Document:

REGISTRATION
      RIGHTS AGREEMENT

     

    This
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of October ___, 2006, by and between Workstream Inc., a corporation existing
      pursuant to the Canada Business Corporations Act with headquarters located
      at
      495 Mark Road, Suite 300, Ottawa, Ontario K2K 3G1, Canada
      (the ”Company”),
      and
      the undersigned lender (“Lender”).

     

     

    RECITALS

     

    A. In
      connection with the Transaction Agreement by and between the parties hereto,
      dated as of September 28, 2006 (the “Transaction
      Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions set forth
      in
      the Transaction Agreement, to issue to the Lender the Warrants (as defined
      in
      the Transaction Agreement) which will be exercisable to purchase Warrant Shares
      (as defined in the Transaction Agreement).

     

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

     

     

    AGREEMENT

     

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

     

    1.  Definitions.
      

     

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

     

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

     

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

     

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

     

    (d)  “Effectiveness
      Deadline”
means
      the date which is 90 days (or 120 days if reviewed by the SEC) after the Closing
      Date.

     

    (e)  “Filing
      Deadline”
means
      forty-five (45) Business Days after the Closing Date.

     

    (f)  “Investor”
or
      “Investors”
means
      the Lender or any transferee or assignee
      of
      any Registrable Securities or Warrants, as applicable, to whom the Lender
      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 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.
      Each
      Investor who may from time to time hold Registrable Securities shall have the
      rights and be subject to the obligations created by this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    2.  Registration.

     

    (a)  Mandatory
      Registration.
      The
      Company shall prepare, and, as soon as practicable, but in no event later than
      the Filing Deadline, file with the SEC the Registration Statement on Form S-3
      covering the resale of all of the Registrable Securities. In the event that
      Form
      S-3 is unavailable for such a registration, the Company shall use such other
      form as is available for such a registration on another appropriate form
      reasonably acceptable to the Required Holders, subject to the provisions of
      Section 2(d).
      The
      Registration Statement prepared pursuant hereto shall register for resale at
      least the number of Common Shares equal to the Required Registration Amount
      as
      of the date the Registration Statement is initially filed with the SEC. The
      Registration Statement shall contain (except if otherwise directed by the
      Required Holders) the “Selling
      Stockholders”
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 best efforts to have
      the Registration Statement declared effective by the SEC as soon as practicable,
      but in no event later than the Effectiveness Deadline. By 9:30 a.m. on the
      Business Day immediately following the Effective Date, 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  Allocation
      of Registrable 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.

     

    (c)  Legal
      Counsel.
      Subject
      to Section 5
      hereof,
      the Lender shall have the right to select one 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 the Lender. The Company and Legal Counsel shall reasonably cooperate with
      each other in regards to the performance of the Company’s obligations under this
      Agreement.

     

    (d)  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 Form SB-2 or 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.

     

    (e)  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 or an Investor’s allocated portion
      of the Registrable Securities pursuant to Section 2(b),
      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 best 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 Required
      Registration Amount. The determination set forth in this paragraph shall be
      made
      without regard to any limitations on the exercise of the Warrants and such
      calculation shall assume that the Warrants are then exercisable for Common
      Shares at the then prevailing applicable Exercise Price.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f)  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 the 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 the Business Day immediately following the Effective
      Date the Company shall not have filed a “final” prospectus for the Registration
      Statement with the SEC under Rule 424(b) in accordance with Section 2(a)
      above
      (whether or not such a prospectus is technically required by such rule), the
      Company shall not be deemed to have satisfied this clause (i)(B) and such event
      shall be deemed to be an Effectiveness Failure) or (ii) on any day after the
      Effective Date 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 best efforts to file such amendment and have such
      amendment declared effective as soon as practicable), then, as partial relief
      for the damages to any holder by reason of any such delay in or reduction of
      its
      ability to sell the underlying Common Shares (which remedy shall not be
      exclusive of any other remedies available at law or in equity) the Company
      shall
      pay to each holder of Registrable Securities relating to such Registration
      Statement an amount in cash equal to two percent (2%) of the initial aggregate
      principal amount of the Notes (as such term is defined in the Transaction
      Agreement) issued on the Closing Date with respect to each thirty (30) day
      period occurring after any (X) Filing Failure; (Y) Effectiveness Failure; or
      (Z)
      Maintenance Failure (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(f)
      are
      referred to herein as “Registration
      Delay Payments.”
      Registration Delay Payments shall be paid on the earlier of (a) the thirtieth
      (30th)
      day
      after the event or failure giving rise to the Registration Delay Payments has
      occurred and (b) the third (3rd)
      Business Day after the event or failure giving rise to the Registration Delay
      Payments is cured. In the event the Company fails to make Registration Delay
      Payments in a timely manner in accordance with the foregoing, such Registration
      Delay Payments shall bear interest at the rate of one and one-half percent
      (1.5%) per month (prorated for partial months) until paid in full.
      Notwithstanding anything contained in this Section 2(f)
      to the
      contrary, in no event shall the Registration Delay Payments exceed $3,000,000
      in
      the aggregate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.  Related
      Obligations.

     

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

     

    (a)  The
      Company shall promptly prepare and file with the SEC a Registration Statement
      with respect to the Registrable Securities (but in no event later than the
      Filing Deadline) and use its best 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 at all
      times until the earlier of (i) the date as of which the Investor may sell all
      of
      the Registrable Securities required to be covered by such Registration Statement
      without restriction pursuant to Rule 144(k) (or any successor thereto)
      promulgated under the 1933 Act or (ii) the date on which the Investor 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,
      with respect to the Company, any untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein, or necessary to make the
      statements therein (in the case of prospectuses, in the light of the
      circumstances in which they were made) not misleading. The Company shall submit
      to the SEC, within two (2) Business Days after the later of the date that (i)
      the Company learns that no review of a particular Registration Statement will
      be
      made by the staff of the SEC or that the staff has no further comments on a
      particular Registration Statement (as the case may be) and (ii) the approval
      of
      Legal Counsel is sought pursuant to Section 3(c)
      (which
      approval is immediately sought), a request for acceleration of effectiveness
      of
      such Registration Statement to 4:00 p.m. on the second (2nd)
      Business Day 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 by the Investor. 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 to review and comment upon (i) a
      Registration Statement at least five (5) Business Days prior to its filing
      with
      the SEC and (ii) all amendments and supplements to all Registration Statements
      (except for Annual Reports on Form 10-K, 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 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,
      without charge, (i) copies of any correspondence from the SEC or the staff
      of
      the SEC to the Company or its representatives relating to any Registration
      Statement, (ii) promptly after the same is prepared and filed with the SEC,
      one copy of any Registration Statement and any amendment(s) thereto, including
      financial statements and schedules, all documents incorporated therein by
      reference, if requested by the Investor, and all exhibits and (iii) upon
      the effectiveness of any Registration Statement, one copy of the prospectus
      included in such Registration Statement and all amendments and supplements
      thereto. The Company shall reasonably cooperate with Legal Counsel in performing
      the Company’s obligations pursuant to this Section 3.

     

    (d)  The
      Company shall furnish to the 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 copy of any Registration Statement
      and any amendment(s) thereto, including financial statements and schedules,
      all
      documents incorporated therein by reference, if requested by the 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 the Investor may reasonably request from time to time)
      and
      (iii) such other documents, including copies of any preliminary or final
      prospectus, as the Investor may reasonably request from time to time in order
      to
      facilitate the disposition of the Registrable Securities owned by the
      Investor.

     

    (e)  The
      Company shall use its best efforts to (i) register and qualify, unless an
      exemption from registration and qualification applies, the resale by the
      Investor 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 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 and the 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, nonpublic information), 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 and the Investor (or such other number
      of copies as Legal Counsel and the Investor may reasonably request from time
      to
      time). The Company shall also promptly notify Legal Counsel and the 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 and the 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.

     

    (g)  The
      Company shall use its best 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 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
      the
      Investor may be required under applicable securities law to be described in
      the
      Registration Statement as an underwriter, at the request of the Investor, the
      Company shall furnish to the Investor, on the date of the effectiveness of
      the
      Registration Statement and thereafter from time to time on such dates as the
      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 Investor, 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 Investor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)  [Reserved].

     

    (j)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning the 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, (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 the Investor is sought in or by a
      court or governmental body of competent jurisdiction or through other means,
      give prompt written notice to the Investor and allow the 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 the Transaction Agreement, the
      Company shall use its best 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), to secure the inclusion for
      quotation on The Nasdaq Capital Market and the Boston Stock Exchange for such
      Registrable Securities and, without limiting the generality of the foregoing,
      to
      use its best efforts to arrange for at least two market makers to register
      with
      the National Association of Securities Dealers, Inc. (“NASD”)
      as
      such with respect to such Registrable Securities. The Company shall pay all
      fees
      and expenses in connection with satisfying its obligation under this Section
      3(k).

     

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

     

    (m)  If
      requested by the Investor, the Company shall as soon as practicable after
      receipt of notice from the Investor and subject to Section 3(r)
      hereof,
      (i) incorporate in a prospectus supplement or post-effective amendment such
      information as the 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 best 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, the Company may delay the disclosure of material,
      non-public information concerning the Company 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 Investor 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 Investor) and the date on which the
      Grace Period will begin, and (ii) notify the Investor 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 prior to the Effective Date or during the
      first
      sixty (60) Business Days after the Effective Date. For purposes of determining
      the length of a Grace Period above, the Grace Period shall begin on and include
      the date the Investor receive the notice referred to in clause (i) and shall
      end
      on and include the later of the date the Investor receives the notice referred
      to in clause (ii) and the date referred to in such notice. The provisions of
      Section 3(g)
      hereof
      shall not be applicable during the period of any Allowable Grace Period. Upon
      expiration of the Grace Period, the Company shall again be bound by the first
      sentence of Section 3(f)
      with
      respect to the information giving rise thereto unless such material, nonpublic
      information is no longer applicable. Notwithstanding anything to the contrary
      contained in this Section 3(r),
      the
      Company shall cause its transfer agent to deliver unlegended Common Shares
      to a
      transferee of an Investor in accordance with the terms of the Transaction
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which an Investor has entered into a contract for sale, and delivered a copy
      of
      the prospectus included as part of the applicable Registration Statement (unless
      an exemption from such prospectus delivery requirement exists), prior to the
      Investor’s receipt of the notice of a Grace Period and for which the Investor
      has not yet settled.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (s)  The
      Company shall use its best efforts to maintain eligibility for use of Form
      S-3
      (or any successor form thereto) so that such form is available for the
      registration of the resale of Registrable Securities.

     

    4.  Obligations
      of the Investor.

     

    (a)  At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Company shall notify the Investor in writing of
      the
      information the Company requires from the 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 the
      Investor that the 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)  The
      Investor, by the 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
      the Investor has notified the Company in writing of the Investor’s election to
      exclude all of the Investor’s Registrable Securities from such Registration
      Statement.

     

    (c)  The
      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),
      the
      Investor will immediately discontinue disposition of Registrable Securities
      pursuant to any Registration Statement(s) covering such Registrable Securities
      until the 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. Notwithstanding
      anything to the contrary in this Section 4(c),
      the
      Company shall cause its transfer agent to deliver unlegended Common Shares
      to a
      transferee of the Investor in accordance with the terms of the Transaction
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which the Investor has entered into a contract for sale prior to the Investor’s
      receipt of a notice from the Company of the happening of any event of the kind
      described in Section 3(g)
      or the
      first sentence of Section 3(f)
      and for
      which the Investor has not yet settled.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (e)  The
      Investor convents and agrees to deliver a Registration Statement Questionnaire,
      in the form attached hereto as Exhibit
      C,
      no
      later than five (5) Business Days prior to the Filing Deadline.

     

    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. The Lender shall be responsible for
      the fees and disbursements of 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 the Investor, the directors, officers, members,
      partners, employees, agents, representatives of, and each Person, if any, who
      controls the 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, (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 or (iv) any violation of this
      Agreement (the matters in the foregoing clauses (i) through (iv) 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
      the
      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, 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
      the Investor pursuant to Section 9.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (c)  Promptly
      after receipt by an Indemnified Person or Indemnified Party (as the case may
      be)
      under this Section 6
      of
      notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party (as the case may be) shall, if a Claim in respect thereof
      is
      to be made against any indemnifying party under this Section 6,
      deliver
      to the indemnifying party a written notice of the commencement thereof, and
      the
      indemnifying party shall have the right to participate in, and, to the extent
      the indemnifying party so desires, jointly with any other indemnifying party
      similarly noticed, to assume control of the defense thereof with counsel
      mutually satisfactory to the indemnifying party and the Indemnified Person
      or
      the Indemnified Party (as the case may be); provided, however, that an
      Indemnified Person or Indemnified Party (as the case may be) shall have the
      right to retain its own counsel with the fees and expenses of such counsel
      to be
      paid by the indemnifying party if: (i) the indemnifying party has agreed in
      writing to pay such fees and expenses; (ii) the indemnifying party shall have
      failed promptly to assume the defense of such Claim and to employ counsel
      reasonably satisfactory to such Indemnified Person or Indemnified Party (as
      the
      case may be) in any such Claim; or (iii) the named parties to any such Claim
      (including any impleaded parties) include both such Indemnified Person or
      Indemnified Party (as the case may be) and the indemnifying party, and such
      Indemnified Person or such Indemnified Party (as the case may be) shall have
      been advised by counsel that a conflict of interest is likely to exist if the
      same counsel were to represent such Indemnified Person or such Indemnified
      Party
      and the indemnifying party (in which case, if such Indemnified Person or such
      Indemnified Party (as the case may be) notifies the indemnifying party in
      writing that it elects to employ separate counsel at the expense of the
      indemnifying party, then the indemnifying party shall not have the right to
      assume the defense thereof and such counsel shall be at the expense of the
      Indemnifying Party, provided further, that in the case of clause (iii) above
      the
      indemnifying party shall not be responsible for the reasonable fees and expenses
      of more than one (1) separate legal counsel for such Indemnified Person or
      Indemnified Party (as the case may be). In the case of an Indemnified Person,
      legal counsel referred to in the immediately preceding sentence shall be
      selected by the Investors holding at least a majority in
      interest of the Registrable Securities included in the Registration Statement
      to
      which the Claim relates. 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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 Securities 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.

