
        

      

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

     

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

     

    (d) Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a)
      is
      insufficient to cover the resale of all of the Registrable Securities required
      to be covered by such Registration Statement, the Company shall amend the
      applicable Registration Statement, or file a new Registration Statement (on
      the
      short form available therefor, if applicable), or both, so as to cover at least
      the Required Registration Amount as of the Trading Day immediately preceding
      the
      date of the filing of such amendment or new Registration Statement, in each
      case, as soon as practicable, but in any event not later than fifteen (15)
      days
      after the necessity therefor arises. The Company shall use its commercially
      reasonable efforts to cause such amendment and/or new Registration Statement
      to
      become effective as soon as practicable following the filing thereof. For
      purposes of the foregoing provision, the number of shares available under a
      Registration Statement shall be deemed “insufficient to cover all of the
      Registrable Securities” if at any time the number of Common Shares available for
      resale under the Registration Statement is less than the product determined
      by
      multiplying (i) the Required Registration Amount as of such time by (ii) 0.90.
      The calculation set forth in the foregoing sentence shall be made without regard
      to any limitations on the exercise of the 2008 Warrants (and such calculation
      shall assume that the 2008 Warrants are then fully exercisable for Common Shares
      at the then prevailing applicable Exercise Price (as defined
      therein).

     

    
      
        
        

      

      
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    (e) Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      If (i)
      a Registration Statement covering the resale of all of the Registrable
      Securities required to be covered thereby and required to be filed by the
      Company pursuant to this Agreement is (A) not filed with the SEC on or before
      the Filing Deadline (a “Filing
      Failure”)
      (it
      being understood that if the Company files a Registration Statement without
      affording each Investor the opportunity to review and comment on the same as
      required by Section 3(c)
      hereof,
      the
      Company shall not be deemed to have satisfied this clause (i)(A) and such event
      shall be deemed to be a Filing Failure);
      or (B)
      not declared effective by the SEC on or before the applicable Effectiveness
      Deadline (an “Effectiveness
      Failure”)
      (it
      being understood that if on the Business Day immediately following the Effective
      Date the Company shall not have filed a “final” prospectus for such Registration
      Statement with the SEC under Rule 424(b) in accordance with Section 2(a)
      above
      (whether or not such a prospectus is technically required by such rule), the
      Company shall not be deemed to have satisfied this clause (i)(B) and such event
      shall be deemed to be an Effectiveness Failure); (ii) on any day after the
      Effective Date of such Registration Statement sales of all of the Registrable
      Securities required to be included on such Registration Statement cannot be
      made
      (other than during an Allowable Grace Period (as defined in Section 3(r))
      pursuant to such Registration Statement (including, without limitation, because
      of a failure to keep such Registration Statement effective, to disclose such
      information as is necessary for sales to be made pursuant to such Registration
      Statement, a suspension or delisting of (or a failure to timely list) the Common
      Shares on its principal trading market or exchange, or to register a sufficient
      number of Common Shares) (a “Maintenance
      Failure”)
      (provided that if an Investor transfers its rights hereunder pursuant to Section
      9
      and the
      transferee requests inclusion in such Registration Statement which requires
      the
      Company under applicable law to file a post-effective amendment to such
      Registration Statement, then a Maintenance Failure shall not be deemed to have
      occurred solely with respect to the filing of such post-effective amendment
      only
      if the Company is using its commercially reasonable efforts to file such
      amendment and have such amendment declared effective as soon as practicable);
      or
      (iii) the Company fails to file with the SEC any required reports under Section
      13 or 15(d) of the 1934 Act such that it is not in compliance with Rule
      144(c)(1) (a “Current
      Public Information Default”)
      as a
      result of which any of the Investors are unable to sell any Registrable
      Securities without restriction under Rule 144 (including, without limitation,
      volume restrictions), then, as partial relief for the damages to any holder
      by
      reason of any such delay in or reduction of its ability to sell the underlying
      Common Shares (which remedy shall not be exclusive of any other remedies
      available at law or in equity), the Company shall pay to each holder of
      Registrable Securities relating to such Registration Statement an amount in
      cash
      equal to one percent (1%) of such Investor’s original principal amount of its
      Note (as defined in the applicable Exchange Agreement) (1) on the date of such
      Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public
      Information Default, as applicable, and (2) on every thirty (30) day anniversary
      of (I) a Filing Failure until such Filing Failure is cured; (II) an
      Effectiveness Failure until such Effectiveness Failure is cured; (III) a
      Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current
      Public Information Default until the earlier of (i) the date such Current Public
      Information Default is cured and (ii) such time that such public information
      is
      no longer required pursuant to Rule 144 (in each case, pro rated for periods
      totaling less than thirty (30) days). The payments to which a holder shall
      be
      entitled pursuant to this Section 2(e)
      are
      referred to herein as “Registration
      Delay Payments.”
      Following
      the initial Registration Delay Payment for any particular event or failure
      (which shall be paid on the date of such event or failure, as set forth above),
      without limiting the foregoing, if an event or failure giving rise to the
      Registration Delay Payments is cured prior to any thirtieth (30th)
      day
      anniversary of such event or failure, then such Registration Delay Payment
      shall
      be made on the third (3rd)
      Business Day after such cure. Notwithstanding anything contained in this Section
      2(e)
      to the
      contrary, in no event shall the Registration Delay Payments exceed $5,000,000
      in
      the aggregate.

     

    
      
        
        

      

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

     

    
      
        
        

      

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

     

    
      	
              3.

            	
              Related
                Obligations.

            

    

     

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

     

    
      
         

      

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

     

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

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (i) If
      any
      Investor may be required under applicable securities law to be described in
      a
      Registration Statement as an underwriter and such Investor consents to so being
      named an underwriter, upon the written request of such Investor, the Company
      shall make available for inspection by (i) such Investor, (ii) legal counsel
      for
      such Investor and (iii) one (1) firm of accountants or other agents retained
      by
      such Investor (collectively, the “Inspectors”),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      in
      writing to hold in strict confidence and not to make any disclosure (except
      to
      such Investor) or use of any Record or other information which the Company’s
      Board of Directors determines in good faith to be confidential, and of which
      determination the Inspectors are so notified, unless (a) the disclosure of
      such
      Records is necessary to avoid or correct a misstatement or omission in any
      Registration Statement or is otherwise required under the 1933 Act, (b) the
      release of such Records is ordered pursuant to a final, non-appealable subpoena
      or order from a court or government body of competent jurisdiction, or (c)
      the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this Agreement or any other Transaction
      Document (as defined in the 2008 Warrants). Such Investor agrees that it shall,
      upon learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential. Nothing herein (or in any other
      confidentiality agreement between the Company and such Investor, if any) shall
      be deemed to limit any Investor’s ability to sell Registrable Securities in a
      manner which is otherwise consistent with applicable laws and
      regulations.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              4.

            	
              Obligations
                of the Investors.

            

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              5.

            	
              Expenses
                of Registration.

            

    

     

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

     

    
      	
              6.

            	
              Indemnification.

            

    

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      	
              7.

            	
              Contribution.

            

    

     

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

     

    
      	
              8.

            	
              Reports
                Under the 1934 Act

            

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              9.

            	
              Assignment
                of Registration Rights

            

    

     

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

     

    
      	
              10.

            	
              Amendment
                of Registration Rights.

            

    

     

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

     

    
      	
              11.

            	
              Miscellaneous.

            

    

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    If
      to the
      Company: 

     

    Workstream
      Inc.

    495
      March
      Road, Suite 300

    Ottawa,
      Ontario, Canada K2K - 3G1 

    Telephone:
      (613) 270-0619

    Facsimile:
      (613) 236-9819

    Attention:
      CEO

    

    With
      a
      copy (for informational purposes only) to:

     

    Cozen
      O’Connor

    1900
      Market Street

    Philadelphia,
      Pennsylvania 19103

    Telephone:
      (215) 665-4141

    Facsimile:
      (215) 665-2013

    Attention:
      Michael J. Heller, Esq.

     

    If
      to the
      Transfer Agent:

     

    American
      Stock Transfer and Trust Company 

    59
      Maiden
      Lane

    New
      York,
      NY 10038 

    Telephone:
      (718)  921-8124 

    Facsimile:
      (718) 921-8327 

    Attention:
      Joseph Comito 

     

    If
      to
      Legal Counsel:

     

    Greenberg
      Traurig, LLP 

    77
      W.
      Wacker Drive, Suite 2400

    Chicago,
      Illinois 60602

    Telephone:
      (312) 456-8400

    Facsimile:
      (312) 456-8435

    Attention:
      Peter H. Lieberman, Esq.

       Todd
      A. Mazur, Esq.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (d) The
      parties hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5
      they have chosen that all questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be governed by the
      internal laws of the State of Illinois, without giving effect to any choice
      of
      law or conflict of law provision or rule (whether of the State of Illinois
      or
      any other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of Illinois. Each party hereby irrevocably
      submits to the exclusive jurisdiction of the state and federal courts sitting
      in
      The City of Chicago, Cook County, for the adjudication of any dispute hereunder
      or in connection herewith or with any transaction contemplated hereby or
      discussed herein, and hereby irrevocably waives, and agrees not to assert in
      any
      suit, action or proceeding, any claim that it is not personally subject to
      the
      jurisdiction of any such court, that such suit, action or proceeding is brought
      in an inconvenient forum or that the venue of such suit, action or proceeding
      is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
      AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
      TRANSACTION CONTEMPLATED HEREBY.

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    (k) The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party. Terms used in this Agreement but defined in the
      other Transaction Documents shall have the meanings ascribed to such terms
      on
      the Closing Date (as defined in the Exchange Agreements) in such other
      Transaction Documents unless otherwise consented to in writing by each
      Buyer.

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

    [signature
      pages follow]

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

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

     

    

      
        	 	
                COMPANY:

              
	 	
                 

                WORKSTREAM
                  INC.

                 

                By: 
                  _________________________________

                Name:
                  __________________

                Title:
                  __________________

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    
      
        	 	
                BUYERS:

                 

              
	 	
                MAGNETAR
                  CAPITAL MASTER FUND, LTD

                 

                By: Magnetar
                  Financial LLC

                Its: Investment
                  Manager

              
	 	
                 

                ______________________________

                By: 

                Its: 

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

              SRB
                GREENWAY CAPITAL, L.P.

               

              By:
                SRB Management, L.P., General Partner

               

              By:
                BC Advisors, L.L.C., General Partner

               

              By:
                ____________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

              SRB
                GREENWAY OFFSHORE OPERATING FUND, L.P.

               

              By:
                SRB Management, L.P., General Partner

               

              By:
                BC Advisors, L.L.C., General Partner

               

              By:
                _________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

              SRB
                GREENWAY CAPITAL (QP), L.P.

               

              By:
                SRB Management, L.P., General Partner

               

              By:
                BC Advisors, L.L.C., General Partner

               

              By:
                __________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

              TOM
                AKIN IRA INDIVIDUAL ACCOUNT

               

              By:
                ________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

            
	 	
              TALKOT
                FUND, L.P.

               

              By:
                _______________________

              By:
                _______________________

               

              By:
                ______________________________

                    Name:
                

                    Title:

            
	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

            
	 	
              CRESTVIEW
                CAPITAL MASTER, LLC

               

              By:
                Crestview Capital Partners, LLC, its sole 

              manager

               

              By:
                ______________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

            
	 	
               

              FORT
                MASON PARTNERS, LP

               

              By:
                Fort Mason Capital, LLC

               

              By:
                ________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

            
	 	
              FORT
                MASON MASTER, LP

               

              By:
                Fort Mason Capital, LLC

               

              By:
                __________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

            
	 	
              CCM
                MASTER QUALIFIED FUND, LTD

               

              By:
                __________________________________

                    Name:
                

                    Title:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      OF BUYERS

     

    
      	
              Buyer
                

            	 	
              Buyer
                Address

              and
                Facsimile Number

            	 	
              Buyer’s
                Representative’s Address 

              and
                Facsimile Number

            
	 	 	 	 	 
	
              Magnetar
                Capital Master Fund, Ltd

            	 	
              1603
                Orrington Avenue

              Evanston,
                IL 60201

              Attn:
                Scott Grossman

              Facsimile:
                (847) 905-5603

              Telephone:
                (847) 905-4832

            	 	
              Greenberg
                Traurig, LLP

              77
                W. Wacker Drive, Suite 2400

              Chicago,
                Illinois 60601

              Attention:
                Peter H. Lieberman

                                 Todd
                A. Mazur

              Facsimile:
                (312) 456-8435

              Telephone:
                (312) 456-8400

            
	 	 	 	 	 
	
              SRB
                Greenway Capital (QP), L.P.

            	 	
              300
                Crescent Court

              Suite
                1111

              Dallas,
                TX 75201

              Attention:
                George Lee

              Facsimile:

              Telephone:
                (214) 756-6016

            	 	 
	 	 	 	 	 
	
              SRB
                Greenway Capital, L.P.

            	 	
              300
                Crescent Court

              Suite
                1111

              Dallas,
                TX 75201

              Attention:
                George Lee

              Facsimile:

              Telephone:
                (214) 756-6016

            	 	 
	 	 	 	 	 
	
              SRB
                Greenway Offshore Operating Fund, L.P.

            	 	
              300
                Crescent Court

              Suite
                1111

              Dallas,
                TX 75201

              Attention:
                George Lee

              Facsimile:

              Telephone:
                (214) 756-6016

            	 	 
	 	 	 	 	 
	
              Tom
                Akin IRA Individual Account

            	 	
              c/o
                Talkot Fund, L.P.

              2400
                Bridgeway

              Suite
                300

              Sausalito,
                CA 94965

              Attention:
                Thomas Akin

              Facsimile:

              Telephone:
                

            	 	 
	 	 	 	 	 
	
              Talkot
                Fund, L.P.

            	 	
              2400
                Bridgeway

              Suite
                300

              Sausalito,
                CA 94965

              Attention:
                Thomas Akin

              Facsimile:

              Telephone:
                

            	 	 
	 	 	 	 	 
	
              Crestview
                Capital Master, LLC

            	 	
              95
                Revere Drive

              Suite
                F

              Northbrook,
                IL 60062

              Attention:
                Daniel I Warsh

              Facsimile:
                (847) 559-5807

              Telephone:
                (847) 559-0060

            	 	 
	 	 	 	 	 
	
              Fort
                Mason Partners, LP

            	 	
              590
                California Street

              Suite
                1925

              San
                Francisco, CA 94104

              Attention:
                David Smolen and Marshall Jensen

              Facsimile:

              Telephone:
                

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Fort
                Mason Master, LP

            	 	
              590
                California Street

              Suite
                1925

              San
                Francisco, CA 94104

              Attention:
                David Smolen and Marshall Jensen

              Facsimile:

              Telephone:
                

            	 	 
	 	 	 	 	 
	
              CCM
                Master Qualified Fund, Ltd

            	 	
              1
                North Wacker Drive

              Suite
                4350

              Chicago,
                IL 60606

              Attention:
                Gunnar Olsen

              Facsimile:

              Telephone:

            	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    ______________________

    ______________________

    ______________________

    Attention:
      _____________

     

    Re: Workstream
      Inc.

     

    Ladies
      and Gentlemen:

     

    [We
      are][I am] counsel to Workstream Inc., a corporation existing pursuant to the
      Canada Business Corporations Act (the “Company”),
      and
      have represented the Company and its subsidiaries in connection with those
      certain separate Exchange Agreements (the “Exchange
      Agreements”)
      entered into by and among the Company and the parties named therein
      (collectively, the “Holders”)
      pursuant to each of which the Company issued to the Holders warrants (the
“2008 Warrants”)
      exercisable for the Company’s common shares, no par value per share
      (the “Common
      Shares”).
      Pursuant to the Exchange Agreements, the Company also has entered into an
      Amended and Restated Registration Rights Agreement with the Holders (the
“Amended Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Amended Registration Rights
      Agreement), including the Common Shares issuable upon exercise of the 2008
      Warrants, under the Securities Act of 1933, as amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Amended Registration Rights
      Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
      on Form S-3 (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names each of the Holders as a
      selling shareholder thereunder.

     

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

     

    This
      letter shall serve as our standing opinion to you that the Common Shares
      underlying the 2008 Warrants are freely transferable by the Holders pursuant
      to
      the Registration Statement, subject to the prospectus delivery requirements
      of
      the 1933 Act, which the selling shareholders have agreed to comply with to
      the
      extent applicable and which we have assumed compliance with in issuing this
      letter. You need not require further letters from us to effect any future
      legend-free issuance or reissuance of such Common Shares to the Holders as
      contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
      _________ __, 200_. 

     

    
      	
              Very
                truly yours,

            
	 
	
              [ISSUER’S
                COUNSEL]

            
	 
	
              By:___________________________

            

    

     

    CC: [LIST
      NAMES OF HOLDERS]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

     

    SELLING
      SHAREHOLDERS

     

    The
      common shares being offered by the selling shareholders are those issuable
      to
      the selling shareholders upon exercise of the 2008 warrants. For additional
      information regarding the issuance of the 2008 warrants, see “Exchange of 2008
      Warrants” above. We are registering the common shares in order to permit the
      selling shareholders to offer the shares for resale from time to time. Except
      for the ownership of the 2008 warrants issued pursuant to the separate Exchange
      Agreements, the selling shareholders have not had any material relationship
      with
      us within the past three years.

     

    The
      table
      below lists the selling shareholders and other information regarding the
      beneficial ownership of the common shares by each of the selling shareholders.
      The second column lists the number of common shares beneficially owned by each
      selling shareholder, based on its ownership of common shares and the 2008
      warrants, as of ________, 2008, assuming exercise of the 2008 warrants held
      by
      the selling shareholders on that date, taking account of any limitations on
      exercise.

     

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

     

    In
      accordance with the terms of a registration rights agreement with the holders
      of
      the 2008 warrants, this prospectus generally covers the resale of the number
      of
      common shares issuable upon exercise of the 2008 warrants, determined as if
      the
      outstanding 2008 warrants were exercised in full (without regard to any
      limitations on exercise contained therein) as of the trading day immediately
      preceding the date this registration statement was initially filed with the
      SEC.
      Because the exercise price of the 2008 warrants may be adjusted, the number
      of
      shares that will actually be issued may be more or less than the number of
      shares being offered by this prospectus. The fourth column assumes the sale
      of
      all of the common shares offered by the selling shareholders pursuant to this
      prospectus.

     

    Under
      the
      terms of the 2008 warrants, a selling shareholder may not exercise the 2008
      warrants, to the extent such exercise would cause such selling shareholder,
      together with its affiliates, to beneficially own a number of common shares
      which would exceed 4.99% or 9.99% (as applicable) of our then outstanding common
      shares following such exercise, excluding for purposes of such determination
      common shares issuable upon exercise of the 2008 warrants which have not been
      exercised. The number of shares in the second column reflects these limitations.
      The selling shareholders may sell all, some or none of their shares in this
      offering. See “Plan of Distribution.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

               

              Name
                of Selling Shareholder

            	 	
              Number of Common Shares
                

              of Owned Prior to Offering

            	 	
              Maximum Number of
                

              Common Shares to be Sold
                

              Pursuant to this Prospectus

            	 	
              Number
                of Common 

              Shares
                of Owned After 

              Offering

            
	
              Magnetar
                Capital Master Fund, Ltd (1)

            	 	 	 	 	 	
              0

            
	 	 	 	 	 	 	 
	
              [Other
                Buyers]

            	 	 	 	 	 	 

    

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PLAN
      OF DISTRIBUTION

     

    We
      are
      registering the common shares issuable upon exercise of the 2008 warrants to
      permit the resale of these common shares by the holders of the 2008 warrants
      from time to time after the date of this prospectus. We will not receive any
      of
      the proceeds from the sale by the selling shareholders of the common shares.
      We
      will bear all fees and expenses incident to our obligation to register the
      common shares.

     

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

     

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

            

    

     

    
      	
            	·	
              in
                the over-the-counter market;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	
            	·	
              privately
                negotiated transactions;

            

    

     

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

            

    

     

    
      	
            	·	
              sales
                pursuant to Rule 144;

            

    

     

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	·	
              a
                combination of any such methods of sale;
                and

            

    

     

    
      	
            	·	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

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

     

    The
      selling shareholders may pledge or grant a security interest in some or all
      of
      the 2008 warrants or common shares owned by them and, if they default in the
      performance of their secured obligations, the pledgees or secured parties may
      offer and sell the common shares from time to time pursuant to this prospectus
      or any amendment to this prospectus under Rule 424(b)(3) or other applicable
      provision of the Securities Act of 1933, as amended, amending, if necessary,
      the
      list of selling shareholders to include the pledgee, transferee or other
      successors in interest as selling shareholders under this prospectus. The
      selling shareholders also may transfer and donate the common shares in other
      circumstances in which case the transferees, donees, pledgees or other
      successors in interest will be the selling beneficial owners for purposes of
      this prospectus.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    WORKSTREAM
      INC.

    (the
      “Company”)

     

    QUESTIONNAIRE
      TO THE SELLING SHAREHOLDERS

     

    This
      Questionnaire is to be completed, signed and faxed to Scott Brucker, Esquire
      at
      (215) 701-2410 by no later than fifteen (15) calendar days after the Trigger
      Date, by the person or entity indicated on the cover of this Questionnaire
      (the
“Selling Shareholder”) whose common shares of the Company are being registered
      pursuant to a Registration Statement on Form S-3. Retain a duplicate copy for
      your files. If you do not return the Questionnaire by the foregoing deadline,
      your shares may not be included in the Registration Statement.

     

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

     

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

     

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

     

    Name
      of
      Selling Shareholder: _________________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Instructions
      and Definitions

     

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

     

    
      	 	
              1.

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

            

    

     

    
      	 	
              2.

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

            

    

     

    
      	 	
              3.

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

            

    

     

    
      	 	
              4.

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

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1. Broker-Dealer
      Status.
      

    

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

    

    Yes
      ____    No
      ____

     

    If
“yes,”
      please give details below.

    

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

    

    Confirmed
      ____  Cannot
      Confirm ____

     

    If
      “cannot confirm,” please give details below.

     

    2.
       Relationships
      with the Company.

    

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

    

    Yes
      ____    No
      ____

     

    If
“yes,”
      please give details below.

    

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

    

    Yes
      ____    No
      ____

     

    If
“yes,”
      please give details below.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3. Equity
      Securities Owned By You.

     

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

    

    
      	
              Class
                of 

              Security

            	 	
              Number
                of Shares 

              Owned

            

    

    

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

    

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

    

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXAMPLE
      RESPONSE

    

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

    

    1.    
Broker-Dealer
      Status.

     

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

    

    2.     Relationships
      with the Company.

    

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

    

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

     

    3.     Equity
      Securities Owned By You.
      

    

    Question
      3(a).

    

    
      	
              Class
                of 

              Security

            	 	
              Number
                of Shares 

              Owned

            
	
              Common
                Shares

            	 	
              100,000

            
	 	 	 
	
              Warrants
                to purchase Common Shares

            	 	
              200,000

            

    

    

    Question
      3(b).

    

    Not
      applicable

    

    Question
      3(c).

    

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

    

    Question
      3(d).

    

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

    

    Question
      3(e).

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	
              DATED:
                __________, 2007

            	
              FOR
                INDIVIDUALS:

            
	 	 
	 	
              __________________________________

            
	 	
              Name
                of Selling Shareholder [please print]

            
	 	 
	 	
              __________________________________

            
	 	
              Signature

            
	 	 
	 	 
	 	
              FOR
                CORPORATIONS, PARTNERSHIPS OR TRUSTS:

            
	 	 
	 	
              __________________________________

            
	 	
              Name
                of Selling Shareholder [please print]

            
	 	 	 
	 	 	 
	 	
              By:

            	
              _________________________________

            
	 	 	
              Signature

            
	 	 	 
	 	 	 
	 	 	
              Name:___________________________

            
	 	 	
              [please
                print]

            
	 	 	 
	 	 	
              Title:____________________________

            
	 	 	
              [please
                print]Exhibit
        10.1

      EXCHANGE
        AGREEMENT

       

      This
        EXCHANGE AGREEMENT
        (the
“Agreement”),
        dated
        as of August 29, 2008, is being entered into by and between Workstream Inc.,
        a
        corporation existing pursuant to the Canada Business Corporations Act, with
        offices located at 495 March Road, Ottawa, Ontario, Canada K2K-3G1 (the
“Company”),
        and
        _______________________ (the “Holder”).

      

      RECITALS

       

      A. The
        Company, the Holder and various others entered into that certain Transaction
        Agreement, dated as July 25, 2007 (as amended and modified by this Agreement
        and
        the Other Exchange Agreements (as defined below), the “Transaction
        Agreement”).

       

      B.Simultaneously
        with the consummation of the transactions contemplated by the Transaction
        Agreement, (i) the Company, the Holder and various others entered into that
        certain Registration Rights Agreement dated as of August 3, 2007 (the
“Registration
        Rights Agreement”)
        and
        (ii) the Company issued and sold to the Holder for $_________ a special warrant
        initially convertible into _________ of the Company’s common shares, no par
        value (the “Common
        Shares”)
        (the
“Special
        Warrant”)
        and a
        warrant initially exercisable for _________ Common Shares (the “2007 Warrant”).

      

      C. Since
        the
        issuance of the Special Warrant, various Triggering Events (as defined in
        the
        Special Warrant) have occurred thereunder.

      

      D. In
        exchange for the Special Warrant, the Company has authorized the issuance
        to the
        Holder of a senior secured note, in the form attached hereto as Exhibit
        A
        (including all senior secured notes issued in exchange therefor or replacement
        thereof, the “Note”).

      

      E. In
        exchange for the 2007 Warrant, the Company has authorized the issuance to
        the
        Holder of a warrant, in the form attached hereto as Exhibit
        B
        (including all warrants issued in exchange therefor or replacement thereof,
        the
“Warrant”),
        which
        Warrant shall be exercisable for Common Shares (as exercised, the “Warrant
        Shares”),
        in
        accordance with the terms thereof.

      

      F. The
        Note,
        the Warrant and the Warrant Shares are collectively referred to herein as
        the
“Securities.”

       

      G. The
        exchange of the Special Warrant and the 2007 Warrant for the Note and Warrant
        is
        being made in reliance upon the exemption from registration provided by
        Section 3(a)(9) of the Securities Act of 1933, as amended (the
“1933
        Act”).
        

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      H. As
        additional consideration for the transactions contemplated hereby, (i) each
        of
        the Subsidiaries (as defined below) will execute a guaranty in favor of the
        Holder in the form attached hereto as Exhibit
        C
        (the
“Guaranty”
and
        collectively the “Guaranties”)
        pursuant to which it guarantees the obligations of the Company under the
        Note
        and (ii) the
        Note
        will be secured by a first priority perfected security interest in all of
        the
        assets of the Company and the Subsidiaries as evidenced by the security
        agreement in the form attached hereto as Exhibit
        D
        (the
”Security
        Agreement”
and,
        together with the other security documents and agreements entered into in
        connection with this Agreement, as each may be amended or modified from time
        to
        time, collectively, the “Security
        Documents”).

      

      AGREEMENT

      

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

       

      
        	
                1.

              	
                EXCHANGE
                  OF SPECIAL WARRANT AND 2007
                  WARRANT.

              

      

       

      
        
          (a)
            Special
            Warrant and 2007 Warrant.
            Subject
            to the satisfaction (or waiver) of the conditions set forth in Sections
            6
            and
7
            below,
            the Company shall, pursuant to Section 3(a)(9) of the 1933 Act, exchange
            (i) the
            Special Warrant for the Note and (ii) the 2007 Warrant for the
            Warrant.

        

      

       

      (b) Closing.
        The
        closing (the “Closing”)
        of the
        exchange of the Special Warrant and the 2007 Warrant shall occur at the offices
        of Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 2400, Chicago, Illinois
        60601. The date and time of the Closing (the “Closing
        Date”)
        shall
        be 10:00 a.m., Chicago Time, on the first (1st)
        Business Day on which the conditions to the Closing set forth in Sections
        6
        and
7
        below
        are satisfied or waived (or such later date as is mutually agreed to by the
        Company and the Holder). As used herein “Business
        Day”
means
        any day other than a Saturday, Sunday or other day on which commercial banks
        in
        Chicago, Illinois are authorized or required by law to remain
        closed.

       

      (c) Delivery.
        On the
        Closing Date, (i) the Holder shall deliver the Special Warrant and the 2007
        Warrant to the Company and (ii) the Company shall exchange and deliver to
        the Holder (A) the Note for the Special Warrant and (B) the Warrant for the
        2007
        Warrant, in all cases duly executed on behalf of the Company and registered
        in
        the name of the Holder or its designee.

       

      
        	
                2.

              	
                HOLDER’S
                  REPRESENTATIONS AND
                  WARRANTIES.

              

      

       

      The
        Holder represents and warrants to the Company: 

       

      (a) Organization;
        Authority.
        The
        Holder is an entity duly organized, validly existing and in good standing
        under
        the laws of the jurisdiction of its organization with the requisite power
        and
        authority to enter into and to consummate the transactions contemplated by
        the
        Exchange Documents (as defined below) to which it is a party and otherwise
        to
        carry out its obligations thereunder.
        For
        purposes of this Agreement, “Exchange Documents”
means
        this Agreement, the Note, the Warrant, the Security Documents, the Guaranties,
        the Amended Registration Rights Agreement (as defined below), the Irrevocable
        Transfer Agent Instructions (as defined below), and each of the other agreements
        and instruments entered into by the parties hereto in connection with the
        transactions contemplated hereby and thereby.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (b) No
        Public Sale or Distribution.
        The
        Holder is (i) acquiring the Note and the Warrant and (ii) upon exercise of
        the Warrant will acquire the Warrant Shares issuable upon exercise thereof,
        in
        each case, for its own account and not with a view towards, or for resale
        in
        connection with, the public sale or distribution thereof, except pursuant
        to
        sales registered or exempted under the 1933 Act; provided,
        however,
        that by
        making the representations herein, the Holder does not agree, or make any
        representation or warranty to hold any of the Securities for any minimum
        or
        other specific term and reserves the right to dispose of the Securities at
        any
        time in accordance with or pursuant to a registration statement or an exemption
        under the 1933 Act. The Holder is not a broker-dealer registered, or required
        to
        be registered, with the United States Securities and Exchange Commission
        (the
“SEC”)
        under
        the 1934 Act (as defined below). The Holder is acquiring the Securities
        hereunder in the ordinary course of its business. The Holder does not presently
        have any agreement or understanding, directly or indirectly, with any Person
        to
        distribute any of the Securities.

       

      (c) Accredited
        Investor Status.
        The
        Holder is an “accredited investor” as that term is defined in Rule 501(a) of
        Regulation D.

       

      (d) Reliance
        on Exemptions.
        The
        Holder understands that the Securities are being offered and issued to it
        in
        reliance on specific exemptions from the registration requirements of United
        States federal and state securities laws and that the Company is relying
        in part
        upon the truth and accuracy of, and the Holder’s compliance with, the
        representations, warranties, agreements, acknowledgments and understandings
        of
        the Holder set forth herein in order to determine the availability of such
        exemptions and the eligibility of the Holder to acquire the
        Securities.

       

      (e) Information.
        The
        Holder and its advisors, if any, have been furnished with all materials relating
        to the business, finances and operations of the Company and materials relating
        to the offer and issuance of the Securities which have been requested by
        the
        Holder. The Holder and its advisors, if any, have been afforded the opportunity
        to ask questions of the Company. Neither such inquiries nor any other due
        diligence investigations conducted by the Holder or its advisors, if any,
        or its
        representatives shall modify, amend or affect the Holder’s right to rely on the
        Company’s representations and warranties contained herein or any representations
        and warranties contained in any other Exchange Document or any other document
        or
        instrument executed and/or delivered in connection with this Agreement or
        the
        consummation of the transaction contemplated hereby. The Holder understands
        that
        its acquisition of the Securities involves a high degree of risk. The Holder
        has
        sought such accounting, legal and tax advice as it has considered necessary
        to
        make an informed investment decision with respect to its acquisition of the
        Securities.

       

      (f) No
        Governmental Review.
        The
        Holder understands that no United States federal or state agency or any other
        government or governmental agency has passed on or made any recommendation
        or
        endorsement of the Securities or the fairness or suitability of the acquisition
        of the Securities nor have such authorities passed upon or endorsed the merits
        of the offering of the Securities.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (g) Transfer
        or Resale.
        The
        Holder understands that except as provided in the Amended Registration Rights
        Agreement: (i) the Securities have not been and are not being registered
        under
        the 1933 Act or any state securities laws, and may not be offered for sale,
        sold, assigned or transferred unless (A) subsequently registered thereunder,
        (B)
        the Holder shall have delivered to the Company an opinion of counsel to the
        Holder (if requested by the Company), in a form reasonably acceptable to
        the
        Company, to the effect that such Securities to be sold, assigned or transferred
        may be sold, assigned or transferred pursuant to an exemption from such
        registration, or (C) the Holder provides the Company with reasonable assurance
        (which shall not include an opinion of counsel) that such Securities can
        be
        sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated
        under the 1933 Act (or a successor rule thereto) (collectively, “Rule
        144”);
        (ii)
        any sale of the Securities made in reliance on Rule 144 may be made only
        in
        accordance with the terms of Rule 144 and further, if Rule 144 is not
        applicable, any resale of the Securities under circumstances in which the
        seller
        (or the Person (as defined below) through whom the sale is made) may be deemed
        to be an underwriter (as that term is defined in the 1933 Act) may require
        compliance with some other exemption under the 1933 Act or the rules and
        regulations of the SEC promulgated thereunder; and (iii) neither the Company
        nor
        any other Person is under any obligation to register the Securities under
        the
        1933 Act or any state securities laws or to comply with the terms and conditions
        of any exemption thereunder.