     

    8.  Reports
      Under the 1934 Act.
      

     

    With
      a
      view to making available to the Investor 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 Investor to sell securities of the Company to the public
      without registration (“Rule
      144”),
      the
      Company agrees to:

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  furnish
      to the Investor so long as the 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, the 1933 Act 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 if such reports
      are
      not publicly available via EDGAR, and (iii) such other information as may be
      reasonably requested to permit the Investor 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 Investor
      to
      any transferee of all or any portion of the Investor’s Registrable Securities
      if: (i) the Investor agrees in writing with the transferee or assignee to assign
      such rights, and a copy of such agreement is furnished to the Company within
      a
      reasonable time after such assignment; (ii) the Company is, within a reasonable
      time after such transfer or assignment, furnished with written notice of (a)
      the
      name and address of such transferee or assignee, and (b) the securities with
      respect to which such registration rights are being transferred or assigned;
      (iii) immediately following such transfer or assignment the further disposition
      of such securities by the transferee or assignee is restricted under the 1933
      Act or applicable state securities laws if so required; (iv) at or before the
      time the Company receives the written notice contemplated by clause (ii) of
      this
      sentence the transferee or assignee agrees in writing with the Company to be
      bound by all of the provisions contained herein; (v) such transfer shall have
      been made in accordance with the applicable requirements of the Transaction
      Agreement; and (vi) such transfer shall have been conducted in accordance with
      all applicable federal and state securities laws.

     

    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 the 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 the Investor and the Company. No such amendment or waiver (unless
      given pursuant to the foregoing proviso) shall be effective to the extent that
      it applies to less than all of the holders of the Registrable Securities. No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    	11.  	
            Miscellaneous.

          

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    If
      to the
      Company: 

     

    Workstream
      Inc.

    495
      March
      Road

    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) 665-4634

     

    Facsimile:
      (215) 665-2013

     

    Attention:
      David S. Petkun, Esq.

     

    If
      to the
      Lender:

     

    Hilco
      Financial, LLC

    c/o
      Hilco
      Trading Co., Inc.

    5
      Revere
      Drive, Suite 206

    Northbrook,
      Illinois 60062

    Telephone:
      847-509-1100

    Facsimile:
      847-509-1150

    Attention:
      CEO  

    

    If
      to
      Legal Counsel:

     

    Greenberg
      Traurig, LLP 

    200
      Park
      Avenue

    New
      York,
      New York 10166

    Telephone:
      212-801-9200

    Facsimile:
      212-801-6400

    Attention:
      Peter H. Lieberman, Esq.

    Jonathan
      A. Ain, Esq.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

    (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 Investor pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders.

     

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

     

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

     

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

     

     

    [signature
      pages follow]

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      	 	COMPANY:
	 	 
	 	WORKSTREAM
              INC.
	 	 	 
	 	By:	
               

            
	 	 	
              
                

              

              Name:
                __________________

              Title:  
                __________________

            
	 	 	 

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
       

      
        	 	
                LENDER:

              
	 	 
	 	HILCO FINANCIAL,
                LLC
	 	 	 
	 	By:	
                 

              
	 	 	
                
                  

                

                Name:
                  __________________

                Title:  
                  __________________

              
	 

      

    

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    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 in connection with that certain Transaction
      Agreement (the “Transaction
      Agreement”)
      entered into by and among the Company and the Lender named therein (the
“Holder”)
      pursuant to which the Company issued to the Holder warrants exercisable for
      Common Shares (the “Warrants”).
      Pursuant to the Transaction Agreement, the Company also has entered into a
      Registration Rights Agreement with the Holder (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement),
      including the Common Shares issuable upon exercise of the Warrants, under the
      Securities Act of 1933, as amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
      on Form S-3 (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names the Holder as a selling
      stockholder 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, 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.

     

    You
      are
      hereby informed that the Common Shares are freely transferable by the Holder
      pursuant to the Registration Statement, subject to the prospectus delivery
      requirements of the 1933 Act, which the selling
      stockholders
      have
      agreed to comply with to the extent applicable and which we have assumed
      compliance with in issuing this letter. 

     

     

    
      	 	 	
              Very
                truly yours,

               

              [ISSUER’S
                COUNSEL]

            

    

     

    
       

      
        	 	 	By:_____________________

      

    

     

    CC: [LIST
      NAMES OF HOLDER(S); # OF SHARES; CERTIFICATE #S]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      B

     

    SELLING
      STOCKHOLDERS

     

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

     

    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership (as determined under Section 13(d) of the Securities
      Exchange Act of 1934, as amended) of the Common Shares by each of the selling
      stockholders. The second column lists the number of Common Shares beneficially
      owned by each selling stockholder, based on its ownership of the warrants,
      as of
      ________, 200_, assuming exercise of the warrants held by the selling
      stockholders on that date.

     

    The
      third
      column lists the Common Shares being offered by this prospectus by the selling
      stockholders.

     

    In
      accordance with the terms of a registration rights agreement with the selling
      stockholders, this prospectus generally covers the resale of the maximum number
      of Common Shares issuable upon exercise of the warrants as of the trading day
      immediately preceding the date the registration statement is initially filed
      with the SEC, without taking into account any limitations on the exercise of
      the
      warrants. The fourth column assumes the sale of all of the shares offered by
      the
      selling stockholders pursuant to this prospectus.

     

    Under
      the
      terms of the warrants, a selling stockholder may not exercise the warrants
      to
      the extent such exercise would cause such selling stockholder, together with
      its
      affiliates, to beneficially own a number of Common Shares which would exceed
      4.90% of our then outstanding Common Shares following such exercise, excluding
      for purposes of such determination Common Shares issuable upon exercise of
      the
      warrants which have not been exercised. The number of shares in the second
      column does not reflect this limitation. The selling stockholders may sell
      all,
      some or none of their shares in this offering. See “Plan of
      Distribution.”

    

      
        
          
            

          

           

        

        
           

          
            

          

        

        
           

          
          

        

      

    
      	
               

               

              Name
                of Selling Stockholder

            	 	
              Number
                of Common Shares 

              Owned
                Prior to Offering

            	 	
              Maximum
                Number of 

              Common
                Shares to be Sold 

              Pursuant
                to this Prospectus

            	 	
              Number
                of Common 

              Shares
                Owned After 

              Offering

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

     

     

     

     

     

     

    
      
        
          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    PLAN
      OF DISTRIBUTION

     

    We
      are
      registering the Common Shares issuable upon exercise of the warrants to permit
      the resale of these Common Shares by the holders of the 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 stockholders of the Common Shares. We will bear
      all
      fees and expenses incident to our obligation to register the Common
      Shares.

     

    The
      selling stockholders 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 stockholders 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;

          

     

    	·  	
            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 stockholders 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 stockholders 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 stockholders 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
      stockholders 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 stockholders may also loan or
      pledge Common Shares to broker-dealers that in turn may sell such
      shares.

     

    The
      selling stockholders may pledge or grant a security interest in some or all
      of
      the 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 stockholders to include the pledgee, transferee or other
      successors in interest as selling stockholders under this prospectus. The
      selling stockholders 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 stockholders 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 stockholders and any discounts, commissions or concessions
      allowed or reallowed or paid to broker-dealers.

     

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

     

    There
      can
      be no assurance that any selling stockholder 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 stockholders 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 stockholders 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 stockholder will pay all underwriting
      discounts and selling commissions, if any. We will indemnify the selling
      stockholders against liabilities, including some liabilities under the
      Securities Act, in accordance with the registration rights agreements, or the
      selling stockholders will be entitled to contribution. We may be indemnified
      by
      the selling stockholders against civil liabilities, including liabilities under
      the Securities Act, that may arise from any written information furnished to
      us
      by the selling stockholder specifically for use in this prospectus, in
      accordance with the related registration rights agreements, or we may be
      entitled to contribution.

     

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

     

    

    

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      C

     

    WORKSTREAM
      INC.

    (the
      “Company”)

     

    QUESTIONNAIRE
      TO THE SELLING SHAREHOLDERS

     

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

     

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

     

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

     

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

     

    

    

     

    Name
      of
      Selling Shareholder: _________________________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Instructions
      and Definitions

     

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

     

    
      	 	
              1.

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

            

    

     

    
      	 	
              2.

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

            

    

     

    
      	 	
              3.

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

            

    

     

    
      	 	
              4.

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1. Broker-Dealer
      Status.
      

    

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

     

    
      	 	Yes ____	No ____	 

    

        

    If
“yes,”
      please give details below.

    
 

     

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

    
       

      
        	 	Confirmed ____	Cannot Confirm ____	 

      

    

     

    If
      “cannot confirm,” please give details below.

     

    
 

    2.
       Relationships
      with the Company.

    

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

     

    
      
        	 	Yes ____	No ____	 

      

       

    

    If
“yes,”
      please give details below.

    

    

     

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

    
       

      
        	 	Yes ____	No ____	 

      

       

    

    If
“yes,”
      please give details below.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. Equity
      Securities Beneficially Owned By You.

     

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

     

    
      	Class 	 	Number of Shares
	of Security	 	Beneficially
              Owned

    

     

     

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

    

    
 

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

    

    

    
 

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

    

    

    
 

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

    

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXAMPLE
      RESPONSE

    

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

    

    1.            
      Broker-Dealer
      Status.

     

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

    

    

    2.           
      Relationships
      with the Company.

    

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

    

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

    

     

    3.           
      Equity
      Securities Beneficially Owned By You.
      

    

    Question
      3(a).

    

    
      	Class	 	Number of Shares
	of Security	 	Owned Beneficially
	 	 	 
	Common Shares	 	100,000
	 	 	 
	Warrants to purchase Common Shares	 	200,000

    

     

    Question
      3(b).

    

    Not
      applicable

    

    Question
      3(c).

    

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

    

    Question
      3(d).

    

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

    

    Question
      3(e).

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

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

     

    
      	 	 	 
	DATED:
              __________, 2006	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]EXECUTION
        COPY

      

      

      SENIOR
        SECURED NOTES

      

      LOAN
        AND SECURITY AGREEMENT

      

      AMONG

       

      WORKSTREAM
        USA, INC.

      PAULA
        ALLEN HOLDINGS, INC.

      THE
        OMNI PARTNERS, INC.

      6FIGUREJOBS.COM,
        INC.,

      AS
        THE BORROWERS,

      

      WORKSTREAM
        INC.,

      as
        A guarantor

      

      AND

      

      HILCO
        FINANCIAL, LLC,

      AS
        THE LENDER

      

      DATED
        AS OF SEPTEMBER 28, 2006

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

       

      
        
          	 	 	 	 	Page
	 	 	 	 	 
	
                  Article
                    I DEFINITIONS

                	 	
                  4

                
	
                  Section
                    1.1

                	 	
                  Definitions

                	 	
                  4

                
	
                  Section
                    1.2

                	 	
                  Other
                    Definitional Terms; Rules of Interpretation

                	 	
                  14

                
	 	 	 	 	 
	
                  Article
                    II TERM ADVANCE

                	 	
                  15

                
	 	 	 
	
                  Section
                    2.1

                	 	
                  Term
                    Advance

                	 	
                  15

                
	
                  Section
                    2.2

                	 	
                  Payment
                    of Term Advance

                	 	
                  15

                
	
                  Section
                    2.3

                	 	
                  Interest;
                    Default Interest Rate; Participations; Usury.

                	 	
                  16

                
	
                  Section
                    2.4

                	 	
                  Fees.

                	 	
                  18

                
	
                  Section
                    2.5

                	 	
                  Time
                    for Interest Payments; Payment on Non-Business Days; Computation
                    of
                    Interest and Fees; Place of Payment.

                	 	
                  18

                
	
                  Section
                    2.6

                	 	
                  Voluntary
                    Prepayment

                	 	
                  19

                
	
                  Section
                    2.7

                	 	
                  Application
                    of Payments

                	 	
                  19

                
	
                  Section
                    2.8

                	 	
                  Advances
                    to Pay Obligations

                	 	
                  19

                
	
                  Section
                    2.9

                	 	
                  Use
                    of Proceeds

                	 	
                  19

                
	
                  Section
                    2.10

                	 	
                  Liability
                    Records

                	 	
                  19

                
	
                  Section
                    2.11

                	 	
                  Joint
                    and Several Liability; Appointment of Borrower
                    Representative.

                	 	
                  19

                
	 	 	 	 	 
	
                  Article
                    III SECURITY INTEREST; OCCUPANCY; SETOFF

                	 	
                  20

                
	 	 	 
	
                  Section
                    3.1

                	 	
                  Grant
                    of Security Interest.