       

      (i) Validity;
        Enforcement.
        This
        Agreement has been duly and validly authorized, executed and delivered on
        behalf
        of the Holder and shall constitute the legal, valid and binding obligations
        of
        the Holder enforceable against the Holder in accordance with its terms, except
        as such enforceability may be limited by general principles of equity or
        to
        applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
        and
        other similar laws relating to, or affecting generally, the enforcement of
        applicable creditors’ rights and remedies.

       

      (j) No
        Conflicts.
        The
        execution, delivery and performance by the Holder of this Agreement and the
        consummation by the Holder of the transactions contemplated hereby will not
        (i)
        result in a violation of the organizational documents of the Holder or (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,
        indenture or instrument to which the Holder is a party, or (iii) result in
        a
        violation of any law, rule, regulation, order, judgment or decree (including
        federal and state securities laws) applicable to the Holder, except in the
        case
        of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
        violations which would not, individually or in the aggregate, reasonably
        be
        expected to have a material adverse effect on the ability of the Holder to
        perform its obligations hereunder.

       

      (k) Residency.
        The
        Holder is a resident of that jurisdiction specified in its address on the
        Schedule of Buyers attached to the Transaction Agreement.

       

      (l) General
        Solicitation.
        The
        Holder is not acquiring 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.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        	
                3.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE
                  COMPANY.

              

      

       

      The
        Company represents and warrants to the Holder that:

       

      (a) Organization
        and Qualification.
        The
        Company and each Subsidiary (as defined below) are entities duly organized
        and
        validly existing and in good standing under the laws of the jurisdiction
        in
        which they are formed, and have the requisite power and authorization to
        own
        their properties and to carry on their business as now being conducted and
        as
        presently proposed to be conducted. Each of the Company and each of the
        Subsidiaries is duly qualified as a foreign entity to do business and is
        in good
        standing in every jurisdiction in which its ownership of property or the
        nature
        of the business conducted by it makes such qualification necessary, except
        to
        the extent that the failure to be so qualified or be in good standing would
        not
        have a Material Adverse Effect. As used in this Agreement, “Material
        Adverse Effect”
means
        any material adverse effect on (i) the business, properties, assets,
        liabilities, operations (including results thereof), condition (financial
        or
        otherwise) or prospects of the Company or any Subsidiary, individually or
        taken
        as a whole, (ii) the transactions contemplated hereby or in the other Exchange
        Documents or (iii) the authority or ability of the Company or any of the
        Subsidiaries to perform their respective obligations under any of the
        Transaction Documents (as defined in the Transaction Agreement) or any of
        the
        Exchange Documents. Other than the Subsidiaries, there is no Person in which
        the
        Company, directly or indirectly, owns capital stock or holds an equity or
        similar interest. For purposes of this Agreement, Workstream USA, Inc., a
        Delaware corporation, Paula Allen Holdings, Inc., a Florida corporation,
        The
        Omni Partners, Inc., a Florida corporation, 6FigureJobs.com, Inc., a Delaware
        corporation, and Workstream
        Merger Sub Inc., a Delaware corporation,
        are
        collectively referred to herein as the “Subsidiaries”
and
        each individually as a “Subsidiary.”

       

      (b) Authorization;
        Enforcement; Validity.
        The
        Company has the requisite power and authority to enter into and perform its
        obligations under the Exchange Documents to which it is a party and to issue
        the
        Securities in accordance with the terms thereof. Each Subsidiary has the
        requisite power and authority to enter into and perform its obligations under
        the Exchange Documents to which it is a party. The execution and delivery
        by the
        Company of this Agreement and the other Exchange Documents to which it is
        a
        party, and the consummation by the Company of the transactions contemplated
        hereby and thereby (including, without limitation, the issuance of the Warrant
        and the reservation for issuance and issuance of the Warrant Shares issuable
        upon exercise of the Warrant) have been duly authorized by the Company’s board
        of directors, and (other than the filing with the SEC of one or more
        Registration Statements (as defined in the Amended Registration Rights
        Agreement) in accordance with the requirements of the Amended Registration
        Rights Agreement and any other filings as may be required by any state
        securities agencies) no further filing, consent or authorization is required
        by
        the Company, its board of directors or its shareholders. The execution and
        delivery by each Subsidiary of the Exchange Documents to which it is a party,
        and the consummation by such Subsidiary of the transactions contemplated
        thereby
        have been duly authorized by the board of directors of such Subsidiary, and
        no
        further filing, consent or authorization is required by such Subsidiary,
        its
        board of directors or its stockholders. This Agreement and the other Exchange
        Documents to which it is a party have been duly executed and delivered by
        the
        Company, and constitute the legal, valid and binding obligations of the Company,
        enforceable against the Company in accordance with their respective terms,
        except as such enforceability may be limited by general principles of equity
        or
        applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
        or
        similar laws relating to, or affecting generally, the enforcement of applicable
        creditors’ rights and remedies and except as rights to indemnification and to
        contribution may be limited by federal or state securities law. The Exchange
        Documents to which it is a party have been duly executed and delivered by
        each
        Subsidiary, and constitute the legal, valid and binding obligations of such
        Subsidiary, enforceable against such Subsidiary in accordance with their
        respective terms, except as such enforceability may be limited by general
        principles of equity or applicable bankruptcy, insolvency, reorganization,
        moratorium, liquidation or similar laws relating to, or affecting generally,
        the
        enforcement of applicable creditors’ rights and remedies and except as rights to
        indemnification and to contribution may be limited by federal or state
        securities law. 

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (c) Issuance
        of Securities.
        The
        issuance of the Note and the Warrant has been duly authorized and, upon issuance
        in accordance with the terms of the Exchange Documents, the Note and the
        Warrant
        shall be validly issued, fully paid and non-assessable and free from all
        taxes,
        liens, charges and other encumbrances with respect to the issue thereof.
        As of
        the Closing, the Company shall have reserved from its duly authorized capital
        stock not less than 110% of the maximum number of Warrant Shares issuable
        upon
        exercise of the Warrant (without regard to any limitations on the exercise
        of
        the Warrant set forth therein). Upon exercise in accordance with the Warrant,
        the Warrant Shares, when issued, will be validly issued, fully paid and
        nonassessable and free from all preemptive or similar rights, taxes, liens,
        charges and other encumbrances with respect to the issue thereof, with the
        holders being entitled to all rights accorded to a holder of Common Shares.
        Subject to the accuracy of the representations and warranties of the Holder
        in
        this Agreement, the offer and issuance by the Company of the Securities is
        exempt from registration under the 1933 Act. The offer and issuance of the
        Note
        and the Warrant is exempt from registration under the 1933 Act pursuant to
        the
        exemption provided by Section 3(a)(9) thereof. 

       

      (d) No
        Conflicts.
        The
        execution, delivery and performance by the Company of the Exchange Documents
        to
        which it is party and the consummation by the Company of the transactions
        contemplated hereby and thereby (including, without limitation, the issuance
        of
        the Note, the Warrant, the Warrant Shares and the reservation for issuance
        of
        the Warrant Shares) will not (i) result in a violation of the Articles of
        Incorporation (as defined below) or other organizational documents of the
        Company or any of the Subsidiaries, any capital stock of the Company or any
        of
        the Subsidiaries or Bylaws (as defined below) of the Company or bylaws of
        any of
        the Subsidiaries, (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, indenture or instrument to which the Company or any of the
        Subsidiaries is a party or (iii) result in a violation of any law, rule,
        regulation, order, judgment or decree (including foreign, federal and state
        securities laws and regulations and the rules and regulations of The
        Nasdaq Capital Market
        and the
        Boston Stock Exchange (together, the “Principal
        Market”)
        and
        including all applicable Canadian and Ontario laws, rules and regulations)
        applicable to the Company or any of the Subsidiaries or by which any property
        or
        asset of the Company or any of the Subsidiaries is bound or affected except,
        in
        the case of clause (ii) or (iii) above, to the extent such conflict, default,
        termination rights or violations, as the case may be, could not reasonably
        be
        expected to have a Material Adverse Effect. The execution, delivery and
        performance by each Subsidiary of the Exchange Documents to which it is party
        and the consummation by such Subsidiary of the transactions contemplated
        thereby
        will not (i) result in a violation of the Articles of Incorporation or other
        organizational documents of the Company or any of the Subsidiaries, any capital
        stock of the Company or any of the Subsidiaries or Bylaws of the Company
        or
        bylaws of any of the Subsidiaries, (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, indenture or instrument to which the Company
        or
        any of the Subsidiaries is a party or (iii) result in a violation of any
        law,
        rule, regulation, order, judgment or decree (including federal and state
        securities laws and regulations and the rules and regulations of the Principal
        Market and including all applicable Canadian laws, rules and regulations)
        applicable to the Company or any of the Subsidiaries or by which any property
        or
        asset of the Company or any of the Subsidiaries is bound or affected except,
        in
        the case of clause (ii) or (iii) above, to the extent such conflict, default,
        termination rights or violations, as the case may be, could not reasonably
        be
        expected to have a Material Adverse Effect. 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (e) Consents.
        Neither
        the Company nor any Subsidiary is required to obtain any consent, authorization
        or order of, or make any filing or registration with, any court, governmental
        agency or any regulatory or self-regulatory agency or any other Person in
        order
        for it to execute, deliver or perform any of its respective obligations under
        or
        contemplated by the Exchange Documents to which it is a party, in each case,
        in
        accordance with the terms hereof and thereof. All consents, authorizations,
        orders, filings and registrations which the Company or any Subsidiary is
        required to obtain pursuant to the preceding sentence have been obtained
        or
        effected on or prior to the Closing Date, and neither the Company nor any
        Subsidiary is aware of any facts or circumstances which might prevent the
        Company or any Subsidiary from obtaining or effecting any of the registration,
        application or filings pursuant to the preceding sentence. The Company is
        not in
        violation of the requirements of the Principal Market and has no knowledge
        of
        any facts or circumstances which could reasonably lead to delisting or
        suspension of the Common Shares in the foreseeable future.

       

      (f) Acknowledgment
        Regarding the Holder’s Acquisition of Securities.
        The
        Company acknowledges and agrees that the Holder is acting solely in the capacity
        of an arm’s length party with respect to the Exchange Documents and the
        transactions contemplated hereby and thereby and that the Holder is not (i)
        an
        officer or director of the Company or any of the Subsidiaries, (ii) an
“affiliate” (as defined in Rule 144) of the Company or any of the Subsidiaries
        or (iii) to its knowledge, a “beneficial owner” of more than 10% of the Common
        Shares (as defined for purposes of Rule 13d-3 of the Securities Exchange
        Act of
        1934, as amended (the “1934
        Act”)).
        The
        Company further acknowledges that the Holder is not acting as a financial
        advisor or fiduciary of the Company or any of the Subsidiaries (or in any
        similar capacity) with respect to the Exchange Documents and the transactions
        contemplated hereby and thereby, and any advice given by the Holder or any
        of
        its representatives or agents in connection with the Exchange Documents and
        the
        transactions contemplated hereby and thereby is merely incidental to the
        Holder’s acquisition of the Securities. The Company further represents to the
        Holder that the Company’s and each Subsidiary’s decision to enter into the
        Exchange Documents has been based solely on the independent evaluation by
        the
        Company, each Subsidiary and their respective representatives.

       

      
        
          (g)
            No
            General Solicitation; Placement Agent’s Fees.
            Neither
            the Company, nor any of the Subsidiaries or affiliates, nor any Person
            acting on
            its or their behalf, has engaged in any form of general solicitation
            or general
            advertising (within the meaning of Regulation D promulgated by the SEC
            under the
            1933 Act) in connection with the offer or issuance of the Securities.
            The
            Company shall be responsible for the payment of any placement agent’s fees,
            financial advisory fees, or brokers’ commissions (other than for Persons engaged
            by the Holder or its investment advisor) relating to or arising out of
            the
            transactions contemplated hereby. Neither the Company nor any of the
            Subsidiaries has engaged any placement agent or other agent in connection
            with
            the offer or issuance of the Securities.

        

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (h) No
        Integrated Offering.
        None of
        the Company, the Subsidiaries or any of their 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 require registration of any of the Securities under the 1933 Act,
        whether through integration with prior offerings or otherwise, or cause this
        offering of Securities (together with any other offering under the Other
        Exchange Agreements) to require approval of shareholders of the Company under
        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. None
        of the
        Company, the Subsidiaries, their affiliates nor any Person acting on their
        behalf will take any action or steps referred to in the preceding sentence
        that
        would require registration of any of the Securities under the 1933 Act or
        cause
        the offering of any of the Securities to be integrated with other
        offerings.

       

      (i) Dilutive
        Effect.
        The
        Company understands and acknowledges that the number of Warrant Shares will
        increase in certain circumstances. The Company further acknowledges that
        its
        obligation to issue the Warrant Shares upon exercise of the Warrant in
        accordance with this Agreement and the Warrant is absolute and unconditional
        regardless of the dilutive effect that such issuance may have on the ownership
        interests of other shareholders of the Company.

       

      (j) Application
        of Takeover Protections; Rights Agreement.
        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 Articles of Incorporation
        or
        other organizational document or the laws of the jurisdiction of its
        incorporation or otherwise which is or could become applicable to the Holder
        as
        a result of the transactions contemplated by this Agreement, including, without
        limitation, the Company’s issuance of the Securities and the Holder’s ownership
        of the Securities. The Company and its board of directors have taken all
        necessary action, if any, in order to render inapplicable any stockholder
        rights
        plan or similar arrangement relating to accumulations of beneficial ownership
        of
        Common Shares or a change in control of the Company or any of the
        Subsidiaries.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (k) SEC
        Documents; Financial Statements.
        During
        the two (2) years prior to the date hereof, the Company has timely filed
        all
        reports, schedules, forms, statements and other documents required to be
        filed
        by it with the SEC pursuant to the reporting requirements of the 1934 Act
        (all
        of the foregoing filed prior to the date hereof and all exhibits included
        therein and financial statements, notes and schedules thereto and documents
        incorporated by reference therein being hereinafter referred to as the
“SEC
        Documents”).
        The
        Company has delivered to the Holder or its representatives true, correct
        and
        complete copies of each of the SEC Documents not available on the EDGAR system.
        As of their respective dates, the SEC Documents complied in all material
        respects with the requirements of the 1934 Act and the rules and regulations
        of
        the SEC promulgated thereunder applicable to the SEC Documents, and none
        of the
        SEC Documents, at the time they were filed with the SEC, 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 the
        light of the circumstances under which they were made, not misleading. As
        of
        their respective dates, the financial statements of the Company included
        in the
        SEC Documents complied as to form in all material respects with applicable
        accounting requirements and the published rules and regulations of the SEC
        with
        respect thereto as in effect as of the time of filing. Such financial statements
        have been prepared in accordance with generally accepted accounting principles,
        consistently applied, 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 exclude
        footnotes or may be condensed or summary statements) and fairly present in
        all
        material respects the financial position of the Company as of the dates thereof
        and the results of its operations and cash flows for the periods then ended
        (subject, in the case of unaudited statements, to normal year-end audit
        adjustments which will not be material, either individually or in the
        aggregate). No other information provided by or on behalf of the Company
        to the
        Holder which is not included in the SEC Documents, including, without
        limitation, information referred to in Section 2(e)
        of this
        Agreement, contains any untrue statement of a material fact or omits to state
        any material fact necessary in order to make the statements therein not
        misleading, in the light of the circumstance under which they are or were
        made.