                	 	
                  20

                
	
                  Section
                    3.2

                	 	
                  Notification
                    of Account Debtors and Other Obligors

                	 	
                  21

                
	
                  Section
                    3.3

                	 	
                  Assignment
                    of Insurance

                	 	
                  21

                
	
                  Section
                    3.5

                	 	
                  License

                	 	
                  22

                
	
                  Section
                    3.6

                	 	
                  Financing
                    Statements

                	 	
                  22

                
	
                  Section
                    3.7

                	 	
                  Setoff

                	 	
                  22

                
	
                  Section
                    3.8

                	 	
                  Collateral

                	 	
                  22

                
	 	 	 	 	 
	
                  Article
                    IV CONDITIONS OF LENDING

                	 	
                  23

                
	 	 	 
	
                  Section
                    4.1

                	 	
                  Conditions
                    Precedent to the Term Advance

                	
                  23

                
	 	 	 	 
	
                  Article
                    V REPRESENTATIONS AND WARRANTIES

                	
                  26

                
	 	 
	
                  Section
                    5.1

                	 	
                  Existence
                    and Power; Name; Chief Executive Office; Inventory and Equipment
                    Locations; Federal Employer Identification Number and Organizational
                    Identification Number

                	 	
                  26

                
	
                  Section
                    5.2

                	 	
                  Capitalization

                	 	
                  26

                
	
                  Section
                    5.3

                	 	
                  Authorization
                    of Borrowing; No Conflict as to Law or Agreements

                	 	
                  26

                
	
                  Section
                    5.4

                	 	
                  Legal
                    Agreements

                	 	
                  27

                
	
                  Section
                    5.5

                	 	
                  Subsidiaries

                	 	
                  27

                
	
                  Section
                    5.6

                	 	
                  Financial
                    Condition; No Adverse Change

                	 	
                  27

                
	
                  Section
                    5.7

                	 	
                  Litigation

                	 	
                  27

                
	
                  Section
                    5.8

                	 	
                  Regulation
                    U

                	 	
                  27

                

        

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        
          	
                  Section
                    5.9

                	 	
                  Taxes

                	 	
                  27

                
	
                  Section
                    5.10

                	 	
                  Title
                    and Liens

                	 	
                  28

                
	
                  Section
                    5.11

                	 	
                  Intellectual
                    Property Rights.

                	 	
                  28

                
	
                  Section
                    5.12

                	 	
                  Plans

                	 	
                  29

                
	
                  Section
                    5.13

                	 	
                  Default

                	 	
                  30

                
	
                  Section
                    5.14

                	 	
                  Environmental
                    Matters.

                	 	
                  30

                
	
                  Section
                    5.15

                	 	
                  Submissions
                    to Lender

                	 	
                  31

                
	
                  Section
                    5.16

                	 	
                  Financing
                    Statements

                	 	
                  31

                
	
                  Section
                    5.17

                	 	
                  Rights
                    to Payment

                	 	
                  31

                
	
                  Section
                    5.18

                	 	
                  Financial
                    Solvency

                	 	
                  31

                
	
                  Section
                    5.19

                	 	
                  Additional
                    Representations and Warranties

                	 	
                  32

                
	 	 	 	 	 
	
                  Article
                    VI COVENANTS

                	
                   

                	 	
                  32

                
	 	 	 	 
	
                  Section
                    6.1

                	 	
                  Reporting
                    Requirements

                	 	
                  32

                
	
                  Section
                    6.2

                	 	
                  Financial
                    Covenants. The Credit Parties shall maintain Minimum Liquidity
                    at all times.

                	 	
                  35

                
	
                  Section
                    6.3

                	 	
                  Permitted
                    Liens; Financing Statements.

                	 	
                  35

                
	
                  Section
                    6.4

                	 	
                  Indebtedness

                	 	
                  36

                
	
                  Section
                    6.5

                	 	
                  Guaranties

                	 	
                  37

                
	
                  Section
                    6.6

                	 	
                  Investments
                    and Subsidiaries

                	 	
                  37

                
	
                  Section
                    6.7

                	 	
                  Dividends
                    and Distributions

                	 	
                  38

                
	
                  Section
                    6.8

                	 	
                  Salaries

                	 	
                  38

                
	
                  Section
                    6.9

                	 	
                  Intentionally
                    Omitted

                	 	
                  38

                
	
                  Section
                    6.10

                	 	
                  Books
                    and Records; Collateral Examination, Inspection and Appraisals;
                    Deposit Account Agreements

                	 	
                  38

                
	
                  Section
                    6.11

                	 	
                  Account
                    Verification

                	 	
                  39

                
	
                  Section
                    6.12

                	 	
                  Compliance
                    with Laws.

                	 	
                  39

                
	
                  Section
                    6.13

                	 	
                  Payment
                    of Taxes and Other Claims

                	 	
                  40

                
	
                  Section
                    6.14

                	 	
                  Maintenance
                    of Properties.

                	 	
                  40

                
	
                  Section
                    6.15

                	 	
                  Insurance

                	 	
                  41

                
	
                  Section
                    6.16

                	 	
                  Preservation
                    of Existence

                	 	
                  41

                
	
                  Section
                    6.17

                	 	
                  Delivery
                    of Instruments, etc

                	 	
                  41

                
	
                  Section
                    6.18

                	 	
                  Sale
                    or Transfer of Assets; Suspension of Business Operations

                	 	
                  41

                
	
                  Section
                    6.19

                	 	
                  Consolidation
                    and Merger; Asset Acquisitions

                	 	
                  42

                
	
                  Section
                    6.20

                	 	
                  Sale
                    and Leaseback

                	 	
                  42

                
	
                  Section
                    6.21

                	 	
                  Restrictions
                    on Nature of Business

                	 	
                  42

                
	
                  Section
                    6.22

                	 	
                  Accounting

                	 	
                  42

                
	
                  Section
                    6.23

                	 	
                  Plans

                	 	
                  42

                
	
                  Section
                    6.24

                	 	
                  Place
                    of Business; Name

                	 	
                  42

                
	
                  Section
                    6.25

                	 	
                  Amendments
                    to Certain Documents

                	 	
                  43

                
	
                  Section
                    6.26

                	 	
                  Performance
                    by the Lender

                	 	
                  43

                
	 	 	 	 	 
	
                  Article
                    VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES

                	 	
                  43

                
	 	 	 	 	 
	
                  Section
                    7.1

                	 	
                  Events
                    of Default

                	 	
                  43

                
	
                  Section
                    7.2

                	 	
                  Rights
                    and Remedies

                	 	
                  45

                
	
                  Section
                    7.3

                	 	
                  Certain
                    Notices

                	 	
                  46

                

        

         

        
          
             

          

          
            -
              2 -

            
              

            

          

          
             

          

        

         

        
          	
                  Article
                    VIII MISCELLANEOUS

                	 	
                  46

                
	 	 	 
	
                  Section
                    8.1

                	 	
                  No
                    Waiver; Cumulative Remedies; Compliance with Laws

                	 	
                  46

                
	
                  Section
                    8.2

                	 	
                  Amendments,
                    Etc

                	 	
                  47

                
	
                  Section
                    8.3

                	 	
                  Notices;
                    Communication of Confidential Information; Requests
                    for Accounting

                	 	
                  47

                
	
                  Section
                    8.4

                	 	
                  Further
                    Documents

                	 	
                  48

                
	
                  Section
                    8.5

                	 	
                  Costs
                    and Expenses

                	 	
                  48

                
	
                  Section
                    8.6

                	 	
                  Indemnity

                	 	
                  48

                
	
                  Section
                    8.7

                	 	
                  Participants

                	 	
                  49

                
	
                  Section
                    8.8

                	 	
                  Execution
                    in Counterparts; Facsimile Execution

                	 	
                  49

                
	
                  Section
                    8.9

                	 	
                  Retention
                    of Credit Parties’ Records

                	 	
                  49

                
	
                  Section
                    8.10

                	 	
                  Binding
                    Effect; Assignment; Complete Agreement.

                	 	
                  50

                
	
                  Section
                    8.11

                	 	
                  Severability
                    of Provisions

                	 	
                  50

                
	
                  Section
                    8.12

                	 	
                  Headings

                	 	
                  50

                
	
                  Section
                    8.13

                	 	
                  Governing
                    Law; Jurisdiction, Venue

                	 	
                  50

                
	
                  Section
                    8.14

                	 	
                  Waiver
                    of Jury Trial

                	 	
                  51

                

        

      

      

      Table
        of Exhibits and Schedules

      

      

      
        	
                Exhibit
                  A

              	
                Form
                  of Term Note

              
	 	 
	
                Exhibit
                  B

              	
                Form
                  of Compliance Certificate

              
	 	 
	
                Exhibit
                  C

              	
                Form
                  of Deposit Account Agreement

              
	 	 
	
                Exhibit
                  D

              	
                Schedule
                  of Closing Documents

              
	 	 
	
                Schedule
                  3.6 

              	
                Financing
                  Statements

              
	 	 
	
                Schedule
                  5.1

              	
                Trade
                  Names, Chief Executive Office, Principal Place of
                  Business, and Locations of Collateral

              
	
                 

              	
                 

              
	
                Schedule
                  5.2

              	
                Capitalization
                  and Organizational Chart

              
	 	 
	
                Schedule
                  5.5

              	
                Subsidiaries

              
	 	 
	
                Schedule
                  5.7

              	
                Litigation
                  Matters

              
	 	 
	
                Schedule
                  5.11

              	
                Intellectual
                  Property Disclosures

              
	 	 
	
                Schedule
                  5.14

              	
                Environmental
                  Matters

              
	 	 
	
                Schedule
                  6.3

              	
                Permitted
                  Liens

              
	 	 
	
                Schedule
                  6.4

              	
                Permitted
                  Debt and Guaranties

              

      

      

      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

      LOAN
        AND SECURITY AGREEMENT

      

      Dated
        as
        of September 28, 2006

      

      WORKSTREAM
        USA, INC., a Delaware corporation (“Workstream USA”), PAULA ALLEN HOLDINGS,
        INC., a Florida corporation (“Paula Allen Holdings”), THE OMNI PARTNERS, INC., a
        Florida corporation (“Omni Partners”), and 6FIGUREJOBS.COM, INC., a Delaware
        corporation (“6FigureJobs.com”) (Workstream USA, Paula Allen Holdings, Omni
        Partners and 6FigureJobs.com are referred to herein as the “Borrowers” and
        individually as a “Borrower”), WORKSTREAM INC., a corporation existing pursuant
        to the Canada Business Corporations Act (“Workstream”), and HILCO FINANCIAL,
        LLC, a Delaware limited liability company (the “Lender”), hereby agree as
        follows:

      

      ARTICLE
        I 

      

      DEFINITIONS

       

      Section
        2.1  Definitions.
        For all
        purposes of this Agreement, except as otherwise expressly provided, the
        following terms shall have the meanings assigned to them in this Section
        or in
        the Section referenced after such term:

      

      “Accounts”
        means all accounts, as such term is defined in the UCC, the PPSA and all
        “Claims” for the purpose of the Civil Code of Quebec (or similar Applicable
        Law), including each and every right to the payment of money, whether such
        right
        to payment now exists or hereafter arises, whether such right to payment
        arises
        out of a sale, lease or other disposition of goods or other property, out
        of a
        rendering of services, out of a loan, out of the overpayment of taxes or
        other
        liabilities, or otherwise arises under any contract or agreement, whether
        such
        right to payment is created, generated or earned by any Credit Party or by
        some
        other Person who subsequently transfers such Person’s interest to any Credit
        Party, whether such right to payment is or is not already earned by performance,
        and howsoever such right to payment may be evidenced, together with all other
        rights and interests (including all Liens) which any Credit Party may at
        any
        time have by law or agreement against any account debtor or other obligor
        obligated to make any such payment or against any property of such account
        debtor or other obligor; all including but not limited to all present and
        future
        accounts, contract rights, loans and obligations receivable, chattel papers,
        bonds, notes and other debt instruments, tax refunds and rights to payment
        in
        the nature of general intangibles.

      

      “Advance”
        means the Term Advance or any other loan or advance made by the Lender to
        or for
        the benefit of the Borrowers at any time, and “Advances” means the Term Advance
        and all such other loans and advances collectively.

      

      “Affiliate”
        or “Affiliates” means, with respect to a Person, (a) any family member, officer,
        director, employee or managing agent of such Person, and (b) any other Person
        (i) that, directly or indirectly, through one or more intermediaries, controls,
        or is controlled by, or is under common control with, such given Person,
        (ii)
        that, directly or indirectly beneficially owns or holds 10% or more of any
        class
        of voting stock or partnership or other interest of such Person or any
        subsidiary of such Person, or (iii) 10% or more of the voting stock or
        partnership or other interest of which is directly or indirectly beneficially
        owned or held by such Person or a subsidiary of such Person. The term “control”
means the possession, directly or indirectly, of the power to direct or cause
        the direction of the management and policies of a Person, whether through
        ownership of voting securities or partnership or other interests, by contract
        or
        otherwise.

       

      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

      

      “Agreement”
        means this Loan and Security Agreement.

      

      “Agreement
        Date” means the date of this Agreement.

      

      “Applicable
        Margin” means (i) from the Funding Date through the date that is 180 days after
        the Agreement Date, 2.50%, and (ii) at all times thereafter, 3.50%.

      

      “Borrower
        Representative” has the meaning set forth in Section
        2.11(b).

      

      “Business
        Day” means any day which is neither a Saturday or Sunday nor a legal holiday on
        which commercial banks are authorized or required to be closed in Chicago,
        Illinois.

      

      “Canadian
        Dollars” and “C$” means dollars in currency of Canada.

      

      “Capital
        Expenditures” means for a period, any expenditure of money during such period
        for the lease, purchase or other acquisition of any capital asset, or for
        the
        lease of any other asset which constitutes a capitalized lease under GAAP,
        whether payable currently or in the future.

      

      “Change
        of Control” means a Change of Control Transaction as defined in the
        Warrant.

      

      “Collateral”
        means all of each Credit Party’s Accounts, chattel paper and electronic chattel
        paper, Deposit Accounts, documents, Equipment, General Intangibles, goods,
        instruments, Inventory, Investment Property, letter-of-credit rights, letters
        of
        credit, all sums on deposit in any Deposit Account, and any items in any
        Lockbox; together with (a) all substitutions and replacements for and
        products of any of the foregoing; (b) in the case of all goods, all
        accessions; (c) all accessories, attachments, parts, equipment and repairs
        now or hereafter attached or affixed to or used in connection with any goods;
        (d) all warehouse receipts, bills of lading and other documents of title
        now or hereafter covering such goods; (e) all collateral subject to the
        Lien of any Security Document; (f) any money, or other assets of each
        Credit Party that now or hereafter come into the possession, custody, or
        control
        of the Lender; (g) proceeds of any and all of the foregoing; (h) books and
        records of each Credit Party, including all mail or electronic mail addressed
        to
        such Credit Party; and (i) all of the foregoing, whether now owned or existing
        or hereafter acquired or arising or in which any Credit Party now has or
        hereafter acquires any rights.

      

      “Constituent
        Documents” means with respect to any Person, as applicable, such Person’s
        certificate of incorporation, articles of incorporation, by-laws, certificate
        of
        formation, articles of organization, limited liability company agreement,
        management agreement, operating agreement, shareholder agreement, partnership
        agreement or similar document or agreement governing such Person’s existence,
        organization or management or concerning disposition of ownership interests
        of
        such Person or voting rights among such Person’s owners.

       

      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

      

      “Credit
        Party” means each Borrower, each Guarantor, any other Person directly or
        indirectly liable for all or any part of the Obligations, or any Person which
        has pledged any collateral for all or any part of the Obligations, and “Credit
        Parties” means all such Persons collectively.

      

      “Debt”
        means of a Person as of a given date, all items of indebtedness or liability
        which in accordance with GAAP would be included in determining total liabilities
        as shown on the liabilities side of a balance sheet for such Person and shall
        also include the aggregate payments required to be made by such Person at
        any
        time under any lease that is considered a capitalized lease under
        GAAP.

      

      “Default”
        means an event that, with giving of notice or passage of time or both, would
        constitute an Event of Default.

      

      “Default
        Period” means any period of time beginning on the day an Event of Default occurs
        and ending on the date such Event of Default has been cured or waived in
        writing
        by the Lender.

      

      “Default
        Rate” means an annual interest rate in effect during a Default Period or
        following the Termination Date, which interest rate shall be equal to two
        percent (2%) over the applicable rate otherwise in effect, as such rate may
        change from time to time.

      

      “Deposit
        Accounts” means all of each Credit Party’s demand, time, savings, passbook,
        money market or other depository accounts, and all certificates of deposit,
        maintained by such Credit Party with any bank, savings and loan association,
        credit union or other depository institution.

      

      “Deposit
        Account Agreement” means each agreement, in the form of Exhibit
        C
        attached
        hereto or otherwise in form and substance satisfactory to the Lender, among
        a
        bank or other depository institution, the applicable Credit Party and Lender
        delivered to Lender pursuant to Section
        6.10
        hereof,
        including in each case such provisions to provide dominion and control over
        such
        accounts to Lender such that upon notice by Lender to such institution of
        the
        occurrence of an Event of Default hereunder all actions under such account
        shall
        be taken solely at Lender’s direction.

      

      “Director”
        means a director of the applicable Credit Party.

      

      “Dollars”
        and “$” means dollars in currency of the United States of America.

      

      “Environmental
        Law” means any federal, state, local or other governmental statute, regulation,
        law or ordinance dealing with the protection of human health and the
        environment.

      

      “Equipment”
        means all equipment, as such term is defined in the UCC, the PPSA (or similar
        applicable law), whether now owned or hereafter acquired, including but not
        limited to all present and future machinery, vehicles, furniture, fixtures,
        manufacturing equipment, shop equipment, office and recordkeeping equipment,
        parts, tools, supplies, and including specifically the goods described in
        any
        equipment schedule or list herewith or hereafter furnished to the Lender
        by any
        Credit Party.

       

      
        
          
          

        

        
          -
            6 -

          
            

          

        

        
          
          

        

      

      

      “ERISA”
        means the Employee Retirement Income Security Act of 1974, as amended from
        time
        to time.

      

      “ERISA
        Affiliate” means any trade or business (whether or not incorporated) that is a
        member of a group which includes any Credit Party and which is treated as
        a
        single employer under Section 414 of the IRC.

      

      “Event
        of
        Default” has the meaning set forth in Section
        7.1.

      

      “Financial
        Covenants” means the covenants set forth in Section
        6.2.

      

      “Fundamental
        Change” has the meaning set forth in the Warrant.

      

      “Funding
        Date” means the date of initial funding of the Term Loan.

      

      “GAAP”
        means generally accepted accounting principles, applied on a basis consistent
        with the accounting practices applied in the financial statements described
        in
Section
        5.6.

      

      “General
        Intangibles” means all general intangibles, as such term is defined in the UCC,
        the PPSA (or similar applicable law), whether now owned or hereafter acquired,
        including all present and future Intellectual Property Rights, customer or
        supplier lists and contracts, manuals, operating instructions, permits,
        franchises, the right to use any name, and the goodwill of each Credit Party’s
        business.

      

      “Guarantor(s)”
        means Workstream and any other Person now or hereafter guarantying the
        Obligations. 

      

      “Hazardous
        Substances” means pollutants, contaminants, hazardous substances, hazardous
        wastes, petroleum and fractions thereof, and all other chemicals, wastes,
        substances and materials listed in, regulated by or identified in any
        Environmental Law.

      

      “Indebtedness”
        has the meaning set forth in the Transaction Agreement.

      

      “Infringement”
        or “Infringing” when used with respect to Intellectual Property Rights means any
        infringement or other violation of Intellectual Property Rights.

      

      “Intellectual
        Property Rights” means all (i) foreign and domestic patents, patent
        applications, patent disclosures and inventions, (ii) Internet domain names,
        trademarks, service marks, trade dress, trade names, logos and corporate
        names
        (both foreign and domestic) and registrations and applications for registration
        thereof together with all of the goodwill associated therewith, (iii) copyrights
        (registered or unregistered) and copyrightable works and registrations and
        applications for registration thereof, (iv) computer software, data, data
        bases
        and documentation thereof, (v) trade secrets and other confidential information
        (including ideas, formulas, compositions, (whether patentable or unpatentable
        and whether or not reduced to practice), know-how, manufacturing and production
        processes and techniques, research and development information, drawings,
        specifications, designs, plans, proposals, technical data, copyrightable
        works,
        financial and marketing plans and customer and supplier lists and information),
        (vi) other material intellectual property rights and (vii) copies and tangible
        embodiments thereof.

       

      
        
          
          

        

        
          -
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      “Inventory”
        means all inventory, as such term is defined in the UCC, the PPSA (or similar
        applicable law), whether now owned or hereafter acquired, whether consisting
        of
        whole goods, spare or maintenance parts or components, supplies or materials,
        whether acquired, held or furnished for sale, for lease or under service
        contracts or for manufacture or processing, and wherever located.

      

      “Investment
        Property” means all investment property, as such term is defined in the UCC, the
        PPSA (or similar applicable law), whether now owned or hereafter acquired,
        including but not limited to all securities, security entitlements, securities
        accounts, commodity contracts, commodity accounts, stocks, bonds, mutual
        fund
        shares, money market shares and U.S. Government securities.

      

      “IRC”
        means the Internal Revenue Code of 1986, as amended from time to
        time.

      

      “Lien”
        means any security interest, mortgage, deed of trust, pledge, lien, charge,
        encumbrance, title retention agreement or analogous instrument or device,
        including the interest of each lessor under any capitalized lease and the
        interest of any bondsman under any payment or performance bond, in, of or
        on any
        assets or properties of a Person, whether now owned or hereafter acquired
        and
        whether arising by agreement or operation of law.

      

      “Loan
        Documents” means this Agreement, the Notes, the Security Documents, the
        Transaction Agreement, the Warrant Documents and any other agreement, document,
        instrument or certificate executed and/or delivered in connection with this
        Agreement or the transactions contemplated hereby.

      

      “Make
        Whole Amount” means, with respect to any payment or prepayment (including,
        without limitation, at maturity, upon acceleration or otherwise) of the
        principal amount of the Term Advance, an additional amount that shall be
        paid by
        the Borrowers to the Lender on the date of such repayment or prepayment,
        if
        necessary, to permit the Lender to achieve an internal rate of return on
        the
        amount then being repaid or prepaid equal to (i) 30% per annum, if the repayment
        or prepayment occurs prior to the date that is 181 days after the Funding
        Date,
        and (ii) 40% per annum, if the repayment or prepayment occurs on or after
        the
        date that is 181 days after the Funding Date, in each case as determined
        in good
        faith by the Lender giving effect to all fees accrued under paragraph (d)
        of
Section
        2.4
        and to
        all interest accrued and paid prior to or concurrently with the making of
        any
        such Make Whole Amount in accordance with this Agreement (it being understood
        by
        the parties that to the extent any sum of interest has been paid, such sum,
        however characterized, will not be paid again as part of any Make Whole Payment
        and it being further understood that any accrued and unpaid interest which
        is
        included in the payment of any Make Whole Amount shall cease to be payable
        as
        interest accrued).

      

      “Material
        Adverse Effect” means any of the following:

      

      (a) A
        material adverse effect on the business, operations, results of operations,
        prospects, assets, liabilities or condition (financial or otherwise) of any
        Credit Party;

       

      
        
          
          

        

        
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      (b) A
        material adverse effect on the ability of any Credit Party to perform its
        obligations under the Loan Documents;

      

      (c) A
        material adverse effect on the ability of the Lender to enforce the Obligations
        or to realize the intended benefits of the Security Documents, including
        a
        material adverse effect on the validity or enforceability of any Loan Document
        or of any rights against any Guarantor, or on the status, existence, perfection,
        priority (subject to Permitted Liens) or enforceability of any Lien securing
        payment or performance of the Obligations; or

      

      (d) Any
        claim
        against any Credit Party or any threat of litigation which if determined
        adversely to such Credit Party would cause such Credit Party to be liable
        to pay
        an amount exceeding $500,000 or would be an event described in clauses (a),
        (b) and (c) above.

      

      “Maturity
        Date” means the date that is 545 days after the Funding Date.

      

      “Minimum
        Liquidity” means, at any time, that (i) the sum of the Qualified Account Amount
        and Qualified Cash at such time is at least $15,000,000 and (ii) Qualified
        Cash
        at such time is at least $10,000,000.

      

      “Multiemployer
        Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to
        which any Credit Party or any ERISA Affiliate contributes or is obligated
        to
        contribute.

      

      “Note”
        means the Term Note or any other promissory note by the Borrowers in favor
        of
        the Lender, and “Notes” means the Term Note and all such other Notes
        collectively.

      

      “Obligations”
        means each Advance and each and every other debt, liability and obligation
        of
        every type and description which any Credit Party may now or at any time
        hereafter owe to the Lender (including all interest and fees contemplated
        by
        this Agreement and the other Loan Documents, and including any amounts owing
        under the Warrant and the Registration Rights Agreement), whether such debt,
        liability or obligation now exists or is hereafter created or incurred, whether
        it arises in a transaction involving the Lender alone or in a transaction
        involving other creditors of such Credit Party, and whether it is direct
        or
        indirect, due or to become due, absolute or contingent, primary or secondary,
        liquidated or unliquidated, or sole, joint, several or joint and several,
        and
        including all Debt of each Credit Party arising under any Loan Document between
        such Credit Party and the Lender, whether now in effect or hereafter entered
        into.

      

      “Officer”
        means an officer of the applicable Credit Party.

      

      “Owner”
        means with respect to any Credit Party, each Person having legal or beneficial
        title to an ownership interest in such Credit Party or a right to acquire
        such
        an interest (excluding the Lender with respect to its rights under any Warrant
        Documents or any Pledge Agreement).

       

      
        
          
          

        

        
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      “Parent
        Pledge Agreement” means the Pledge Agreement of even date herewith executed by
        Workstream in favor of the Lender, pledging all of the capital stock of
        Workstream USA held by it.

      

      “Patent,
        Trademark and Copyright Security Agreement” means the Patent, Trademark and
        Copyright Security Agreement dated as of the Agreement Date made by Workstream
        and the Borrowers in favor of the Lender.

      

      “Pension
        Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for
        employees of any Credit Party or any ERISA Affiliate and covered by Title
        IV of
        ERISA.

      

      “Permitted
        Lien” and “Permitted Liens” have the meanings set forth in Section
        6.3(a).

      

      “Person”
        means any individual, corporation, partnership, joint venture, limited liability
        company, association, joint-stock company, trust, unincorporated organization
        or
        government or any agency or political subdivision thereof.

      

      “Plan”
        means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
        for employees of any Credit Party or any ERISA Affiliate.

      

      “Pledge
        Agreements” means the Parent Pledge Agreement, the Workstream USA Pledge
        Agreement and
        any
        other pledge agreement entered into after the Agreement Date by any Credit
        Party.

      

      “PPSA”
        means the Personal Property Security Act as the same may, from time to time,
        be
        in effect in the Province of Ontario; provided, that in the event that, by
        reason of mandatory provisions of law, any or all of the attachment, perfection
        or priority of the Lender's security interest in any Collateral is governed
        by
        the Personal Property Security Act as in effect in a jurisdiction other than
        the
        Province of Ontario, the term “PPSA” shall mean the Personal Property Security
        Act or a similar act or statute as in effect in such other jurisdiction for
        purposes of the provisions of this Agreement relating to such attachment,
        perfection or priority and for purposes of definition related to such
        provisions.

      

      “Premises”
        means all locations where each Credit Party conducts its business or has
        any
        rights of possession, including but not limited to the addresses listed on
        Schedule
        5.1
        attached
        hereto.

      

      “Prime
        Rate” means, at any time, the rate of interest which is identified and normally
        published by Bloomberg Professional Service Page Prime as the “Prime Rate” (or,
        if more than one rate is published as the Prime Rate, then the highest of
        such
        rates). Any change in Prime Rate will become effective as of the date the
        rate
        of interest which is so identified as the “Prime Rate” is different from that
        published on the preceding Business Day. If Bloomberg Professional Service
        no
        longer reports the Prime Rate, or if such Page Prime no longer exists, or
        the
        Lender determines in good faith that the rate so reported no longer accurately
        reflects an accurate determination of the prevailing Prime Rate, the Lender
        may
        select a reasonably comparable index or source to use as the basis for the
        Prime
        Rate. The “Prime Rate” may not be the lowest or best rate at which the Lender
        calculates interest or extends credit.