       

      (l) Absence
        of Certain Changes.
        Since
        the date of the Company’s most recent audited financial statements contained in
        a Form 10-K, there has been no material adverse change and no material adverse
        development in the business, assets, liabilities, properties, operations
        (including results thereof), condition (financial or otherwise) or prospects
        of
        the Company or any of the Subsidiaries. Since the date of the Company’s most
        recent audited financial statements contained in a Form 10-K, neither the
        Company nor any of the Subsidiaries has (i) declared or paid any dividends,
        (ii)
        sold any material assets outside of the ordinary course of business,
        individually or in the aggregate,
        or (iii)
        made any material capital expenditures, individually or in the aggregate.
        Neither the Company nor any of the Subsidiaries has taken any steps to seek
        protection pursuant to any law or statute relating to bankruptcy, insolvency,
        reorganization, liquidation or winding up, nor does the Company or any
        Subsidiary have any knowledge or reason to believe that any of their respective
        creditors intend to initiate involuntary bankruptcy proceedings or any actual
        knowledge of any fact which would reasonably lead a creditor to do so. The
        Company and the Subsidiaries, individually and on a consolidated basis, are
        not
        as of the date hereof, and after giving effect to the transactions contemplated
        hereby to occur at the Closing, will not be Insolvent (as defined below).
        For
        purposes of this Section 3(l),
        “Insolvent”
means,
        (I) with respect to the Company and the Subsidiaries, on a consolidated basis,
        (i) the present fair saleable value of the Company’s and the Subsidiaries’
assets is less than the amount required to pay the Company’s and the
        Subsidiaries’ total Indebtedness (as defined below), (ii) the Company and the
        Subsidiaries are unable to pay their debts and liabilities, subordinated,
        contingent or otherwise, as such debts and liabilities become absolute and
        matured or (iii) the Company and the Subsidiaries intend to incur or believe
        that they will incur debts that would be beyond their ability to pay as such
        debts mature; and (II) with respect to the Company and each Subsidiary,
        individually, (i) the present fair saleable value of the Company’s or any of the
        Subsidiaries’ assets is less than the amount required to pay each of their
        respective total Indebtedness, (ii) the Company or any of the Subsidiaries
        are
        unable to pay their respective debts and liabilities, subordinated, contingent
        or otherwise, as such debts and liabilities become absolute and matured or
        (iii)
        the Company or any of the Subsidiaries intend to incur or believe that they
        will
        incur debts that would be beyond their respective ability to pay as such
        debts
        mature. Neither the Company nor any of the Subsidiaries has engaged in business
        or in any transaction, and is not about to engage in business or in any
        transaction, for which the Company’s or such Subsidiary’s remaining assets
        constitute unreasonably small capital.

       

      
        
          
          

        

        
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      (m) No
        Undisclosed Events, Liabilities, Developments or Circumstances.
        No
        event, liability, development or circumstance has occurred or exists, or
        is
        reasonably expected to exist or occur with respect to the Company, any of
        the
        Subsidiaries or their respective business, properties, liabilities, prospects,
        operations (including results thereof) or condition (financial or otherwise),
        that (i) would be required to be disclosed by the Company under applicable
        securities laws on a registration statement on Form S-1 filed with the SEC
        relating to an issuance and sale by the Company of its Common Shares and
        which
        has not been publicly announced or (ii) could have a Material Adverse
        Effect.

       

      (n) Conduct
        of Business; Regulatory Permits.
        Neither
        the Company nor any of the Subsidiaries is in violation of any term of or
        in
        default under its Articles of Incorporation, any certificate of designation,
        preferences or rights of any other outstanding series of preferred stock
        of the
        Company or any of the Subsidiaries or Bylaws or their organizational charter,
        certificate of formation or certificate of incorporation or bylaws,
        respectively. Neither the Company nor any of the Subsidiaries is in violation
        of
        any judgment, decree or order or any statute, ordinance, rule or regulation
        applicable to the Company or any of the Subsidiaries, and neither the Company
        nor any of the Subsidiaries will conduct its business in violation of any
        of the
        foregoing, except in all cases for possible violations which could not,
        individually or in the aggregate, have a Material Adverse Effect. Without
        limiting the generality of the foregoing, the Company is not in violation
        of any
        of the rules, regulations or requirements of the Principal Market and has
        no
        knowledge of any facts or circumstances that would reasonably lead to delisting
        or suspension of the Common Shares by the Principal Market in the foreseeable
        future. Except as set forth on Schedule 3(n),
        since
        January 1, 2006, (i) the Common Shares have been designated for quotation
        on the
        Principal Market, (ii) trading in the Common Shares has not been suspended
        by
        the SEC or the Principal Market and (iii) the Company has received no
        communication, written or oral, from the SEC or the Principal Market regarding
        the suspension or delisting of the Common Shares from the Principal Market.
        The
        Company and each of the Subsidiaries possess all certificates, authorizations
        and permits issued by the appropriate regulatory authorities necessary to
        conduct their respective businesses, except where the failure to possess
        such
        certificates, authorizations or permits would not have, individually or in
        the
        aggregate, a Material Adverse Effect, and neither the Company nor any such
        Subsidiary has received any notice of proceedings relating to the revocation
        or
        modification of any such certificate, authorization or permit.

       

      (o) Foreign
        Corrupt Practices.
        Neither
        the Company nor any of the Subsidiaries nor any director, officer, agent,
        employee or other Person acting on behalf of the Company or any of the
        Subsidiaries has, in the course of its actions for, or on behalf of, the
        Company
        or any of the Subsidiaries (i) used any corporate funds for any unlawful
        contribution, gift, entertainment or other unlawful expenses relating to
        political activity; (ii) made any direct or indirect unlawful payment to
        any
        foreign or domestic government official or employee from corporate funds;
        (iii)
        violated or is in violation of any provision of the U.S. Foreign Corrupt
        Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
        payoff, influence payment, kickback or other unlawful payment to any foreign
        or
        domestic government official or employee.

       

      
        
          
          

        

        
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      (p) Sarbanes-Oxley
        Act.
        The
        Company and each Subsidiary is in compliance in all material respects with
        all
        applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
        as
        of the date hereof, and all applicable rules and regulations promulgated
        by the
        SEC thereunder that are effective as of the date hereof.

       

      (q) Transactions
        With Affiliates.
        Other
        than as set forth on Schedule 3(q),
        none of
        the officers, directors or employees of the Company or any of the Subsidiaries
        is presently a party to any transaction with the Company or any of the
        Subsidiaries (other than for ordinary course services as employees, officers
        or
        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 such
        officer, director or employee or, to the knowledge of the Company or any
        of the
        Subsidiaries, any corporation, partnership, trust or other entity in which
        any
        such officer, director, or employee has a substantial interest or is an officer,
        director, trustee or partner.

       

      (r) Equity
        Capitalization.
        As of
        the date hereof, the authorized capital stock of the Company consists of
        (i)
        unlimited Common Shares, of which 52,551,119 shares
        are issued and outstanding, no shares are held in treasury, and 2,738,534
        shares
        are reserved for issuance pursuant to securities (other than the Warrants)
        exercisable or exchangeable for, or convertible into, Common Shares, and
        (ii)
        unlimited shares of preferred stock, none of which, as of the date hereof,
        are
        issued and outstanding. All of such outstanding shares are duly authorized
        and
        have been, or upon issuance will be, validly issued and are fully paid and
        nonassessable. 11,915,911 shares of the Company’s issued and outstanding Common
        Shares on the date hereof are owned by Persons who are “affiliates” (as defined
        in Rule 405 of the 1933 Act and calculated based on the assumption that only
        officers, directors and holders of at least 10% of
        the
        Company’s issued and outstanding Common Shares
        are
“affiliates” without conceding that any such Persons are “affiliates” for
        purposes of federal securities laws) of the Company or any of the Subsidiaries.
        To
        the
        Company’s knowledge, no Person owns 10% or more of the Company’s issued and
        outstanding Common Shares (calculated based on the assumption that all
        Equivalents, whether or not presently exercisable or convertible, have been
        fully exercised or converted (as the case may be) but taking account
        of any limitations on exercise or conversion (including “blockers”) contained
        therein without conceding that such identified Person is a 10% stockholder
        for
        purposes of federal securities laws).
        Except
        as disclosed in Schedule 3(r):
        (i)
        none of the Company’s or any Subsidiary’s capital stock is subject to preemptive
        rights or any other similar rights or any liens or encumbrances suffered
        or
        permitted by the Company or any Subsidiary; (ii) there are no outstanding
        options, warrants, scrip, rights to subscribe to, calls or commitments of
        any
        character whatsoever relating to, or securities or rights convertible into,
        or
        exercisable or exchangeable for, any capital stock of the Company or any
        of the
        Subsidiaries, or contracts, commitments, understandings or arrangements by
        which
        the Company or any of the Subsidiaries is or may become bound to issue
        additional capital stock of the Company or any of the Subsidiaries or options,
        warrants, scrip, rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities or rights convertible into, or exercisable
        or exchangeable for, any capital stock of the Company or any of the
        Subsidiaries; (iii) there are no outstanding debt securities, notes, credit
        agreements, credit facilities or other agreements, documents or instruments
        evidencing Indebtedness (as defined below) of the Company or any of the
        Subsidiaries or by which the Company or any of the Subsidiaries is or may
        become
        bound; (iv) there are no financing statements securing obligations in any
        amounts filed in connection with the Company or any of the Subsidiaries;
        (v)
        there are no agreements or arrangements under which the Company or any of
        the
        Subsidiaries is obligated to register the sale of any of their securities
        under
        the 1933 Act (except pursuant to the Amended Registration Rights Agreement);
        (vi) there are no outstanding securities or instruments of the Company or
        any of
        the Subsidiaries which contain any redemption or similar provisions, and
        there
        are no contracts, commitments, understandings or arrangements by which the
        Company or any of the Subsidiaries is or may become bound to redeem a security
        of the Company or any of the Subsidiaries; (vii) there are no securities
        or
        instruments containing anti-dilution or similar provisions that will be
        triggered by the issuance of the Securities; (viii) neither the Company nor
        any
        Subsidiary has any stock appreciation rights or “phantom stock” plans or
        agreements or any similar plan or agreement; and (ix) neither the Company
        nor
        any of the Subsidiaries have any liabilities or obligations required to be
        disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
        other than those incurred in the ordinary course of the Company’s or the
        Subsidiaries’ respective businesses and which, individually or in the aggregate,
        do not or could not have a Material Adverse Effect. The Company has furnished
        to
        the Holder true, correct and complete copies of the Company’s Articles of
        Amendment, Articles of Incorporation, as amended and as in effect on the
        date
        hereof (the “Articles of
        Incorporation”),
        and
        the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”),
        and
        the terms of all securities convertible into, or exercisable or exchangeable
        for, Common Shares and the material rights of the holders thereof in respect
        thereto.

       

      
        
          
          

        

        
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      (s) Indebtedness
        and Other Contracts.
        Except
        as disclosed on Schedule 3(s),
        neither
        the Company nor any of the Subsidiaries (i) has any outstanding Indebtedness
        (as
        defined below), (ii) is a party to any contract, agreement or instrument,
        the
        violation of which, or default under which, by the other party(ies) to such
        contract, agreement or instrument could reasonably be expected to result
        in a
        Material Adverse Effect, (iii) is in violation of any term of or in default
        under any contract, agreement or instrument relating to any Indebtedness,
        except
        where such violations and defaults would not result, individually or in the
        aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
        agreement or instrument relating to any Indebtedness, the performance of
        which,
        in the judgment of the Company’s officers, has or is expected to have a Material
        Adverse Effect. For purposes of this Agreement: (x) “Indebtedness”
of
        any
        Person means, without duplication (A) all indebtedness for borrowed money,
        (B)
        all obligations issued, undertaken or assumed as the deferred purchase price
        of
        property or services (including, without limitation, “capital leases” in
        accordance with generally accepted accounting principles) (other than trade
        payables entered into in the ordinary course of business), (C) all reimbursement
        or payment obligations with respect to letters of credit, surety bonds and
        other
        similar instruments, (D) all obligations evidenced by notes, bonds, debentures
        or similar instruments, including obligations so evidenced incurred in
        connection with the acquisition of property, assets or businesses, (E) all
        indebtedness created or arising under any conditional sale or other title
        retention agreement, or incurred as financing, in either case with respect
        to
        any property or assets acquired with the proceeds of such indebtedness (even
        though the rights and remedies of the seller or bank under such agreement
        in the
        event of default are limited to repossession or sale of such property), (F)
        all
        monetary obligations under any leasing or similar arrangement which, in
        connection with generally accepted accounting principles, consistently applied
        for the periods covered thereby, is classified as a capital lease, (G) all
        indebtedness referred to in clauses (A) through (F) above secured by (or
        for
        which the holder of such Indebtedness has an existing right, contingent or
        otherwise, to be secured by) any mortgage, lien, pledge, charge, security
        interest or other encumbrance upon or in any property or assets (including
        accounts and contract rights) owned by any Person, even though the Person
        which
        owns such assets or property has not assumed or become liable for the payment
        of
        such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
        or obligations of others of the kinds referred to in clauses (A) through
        (G)
        above; (y) “Contingent
        Obligation”
means,
        as to any Person, any direct or indirect liability, contingent or otherwise,
        of
        that Person with respect to any indebtedness, lease, dividend or other
        obligation of another Person if the primary purpose or intent of the Person
        incurring such liability, or the primary effect thereof, is to provide assurance
        to the obligee of such liability that such liability will be paid or discharged,
        or that any agreements relating thereto will be complied with, or that the
        holders of such liability will be protected (in whole or in part) against
        loss
        with respect thereto; and (z) “Person”
means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization, any other entity and
        a
        government or any department or agency thereof.

       

      
        
           

        

        
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      (t) Absence
        of Litigation.
        Except
        as set forth on Schedule 3(t),
        there
        is no action, suit, proceeding, inquiry or investigation before or by the
        Principal Market, any court, public board, government agency, self-regulatory
        organization or body pending or, to the knowledge of the Company, threatened
        against or affecting the Company or any of the Subsidiaries, the Common Shares
        or any of the Company’s or the Subsidiaries’ officers or directors which is
        outside of the ordinary course of business or individually or in the aggregate
        material to the Company or any of the Subsidiaries.

       

      (u) Insurance.
        The
        Company and each of the Subsidiaries are insured by insurers of recognized
        financial responsibility against such losses and risks and in such amounts
        as
        management of the Company believes to be prudent and customary in the businesses
        in which the Company and the Subsidiaries are engaged. Neither the Company
        nor
        any such Subsidiary has been refused any insurance coverage sought or applied
        for, and neither the Company nor any such Subsidiary has any reason to believe
        that it will be unable 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 at a cost that would not have a Material
        Adverse Effect.

       

      (v) Employee
        Relations.
        Neither
        the Company nor any of the Subsidiaries is a party to any collective bargaining
        agreement or employs any member of a union. The Company and the Subsidiaries
        believe that their relations with their employees are good. No executive
        officer
        (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee
        of the Company or any of the Subsidiaries has notified the Company or any
        such
        Subsidiary that such officer intends to leave the Company or any such Subsidiary
        or otherwise terminate such officer’s employment with the Company or any such
        Subsidiary. No executive officer or other key employee of the Company or
        any of
        the Subsidiaries is, or is now expected to be, in violation of any material
        term
        of any employment contract, confidentiality, disclosure or proprietary
        information agreement, non-competition agreement, or any other contract or
        agreement or any restrictive covenant, and the continued employment of each
        such
        executive officer or other key employee (as the case may be) does not subject
        the Company or any of the Subsidiaries to any liability with respect to any
        of
        the foregoing matters. The Company and the Subsidiaries are in compliance
        with
        all federal, state, local and foreign laws and regulations respecting labor,
        employment and employment practices and benefits, terms and conditions of
        employment and wages and hours, except where failure to be in compliance
        would
        not, either individually or in the aggregate, reasonably be expected to result
        in a Material Adverse Effect.

       

      
        
          
          

        

        
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      (w) Title.
        The
        Company and the Subsidiaries have good and marketable title in fee simple
        to all
        real property and good and marketable title to all personal property owned
        by
        them, in each case, free and clear of all liens, encumbrances and defects
        except
        such as do not materially affect the value of such property and do not interfere
        with the use made and proposed to be made of such property by the Company
        and
        any of the Subsidiaries. Any real property and facilities held under lease
        by
        the Company or any of the Subsidiaries are held by them under valid, subsisting
        and enforceable leases with such exceptions as are not material and do not
        interfere with the use made and proposed to be made of such property and
        buildings by the Company or any of the Subsidiaries.

       

      (x) Intellectual
        Property Rights.
        The
        Company and the Subsidiaries own or possess adequate rights or licenses to
        use
        all trademarks, trade names, service marks, service mark registrations, service
        names, patents, patent rights, copyrights, original works, inventions, licenses,
        approvals, governmental authorizations, trade secrets and other intellectual
        property rights and all applications and registrations therefor (“Intellectual
        Property Rights”)
        necessary to conduct their respective businesses as now conducted and as
        presently proposed to be conducted. None of the Company’s or the Subsidiaries’
Intellectual Property Rights have expired, terminated or been abandoned,
        or are
        expected to expire, terminate or be abandoned, within three years from the
        date
        of this Agreement. The Company does not have any knowledge of any infringement
        by the Company or any of the Subsidiaries of Intellectual Property Rights
        of
        others. There is no claim, action or proceeding being made or brought, or
        to the
        knowledge of the Company or any of the Subsidiaries, being threatened, against
        the Company or any of the Subsidiaries regarding their Intellectual Property
        Rights. The Company is unaware of any facts or circumstances which might
        give
        rise to any of the foregoing infringements or claims, actions or proceedings.
        The Company and each of the Subsidiaries have taken reasonable security measures
        to protect the secrecy, confidentiality and value of all of their Intellectual
        Property Rights.