       

      
        
          
          

        

        
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      “Qualified
        Accounts” means Accounts of a Borrower arising in the ordinary course of such
        Borrower’s business, payable in Dollars or Canadian Dollars and deemed by the
        Lender in its commercially reasonable judgment to be Qualified Accounts.
        Unless
        otherwise approved in writing by the Lender, the following Accounts shall
        not be
        deemed Qualified Accounts:

       

      	(i)  	Accounts for which the rendition of services has
              not been
              completed;

      	 	 

      	(ii)  	Accounts for which the rendition of professional
              services
              have been provided but are yet unbilled in excess of
              $500,000;

        

      (iii) Accounts
        which have been disputed; the account debtor has asserted a setoff, defense
        or
        counterclaim with respect to the applicable Account (provided, that in the
        case
        of any dispute, setoff, defense or counterclaim with respect to any Account,
        only that portion of the Account subject to such dispute, setoff, defense
        or
        counterclaim shall be deemed ineligible by reason of this clause
        (iii));

      

      (iv) Accounts
        that are not lawfully owned by a Borrower free and clear of any Lien, other
        than
        Permitted Liens (provided that the Lien in favor of the Lender shall be a
        first
        priority Lien), or are not otherwise in compliance with all representations
        and
        warranties made by Borrowers with respect thereto in the Loan
        Documents;

      

      (v) Accounts
        that are not unconditionally payable within 90 days from the invoice
        date;

      

      (vi) Accounts
        that are evidenced by a judgment or a promissory note, chattel paper or any
        other instrument or other document that is not in the possession of the Lender
        or does not contain all necessary endorsements in favor of the
        Lender;

      

      (vii) Accounts
        that remain unpaid more than 60 days past the invoice due date; 

      

      (viii) Accounts
        due from an Affiliate or an employee, officer, director, creditor or supplier
        of
        any Credit Party;

      

      (ix) Accounts
        constituting an obligation of the United States of America or any other
        Governmental Authority (unless all steps required by the Lender in connection
        therewith, including notice to the Government of the United States of America
        under the Federal Assignment of Claims Act or any action under any state
        statute
        comparable to the Federal Assignment of Claims Act, have been duly taken
        in a
        manner reasonably satisfactory to the Lender);

      

      (x) Accounts
        due from an account debtor (or an applicable office of such account debtor)
        not
        located in a state of the United States of America or in Canada which are
        not
        supported by a letter of credit or other similar credit satisfactory to the
        Lender; provided, however, that Accounts due from account debtors located
        in
        Canada shall not at any time constitute more than 10% of all Qualified Accounts
        at such time;

       

      
        
          
          

        

        
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      (xi) Accounts
        owing from an account debtor for which more than 50% of the aggregate amount
        of
        all Accounts owing to the Borrowers from such account debtor remain unpaid
        more
        than 90 days past the invoice date;

      

      (xii) Accounts
        from an account debtor that (A) has filed a petition for bankruptcy or any
        other
        relief under the Bankruptcy Code or any other law relating to bankruptcy,
        insolvency, reorganization or relief of debtors, made an assignment for the
        benefit of creditors, had filed against it any petition or other application
        for
        relief under the Bankruptcy Code or any such other law, (B) has failed,
        suspended business operations, become insolvent or called a meeting of its
        creditors for the purpose of obtaining any financial concession or
        accommodation, or (C) has had or suffered to be appointed a receiver or a
        trustee for all or a significant portion of its assets or affairs;

      

      (xiii) Accounts
        owing from an account debtor to the extent such Accounts exceed 20% of the
        aggregate Qualified Accounts of Borrowers (provided, that only that portion
        of
        the Accounts of any account debtor which exceeds the applicable percentage
        rate
        of the aggregate Qualified Accounts of Borrowers set forth above with respect
        to
        such account debtor shall be so deemed ineligible shall be deemed ineligible
        by
        reason of this clause (xiii));

      

      (xiv) Accounts
        with respect to which the Lender has notified Borrowers in writing that Lender
        is not reasonably satisfied with the credit standing of the account debtor
        in
        relation to the aggregate amount of credit extended to such account debtor
        by
        Borrowers or for which the Lender believes, in its sole discretion (which
        discretion shall not be exercised in an arbitrary or capricious manner),
        that
        the prospect of collection thereof is impaired in any material respect for
        any
        reason;

      

      (xv) Accounts
        in respect of which the Lender does not have a perfected first priority Lien;
        and

      

      (xvi)
         Accounts
        owing from an account debtor located in a state in which such Borrower is
        deemed
        to be doing business under the laws of such state and which denies creditors
        access to its courts in the absence of qualification to transact business
        in
        such state or of the filing of any reports with such state, unless such Borrower
        has qualified as a foreign entity authorized to transact business in such
        state
        or has filed all required reports.

      

      “Qualified
        Account Amount” means, at any time, the net amount of Qualified Accounts at such
        time. As used herein, the phrase "net amount of Qualified Accounts" shall
        mean
        the face amount of such Accounts at any time less any and all returns, rebates,
        discounts (which may, at the Lender's option, be calculated on shortest terms),
        credits or allowances at any time issued, owing, claimed by account debtors
        or
        granted in connection with, or any interest accrued on the amount of, such
        Accounts at such time.

      

      “Qualified
        Cash” means, at any time, the aggregate amount of unrestricted cash in each
        Deposit Account that is (i) maintained by a Credit Party with a depositary
        institution in the United States of America or Canada at such time and (ii)
        subject to a Deposit Account Agreement (or, in the case of a Deposit Account
        maintained by a Credit Party with a depositary institution in Canada, at
        the
        Lender’s option, an alternative arrangement satisfactory to the Lender which, in
        the Lender’s judgment, provides equivalent benefits to the Lender under
        applicable Canadian law as the Lender would have as a secured party by virtue
        of
        a Deposit Account Agreement under U.S. law) at such time; provided, however,
        that not more than $1,000,000 of cash maintained by the Credit Parties with
        depositary institutions in Canada shall be included as Qualified Cash at
        any one
        time.

       

      
        
          
          

        

        
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      “Reportable
        Event” means a reportable event (as defined in Section 4043 of ERISA), other
        than an event for which the 30-day notice requirement under ERISA has been
        waived in regulations issued by the Pension Benefit Guaranty
        Corporation.

      

      “Restricted
        Payment” means (i) any redemption or prepayment or other retirement, prior to
        the stated maturity thereof or prior to the due date of any regularly scheduled
        installment or amortization payment with respect thereto, of any Debt (other
        than the Obligations), and (ii) any payment on or with respect to any
        Subordinated Debt other than in accordance with the terms of the applicable
        Subordination Agreement, if any.

      

      “Securities
        Accounts” means all of each Credit Party’s securities accounts, as such term is
        defined in the UCC.

      

      “Securities
        Account Agreement” means each agreement, in form and substance satisfactory to
        the Lender, among a securities intermediary, the applicable Credit Party
        and
        Lender delivered to Lender pursuant to Section
        6.10
        hereof,
        including in each case such provisions to provide dominion and control over
        such
        accounts to Lender such that upon notice by Lender to such securities
        intermediary of the occurrence of an Event of Default hereunder all actions
        under such account shall be taken solely at Lender’s direction.

      

      “Security
        Documents” means this Agreement, the guaranty of any Guarantor, a security
        agreement of each Guarantor, in each case in form and substance satisfactory
        to
        Lender, the Patent, Trademark and Copyright Security Agreement, the Pledge
        Agreements and
        any
        other document delivered to the Lender from time to time to secure the
        Obligations.

      

      “Security
        Interest” has the meaning set forth in Section
        3.1.

      

      “Subordinated
        Debt” means Debt which is subordinated to the Obligations pursuant to a
        Subordination Agreement or which is subordinated to the Obligations pursuant
        to
        the agreements, documents and instruments evidencing such Debt (which
        subordination provisions must be acceptable to the Lender in its
        discretion).

      

      “Subordination
        Agreement” means any subordination agreement in favor of the Lender which is
        accepted in writing by the Lender from time to time and which subordinates
        any
        Debt of a Credit Party to the Obligations.

      

      “Subsidiary”
        means, with respect to any Person, (a) any corporation of which an
        aggregate of more than 50% of the outstanding capital stock having ordinary
        voting power to elect a majority of the board of directors of such corporation
        (irrespective of whether, at the time, capital stock of any other class or
        classes of such corporation shall have or might have voting power by reason
        of
        the happening of any contingency) is at the time, directly or indirectly,
        owned
        legally or beneficially by such Person and/or one or more Subsidiaries of
        such
        Person, or with respect to which any such Person has the right (directly
        or
        indirectly) to vote or designate the vote of 50% or more of such capital
        stock
        whether by proxy, agreement, operation of law or otherwise, and (b) any
        partnership or limited liability company in which such Person and/or one
        or more
        Subsidiaries of such Person shall have a direct or indirect interest (whether
        in
        the form of voting or participation in profits or capital contribution) of
        more
        than 50% or of which any such Person is a general partner or may exercise
        the
        powers of a general partner. Unless the context otherwise requires, each
        reference to a Subsidiary shall be a reference to a Subsidiary of
        Workstream.

       

      
        
          
          

        

        
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      “Term
        Advance” means the $15,000,000 term loan made by the Lender to the Borrowers
        pursuant to the terms of this Agreement.

      

      “Term
        Note” means the Borrowers’ term loan promissory note, payable to the order of
        the Lender in substantially the form of Exhibit
        A
        hereto,
        as same may be renewed and amended from time to time, and all replacements
        thereof.

      

      “Termination
        Date” means the earlier of (a) the Maturity Date, or (b) the date the Lender
        demands payment of the Obligations, following an Event of Default, pursuant
        to
Section
        7.2.
        

      

      “Transaction
        Agreement” means that certain Transaction Agreement between Workstream and the
        Lender, dated the date hereof.

      

      “Triggering
        Event” has the meaning set forth in the Transaction Agreement.

      

      “UCC”
        means the Uniform Commercial Code as in effect in the State of Illinois,
        or in
        any other state whose laws are held to govern this Agreement or any portion
        hereof.

      

      “Warrant
        Documents” means each warrant (including the Warrant), registration rights
        agreement and each related document between Workstream and the Lender with
        respect to any warrant or any other right of the Lender to obtain, register,
        have registered, sell or otherwise dispose of any equity interest of Workstream,
        and such other documents contemplated by the Transaction Agreement related
        thereto.

      

      “Warrant”
        has the meaning set forth in the Transaction Agreement.

      

      “Workstream
        USA Pledge Agreement” means the Pledge Agreement of even date herewith executed
        by Workstream USA in favor of the Lender, pledging all of the capital stock
        of
        Paula Allen Holdings, Omni Partners and 6FigureJobs.com held by it.

      

      Section
        1.2  Other
        Definitional Terms; Rules of Interpretation.
        The
        words “hereof”, “herein” and “hereunder” and words of similar import when used
        in this Agreement shall refer to this Agreement as a whole and not to any
        particular provision of this Agreement. All accounting terms not otherwise
        defined herein have the meanings assigned to them in accordance with GAAP.
        All
        terms defined in the UCC or the PPSA and not otherwise defined herein have
        the
        meanings assigned to them in the UCC or the PPSA, as the context may require.
        References to Articles, Sections, subsections, Exhibits, Schedules and the
        like,
        are to Articles, Sections and subsections of, or Exhibits or Schedules attached
        to, this Agreement unless otherwise expressly provided. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
        limitation”. Unless the context in which used herein otherwise clearly requires,
“or” has the inclusive meaning represented by the phrase “and/or”. Defined terms
        include in the singular number the plural and in the plural number the singular.
        Reference to any agreement (including the Loan Documents), document or
        instrument means such agreement, document or instrument as amended or modified
        and in effect from time to time in accordance with the terms thereof (and,
        if
        applicable, in accordance with the terms hereof and the other Loan Documents),
        except where otherwise explicitly provided, and reference to any promissory
        note
        includes any promissory note which is an extension or renewal thereof or
        a
        substitute or replacement therefor. Reference to any law, rule, regulation,
        order, decree, requirement, policy, guideline, directive or interpretation
        means
        such law, rule, regulation, order, decree, requirement, policy, guideline,
        directive or interpretation as amended, modified, codified, replaced or
        reenacted, in whole or in part, and in effect on the determination date,
        including rules and regulations promulgated thereunder. Except as otherwise
        expressly provided herein, reference to any United States law, rule or
        regulation shall also mean and include any analogous Canadian law, rule or
        regulation, as the context may require. Reference to time of day, unless
        otherwise specifically provided, means local time in Chicago,
        Illinois.

       

      
        
          
          

        

        
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      ARTICLE
        II 

      TERM
        ADVANCE

       

      Section
        2.1  Term
        Advance.
        The
        Lender agrees, subject to the terms and conditions of this Agreement (including
        the satisfaction of the conditions precedent set forth in Article
        IV),
        to
        make the Term Advance to the Borrowers in the form of a single advance in
        the
        amount of $15,000,000; provided, however, that the Lender may, at its option,
        withhold from such Term Advance the amount of all fees, costs and expenses
        due
        to the Lender or for which the Borrowers are obligated to reimburse the Lender
        hereunder. The Borrowers’ obligation to pay the Term Advance shall be evidenced
        by the Term Note and shall be secured by the Collateral as provided in
Article III.
        Amounts
        repaid with respect to the Term Advance may not be reborrowed, and the Borrowers
        acknowledge and agree that the Lender has no commitment to make any loans
        or
        other financial accommodations to the Borrowers (or any of them) hereunder
        other
        than the Term Advance.

      

      Section
        2.2  Payment
        of Term Advance.
        The Term
        Advance shall be due and payable as follows:

      

      (a) Immediately
        upon receipt by any Credit Party of proceeds of any asset disposition (other
        than any disposition of assets that is permitted under Section
        6.18(c)),
        such
        Credit Party shall notify the Lender thereof in writing and prepay the Term
        Advance in an amount equal to 90% of all such proceeds, net of (A) commissions
        and other reasonable and customary transaction costs, fees and expenses properly
        attributable to such transaction and payable by such Credit Party in connection
        therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C)
        amounts payable to holders of senior Liens on such asset (to the extent such
        Liens constitute Permitted Liens hereunder), if any, and (D) an appropriate
        reserve for income taxes in accordance with GAAP in connection therewith.
        Nothing in this Section
        2.2
        shall be
        construed to constitute the Lender’s consent to any transaction that is not
        permitted by other provisions of this Agreement or the other Loan
        Documents.

       

      
        
          
          

        

        
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      (b) On
        the
        Termination Date, the entire unpaid principal balance of the Term Advance,
        all
        unpaid interest accrued thereon and the Make Whole Amount shall in any event
        be
        due and payable by the Borrowers.

      

      Section
        2.3  Interest;
        Default Interest Rate; Participations; Usury.

       

      (a)  Interest
        Rate.
        All
        outstanding Advances shall bear interest on the unpaid principal amount thereof
        (including, to the extent permitted by law, on interest thereon not paid
        when
        due) from the date made until paid in full in cash at a rate determined by
        reference to the Prime Rate plus the Applicable Margin. Each change in the
        Prime
        Rate shall be reflected in the interest rate applicable to Advances as of
        the
        effective date of such change. All interest charges and fees hereunder shall
        be
        computed on the basis of a year of 360 days and actual days elapsed (which
        results in more interest and fees being paid than if computed on the basis
        of a
        365-day year).

       

      (b)  Default
        Interest Rate.
        At any
        time during any Default Period or following the Termination Date, in the
        Lender’s sole discretion and without waiving any of its other rights or
        remedies, the principal of the Advances shall bear interest at the Default
        Rate
        or such lesser rate as the Lender may determine, effective as of the first
        day
        on which any Default Period begins through the last day of such Default Period,
        or any shorter time period that the Lender may determine. The decision of
        the
        Lender to impose a rate that is less than the Default Rate or to not impose
        the
        Default Rate for the entire duration of the Default Period shall be made
        by
        Lender in its sole discretion and shall not be a waiver of any of its other
        rights and remedies, including its right to retroactively impose the full
        Default Rate for the entirety of any such Default Period or following the
        Termination Date.

       

      (c)  Participations.
        If any
        Person shall acquire a participation in the Advances, the Borrowers shall
        be
        obligated to the Lender to pay the full amount of all interest calculated
        under
        this Section
        2.3,
        along
        with all other fees, charges and other amounts due under this Agreement,
        regardless if such Person elects to accept interest with respect to its
        participation at a lower rate than that calculated under this Section
        2.3,
        or
        otherwise elects to accept less than its pro rata share of such fees, charges
        and other amounts due under this Agreement.

        

      (d)  Usury.
        In any
        event no rate change shall be put into effect which would result in a rate
        greater than the highest rate permitted by law. Notwithstanding anything
        to the
        contrary contained in any Loan Document, all agreements which either now
        are or
        which shall become agreements between the Borrowers and the Lender are hereby
        limited so that in no contingency or event whatsoever shall the total liability
        for payments in the nature of interest, additional interest and other charges
        exceed the applicable limits imposed by any applicable usury laws. This
        provision shall never be superseded or waived and shall control every other
        provision of the Loan Documents and all agreements between the Borrowers
        and the
        Lender, or their successors and assigns.
        It is
        the intention of the parties that in no event shall the amounts paid by the
        Borrowers and/or the Guarantors, or payable to or received by Lender under
        the
        Loan Documents or any related documents, including without limitation any
        amounts that would be characterized as "interest" under applicable law
        (including, without limitation, any applicable Canadian law), exceed amounts
        permitted under any such applicable law. Accordingly, if any obligation to
        pay,
        payment made to the Lender, or collection by the Lender pursuant the Loan
        Documents (or in connection therewith) 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 Lender,
        the Borrowers and the Guarantors 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
        (as required by applicable law and, to the extent not so required, at the
        option
        of the Lender) the amount of interest or any other amounts which would
        constitute unlawful amounts required to be paid or actually paid to the Lender
        under the Loan Documents and any such other agreement related thereto or
        by
        treating any such excess interest paid to be a payment of principal hereunder.
        For greater certainty, to the extent that any interest, charges, fees, expenses
        or other amounts required to be paid to or received by the Lender under the
        Loan
        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 (A) the period of time to which they relate
        or
        (B) otherwise over the period from the initial advance date to the applicable
        Maturity Date (or repayment date as applicable).

       

      
        
          
          

        

        
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      (e)  Increased
        Capital Costs.
        If any
        change in, or the introduction, adoption, effectiveness, interpretation,
        reinterpretation or phase-in of, any law or regulation, directive, guideline,
        decision or request (whether or not having the force of law) of any court,
        central bank, regulator or other governmental authority affects or would
        affect
        the amount of capital required or expected to be maintained by the Lender,
        or
        any Person controlling the Lender, and the Lender determines (in its sole
        and
        absolute discretion) that the rate of return on its or such controlling Person’s
        capital as a consequence of its commitments or the Advances made by the Lender
        is reduced to a level below that which the Lender or such controlling Person
        could have achieved but for the occurrence of any such circumstance, then,
        in
        any such case upon notice from time to time by the Lender to the Borrowers,
        the
        Borrowers shall immediately pay directly to the Lender additional amounts
        sufficient to compensate the Lender or such controlling Person for such
        reduction in rate of return. A statement of the Lender as to any such additional
        amount or amounts (including calculations thereof in reasonable detail) shall,
        in the absence of manifest error, be conclusive and binding on the Borrowers.
        In
        determining such amount, the Lender may use any method of averaging and
        attribution that it (in its sole and absolute discretion) shall deem
        applicable.

        

      (f)  Taxes.
        All
        payments by the Borrowers of principal of, and interest on, the Advances
        and all
        other amounts payable hereunder shall be made free and clear of and without
        deduction for any present or future income, excise, stamp or franchise taxes
        and
        other taxes, fees, duties, withholdings or other charges of any nature
        whatsoever imposed by any taxing authority, but excluding franchise taxes
        and
        taxes imposed on or measured by the Lender’s net income or receipts (such
        non-excluded items being called “Taxes”). In the event that any withholding or
        deduction from any payment to be made by the Borrower hereunder is required
        in
        respect of any Taxes pursuant to any applicable law, rule or regulation,
        then
        the Borrowers will:

        

      (i)  pay
        directly to the relevant authority the full amount required to be so withheld
        or
        deducted, including, without limitation, as a result of any payment under
        clause
        (iii) below;  

       

      
        
          
          

        

        
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      (ii)  promptly
        forward to the Lender an official receipt or other documentation satisfactory
        to
        the Lender evidencing such payment to such authority; and

        

      (iii)  pay
        to
        the Lender such additional amount or amounts as is necessary to ensure that
        the
        net amount actually received by the Lender will equal the full amount the
        Lender
        would have received had no such withholding or deduction been
        required.

        

      Moreover,
        if any Taxes are directly asserted against the Lender with respect to any
        payment received by the Lender hereunder, the Lender may pay such Taxes and
        the
        Borrowers will promptly pay such additional amount (including any penalties,
        interest or expenses) as is necessary in order that the net amount received
        by
        the Lender after the payment of such Taxes (including any Taxes on such
        additional amount) shall equal the amount the Lender would have received
        had not
        such Taxes been asserted. If the Borrowers fail to pay any Taxes when due
        to the
        appropriate taxing authority or fails to remit to the Lender the required
        receipts or other required documentary evidence, the Borrowers shall indemnify
        the Lender for any incremental Taxes, interest or penalties that may become
        payable by the Lender as a result of any such failure.

      

      Section
        2.4  Fees.

        

      (a)  Intentionally
        Deleted.

        

      (b)  Collateral
        Exam Expenses.
        The
        Borrowers shall pay the Lender all actual out-of-pocket costs and expenses
        incurred by the Borrowers or any collateral examiner engaged by the Borrowers
        in
        conducting any collateral examination or inspection of the Collateral or
        the
        Borrowers’ operations or businesses.

        

      (c)  Intentionally
        Deleted.

       

      (d)  Prepayment
        Fee.
        If the
        Term Advance is prepaid for any reason, in whole or in part, the Borrowers
        shall
        pay to the Lender the Make Whole Amount with respect to the amount prepaid
        as a
        prepayment fee. The Borrowers acknowledge that a prepayment may result in
        the
        Lender incurring additional costs (including, without limitation, opportunity
        costs), expenses and/or liabilities, and that it is difficult to ascertain
        the
        full extent of such costs, expenses and/or liabilities. The Borrowers therefore
        agree to pay the above-described prepayment fee and agrees that said prepayment
        fee represents a reasonable estimate of the prepayment costs, expenses and/or
        liabilities of the Lender.

      

      Section
        2.5  Time
        for Interest Payments; Payment on Non-Business Days; Computation of Interest
        and
        Fees; Place of Payment.

       

      (a)  Time
        For Interest Payments.
        Accrued
        and unpaid interest on the Advances shall be due and payable on the first
        day of
        each month and on the Termination Date. Additionally, all accrued but unpaid
        interest on the Advances shall be due and payable contemporaneously with
        any
        prepayment thereof (whether voluntary or mandatory). Interest will accrue
        from
        the most recent date to which interest has been paid or, if no interest has
        been
        paid, from the date of advance to the date such payment is due.

       

       

      
        
          
          

        

        
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      (b)  Payment
        on Non-Business Days.
        Whenever any payment to be made hereunder shall be stated to be due on a
        day
        which is not a Business Day, such payment may be made on the next succeeding
        Business Day, and such extension of time shall in such case be included in
        the
        computation of interest on the Advances or the fees hereunder, as the case
        may
        be.

        

      (c)  Place
        of Payments.
        All
        payments by Credit Parties of the Obligations shall be without deduction,
        defense, setoff or counterclaim and shall be made in same day funds and
        delivered to the Lender in Chicago, Illinois by wire transfer to such account
        as
        the Lender shall from time to time designate to the Credit Parties in
        writing.

      

      Section
        2.6  Voluntary
        Prepayment.
        Except
        as otherwise provided herein, the Borrowers may prepay the Advances in whole
        at
        any time or from time to time in part.

      

      Section
        2.7   Application
        of Payments.
        Any
        payment received by the Lender may be applied to the Obligations in such
        order
        and in such amounts as the Lender in its sole discretion may determine from
        time
        to time.

      

      Section
        2.8  Advances
        to Pay Obligations.
        While
        the Lender has no obligation to do so, the Lender may, in its discretion
        at any
        time or from time to time during a Default Period, without any Borrower’s
        request, make an Advance in an amount equal to the portion of the Obligations
        from time to time due and payable. Any such Advance shall constitute an
        Obligation hereunder, shall be secured by all of the Collateral, shall bear
        interest at the Default Rate and shall be payable by the Borrowers (together
        with all accrued interest thereon) on the earlier of (a) the Lender’s demand
        therefor and (b) the Termination Date.

      

      Section
        2.9  Use
        of
        Proceeds.
        The
        Borrowers shall use the proceeds of the Term Advance only for ordinary working
        capital purposes.

      

      Section
        2.10  Liability
        Records.
        The
        Lender may maintain from time to time, at its discretion, records as to the
        Obligations. All entries made on any such record shall be presumed correct
        until
        the Borrowers establish the contrary. Upon the Lender’s demand, the Borrowers
        will admit and certify in writing the exact principal balance of the Obligations
        that the Borrowers then assert to be outstanding.

      

      Section
        2.11  Joint
        and Several Liability; Appointment of Borrower Representative.

       

      (a)  Each
        Borrower acknowledges that it is jointly and severally liable for all of
        the
        Obligations under the Loan Documents. Each Borrower expressly understands,
        agrees and acknowledges that (i) the Borrowers are all affiliated entities
        and
        part of a mutual and collective business enterprise, (ii) each Borrower desires
        to have the availability of one common credit facility instead of separate
        credit facilities, (iii) each Borrower has requested that the Lender extend
        such
        a common credit facility on the terms herein provided, (iv) the Lender will
        be
        lending against, and relying on a security interest in, all of the Borrowers’
assets even though the proceeds of any particular Advance made hereunder
        may not
        be advanced directly to a particular Borrower, (v) each Borrower will
        nonetheless benefit by the making of all such Advances by the Lender and
        the
        availability of a single credit facility of a size greater than each could
        independently warrant, and (vi) all of the representations, warranties,
        covenants, obligations, conditions, agreements and other terms contained
        in the
        Loan Documents shall be applicable to and shall be binding upon each
        Borrower.

       

      
        
          
          

        

        
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      (b)  Each
        of
        the Borrowers hereby irrevocably designates and authorizes Workstream to
        act as
        its representative and agent generally for purposes of this Agreement and
        the
        other Loan Documents (Workstream, in such capacity, including its successors
        and
        assigns, is referred to herein as the “Borrower Representative”). Each Borrower
        agrees (i) that Borrower Representative may exercise any right, or perform
        any
        obligation, specified by this Agreement on such Borrower’s behalf, (ii) that all
        documents and instruments executed by the Borrower Representative on such
        Borrower’s behalf will jointly and severally bind such Borrower, and (iii) to be
        bound by any communication or request delivered by the Borrower Representative
        to the Lender or its agents. Each Borrower grants to Borrower Representative
        a
        power of attorney to act on its behalf as provided herein, including, without
        limitation, with respect to executing documents and instruments, requesting
        Advances hereunder, and providing notices, reports, certificates and statements
        to, and receiving the same from, the Lender hereunder and under the other
        Loan
        Documents. This appointment as attorney-in-fact is durable and irrevocable
        as
        long as any Obligations are outstanding and this Agreement has not been
        terminated, and will not be affected by any disability or incapacity of any
        Borrower’s employees, agents or representatives, or the lapse of time. The
        Lender shall be entitled to rely on any such communication or request delivered
        by the Borrower Representative.