       

      (y) Environmental
        Laws.
        The
        Company and the Subsidiaries (i) are in compliance with all Environmental
        Laws
        (as defined below), (ii) have received all permits, licenses or other approvals
        required of them under applicable Environmental Laws to conduct their respective
        businesses and (iii) are in compliance with all terms and conditions of any
        such
        permit, license or approval where, in each of the foregoing clauses (i),
        (ii)
        and (iii), the failure to so comply could be reasonably expected to have,
        individually or in the aggregate, a Material Adverse Effect. The term
“Environmental
        Laws”
means
        all federal, state, local or foreign laws relating to pollution or protection
        of
        human health or the environment (including, without limitation, ambient air,
        surface water, groundwater, land surface or subsurface strata), including,
        without limitation, laws relating to emissions, discharges, releases or
        threatened releases of chemicals, pollutants, contaminants, or toxic or
        hazardous substances or wastes (collectively, “Hazardous
        Materials”)
        into
        the environment, or otherwise relating to the manufacture, processing,
        distribution, use, treatment, storage, disposal, transport or handling of
        Hazardous Materials, as well as all authorizations, codes, decrees, demands
        or
        demand letters, injunctions, judgments, licenses, notices or notice letters,
        orders, permits, plans or regulations issued, entered, promulgated or approved
        thereunder.

       

      
        
          
          

        

        
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      (z) Subsidiary
        Rights.
        The
        Company or one of the Subsidiaries has the unrestricted right to vote, and
        (subject to limitations imposed by applicable law) to receive dividends and
        distributions on, all capital securities of the Subsidiaries as owned by
        the
        Company or such Subsidiary.

       

      (aa) Tax
        Status.
        The
        Company and each of the Subsidiaries (i) has timely made or filed all foreign,
        federal and state income and all other tax returns, reports and declarations
        required by any jurisdiction to which it is subject, (ii) has timely paid
        all
        taxes and other governmental assessments and charges that are material in
        amount, shown or determined to be due on such returns, reports and declarations,
        except those being contested in good faith and (iii) has set aside on its
        books
        provision reasonably adequate for the payment of all taxes for periods
        subsequent to the periods to which such returns, reports or declarations
        apply.
        There are no unpaid taxes in any material amount claimed to be due by the
        taxing
        authority of any jurisdiction, and the officers of the Company and the
        Subsidiaries know of no basis for any such claim. The Company is not operated
        in
        such a manner as to qualify as a passive foreign investment company, as defined
        in Section 1297 of the U.S. Internal Revenue Code of 1986, as
        amended.

       

      (bb) Internal
        Accounting and Disclosure Controls.
        The
        Company maintains internal control over financial reporting (as such term
        is
        defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide
        reasonable assurance regarding the reliability of financial reporting and
        the
        preparation of financial statements for external purposes in accordance with
        generally accepted accounting principles, including 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 and liability accountability, (iii) access to assets or
        incurrence of liabilities is permitted only in accordance with management’s
        general or specific authorization and (iv) the recorded accountability for
        assets and liabilities is compared with the existing assets and liabilities
        at
        reasonable intervals and appropriate action is taken with respect to any
        difference. The Company maintains disclosure controls and procedures (as
        such
        term is defined in Rule 13a-15(e) under the 1934 Act) that are reasonably
        effective in ensuring that information required to be disclosed by the Company
        in the reports that it files or submits under the 1934 Act is recorded,
        processed, summarized and reported, within the time periods specified in
        the
        rules and forms of the SEC, including, without limitation, controls and
        procedures designed to ensure that information required to be disclosed by
        the
        Company in the reports that it files or submits under the 1934 Act is
        accumulated and communicated to the Company’s management, including its
        principal executive officer or officers and its principal financial officer
        or
        officers, as appropriate, to allow timely decisions regarding required
        disclosure. Neither the Company nor any of the Subsidiaries has received
        any
        notice or correspondence from any accountant or other Person relating to
        any
        potential material weakness or significant deficiency in any part of the
        Company’s internal control over financial reporting.

      

      (cc) Off
        Balance Sheet Arrangements.
        There
        is no transaction, arrangement, or other relationship between the Company
        or any
        of the Subsidiaries and an unconsolidated or other off balance sheet entity
        that
        is required to be disclosed by the Company in its 1934 Act filings and is
        not so
        disclosed or that otherwise could be reasonably likely to have a Material
        Adverse Effect.

       

      
        
          
          

        

        
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      (dd) Investment
        Company Status.
        The
        Company is not, and upon consummation of the exchange and issuance of the
        Securities will not be, an “investment company,” an affiliate of an “investment
        company,” a company controlled by an “investment company” or an “affiliated
        person” of, or “promoter” or “principal underwriter” for, an “investment
        company” as such terms are defined in the Investment Company Act of 1940, as
        amended.

       

      (ee) Acknowledgement
        Regarding the Holder’s Trading Activity.
        It is
        understood and acknowledged by the Company (i) that, other than as contemplated
        by Section 4(o) of the Transaction Agreement, the Holder has not been asked
        by
        the Company or any of the Subsidiaries to agree, nor has the Holder agreed
        with
        the Company or any of the Subsidiaries, to desist from purchasing or selling,
        long and/or short, securities of the Company, or “derivative” securities based
        on securities issued by the Company or to hold the Securities for any specified
        term; (ii) that the Holder, and counter parties in “derivative” transactions to
        which the Holder is a party, directly or indirectly, presently may have a
        “short” position in the Common Shares which were established prior to the
        Holder’s knowledge of the transactions contemplated by the Exchange Documents,
        and (iii) that the Holder shall not be deemed to have any affiliation with
        or
        control over any arm’s length counter party in any “derivative” transaction. The
        Company further understands and acknowledges that, except as set forth in
        Section 4(o) of the Transaction Agreement, the Holder may engage in hedging
        and/or trading activities at various times during the period that the Securities
        are outstanding, including, without limitation, during the periods that the
        value of the Warrant Shares deliverable with respect to the Warrant are being
        determined and (b) such hedging and/or trading activities, if any, can reduce
        the value of the existing stockholders’ equity interest in the Company both at
        and after the time the hedging and/or trading activities are being conducted.
        Subject to the provisions of Section 4(o) of the Transaction Agreement, the
        Company acknowledges that such aforementioned hedging and/or trading activities
        do not constitute a breach of this Agreement or any other Exchange Document
        or
        any of the documents executed in connection herewith or therewith.

       

      (ff) Manipulation
        of Price.
        Neither
        the Company nor any of the Subsidiaries has, and to their knowledge no Person
        acting on their behalf has, (i) taken, directly or indirectly, any action
        designed to cause or to result in the stabilization or manipulation of the
        price
        of any security of the Company or any of the Subsidiaries to facilitate the
        sale
        or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
        any
        compensation for soliciting purchases of, any of the Securities, or (iii)
        paid
        or agreed to pay to any Person any compensation for soliciting another to
        purchase any other securities of the Company or any of the
        Subsidiaries.

       

      (gg) U.S.
        Real Property Holding Corporation.
        Neither
        the Company nor any of the Subsidiaries is or has ever been a U.S. real property
        holding corporation within the meaning of Section 897 of the Internal Revenue
        Code of 1986, as amended, and the Company and each Subsidiary shall so certify
        upon the Holder’s request. The Common Shares do not derive, and have not at
        any time during the previous five years derived, directly or indirectly
        more than 50% of its fair market value from one or any combination of: (i)
        real
        property situated in Canada, (ii) Canadian resource property and (iii) timber
        resource properties (as such terms are defined for purposes of the Income
        Tax Act (Canada).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (ii) Registration
        Eligibility.
        The
        Company is eligible to register the Registrable Securities for resale by
        the
        Holder using Form S-3 promulgated under the 1933 Act.

       

      (jj) Shell
        Company Status.
        The
        Company is not, and has never been, an issuer identified in Rule
        144(i)(1).

       

      
        
          (kk)
            Transfer
            Taxes.
            On the
            Closing Date, all stock transfer or other taxes (other than income or
            similar
            taxes) which are required to be paid in connection with the issuance
            of the
            Securities to be acquired by the Holder will be, or will have been, fully
            paid
            or provided for by the Company, and all laws imposing such taxes will
            be or will
            have been complied with.

        

      

       

      (ll) Bank
        Holding Company Act.
        Neither
        the Company nor any of its Subsidiaries is subject to the Bank Holding Company
        Act of 1956, as amended (the “BHCA”)
        and to
        regulation by the Board of Governors of the Federal Reserve System (the
“Federal
        Reserve”).
        Neither the Company nor any of its Subsidiaries or affiliates owns or controls,
        directly or indirectly, five percent (5%) or more of the outstanding shares
        of
        any class of voting securities or twenty-five percent (25%) or more of the
        total
        equity of a bank or any equity that is subject to the BHCA and to regulation
        by
        the Federal Reserve. Neither the Company nor any of its Subsidiaries or
        affiliates exercises a controlling influence over the management or policies
        of
        a bank or any entity that is subject to the BHCA and to regulation by the
        Federal Reserve.

       

      (mm) Disclosure.
        The
        Company confirms that neither it nor any other Person acting on its behalf
        has
        provided the Holder or any of its agents or counsel with any information
        that
        constitutes or could reasonably be expected to constitute material, nonpublic
        information. The Company understands and confirms that the Holder will rely
        on
        the foregoing representations in effecting transactions in securities of
        the
        Company. All disclosure provided to the Holder regarding the Company and
        the
        Subsidiaries, their businesses and the transactions contemplated hereby,
        including the Schedules to this Agreement, furnished by or on behalf of the
        Company or any of the Subsidiaries is true and correct and does 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 the light of the circumstances
        under which they were made, not misleading. Each press release issued by
        the
        Company or any of the Subsidiaries during the twelve (12) months preceding
        the
        date of this Agreement did not at the time of release contain any untrue
        statement of a material fact or omit to state a material fact required to
        be
        stated therein or necessary in order to make the statements therein, in the
        light of the circumstances under which they are made, not misleading. No
        event
        or circumstance has occurred or information exists with respect to the Company
        or any of the Subsidiaries or its or their business, properties, liabilities,
        prospects, operations (including results thereof) or conditions (financial
        or
        otherwise), which, under applicable law, rule or regulation, requires public
        disclosure at or before the date hereof or announcement by the Company but
        which
        has not been so publicly announced or disclosed. The Company acknowledges
        and
        agrees that the Holder is not making and has not made any representations
        or
        warranties with respect to the transactions contemplated hereby other than
        those
        specifically set forth in Section 2.

       

      (nn) Ranking
        of Notes.
        No
        Indebtedness of the Company or any of the Subsidiaries, at the Closing, will
        be
        senior to, or pari
        passu
        with,
        the Notes in right of payment, whether with respect to payment or redemptions,
        interest, damages, upon liquidation or dissolution or otherwise.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      
        	
                4.

              	
                COVENANTS.

              

      

       

      (a) Best
        Efforts.
        Each
        party shall use its best efforts timely to satisfy each of the conditions
        to be
        satisfied by it as provided in Sections 6
        and
7
        of this
        Agreement.

       

      (b) Blue
        Sky.
        If
        required by applicable law, the Company shall, on or before the Closing Date,
        take such action as the Company shall reasonably determine is necessary in
        order
        to obtain an exemption for, or to, qualify the Securities for issuance to
        the
        Holder at the Closing pursuant to this Agreement under applicable securities
        or
“Blue Sky” laws of the states of the United States (or to obtain an exemption
        from such qualification), and shall provide evidence of any such action so
        taken
        to the Holder on or prior to the Closing Date. The Company shall make all
        filings and reports relating to the offer and issuance of the Securities
        required under applicable securities or “Blue Sky” laws of the states of the
        United States
        following the Closing Date.

       

      (c) Listing.
        The
        Company shall promptly secure the listing of all of the Registrable Securities
        (as defined in the Amended Registration Rights Agreement) upon each national
        securities exchange and automated quotation system, if any, upon which the
        Common Shares are then listed (subject to official notice of issuance) and
        shall
        maintain such listing of all Registrable Securities from time to time issuable
        under the terms of the Exchange Documents on such national securities exchange
        or automated quotation system. The Company shall maintain the Common Shares’
authorization for quotation on the Principal Market, the New York Stock
        Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market (each,
        an
“Eligible
        Market”).
        The
        Company shall not take any action which could be reasonably expected to result
        in the delisting or suspension of the Common Shares on an Eligible Market.
        The
        Company shall pay all fees and expenses in connection with satisfying its
        obligations under this Section 4(c).

       

      (d) Fees.
        [For
        Magnetar:
        The
        Company shall reimburse the Holder or its designee(s) (in addition to any
        other
        expense amounts paid to the Holder prior to the date of this Agreement) for
        all
        reasonable costs and expenses incurred by it or its affiliates in connection
        with the transactions contemplated by the Exchange Documents (including,
        without
        limitation, all reasonable legal fees and disbursements in connection therewith,
        documentation and implementation of the transactions contemplated by the
        Exchange Documents and due diligence in connection therewith), which amount
        shall be paid by the Company by wire transfer of immediately available funds
        at
        the Closing or upon termination of this Agreement so long as such termination
        did not occur as a result of a material breach by the Holder of any of its
        obligations hereunder (as the case may be), provided that if the Closing
        occurs,
        up to $30,000 of such costs and expenses shall be paid by the Company in
        cash
        and the aggregate amount of any such costs and expenses in excess of $30,000
        shall be added to the original principal amount of the Note issued to the
        Holder. The Company shall be responsible for the payment of any placement
        agent’s fees, financial advisory fees, or broker’s commissions (other than for
        Persons engaged by the Holder) relating to or arising out of the transactions
        contemplated hereby. The Company shall pay, and hold the Holder harmless
        against, any liability, loss or expense (including, without limitation,
        reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
        with any claim relating to any such payment.] [For
        Other Investors:
        Each of
        the Company and the Holder shall bear its own costs and expenses incurred
        in
        connection with this Agreement and the transactions contemplated hereby.
        Notwithstanding the foregoing, the Company shall be responsible for the payment
        of any placement agent’s fees, financial advisory fees, or broker’s commissions
        (other than for Persons engaged by the Holder) relating to or arising out
        of the
        transactions contemplated hereby, and the Company shall pay, and hold the
        Holder
        harmless against, any liability, loss or expense (including, without limitation,
        reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
        with any claim relating to any such payment.]

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (e) Pledge
        of Securities.
        Notwithstanding anything to the contrary contained in Section 2(g),
        the
        Company acknowledges and agrees that the Securities may be pledged by the
        Holder
        in connection with a bona fide margin agreement or other loan or financing
        arrangement that is secured by the Securities. The pledge of Securities shall
        not be deemed to be a transfer, sale or assignment of the Securities hereunder,
        and if the Holders effects a pledge of Securities it shall not be required
        to
        provide the Company with any notice thereof or otherwise make any delivery
        to
        the Company pursuant to this Agreement or any other Exchange Document. The
        Company hereby agrees to execute and deliver such documentation as a pledgee
        of
        the Securities may reasonably request in connection with a pledge of the
        Securities to such pledgee by the Holder.