      

      ARTICLE III  

      

      SECURITY
        INTEREST; OCCUPANCY; SETOFF

        

      Section
        3.1  Grant
        of Security Interest. 

        

      (a)  Each
        Borrower hereby pledges, assigns and grants to the Lender a lien on and security
        interest in the Collateral (collectively referred to as the “Security Interest”)
        as security for the payment and performance of the Obligations. Upon request
        by
        the Lender, each Borrower will grant the Lender a security interest in all
        commercial tort claims it may have against any Person.

        

      (b)  Without
        limiting the generality of the foregoing, as additional security for the
        payment
        and performance of the Obligations, each Borrower hereby grants to the
        Lender a continuing security interest in and Lien upon, and hereby collaterally
        assigns to the Lender, all of such Borrower's right, title and interest in
        and
        to each Deposit Account and in and to any deposits or other sums at any time
        credited to each such Deposit Account. In connection with the foregoing,
        each Borrower hereby authorizes and directs each bank or other depository
        which
        maintains any Deposit Account to pay or deliver to the Lender upon the Lender’s
        written demand therefor made at any time during a Default Period and without
        further notice to such Borrower (such notice being hereby expressly waived),
        all
        balances in each Deposit Account with such depository for application to
        the
        Obligations then outstanding, and the rights given to the Lender in this
        Section
        shall be cumulative with and in addition to the Lender’s other rights and
        remedies in regard to the amounts on deposit in any Deposit Account as proceeds
        of Collateral. Each Borrower hereby irrevocably appoints the Lender as such
        Borrower’s attorney-in-fact to collect any and all such balances to the extent
        any such payment is not made to the Lender by such bank or other depository
        after demand thereon is made by the Lender pursuant hereto.

       

      
        
          
          

        

        
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      Section
        3.2  Notification
        of Account Debtors and Other Obligors.
        The
        Lender may at any time during a Default Period notify any account debtor
        or
        other Person obligated to pay the amount due that such right to payment has
        been
        assigned or transferred to the Lender for security and, subject to applicable
        law, shall be paid directly to the Lender. Each Borrower will join in giving
        such notice if the Lender so requests. At any time after any Borrower or
        the
        Lender gives such notice to an account debtor or other obligor, the Lender
        may,
        but need not, subject to applicable law, in the Lender’s name or in such
        Borrower’s name, (a) demand, sue for, collect or receive any money or
        property at any time payable or receivable on account of, or securing, any
        such
        right to payment, or grant any extension to, make any compromise or settlement
        with or otherwise agree to waive, modify, amend or change the obligations
        (including collateral obligations) of any such account debtor or other
        obligor.

      

      Section
        3.3  Assignment
        of Insurance.
        As
        additional security for the payment and performance of the Obligations, each
        Borrower hereby assigns to the Lender any and all monies (including proceeds
        of
        insurance and refunds of unearned premiums) due or to become due under, and
        all
        other rights of such Borrower with respect to, any and all policies of insurance
        now or at any time hereafter covering the Collateral or any evidence thereof
        or
        any business records or valuable papers pertaining thereto, and such Borrower
        hereby directs the issuer of any such policy to pay all such monies directly
        to
        the Lender. At any time, whether or not a Default Period then exists, the
        Lender
        may (but need not), in the Lender’s name or in such Borrower’s name, execute and
        deliver proofs of claims, receive all such monies, endorse checks and other
        instruments representing payment of such monies, and adjust, litigate,
        compromise or release any claim against the issuer of any such
        policy.

      

      Section
        3.4  Occupancy.

      

      (a) Each
        Borrower hereby irrevocably grants to the Lender the right to take exclusive
        possession of the Premises at any time during a Default Period without notice
        or
        consent.

      

      (b) The
        Lender may use the Premises only to hold, process, manufacture, sell, use,
        store, liquidate, realize upon or otherwise dispose of goods that are Collateral
        and for other purposes that the Lender may in good faith deem to be related
        or
        incidental purposes.

      

      (c) The
        Lender’s right to hold the Premises shall cease and terminate upon the earlier
        of (i) payment in full and discharge of all Obligations and termination of
        this Agreement, and (ii) final sale or disposition of all goods
        constituting Collateral and delivery of all such goods to
        purchasers.

      

      (d) The
        Lender shall not be obligated to pay or account for any rent or other
        compensation for the possession, occupancy or use of any of the Premises;
        provided, however, that if the Lender does pay or account for any rent or
        other
        compensation for the possession, occupancy or use of any of the Premises,
        the
        Borrowers shall reimburse the Lender promptly for the full amount thereof.
        In
        addition, the Borrowers will pay, or reimburse the Lender for, all taxes,
        fees,
        duties, imposts, charges and expenses at any time incurred by or imposed
        upon
        the Lender by reason of the execution, delivery, existence, recordation,
        performance or enforcement of this Agreement or the provisions of this
Section
        3.4.

       

      
        
          
          

        

        
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        Section
          3.5  License.
          Without
          limiting the generality of any other Security Document, each Borrower hereby
          grants to the Lender a non-exclusive, worldwide and royalty-free license
          to use
          or otherwise exploit all Intellectual Property Rights of such Borrower
          for the
          purpose of: (a) completing the manufacture of any in-process materials
          during
          any Default Period so that such materials become saleable Inventory, all
          in
          accordance with the same quality standards previously adopted by such Borrower
          for its own manufacturing and subject to such Borrower’s reasonable exercise of
          quality control; and (b) selling, leasing or otherwise disposing of any or
          all Collateral during any Default Period.

         

        Section
          3.6  Financing
          Statements.
          Each
          Borrower authorizes the Lender to file, from time to time, such financing
          statements under the UCC and the PPSA against collateral described as “all
          personal property” or “all assets” or describing specific items of collateral
          including commercial tort claims as the Lender deems necessary or useful
          to
          perfect the Security Interest. All financing statements filed before the
          date
          hereof to perfect the Security Interest were authorized by the applicable
          Borrower and are hereby re-authorized. A carbon, photographic or other
          reproduction of this Agreement or of any financing statements signed by
          any
          Borrower is sufficient as a financing statement and may be filed as a financing
          statement in any state to perfect the security interests granted hereby.
          For
          this purpose, each Borrower represents and warrants that the information
          set
          forth on Schedule
          3.6
          hereto
          (as to such Borrower’s exact legal name, address of chief executive office,
          state of organization, organizational identification number, federal employer
          identification number and type of organization) with respect to such Borrower
          is
          true and correct.

         

        Section
          3.7  Setoff.
          The
          Lender may at any time or from time to time, at its sole discretion and
          without
          demand and without notice to anyone, setoff any liability owed to any Credit
          Party by the Lender, whether or not due, against any Obligation, whether
          or not
          due.

         

        Section
          3.8  Collateral.
          This
          Agreement does not contemplate a sale of accounts, contract rights or chattel
          paper, and, as provided by law, the Credit Parties are entitled to any
          surplus
          and shall remain liable for any deficiency. The Lender’s duty of care with
          respect to Collateral in its possession (as imposed by law) shall be deemed
          fulfilled if it exercises reasonable care in physically keeping such Collateral,
          or in the case of Collateral in the custody or possession of a bailee or
          other
          third Person, exercises reasonable care in the selection of the bailee
          or other
          third Person, and the Lender need not otherwise preserve, protect, insure
          or
          care for any Collateral. The Lender shall not be obligated to preserve
          any
          rights any Credit Party may have against any other Person, to realize on
          the
          Collateral at all or in any particular manner or order or to apply any
          cash
          proceeds of the Collateral in any particular order of application. The
          Lender
          has no obligation to clean-up or otherwise prepare the Collateral for sale.
          Each
          Credit Party waives any right it may have to require the Lender to pursue
          any
          third Person for any of the Obligations.

         

        
          
             

          

          
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        Article
          IV

         

        CONDITIONS
          OF LENDING

         

        Section
          4.1  Conditions
          Precedent to the Term Advance.
          The
          Lender’s obligation to make the Term Advance shall be subject to the condition
          precedent that the Lender shall have received, not later than Friday, October
          13, 2006, all of the following, each properly executed by the appropriate
          party
          and in form and substance satisfactory to the Lender:

         

        (a) This
          Agreement.

         

        (b) The
          Term
          Note.

         

        (c) A
          true
          and correct copy of any and all leases pursuant to which any Credit Party
          is
          leasing the Premises, together with a landlord’s disclaimer and consent with
          respect to each such lease.

         

        (d) A
          true
          and correct copy of any and all agreements pursuant to which any Credit
          Party’s
          property is in the possession of any Person other than such Credit Party
          (including any consignee, warehouseman or other bailee), together with
          (i) an acknowledgment of the Security Interest and waiver of any Liens in
          favor of such Person, (ii) UCC and PPSA financing statements sufficient to
          protect such Credit Party’s and the Lender’s interests in such goods, and
          (iii) UCC and PPSA searches showing that no other secured party has filed a
          financing or registration statement against such Person and covering property
          similar to such Credit Party’s other than such Credit Party, or if there exists
          any such secured party, evidence that each such secured party has received
          notice from such Credit Party and the Lender sufficient to protect such
          Credit
          Party’s and the Lender’s interests in such Credit Party’s goods from any claim
          by such secured party.

         

        (e) Deposit
          Account Agreements executed by the applicable Credit Parties and each bank
          and
          other financial institution at which such Credit Parties maintain Deposit
          Accounts, Securities Account Agreements executed by the applicable Credit
          Parties and each securities intermediary at which such Credit Parties maintains
          Securities Accounts, together with such evidence as Lender shall require
          to show
          that all Indebtedness of Workstream owing to Bank of Montreal and all other
          Debt
          of the Credit Parties that is not permitted under this Agreement on the
          Agreement Date has been or will be paid off simultaneously with the funding
          under this Agreement.

         

        (f) 
          The
          Patent, Trademark and Copyright Security Agreement.

         

        (g) Current
          searches of appropriate filing offices showing that (i) no Liens have been
          filed
          and remain in effect against any Credit Party except Permitted Liens or
          Liens
          held by Persons who have agreed in writing that upon receipt of proceeds
          of the
          initial Advances, they will satisfy, release or terminate such Liens in
          a manner
          satisfactory to the Lender, (ii) the Lender has duly filed all UCC and
          PPSA
          financing statements necessary to perfect the Security Interest (which
          shall be
          a first priority Lien subject to Permitted Liens), to the extent the Security
          Interest is capable of being perfected by filing, and (iii)
          no
          judgments, litigation, bankruptcies or tax liens have been entered or filed
          against or are pending with respect to any Credit Party or any of its assets
          except those which have been approved by the Lender in writing in its sole
          discretion.

         

        
          
             

          

          
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        (h) A
          certificate of each Credit Party’s Secretary or Assistant Secretary certifying
          that attached to such certificate are (i) the resolutions of such Credit
          Party’s Directors and, if required, Owners, authorizing the execution, delivery
          and performance of the Loan Documents, (ii) true, correct and complete
          copies of such Credit Party’s Constituent Documents, and (iii) examples of
          the signatures of such Credit Party’s Officers or agents authorized to execute
          and deliver the Loan Documents and other instruments, agreements and
          certificates, including Advance requests, on such Credit Party’s
          behalf.

         

        (i) A
          current
          certificate issued by the Secretary of State of the jurisdiction of each
          Credit
          Party’s incorporation (or, in the case of Workstream, Industry Canada),
          certifying that such Credit Party is in compliance with all applicable
          organizational requirements of such jurisdiction (or, in the case of Workstream,
          of the Canada Business Corporations Act).

         

        (j) Evidence
          that each Credit Party is duly licensed or qualified to transact business
          in all
          jurisdictions where the character of the property owned or leased or the
          nature
          of the business transacted by it makes such licensing or qualification
          necessary.

         

        (k) A
          certificate of an Officer of the Borrower Representative confirming the
          representations and warranties set forth in Article V
          are
          true
          and correct as
          of the
          date of funding of the Term Advance (disregarding
          the disclosure letter contemplated below) and the absence of
          any
          Default or Event of Default, both before and after giving effect to the
          making
          of the Term Advance and the application of the proceeds thereof and without
          giving effect to any cure period (and the Lender shall have received evidence
          satisfactory to it that such confirmations are true) . 

         

        (l) Opinions
          of U.S. (which shall include local counsel in Delaware and Florida) and
          Canadian
          counsel to the Credit Parties, addressed to the Lender, in form and substance
          satisfactory to Lender.

         

        (m) Certificates
          of the insurance required hereunder, with all hazard insurance containing
          a
          lender’s loss payable endorsement in the Lender’s favor and with all liability
          insurance naming the Lender as an additional insured.

         

        (n) The
          separate guaranty of each Guarantor and such security documents from each
          Guarantor as Lender shall require which shall be sufficient to grant to
          Lender a
          first priority security interest in all of the assets of each such
          Guarantor.

         

        (o) Payment
          of the fees and commissions due under Section
          2.4
          through
          the date of the initial Advance and expenses incurred by the Lender through
          such
          date and required to be paid by the Borrowers under Section
          8.5,
          including all legal expenses incurred in connection with this
          Agreement.

         

        (p) Such
          forms and verification as Lender may need to comply with the U.S.A. Patriot
          Act.

         

        
          
             

          

          
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              24 -

            
              

            

          

          
             

          

        

         

        (q) An
          executed Transaction Agreement and Warrant Documents, including, without
          limitation, the Warrants in favor of the Lender for the purchase of 2,750,000
          shares of Workstream’s common stock, and all other documents contemplated by the
          Transaction Agreement.

         

        (r) Duly
          executed originals of the Parent Pledge Agreement and the Workstream USA
          Pledge
          Agreement accompanied by (a) original share certificates representing all
          of the
          outstanding capital stock being pledged pursuant to such Pledge Agreements
          and
          stock powers for such share certificates executed in blank and (b) the
          original
          instruments evidencing Indebtedness being pledged pursuant to such Pledge
          Agreements, duly endorsed in blank.