       

      (f) Disclosure
        of Transactions and Other Material Information.
        The
        Company shall, on or before 8:30 a.m., New York time, on the first
        (1st)
        Business Day after the date of this Agreement, issue a press release (the
        “Press
        Release”)
        reasonably acceptable to the Holder disclosing all the material terms of
        the
        transactions contemplated by the Exchange Documents. On
        or
        before 8:30 a.m., New York time, on the fourth (4th)
        Business Day following the date of this Agreement, the Company shall file
        a
        Current Report on Form 8-K describing all the material terms of the transactions
        contemplated by the Exchange Documents in the form required by the 1934 Act
        and
        attaching all the material Exchange Documents (including, without limitation,
        this Agreement (and all schedules to this Agreement), the form of the Note,
        the
        form of Warrant and the Amended Registration Rights Agreement) (including
        all
        attachments, the “8-K
        Filing”).
        From
        and after the issuance of the Press Release, the Company shall have disclosed
        all material, nonpublic information delivered to the Holder by the Company
        or
        any of the Subsidiaries, or any of their respective officers, directors,
        employees or agents (if any) in connection with the transactions contemplated
        by
        the Exchange Documents. The Company shall not, and the Company shall cause
        each
        of the Subsidiaries and each of its and their respective officers, directors,
        employees and agents not to, provide the Holder with any material, nonpublic
        information regarding the Company or any of the Subsidiaries from and after
        the
        issuance of the Press Release without the express prior written consent of
        the
        Holder. If the Holder has, or believes it has, received any material, nonpublic
        information regarding the Company or any of its Subsidiaries in breach of
        the
        immediately preceding sentence, the Holder shall provide the Company with
        written notice thereof in which case the Company shall, within two (2) Trading
        Days (as defined below) of the receipt of such notice, make a public disclosure
        of all such material, nonpublic information so provided. In the event of
        a
        breach of any of the foregoing covenants by the Company, any of the
        Subsidiaries, or any of its or their respective officers, directors, employees
        and agents (as determined in the reasonable good faith judgment of the Holder),
        in addition to any other remedy provided herein or in the other Exchange
        Documents, the Holder shall have the right to make a public disclosure, in
        the
        form of a press release, public advertisement or otherwise, of such material,
        nonpublic information without the prior approval by the Company, any of the
        Subsidiaries, or any of its or their respective officers, directors, employees
        or agents. The Holder shall not have any liability to the Company, any of
        the
        Subsidiaries, or any of its or their respective officers, directors, employees,
        stockholders or agents, for any such disclosure. Subject to the foregoing,
        neither the Company, the Subsidiaries nor the Holder shall issue any press
        releases or any other public statements with respect to the transactions
        contemplated hereby; provided,
        however,
        that
        the Company shall be entitled, without the prior approval of the Holder,
        to make
        any press release or other public disclosure with respect to such transactions
        (i) in substantial conformity with the 8-K Filing and contemporaneously
        therewith and (ii) as is required by applicable law and regulations
        (provided
        that in
        the case of clause (i) the Holder shall be consulted by the Company in
        connection with any such press release or other public disclosure prior to
        its
        release). Without the prior written consent of the Holder, the Company shall
        not
        (and shall cause each of the Subsidiaries to not) disclose the name of the
        Holder in any filing, announcement, release or otherwise unless required
        by
        applicable law or regulations.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      (g) Amendment
        of Transaction Agreement.
        From and
        after the Closing: 

       

      (i) The
        term
“Conversion Shares” in the Transaction Agreement is hereby deleted.

       

      (ii) The
        term
“Registration Rights Agreement” in the Transaction Agreement is hereby replaced
        with the term “Amended Registration Rights Agreement.”

       

      (iii) The
        defined term “Securities” in the Transaction Agreement is hereby replaced with
        the following: ““Securities”
means,
        collectively, the Notes, the 2008 Warrants and the 2008 Warrant Shares.”
Notwithstanding anything in this Section 4(g)
        to the
        contrary, for purposes of Section 4(d) and 9(k) of the Transaction Agreement,
        the terms “Securities” and “Transaction Documents” shall each have the meaning
        ascribed to such terms prior to the amendment contemplated by this Agreement
        and
        the Other Exchange Agreements.

       

      (iv) The
        term
“Special Warrants” in the Transaction Agreement is hereby replaced with the term
“Notes.”

       

      (v) The
        term
“Warrants” in the Transaction Agreement is hereby replaced with the term “2008
        Warrants.”

       

      (vi) The
        term
“Warrant Shares” in the Transaction Agreement is hereby replaced with the term
“2008 Warrant Shares.”

       

      (vii) The
        following terms are hereby added to the Transaction Agreement:

       

      (1) “2008
        Warrants”
means
        all of the warrants issued by the Company in exchange for Warrants, and shall
        include all warrants issued in exchange therefor or replacement
        thereof.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      (2) “2008
        Warrant Shares”
means
        all of the Common Shares issuable upon exercise of the 2008
        Warrants.

       

      (3) “Notes”
means
        all of the senior secured notes issued by the Company in exchange for Special
        Warrants, and shall include all senior secured notes issued in exchange therefor
        or replacement thereof.

       

      (4) “Special
        Warrants”
means
        all of the special warrants issued to the Buyers on the Closing
        Date.

       

      (5) “Warrants”
means
        all of the warrants (other than Special Warrants) issued to the Buyers on
        the
        Closing Date.

       

      (viii) Section
        4(p)(i) of the Transaction Agreement is hereby replaced with the
        following:

       

      “The
        Company shall deliver to each Buyer a written notice (the “Offer
        Notice”)
        of any
        proposed or intended issuance or sale or exchange (the “Offer”)
        of the
        securities being offered (the “Offered
        Securities”)
        in a
        Subsequent Placement, which Offer Notice shall (w) identify and describe
        the
        Offered Securities, (x) describe the price and other terms upon which they
        are
        to be issued, sold or exchanged, and the number or amount of the Offered
        Securities to be issued, sold or exchanged, (y) identify the Persons (if
        known)
        to which or with which the Offered Securities are to be offered, issued,
        sold or
        exchanged and (z) offer to issue and sell to or exchange with such Buyer
        in
        accordance with the terms of the Offer at least 50% of the Offered Securities,
        provided
        that the
        number of Offered Securities which such Buyer shall have the right to subscribe
        for under this Section 4(p) shall be (a) based on such Buyer’s pro rata portion
        of the aggregate principal amount of the Notes issued in exchange for the
        Special Warrants acquired by all Buyers (the “Basic
        Amount”),
        and
        (b) with respect to each Buyer that elects to purchase its Basic Amount,
        any
        additional portion of the Offered Securities attributable to the Basic Amounts
        of other Buyers as such Buyer shall indicate it will purchase or acquire
        should
        the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription
        Amount”).”

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      (ix) Except
        as
        otherwise expressly provided herein, (i) the Transaction Agreement and each
        other Transaction Document is, and shall continue to be, in full force and
        effect and is hereby ratified and confirmed in all respects, except that
        on and
        after the Closing Date (A) all references in the Transaction Agreement to
        the “Transaction Agreement,” “hereto,” “hereof,” “this Agreement,” “hereunder”
or words of like import referring to the Transaction Agreement shall mean
        the
        Transaction Agreement as amended by this Agreement and the Other Exchange
        Agreements, and (B) all references in the other Transaction Documents to
        the “Transaction Agreement,” “thereto,” “thereof,” “thereunder” or words of like
        import referring to the Transaction Agreement shall mean the Transaction
        Agreement as amended by this Agreement and the Other Exchange Agreements,
        and
        (ii) the execution, delivery and effectiveness of this Agreement shall not
        operate as an amendment of any right, power or remedy of the Holder under
        any
        Transaction Document, nor constitute an amendment of any provision of any
        Transaction Document and all of them shall continue in full force and effect,
        as
        amended or modified by this Agreement and the Other Exchange Agreements.
        For
        purposes of this Agreement, (1) “Other
        Special Warrant Holders”
means,
        collectively, the holders (other than the Holder) of special warrants acquired
        pursuant to the Transaction Agreement; (2) “Other
        Exchange Agreements”
means,
        collectively, the separate exchange agreements, each dated as of August 29,
        2008, entered into between the Company and each of the Other Special Warrant
        Holders; (3) “Other
        Notes”
means,
        collectively, the senior secured notes issued pursuant to the Other Exchange
        Agreements, and shall include all senior secured notes issued in exchange
        therefor or replacement thereof; (4) “Notes”
means,
        collectively, the Note and the Other Notes; (5) “Other
        Warrants”
means,
        collectively, the warrants issued pursuant to the Other Exchange Agreements,
        and
        shall include all warrants issued in exchange therefor or replacement thereof;
        (6) “2008 Warrants”
means,
        collectively, the Warrant and the Other Warrants; and (7) “Other
        Exchange Documents”
means,
        collectively, the Other Exchange Agreements, the Other Notes, the Other Warrants
        and all other agreements, documents and instruments executed and delivered
        in
        connection with the transactions contemplated thereby.

       

      (x) It
        is
        expressly understood and agreed that the Note (or any portion thereof) may
        be
        used by the Holder as purchase price to purchase any securities of the Company,
        whether pursuant to Section 4(p)(i) of the Transaction Agreement or
        otherwise.

       

      (h) Rule
        144.
        The
        Company expressly acknowledges and agrees that for purposes of Rule 144(d)
        the
        Holder shall be deemed to have acquired the Warrant on August 3, 2007 and
        that
        the holding period for it may be tacked onto the holding period of the 2007
        Warrant. The Company agrees that it shall not (and shall cause each of its
        officers, directors, employees and agents to not) take any action or omit
        to
        take any action inconsistent with the foregoing. The Company further agrees
        to
        take all actions necessary (including, without limitation, the issuance by
        its
        legal counsel of any necessary legal opinions) to issue to the Warrant Shares
        so
        that (subject
        to the Company being compliant with Section 144(c)(1) only if the Holder
        becomes
        an affiliate of the Company after the date hereof) they
        are
        immediately freely tradable on an Eligible Market without restriction and
        not
        containing any restrictive legend, all without the need for any action by
        the
        Holder.

       

      (i) Registration
        Delay Payments.
        Effective simultaneously with the Holder’s receipt of the Note and Warrant, the
        Holder hereby waives (i) all Registration Delay Payments accrued and owing
        to
        the Holder under the Registration Rights Agreement and (ii) the Effectiveness
        Failure (as defined in the Registration Rights Agreement) that occurred prior
        to
        the date hereof under Section 2(e) of the Registration Rights Agreement as
        a
        result of the failure of the Registration Statement (as defined in the
        Registration Rights Agreement) initially filed by the Company with the SEC
        on
        September 11, 2007 to be declared effective by the SEC on or before the
        Effectiveness Deadline (as defined in the Registration Rights Agreement)
        for
        such Registration Statement.

       

      (j) Existing
        Triggering Events;
        Existing Payment Breach.
        Effective simultaneously with the Holder’s receipt of the Note and Warrant, the
        Holder hereby waives all Existing Trigger Events and the Existing Payment
        Breach
        (each as defined in that certain Forbearance Agreement, dated as of April
        14,
        2008, by and between the Company and the Holder). Without implication that
        the
        contrary would otherwise be true, it is expressly understood and agreed that
        Sections 4(i)
        and
4(j)
        shall be
        null and void ab initio and be of no force or effect if the Closing does
        not
        occur and this Agreement is terminated pursuant to Section 8
        hereof.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      
        
           

          (k)
            Issuance
            of Notes and 2008 Warrants.
            Effective simultaneously with the Closing, the Holder hereby consents,
            under
            Sections 4(k) and 4(n) of the Transaction Agreement, to the issuance
            of the
            Notes and 2008 Warrants and the Common Shares issuable upon exercise
            of the 2008
            Warrants.

        

      

       

      (l) Public
        Information.
        At any
        time during the period commencing on the Closing Date and ending at such
        time
        that all of the Securities have been sold, if a registration statement is
        not
        available for the resale of all of the Securities and the Company shall fail
        for
        any reason to satisfy the current public information requirement under Rule
        144(c)(1) and the Securities cannot then be sold without the requirement
        for the
        Company to be in compliance with Rule 144(c)(1) and otherwise without
        restriction or limitation pursuant to Rule 144 (a “Public
        Information Failure”),
        then,
        as partial relief for the damages to any holder of Securities by reason of
        any
        such delay in or reduction of its ability to sell the Securities (which remedy
        shall not be exclusive of any other remedies available at law or in equity),
        the
        Company shall pay to each such holder an amount in cash equal to one percent
        (1%) of the original principal amount of the Note on the day of a Public
        Information Failure and on every thirtieth day (pro rated for periods totaling
        less than thirty days) thereafter until the earlier of (i) the date such
        Public Information Failure is cured and (ii) such time that such public
        information is no longer required pursuant to Rule 144. The payments to which
        a
        holder shall be entitled pursuant to this Section 4(l)
        are
        referred to herein as “Public
        Information Failure Payments.”
        Following the initial Public Information Failure Payment for a Public
        Information Failure (which shall be paid on the date of such Public Information
        Failure, as set forth above), without limiting the foregoing, if a failure
        giving rise to such Public Information Failure Payment is cured or such public
        information is no longer required (as the case may be) prior to any thirtieth
        (30th)
        day
        anniversary of such Public Information Failure, then such Public Information
        Failure Payment shall be paid on the third (3rd)
        Business Day after such cure or such public information is no longer required
        (as the case may be).

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      (m) Shareholder
        Approval.
        To the
        extent required by the rules and regulations of the Principal Market, the
        Company shall provide each shareholder entitled to vote at a special or annual
        meeting of shareholders of the Company (the “Shareholder
        Meeting”),
        which
        shall be called and held not later than one hundred eighty (180) days after
        the
        Closing Date (the “Shareholder
        Meeting Deadline”),
        a
        proxy statement, in the form which has been previously reviewed by the Holder
        and its counsel, soliciting each such shareholder’s affirmative vote at the
        Shareholder Meeting for approval of resolutions providing for the Company’s
        issuance of all of the Securities as described in the Exchange Documents
        in
        accordance with
        applicable law and the rules and regulations of Principal Market
        (such
        affirmative approval being referred to herein as the “Shareholder
        Approval”
and
        the
        date of such Shareholder Approval shall be referred to as the “Shareholder
        Approval Date”),
        and
        the Company shall use its commercially reasonable efforts to solicit its
        shareholders’ approval of such resolutions (which efforts shall include, without
        limitation, the requirement to hire a reputable proxy solicitor) and to cause
        the board of directors of the Company to recommend to the shareholders that
        they
        approve such resolutions. If the Company shall be obligated to seek to obtain
        the Shareholder Approval, then it shall do so by the Shareholder Meeting
        Deadline. If, despite the Company’s commercially reasonable efforts the
        Shareholder Approval is not obtained on or prior to the Shareholder Meeting
        Deadline, the Company shall cause an additional Shareholder Meeting to be
        held
        each semi-annual period thereafter until such Shareholder Approval is obtained
        or until such Shareholder Approval is no longer required under the rules
        and
        regulations of the Principal Market or is no longer required to eliminate
        restrictions on the issuance of Common Shares pursuant to the 2008 Warrants.
        The
        Company shall not directly or indirectly take any action which would result
        in a
        Dilutive Issuance (as defined in the Warrant) below the Floor Price (as defined
        in the Warrant) prior to the Shareholder Approval Date. The Company agrees
        that
        any such action and resulting Dilutive Issuance shall be null and void and
        that
        the Holder would be irreparably harmed to the extent that the Company takes
        any such action.

       

      
        	
                5.

              	
                REGISTER;
                  TRANSFER AGENT INSTRUCTIONS;
                  LEGEND.

              

      

       

      (a) Register.
        The
        Company shall maintain at its principal executive offices (or such other
        office
        or agency of the Company as it may designate by notice to each holder of
        Securities), a register for the Note and the Warrant in which the Company
        shall
        record the name and address of the Person in whose name the Note and the
        Warrant have been issued (including the name and address of each transferee),
        the principal amount of the Note held by such Person and the number of Warrant
        Shares issuable upon exercise of the Warrant held by such Person. The Company
        shall keep the register open and available at all times during business hours
        for inspection of the Holder or its legal representatives.

       

      (b) Transfer
        Agent Instructions.
        The
        Company shall issue irrevocable instructions to its transfer agent and any
        subsequent transfer agent in the form reasonably acceptable to the Holder
        (the
“Irrevocable
        Transfer Agent Instructions”)
        to
        issue certificates or credit shares to the applicable balance accounts at
        The
        Depository Trust Company (“DTC”),
        registered in the name of the
        Holder or its respective nominee(s),
        for the
        Warrant Shares in such amounts as specified from time to time by the Holder
        to
        the Company upon exercise of the Warrant. The Company represents and warrants
        that no instruction other than the Irrevocable Transfer Agent Instructions
        referred to in this Section 5(b),
        and
        stop transfer instructions to give effect to Section 2(g)
        hereof,
        will be given by the Company to its transfer agent with respect to the
        Securities, and that the Securities shall otherwise be freely transferable
        on
        the books and records of the Company, to the extent provided in this Agreement
        and the other Exchange Documents. If the Holder effects a sale, assignment
        or
        transfer of the Securities in accordance with Section 2(g)
        hereof,
        the Company shall permit the transfer and shall promptly instruct its transfer
        agent to issue one or more certificates or credit shares to the applicable
        balance accounts at DTC in such name and in such denominations as specified
        by
        the Holder to effect such sale, transfer or assignment. In the event that
        such
        sale, assignment or transfer involves Warrant Shares sold, assigned or
        transferred pursuant to an effective registration statement or in compliance
        with Rule 144, the transfer agent shall issue such shares to the Holder,
        assignee or transferee (as the case may be) without any restrictive legend
        in
        accordance with Section 5(d)
        below.
        The Company acknowledges that a breach by it of its obligations hereunder
        will
        cause irreparable harm to the Holder. Accordingly, the Company acknowledges
        that
        the remedy at law for a breach of its obligations under this Section
5(b)
        will be
        inadequate and agrees, in the event of a breach or threatened breach by the
        Company of the provisions of this Section 5(b),
        that
        the Holder shall be entitled, in addition to all other available remedies,
        to an
        order and/or injunction restraining any breach and requiring immediate issuance
        and transfer, without the necessity of showing economic loss and without
        any
        bond or other security being required. The Company shall cause its counsel
        to
        issue the legal opinion referred to in the Irrevocable Transfer Agent
        Instructions to the Company’s transfer agent on the earlier of each Effective
        Date (as defined in the Amended Registration Rights Agreement) or the date
        on
        which the Securities are eligible to be sold pursuant to Rule 144. Any fees
        (with respect to the transfer agent, counsel to the Company or otherwise)
        associated with the issuance of such opinion or the removal of any legends
        on
        any of the Securities shall be borne by the Company.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      (c) Legends.
        The
        Holder understands that the certificates or other instruments representing
        the
        Warrant and, until such time as the resale of the Warrant Shares have been
        registered under the 1933 Act as contemplated by the Amended Registration
        Rights
        Agreement or are eligible for sale pursuant to Rule 144, the stock certificates
        representing the Warrant Shares, except as set forth below, shall bear any
        legend as required by the “blue sky” laws of any state and a restrictive legend
        in substantially the following form (and a stop-transfer order may be placed
        against transfer of such stock certificates):

       

      [NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] HAVE BEEN][THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
        THE
        SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I)
        IN THE
        ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
        (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
        THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
        TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
        THE
        FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
        ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
        SECURITIES.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      
        
          (d)
            Removal
            of Legends.
            Certificates evidencing the Warrant and Warrant Shares shall not be required
            to
            contain the legend set forth in Section 5(c)
            above or
            any other legend (i) while a registration statement (including the Registration
            Statement) covering the resale of such Securities is effective under
            the 1933
            Act and the Holder indicates in its exercise notice that it intends to,
            immediately following such exercise, sell the number of Warrant Shares
            specified
            in such notice under such Registration Statement, (ii) following any
            sale of
            such Securities pursuant to Rule 144 (assuming that the transferor is
            not an
            affiliate of the Company), (iii) if such Securities are eligible to be
            sold,
            assigned or transferred under Rule 144 (provided
            that the
            Holder provides the Company with reasonable assurances that such Securities
            are
            eligible for sale, assignment or transfer under Rule 144, which shall
            not
            include an opinion of counsel), (iv) in connection with a sale, assignment
            or
            other transfer (other than under Rule 144) provided
            the
            Holder provides the Company with an opinion of counsel to the Holder,
            in a
            generally acceptable form, to the effect that such sale, assignment or
            transfer
            of such Securities may be made without registration under the applicable
            requirements of the 1933 Act or (v) if such legend is not required under
            applicable requirements of the 1933 Act (including, without limitation,
            controlling judicial interpretations and pronouncements issued by the
            SEC). If a
            legend is not required pursuant to the foregoing, the Company shall no
            later
            than two (2) Trading Days (as defined below) following the delivery by
            the
            Holder to the Company or the transfer agent (with notice to the Company)
            of a
            legended certificate representing such Securities (endorsed or with stock
            powers
            attached, signatures guaranteed, and otherwise in form necessary to affect
            the
            reissuance and/or transfer, if applicable), together with any other deliveries
            from the Holder as may be required above in this Section 5(d),
            as
            directed by the Holder, either: (A) deliver (or cause to be delivered
            to) the
            Holder a certificate representing such Securities that is free from all
            restrictive and other legends or (B) credit the balance account of the
            Holder’s
            or the Holder’s nominee with DTC with a number of Common Shares equal to the
            number of Warrant Shares represented by the certificate or exercise notice
            (as
            the case may be) so delivered by the Holder (the date by which such certificate
            is required to be delivered to the Holder or such credit is so required
            to be
            made to the balance account of the Holder’s or the Holder’s nominee with DTC
            pursuant to the foregoing is referred to herein as the “Required
            Delivery Date”).
            

        

      

       

      (e) Failure
        to Timely Deliver; Buy-In.
        If the
        Company fails to use its best efforts to (i) issue and deliver (or cause
        to be
        delivered) to the Holder by the Required Delivery Date a certificate
        representing the Securities required to be so delivered by the Company to
        the
        Holder that is free from all restrictive and other legends or (ii) credit
        the
        balance account of the Holder’s or the Holder’s nominee with DTC for such number
        of Warrant Shares required to be so delivered by the Company, then, in addition
        to all other remedies available to the Holder, the Company shall pay in cash
        to
        the Holder on each day after the Required Delivery Date that the issuance
        or
        credit of such shares is not timely effected an amount equal to 1% of the
        original principal amount of the Note. In addition to the foregoing, if the
        Company fails to so properly deliver such unlegended certificates or so properly
        credit the balance account of the Holder’s or the Holder’s nominee with DTC by
        the Required Delivery Date, and if on or after the Required Delivery Date
        the
        Holder purchases (in an open market transaction or otherwise) Common Shares
        to
        deliver in satisfaction of a sale by the Holder of Common Shares that the
        Holder
        anticipated receiving from the Company without any restrictive legend (a
        “Buy-In”),
        then
        the Company shall, within three (3) Trading Days after the Holder’s request and
        in the Holder’s sole discretion, either (i) pay cash to the Holder in an amount
        equal to the Holder’s total purchase price (including brokerage commissions, if
        any) for the Common Shares so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such certificate or credit the
        Holder’s balance account shall terminate and such shares shall be cancelled, or
        (ii) promptly honor its obligation to deliver to the Holder a certificate
        or
        certificates or credit the Holder’s DTC account representing such number of
        Common Shares that would have been issued if the Company timely complied
        with
        its obligations hereunder and pay cash to the Holder in an amount equal to
        the
        excess (if any) of the Buy-In Price over the product of (A) such number of
        Warrant Shares that the Company was required to deliver to the Holder by
        the
        Required Delivery Date times (B) the average of the VWAP of the Common Shares
        for the five (5) Trading Day period immediately preceding the Required Delivery
        Date.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      For
        purposes of this Section 5(e),
        “VWAP”
        means,
        for any security as of any date, the dollar volume-weighted average price
        for
        such security on the Principal Market (or, if the Principal Market is not
        the
        principal trading market for the Common Shares, then on the principal securities
        exchange or securities market on which the Common Shares is then traded)
        during
        the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
        p.m.,
        New York time, as reported by Bloomberg Financial Markets (“Bloomberg”)
        through its “Volume at Price” function or, if the foregoing does not apply, the
        dollar volume-weighted average price of such security in the over-the-counter
        market on the electronic bulletin board for such security during the period
        beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New
        York
        time, as reported by Bloomberg, or, if no dollar volume-weighted average
        price
        is reported for such security by Bloomberg for such hours, the average of
        the
        highest closing bid price and the lowest closing ask price of any of the
        market
        makers for such security as reported in the “pink sheets” by Pink Sheets LLC
        (formerly the National Quotation Bureau, Inc.). If VWAP cannot be calculated
        for
        such security on such date on any of the foregoing bases, the VWAP of such
        security on such date shall be the fair market value as mutually determined
        by
        the Company and the Holder. If the Company and the Holder are unable to agree
        upon the fair market value of such security, then they shall agree in good
        faith
        on a reputable investment bank to make such determination of fair market
        value,
        whose determination shall be final and binding and whose fees and expenses
        shall
        be borne by the Company. All such determinations shall be appropriately adjusted
        for any share dividend, share split or other similar transaction during such
        period. “Trading
        Day”
means
        any day on which the Common Shares are traded on the Principal Market, or,
        if
        the Principal Market is not the principal trading market for the Common Shares,
        then on the principal securities exchange or securities market on which the
        Common Shares are then traded; provided that “Trading Day” shall not include any
        day on which the Common Shares are scheduled to trade on such exchange or
        market
        for less than 4.5 hours or any day that the Common Shares are suspended from
        trading during the final hour of trading on such exchange or market (or if
        such
        exchange or market does not designate in advance the closing time of trading
        on
        such exchange or market, then during the hour ending at 4:00:00 p.m., New
        York
        time).

       

      
        	
                6.

              	
                CONDITIONS
                  TO THE COMPANY’S OBLIGATION TO EXCHANGE AND
                  ISSUE.

              

      

       

      (a) The
        obligation of the Company hereunder to exchange and issue the Note and the
        Warrant to the Holder at the Closing is subject to the satisfaction, at or
        before the Closing Date, of each of the following conditions, provided
        that
        these conditions are for the Company’s sole benefit and may be waived by the
        Company at any time in its sole discretion by providing the Holder with prior
        written notice thereof:

       

      (i) The
        Holder shall have executed each of the Exchange Documents to which it is
        a party
        and delivered the same to the Company.

       

      (ii) The
        Holder shall have delivered to the Company its Special Warrant and 2007
        Warrant.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (iii) The
        representations and warranties of the Holder shall be true and correct in
        all
        material respects as of the date when made and as of the Closing Date as
        though
        originally made at that time (except for representations and warranties that
        speak as of a specific date, which shall be true and correct as of such date),
        and the Holder shall have performed, satisfied and complied in all material
        respects with the covenants, agreements and conditions required by this
        Agreement to be performed, satisfied or complied with by the Holder at or
        prior
        to the Closing Date.

       

      
        	
                7.

              	
                CONDITIONS
                  TO HOLDER’S OBLIGATION TO EXCHANGE. 

              

      

       

      (a) The
        obligation of the Holder hereunder to exchange its Special Warrant and
        2007
        Warrant at the Closing is subject to the satisfaction, at or before the Closing
        Date, of each of the following conditions, provided
        that
        these conditions are for the Holder’s sole benefit and may be waived by the
        Holder at any time in its sole discretion by providing the Company with prior
        written notice thereof:

       

      (i) The
        Company shall have duly executed and delivered to the Holder each of the
        Exchange Documents to which it is a party, including the Note and the
        Warrant.

       

      (ii) Each
        Subsidiary shall have duly executed and delivered to the Holder each of the
        Exchange Documents to which it is a party.

       

      (iii) The
        Holder shall have received the opinion of Cozen O’Connor, the Company’s outside
        U.S. counsel, and Perley-Robertson, Hill & McDougall LLP, the Company’s
        Canadian counsel, in each case dated as of the Closing Date, in forms reasonably
        acceptable to the Holder.

       

      (iv) The
        Company shall have delivered to the Holder a copy of the Irrevocable Transfer
        Agent Instructions, in form reasonably acceptable to the Holder, which
        instructions shall have been delivered to and acknowledged in writing by
        the
        Company’s transfer agent.

       

      (v) The
        Company shall have delivered to the Holder a certificate evidencing the
        formation and good standing of the Company and each Subsidiary in such entity’s
        jurisdiction of formation issued by the Secretary of State (or equivalent)
        of
        such jurisdiction of formation as of a date within ten (10) days of the Closing
        Date.

       

      (vi) The
        Company shall have delivered to the Holder a certificate evidencing the
        Company’s qualification as a foreign corporation and good standing issued by the
        Secretary of State (or comparable office) of each jurisdiction in which the
        Company conducts business and is required to so qualify, as of a date within
        ten
        (10) days of the Closing Date.

       

      (vii) The
        Company shall have delivered to the Holder a certificate evidencing the
        qualification of each Subsidiary as a foreign corporation and good standing
        issued by the Secretary of State (or comparable office) of each jurisdiction
        in
        which each Subsidiary conducts business and is required to so qualify, as
        of a
        date within ten (10) days of the Closing Date.

       

      (viii) The
        Company shall have delivered to the Holder a certified copy of the Articles
        of
        Incorporation within ten (10) days of the Closing Date.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (ix) The
        Company shall have delivered to the Holder a certificate, executed by the
        Secretary of the Company and each Subsidiary and dated as of the Closing
        Date,
        as to (i) the resolutions consistent with Section 3(b)
        as
        adopted by the Company’s or such Subsidiary’s (as the case may be) board of
        directors in a form reasonably acceptable to the Holder, (ii) the Articles
        of
        Incorporation or its other constituent documents (as the case may be) and
        (iii)
        the Bylaws or its bylaws (as the case may be), each as in effect at the Closing,
        in form reasonably acceptable to the Holder.

       

      (x) Each
        and
        every representation and warranty of the Company shall be true and correct
        as of
        the date when made and as of the Closing Date as though made at that time
        (except for representations and warranties that speak as of a specific date,
        which shall be true and correct as of such date) and the Company shall have
        (and
        the Company shall have caused each Subsidiary to have) performed, satisfied
        and
        complied in all respects with the covenants, agreements and conditions required
        to be performed, satisfied or complied with by the Company or such Subsidiary
        (as the case may be) at or prior to the Closing Date. The Holder shall have
        received a certificate, executed by the Chief Executive Officer of the Company,
        dated as of the Closing Date, to the foregoing effect and as to such other
        matters as may be reasonably requested by the Holder in form reasonably
        acceptable to the Holder.

       

      (xi) The
        Company shall have delivered to the Holder a letter from the Company’s transfer
        agent certifying the number of Common Shares outstanding on the Closing Date
        immediately prior to the Closing.

       

      (xii) The
        Common Shares (I) shall be designated for quotation or listed on the Principal
        Market and (II) shall not have been suspended, as of the Closing Date, by
        the
        SEC or the Principal Market from trading on the Principal Market.

       

      (xiii) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the issuance of the Securities, including
        without limitation, those required by the Principal Market.

       

      (xiv) No
        statute, rule, regulation, executive order, decree, ruling or injunction
        shall
        have been enacted, entered, promulgated or endorsed by any court or governmental
        authority of competent jurisdiction that prohibits the consummation of any
        of
        the transactions contemplated by the Exchange Documents.

       

      (xv) Since
        the
        date of execution of this Agreement, no event or series of events shall have
        occurred that reasonably would have or result in a Material Adverse
        Effect.

       

      (xvi) The
        Company shall have obtained approval of the Principal Market to list the
        Conversion Shares and the Warrant Shares.

       

      (xvii) The
        Company shall have delivered to the Holder appropriate financing statements
        on
        Form UCC-1 or PPSA filings (as the case may be) to be duly filed in such
        office
        or offices as may be necessary or, in the opinion of the Holder, desirable
        to
        perfect the security interests purported to be created by each Security
        Document. 

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (xviii) The
        results of UCC searches, and searches for any tax or judgment lien filed
        against
        the Company or any of the Subsidiaries or any of its or their respective
        property, shall not show any Liens (as
        defined in the Note)
        on any
        of the Collateral (as defined in the Security Agreement).

       

      (xix) Each
        of
        the Other Special Warrant Holders shall have (i) executed the Other
        Exchange Agreements, (ii) satisfied or waived all conditions to the
        closings contemplated by such agreements and (iii) surrendered their
        Special Warrants and 2007 Warrants being exchanged at the Closing. 

       

      (xx) The
        Company shall have amended the Registration Rights Agreement in the form
        attached hereto as Exhibit
        E
        (the
“Amended
        Registration Rights Agreement”).

       

      (xxi) The
        Company shall have delivered to the Holder such other documents relating
        to the
        transactions contemplated by this Agreement as the Holder or its counsel
        may
        reasonably request.

       

      
        	
                8.

              	
                TERMINATION. 

              

      

       

      In
        the
        event that the Closing shall not have occurred on or before twenty (20) days
        from the date hereof due to the Company’s or the Holder’s failure to satisfy the
        conditions set forth in Sections 6
        and
7
        above
        (and a non-breaching party’s failure to waive such unsatisfied condition(s)),
        any such non-breaching party at any time shall have the right to terminate
        its
        obligations under this Agreement with respect to such breaching party on
        or
        after the close of business on such date without liability of such non-breaching
        party to any other party; provided,
        however,
        notwithstanding any such termination the Company shall remain obligated to
        reimburse the Holder (if the Holder is a non-breaching party) in cash for
        all
        the expenses described in Section 4(d)
        above.
        Nothing contained in this Section 8
        shall be
        deemed to release any party from any liability for any breach by such party
        of
        the terms and provisions of this Agreement or the other Exchange Documents
        or to
        impair the right of any party to compel specific performance by any other
        party
        of its obligations under this Agreement or the other Exchange
        Documents.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      
        	
                9.

              	
                MISCELLANEOUS.

              

      

       

      (a) Governing
        Law; Jurisdiction; Jury Trial.
        The
        parties hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5
        they have chosen that all questions concerning the construction, validity,
        enforcement and interpretation of this Agreement shall be governed by the
        internal laws of the State of Illinois, without giving effect to any choice
        of
        law or conflict of law provision or rule (whether of the State of Illinois
        or
        any other jurisdictions) that would cause the application of the laws of
        any
        jurisdictions other than the State of Illinois. Each party hereby irrevocably
        submits to the exclusive jurisdiction of the state and federal courts sitting
        in
        Chicago, Illinois, for the adjudication of any dispute hereunder or in
        connection herewith or with any transaction contemplated hereby or discussed
        herein, and hereby irrevocably waives, and agrees not to assert in any suit,
        action or proceeding, any claim that it is not personally subject to the
        jurisdiction of any such court, that such suit, action or proceeding is brought
        in an inconvenient forum or that the venue of such suit, action or proceeding
        is
        improper. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof to such party at the address for such notices to it
        under
        this Agreement and agrees that such service shall constitute good and sufficient
        service of process and notice thereof. Nothing contained herein shall be
        deemed
        to limit in any way any right to serve process in any manner permitted by
        law.
        EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES
        NOT TO
        REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
        CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
        HEREBY. 

       

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

       

      (c) Headings;
        Gender.
        The
        headings of this Agreement are for convenience of reference and shall not
        form
        part of, or affect the interpretation of, this Agreement. Unless the context
        clearly indicates otherwise, each pronoun herein shall be deemed to include
        the
        masculine, feminine, neuter, singular and plural forms thereof. The terms
        “including,”
        “includes,”
        “include”
and
        words of like import shall be construed broadly as if followed by the words
        “without limitation.” The terms “herein,”
        “hereunder,”
        “hereof”
and
        words of like import refer to this entire Agreement instead of just the
        provision in which they are found. For purposes of this Agreement for the
        Holder’s benefit, the word “state” or “states” includes any “province” or
“provinces” in Canada and the concept of “law, rules or regulations” includes
        laws, rules and regulations under applicable law, rules and regulations in
        Canada.

       

      (d) Severability.
        If any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement in that jurisdiction
        or the
        validity or enforceability of any provision of this Agreement in any other
        jurisdiction. Notwithstanding anything to the contrary contained in this
        Agreement or any other Exchange Document (and without implication that the
        following is required or applicable), it is the intention of the parties
        that in
        no event shall amounts and value paid by the Company and/or the Subsidiaries
        (as
        the case may be), or payable to or received by the Holder, under the Exchange
        Documents, including without limitation, any amounts that would be characterized
        as “interest” under applicable law (including, without limitation, any
        applicable Canadian or Ontario law), exceed amounts permitted under any such
        applicable law. Accordingly, if any obligation to pay, payment made to the
        Holder, or collection by the Holder pursuant the Exchange Documents is finally
        judicially determined to be contrary to any such applicable law, such obligation
        to pay, payment or collection shall be deemed to have been made by mutual
        mistake of the Holder, the Company and the Subsidiaries and such amount shall
        be
        deemed to have been adjusted with retroactive effect to the maximum amount
        or
        rate of interest, as the case may be, as would not be so prohibited by the
        applicable law. Such adjustment shall be effected, to the extent necessary,
        by
        reducing or refunding, at the option of the Holder, the amount of interest
        or
        any other amounts which would constitute unlawful amounts required to be
        paid or
        actually paid to the Holder under the Exchange Documents. For greater certainty,
        to the extent that any interest, charges, fees, expenses or other amounts
        required to be paid to or received by the Holder under any of the Exchange
        Documents or related thereto are held to be within the meaning of “interest” or
        another applicable term to otherwise be violative of applicable law, such
        amounts shall be pro-rated over the period of time to which they
        relate.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (e) Entire
        Agreement; Amendments.
        This
        Agreement, the other Exchange Documents and the schedules and exhibits attached
        hereto and thereto and the instruments referenced herein and therein supersede
        all other prior oral or written agreements between the Holder, the Company,
        their affiliates and Persons acting on their behalf with respect to the matters
        contained herein and therein (provided that (i) except as expressly contemplated
        elsewhere in this Agreement, the foregoing shall not have any effect on any
        agreements the Holder has entered into with the Company or any of its
        Subsidiaries prior to the date hereof, (ii) Section 4(c) hereof supersedes
        Section 4(f) of the Transaction Agreement in its entirety, (iii) Section
        4(e)
        hereof supersedes Section 4(h) of the Transaction Agreement in its entirety
        and
        (iv) Section 5 hereof supersedes Section 5 of the Transaction Agreement in
        its
        entirety), and this Agreement, the other Exchange Documents, the schedules
        and
        exhibits attached hereto and thereto and the instruments referenced herein
        and
        therein contain the entire understanding of the parties with respect to the
        matters covered herein and therein and, except as specifically set forth
        herein
        or therein, neither the Company nor the Holder makes any representation,
        warranty, covenant or undertaking with respect to such matters. No provision
        of
        this Agreement may be amended or waived other than by an instrument in writing
        signed by the Company and the Holder, provided
        that any
        party may give a waiver in writing as to itself. 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 Other Exchange Documents unless the same
        consideration also is offered to the Holder. [For
        Other Investors:
        Except
        for the Company’s agreement to pay legal fees and expenses of an Other Special
        Warrant Holder pursuant to the Other Exchange Agreement between the Company
        and
        such Other Special Warrant Holders, t] [For
        Magnetar:
        T]he
        Company has not, directly or indirectly, made any agreements with any other
        Person relating to the terms or conditions of the transactions contemplated
        by
        the Other Exchange Documents which differs in any respect from the terms
        and
        conditions set forth in the Exchange Documents. Without limiting the foregoing,
        the Company confirms that the Holder has made not any commitment or promise
        or
        has any other obligation to provide any financing to the Company, any Subsidiary
        or otherwise.

       

      (f) Notices.
        Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered in accordance with the provisions of Section 9(f) of
        the
        Transaction Agreement. A copy of all notices (for informational purposes
        only)
        sent to the Holder shall also be sent to:

       

      
        	
                ____________________________________

              
	
                ____________________________________

              
	
                ____________________________________

              
	
                Telephone:
                  

              	
                ________________________

              
	
                Facsimile:
                  

              	
                ________________________

              
	
                Attention:
                  

              	
                ________________________

              

      

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      (g) Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and assigns, including any purchasers of any
        of the
        Securities. The Company shall not assign this Agreement or any rights or
        obligations hereunder without the prior written consent of the Holder,
        including, without limitation, by way of a Fundamental Transaction (as defined
        in the Note and the Warrant) (unless the Company is in compliance with the
        applicable provisions governing Fundamental Transactions set forth in the
        Note
        and the Warrant). The Holder may assign some or all of its rights hereunder
        in
        connection with transfer of any of its Securities without the consent of
        the
        Company, in which event such assignee shall be deemed to be a Holder hereunder
        with respect to such assigned rights.

       

      (h) No
        Third Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other Person, other than the Indemnitees
        referred to in Section 9(k).

       

      (i) Survival.
        Unless
        this Agreement is terminated under Section 8
        in
        accordance with the terms thereof, the representations, warranties, agreements
        and covenants shall survive the Closing.

       

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

       

      (k) Indemnification.
        In
        consideration of the Holder’s execution and delivery of the Exchange Documents
        to which it is a party and acquiring the Securities thereunder and in addition
        to all of the Company’s and the Subsidiaries’ other obligations under the
        Exchange Documents, the Company shall defend, protect, indemnify and hold
        harmless the Holder and each affiliate of the Holder that holds any Securities
        and all of their stockholders, partners, members, officers, directors, employees
        and direct or indirect investors and any of the foregoing Persons’ agents or
        other representatives (including, without limitation, those retained in
        connection with the transactions contemplated by this Agreement) (collectively,
        the “Indemnitees”)
        from
        and against any and all actions, causes of action, suits, claims, losses,
        costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith
        (irrespective of whether any such Indemnitee is a party to the action for
        which
        indemnification hereunder is sought), and including reasonable attorneys’ fees
        and disbursements (the “Indemnified
        Liabilities”),
        incurred by any Indemnitee as a result of, or arising out of, or relating
        to (a)
        any misrepresentation or breach of any representation or warranty made by
        the
        Company or any
        Subsidiary in
        any of
        the Exchange Documents, (b) any breach of any covenant, agreement or obligation
        of the Company or any Subsidiary contained in any of the Exchange Documents
        or
        (c) any cause of action, suit or claim brought or made against such Indemnitee
        by a third party (including for these purposes a derivative action brought
        on
        behalf of the Company or any Subsidiary) and arising out of or resulting
        from
        (i) the execution, delivery, performance or enforcement of any of the Exchange
        Documents, (ii) any transaction financed or to be financed in whole or in
        part,
        directly or indirectly, with the proceeds of the issuance of the Securities,
        (iii) any disclosure properly made by the Holder pursuant to Section
4(f)
        or (iv)
        the status of the Holder or holder of the Securities as an investor in the
        Company pursuant to the transactions contemplated by the Exchange Documents,
        except, with respect to clause (c) above, to the extent (but only to the
        extent)
        such Indemnified Liability arises from the Holder’s gross negligence or willful
        misconduct. To the extent that the foregoing undertaking by the Company may
        be
        unenforceable for any reason, the Company shall make the maximum contribution
        to
        the payment and satisfaction of each of the Indemnified Liabilities which
        is
        permissible under applicable law. Except as otherwise set forth herein, the
        mechanics and procedures with respect to the rights and obligations under
        this
        Section 9(k)
        shall be
        the same as those set forth in Section 6 of the Amended Registration Rights
        Agreement.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      (l) No
        Strict Construction.
        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.

       

      (m) Remedies.
        The
        Holder and each affiliate of the Holder that holds any Securities shall have
        all
        rights and remedies set forth in the Exchange Documents and all rights and
        remedies which such holders have been granted at any time under any other
        agreement or contract and all of the rights which such holders have under
        any
        law. Any Person having any rights under any provision of this Agreement shall
        be
        entitled to enforce such rights specifically (without posting a bond or other
        security), to recover damages by reason of any breach of any provision of
        this
        Agreement and to exercise all other rights granted by law. Furthermore, the
        Company recognizes that in the event that it or any Subsidiary fails to perform,
        observe, or discharge any or all of its or their obligations under any of
        the
        Exchange Documents, any remedy at law may prove to be inadequate relief to
        the
        Holder. The Company therefore agrees, on behalf of itself and each Subsidiary,
        that the Holder shall be entitled to seek specific performance and/or temporary,
        preliminary and permanent injunctive or other equitable relief from any court
        of
        competent jurisdiction in any such case without the necessity of proving
        damages
        and without posting a bond or other security.

       

      (n) Withdrawal
        Right.
        Notwithstanding anything to the contrary contained in (and without limiting
        any
        similar provisions of) the Exchange Documents, whenever the Holder exercises
        a
        right, election, demand or option under an Exchange Document and the Company
        or
        any Subsidiary does not timely perform its related obligations within the
        periods therein provided, then the Holder may rescind or withdraw, in its
        sole
        discretion from time to time upon written notice to the Company or such
        Subsidiary (as the case may be), any relevant notice, demand or election
        in
        whole or in part without prejudice to its future actions and rights

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      (o) Payment
        Set Aside.
        To the
        extent that the Company or any Subsidiary makes a payment or payments to
        the
        Holder hereunder or pursuant to any of the other Exchange Documents or the
        Holder enforces or exercises its rights hereunder or 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 or any Subsidiary, a trustee, receiver
        or
        any other Person under any law (including, without limitation, any bankruptcy
        law, foreign, 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. Unless otherwise expressly indicated, all dollar amounts
        referred to in this Agreement and the other Exchange Documents are in United
        States Dollars (“US
        Dollars”),
        and
        all amounts owing under this Agreement and all other Transaction Documents
        shall
        be paid in US Dollars. All amounts denominated in other currencies shall
        be
        converted in the US Dollar equivalent amount in accordance with the Exchange
        Rate on the date of calculation. “Exchange
        Rate” means,
        in
        relation to any amount of currency to be converted into US Dollars pursuant
        to
        this Agreement, the US Dollar exchange rate as published in the Wall Street
        Journal on the relevant date of calculation.

       

      (p) Independent
        Nature of the Holder’s Obligations and Rights.
        The
        obligations of the Holder under the Exchange Documents are several and not
        joint
        with the obligations of any Other Special Warrant Holder under the Other
        Exchange Documents, and the Holder shall not be responsible in any way for
        the
        performance of the obligations of any Other Special Warrant Holders under
        any
        Other Exchange Documents.
        Nothing
        contained herein or in any other Exchange Document, and no action taken by
        the
        Holder pursuant hereto or any Other Special Warrant Holder pursuant to any
        Other
        Exchange Documents, shall be deemed to constitute the Holder or any Other
        Special Warrant Holder as, and the Company acknowledges that the Holder and
        the
        Other Special Warrant Holders do not so constitute, a partnership, an
        association, a joint venture or any other kind of group or entity, or create
        a
        presumption that the Holder and any Other Special Warrant Holder are in any
        way
        acting in concert or as a group or entity with respect to such obligations
        or
        the transactions contemplated by the Exchange Documents, the Other Exchange
        Documents or any matters, and the Company acknowledges that the Holder and
        the
        Other Special Warrant Holders are not acting in concert or as a group or
        entity,
        and the Company shall not assert any such claim, with respect to such
        obligations or the transactions contemplated by the Exchange Documents and
        the
        Other Exchange Documents. The decision of the Holder to acquire the Securities
        pursuant to the Exchange Documents has been made by the Holder independently
        of
        any Other Special Warrant Holder. The Holder acknowledges that no Other Special
        Warrant Holder has acted as agent for the Holder in connection with the Holder
        making its acquisition hereunder and that no Other Special Warrant Holder
        will
        be acting as agent of the Holder in connection with monitoring the Holder’s
        Securities or enforcing its rights under the Exchange Documents. The Company
        and
        the Holder confirms that the Holder has independently participated with the
        Company and the Subsidiaries in the negotiation of the transaction contemplated
        hereby with the advice of its own counsel and advisors. The Holder shall
        be
        entitled to independently protect and enforce its rights, including, without
        limitation, the rights arising out of this Agreement or out of any of the
        other
        Exchange Documents, and it shall not be necessary for any Other Special Warrant
        Holder to be joined as an additional party in any proceeding for such
        purpose.
        To the
        extent that any of the Other Special Warrant Holders and the Company enter
        into
        the same or similar documents, all such matters are solely in the control
        of the
        Company and the Subsidiaries, not the action or decision of the Holder, and
        would be solely for the convenience of the Company and
        the
        Subsidiaries and not because it was required or requested to do so by
the
        Holder or any Other Special Warrant Holder. For clarification purposes only
        and
        without implication that the contrary would otherwise be true, the transactions
        contemplated by the Exchange Documents include only the transaction between
        the
        Company and the Holder and do not include any other transaction between the
        Company and any Other Special Warrant Holder.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      
        
          (q)
            Delivery
            of Securities.
            Notwithstanding anything contained in this Agreement or any other Exchange
            Document to the contrary, unless otherwise directed in writing by the
            Holder or
            if being credited to the applicable balance accounts at DTC, the Company
            shall,
            and shall cause its agents and representatives to, deliver all of the
            Holder’s
            securities acquired pursuant to this Agreement (and all securities which
            are
            issuable to the Holder pursuant to the terms of this Agreement or any
            other
            Exchange Document) to the address for delivery of securities set forth
            on the
            Holder’s signature page to this Agreement, and copies of the certificates
            representing such securities shall be sent to the Holder to the address
            of the
            Holder as set forth on the Holder’s signature page to this
            Agreement.

        

      

       

      (r) Most
        Favored Nation.
        The
        Company hereby represents and warrants as of the date hereof and covenants
        and
        agrees from and after the date hereof that none of the terms offered to any
        Person with respect to any amendment or waiver (each an “Amendment”)
        relating to the terms, conditions and transactions contemplated by any Exchange
        Document or any Other Exchange Document is or will be more favorable to such
        Person than those of the Holder, and, if they are or become more favorable
        to
        any other Person, this Agreement and the other Exchange Documents shall be,
        without any further action by the Holder or the Company, deemed amended and
        modified in an economically and legally equivalent manner such that the Holder
        shall receive the benefit of the more favorable terms contained in such
        Amendment. Notwithstanding the foregoing, the Company agrees, at its expense,
        to
        take such other actions (such as entering into amendments to the Exchange
        Documents and the Transaction Documents) as the Holder may reasonably request
        to
        further effectuate the foregoing. Notwithstanding the foregoing, the foregoing
        provisions shall not apply to any settlement with any Person that arises
        from or
        is entered into in connection with the settlement or disposition of a dispute
        with or claim by such Person.

       

      [signature
        pages follow]

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

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

       

      
        	COMPANY:
	 
	WORKSTREAM
                INC.
	 
	
                By:

              	   

	
                 

              	
                Name: 

              	   

	
                 

              	
                Title:  

              	   

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

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

       

      
        	 	
                HOLDER:

              
	 	
                   
                  

              
	 	
                 
                  

                 

              
	 	
                By:

              
	 	
                Its:

              

      

       

      
        	
                ADDRESS
                  FOR DELIVERY OF SECURITIES:

              
	
                 

                   

              
	  
                
	  
                
	
                Attention:

              	
                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBITS

       

      
        	Exhibit
                A	
                Form
                  of Note

              

        	Exhibit B 	Form
                of Warrant 

        	Exhibit C 	Form of
                Guaranty 

        	Exhibit D 	Form of Security
                Agreement 

        	Exhibit E 	Form
                of Amended Registration Rights
                Agreement

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