         

        (s) Such
          other documents and certificates as the Lender may reasonably require,
          including, without limitation, the documents and certificates listed on
          the
          Schedule of Closing Documents attached hereto as Exhibit
          D.

         

        In
          addition, Lender’s obligation to make the Term Advance shall be subject to the
          condition precedent that the conditions to Lender’s obligations under the
          Transaction Agreement (as set forth in Section 7 of the Transaction Agreement)
          all shall have been satisfied or waived by Lender in its sole
          discretion.

         

        Notwithstanding
          anything to the contrary contained in this Agreement, in the event that
          the
          funding of the Term Advance does not occur by Friday, October 13, 2006,
          because
          any of the conditions to such funding set forth above have not been satisfied
          or
          waived by Lender in its sole discretion, then Lender may, without liability
          or
          obligation hereunder, terminate this Agreement and all of its obligations
          hereunder.  Any such termination by Lender shall not relieve any Credit
          Party of any liability of such Credit Party for any breach of this Agreement
          occurring prior to such termination. In
          addition to the foregoing and without
          limiting any other termination right of the Lender, the Lender shall have
          the
          right to terminate this Agreement in the event that any disclosure or
          disclosures contained in the disclosure letter contemplated below (whether
          with
          respect to Article V hereof or otherwise as contemplated by Section 8.4),
          individually or in the aggregate, could (in Lender’s good faith judgment)
          reasonably be expected to result in a Material Adverse Effect (as defined
          in
          this Agreement or the Transaction Agreement) or a material adverse effect
          on the
          Loan (as defined in the Transaction Agreement) (including, without limitation,
          any of the Borrowers’ ability to repay the Loan), any of the collateral securing
          the Loan or any of the Securities (as defined in the Transaction Agreement)
          to
          be issued to the Lender. In the event of a termination pursuant to the
          immediately preceding sentence, no party hereto shall have any further
          liability
          or obligation to the other hereunder (it being understood and agreed that
          in the
          event of such a termination any representation or warranty modified by
          such
          disclosure letter shall be deemed to have been so modified as of the time
          such
          representation or warranty was originally made on the date hereof).

         

        
          
             

          

          
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        Article
          V

         

        REPRESENTATIONS
          AND WARRANTIES

         

        Each
          Credit Party represents and warrants to the Lender as follows, except as
          set
          forth in a disclosure letter to be delivered by the Credit Parties to the
          Lender
          as soon as practicable after the date hereof (but in no event three (3)
          Business
          Days prior to the Closing Date (as defined in the Transaction Agreement))
          (which
          such letter shall make explicit reference to the particular representation
          or
          warranty as to which exception is taken):

         

        Section
          5.1  Existence
          and Power; Name; Chief Executive Office; Inventory and Equipment Locations;
          Federal Employer Identification Number and Organizational Identification
          Number.
          Each
          Credit Party is a corporation, duly organized, validly existing and in
          good
          standing under the laws of its jurisdiction of incorporation and is duly
          licensed or qualified to transact business in all jurisdictions where the
          character of the property owned or leased or the nature of the business
          transacted by it makes such licensing or qualification necessary. Each
          Credit
          Party has all requisite power and authority to conduct its business, to
          own its
          properties and to execute and deliver, and to perform all of its obligations
          under, the Loan Documents. During its existence, each Credit Party has
          done
          business solely under the names set forth in Schedule
          5.1.
          Each
          Credit Party’s chief executive office and principal place of business is located
          at the address set forth in Section
          3.6,
          all of
          such Credit Party’s records relating to its business or the Collateral are kept
          at that location, and such Credit Party’s chief executive office has not been
          located at any other address in the past five years (except as set forth
          in
Schedule
          5.1).
          All
          Inventory and Equipment is located at the Credit Parties’ respective chief
          executive offices or at one of the other locations listed in Schedule
          5.1.
          Each
          Credit Party’s federal employer identification number and organizational
          identification number are correctly set forth in Section
          3.6.

         

        Section
          5.2  Capitalization.
          Schedule
          5.2
          constitutes a correct and complete list of all ownership interests of each
          Credit Party and rights to acquire ownership interests, including the record
          holder, number of interests and percentage interests on a fully diluted
          basis
          and an organizational chart showing the ownership structure of all Subsidiaries
          of the Credit Parties.

         

        Section
          5.3  Authorization
          of Borrowing; No Conflict as to Law or Agreements.
          The
          execution, delivery and performance by each Credit Party of the Loan Documents
          to which it is a party and the borrowing of the Term Advance hereunder
          by each
          Borrower have been duly authorized by all necessary corporate action and
          do not
          and will not (a) require any consent or approval of any Credit Party’s
          Owners; (b) require any authorization, consent or approval by, or
          registration, declaration or filing with, or notice to, any governmental
          department, commission, board, bureau, agency or instrumentality, domestic
          or
          foreign, or any third party, except such authorization, consent, approval,
          registration, declaration, filing or notice as has been obtained, accomplished
          or given prior to the date hereof and except as may be required by or in
          the
          performance of the Warrant Documents; (c) assuming the accuracy of all of
          the Lender’s representations and warranties set forth in the Loan
          Documents, violate any provision of any law, rule or regulation (including
          Regulation X of the Board of Governors of the Federal Reserve System) or of
          any order, writ, injunction or decree presently in effect having applicability
          to any Credit Party or of any Credit Party’s Constituent Documents;
          (d) result in a breach of or constitute a default under any indenture or
          loan or credit agreement or any other material agreement, lease or instrument
          to
          which any Credit Party is a party or by which it or its properties may
          be bound
          or affected; or (e) result in, or require, the creation or imposition of
          any Lien (other than the Security Interest) upon or with respect to any
          of the
          properties now owned or hereafter acquired by any Credit Party.

         

        
          
             

          

          
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              26 -

            
              

            

          

          
             

          

        

         

        Section
          5.4  Legal
          Agreements.
          This
          Agreement and each other Loan Document to which any Credit Party is a party
          constitutes the legal, valid and binding obligations of such Credit Party,
          enforceable against it in accordance with its terms except as such
          enforceability may be limited by general principles of equity or by applicable
          bankruptcy, insolvency, reorganization, moratorium, liquidation and other
          similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies. 

         

        Section
          5.5  Subsidiaries.
          Except
          as set forth on Schedule
          5.5
          hereto,
          no Credit Party has any Subsidiaries.

         

        Section
          5.6  Financial
          Condition; No Adverse Change.
          Workstream has furnished to the Lender the consolidated audited financial
          statements of Workstream and its Subsidiaries for the fiscal year ended
          May 31,
          2006 and the consolidated unaudited financial statements of Workstream
          and its
          Subsidiaries for the fiscal-year-to-date period ended July 31, 2006, and
          those
          statements fairly present the financial condition of Workstream and its
          Subsidiaries on the dates thereof and the results of its operations and
          cash
          flows for the periods then ended and were prepared in accordance with GAAP,
          consistently applied. Since the date of the most recent financial statements
          delivered to the Lender, there has been no change in any Credit Party’s
          business, properties, operations (including results of operations), condition
          (financial or otherwise) or prospects which has had or could be expected
          to
          have, individually or collectively, a Material Adverse Effect.

         

        Section
          5.7  Litigation.
          There
          are no actions, suits or proceedings pending or, to any Credit Party’s
          knowledge, threatened against or affecting any Credit Party or any of its
          Affiliates or the properties of any Credit Party or any of its Affiliates
          before
          any court or governmental department, commission, board, bureau, agency
          or
          instrumentality, domestic or foreign, other than those matters specifically
          listed in Schedule
          5.7.

         

        Section
          5.8  Regulation U.
          No
          Credit Party is engaged in the business of extending credit for the purpose
          of
          purchasing or carrying margin stock (within the meaning of Regulation U
          of the
          Board of Governors of the Federal Reserve System), and no part of the proceeds
          of any Advance will be used to purchase or carry any margin stock or to
          extend
          credit to others for the purpose of purchasing or carrying any margin
          stock.

         

        Section
          5.9  Taxes.
          Each
          Credit Party and each of its Affiliates (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 (including
          withholding) 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 Credit Parties know of no basis for any such
          claim.

         

        
          
             

          

          
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        Section
          5.10  Title
          and Liens.
          Each
          Credit Party has good and absolute title to all Collateral free and clear
          of all
          Liens, other than Permitted Liens. No UCC or PPSA financing statement (or
          the
          equivalent thereof in any jurisdiction) naming any Credit Party as debtor
          is on
          file in any office except to perfect only Permitted Liens.

         

        Section
          5.11  Intellectual
          Property Rights.

         

        (a) Schedule
          5.11
          contains
          a complete and accurate list of all (i) patented or registered Intellectual
          Property Rights owned or used by any Credit Party, (ii) pending patent
          applications and applications for other registrations of Intellectual Property
          Rights filed by or on behalf of any Credit Party, (iii) material unregistered
          Intellectual Property Rights owned or used by any Credit Party and (iv)
          material
          software owned by any Credit Party together with other software used in
          the
          business (other than commercially-available, off-the-shelf software purchased
          or
          licensed for a total cost of less than $10,000) (“Software”). Schedule
          5.11
          also
          contains a complete and accurate list of all licenses or similar agreements
          or
          similar agreements or arrangements to which any Credit Party is a party,
          either
          as licensee or licensor, for Intellectual Property Rights (excluding licenses
          for unmodified, commercially-available, off-the-shelf software purchased
          or
          licensed for a total cost of less than $10,000), in each case identifying
          the
          subject Intellectual Property Rights. Each Credit Party has taken all reasonable
          necessary steps to maintain and protect the Intellectual Property Rights
          which
          its owns and uses.

         

        (b) Each
          Credit Party owns and possesses or has the right to use and as of the Closing
          Date shall own and possess all right, title and interest to, or has the
          right to
          use pursuant to a valid and enforceable license, all Intellectual Property
          Rights necessary for the operation of the businesses of such Credit Party
          as
          presently conducted and as presently proposed to be conducted, free and
          clear of
          all encumbrances and liens (other than restrictions on transfer of licensed
          Intellectual Property Rights). Without limiting the generality of the foregoing,
          each Credit Party owns and possesses all right, title and interest in and
          to all
          Intellectual Property Rights (including software, processes and systems)
          created
          or developed by such Credit Party’s employees and independent contractors or
          under the direction or supervision of such Credit Party’s employees or
          independent contractors relating to the business of such Credit Party.
          

         

        (c) Except
          as
          set forth on Schedule
          5.11,
          (i)
          there have been no claims made against any Credit Party asserting the
          invalidity, misuse or unenforceability of any of the Intellectual Property
          Rights owned or used by any Credit Party, and to the best knowledge of
          each
          Credit Party, there is no basis for any such claim, (ii) no Credit Party
          has
          received any notices of, and has no knowledge of any facts which indicate
          a
          reasonable likelihood of, any infringement or misappropriation by, or conflict
          with, any third party with respect to any Intellectual Property Rights
          (including any demand or request that any Credit Party license any rights
          from a
          third party), (iii) the conduct of each Credit Party’s business has not
          infringed, misappropriated or conflicted with and does not infringe,
          misappropriate or conflict with any Intellectual Property Rights of other
          Persons, (iv) each Credit Party has the right to use and license the
          Intellectual Property Rights, free and clear of any claim or conflict with
          the
          rights of others, (v) no royalties, honorariums or fees are payable by
          any
          Credit Party to any Person by reason of the ownership or use of any of
          the
          Intellectual Property Rights, and (vi) the transactions contemplated by
          this
          Agreement will not have a Material Adverse Effect on any Credit Party’s right,
          title or interest in and to the Intellectual Property Rights listed on
          Schedule
          5.11
          and all
          of such Intellectual Property Rights shall be owned or available for use
          by the
          Credit Parties on identical terms and conditions immediately after the
          Closing.

         

        
          
             

          

          
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              28 -

            
              

            

          

          
             

          

        

         

        (d)
          No
          government funding, facilities of a university, college, other educational
          institution or research center or funding from third parties was used in
          the
          development of the Intellectual Property Rights owned by any Credit
          Party.

         

        (e)
          The
          validity of the Intellectual Property Rights owned by any Credit Party
          and title
          thereto and, to the best knowledge of each Credit Party, the validity of
          any
          Intellectual Property Rights licensed to any Credit Party (i) have not
          been
          questioned in any prior proceeding; (ii) are not being questioned in any
          pending
          proceeding; and (iii) are not the subject(s) of any threatened or proposed
          proceeding. The consummation of the transactions contemplated by this Agreement
          will not result in the termination or impairment of any Credit Party’s rights to
          use or otherwise exploit any of the Intellectual Property Rights in the
          manner
          such Intellectual Property Rights was used or otherwise exploited prior
          to the
          consummation of the transactions contemplated by this Agreement, and will
          not
          require the consent of any governmental authority or third party in respect
          of
          such Intellectual Property Rights.

         

        (f)
          Except
          as
          set forth on Schedule
          5.11,
          none of
          the Software used in connection with the business of any Credit Party
          incorporates or is based on or is a derivative work of any third party
          code that
          is subject to the terms of, or licensed to any Credit Party pursuant to,
          any
          form of public source or “open source” license, such that the public source or
“open source” license imposes conditions on the terms and conditions under which
          the Software may be used or distributed.

         

        (g)
          Each
          Credit Party has entered into a legally enforceable agreement with each
          of its
          employees and independent contractors obligating each such Person to assign
          to
          such Credit Party, without any additional compensation, any Intellectual
          Property Rights created, discovered or invented by such Person in the course
          of
          such Person’s employment or engagement with such Credit Party (except to the
          extent prohibited by law), and further requiring such Person to cooperate
          with
          such Credit Party, without any additional compensation, in connection with
          securing and enforcing any Intellectual Property Rights therein; provided,
          however,
          that
          the foregoing shall not apply with respect to employees and independent
          contractors whose job descriptions are of the type such that no such assignments
          are reasonably foreseeable.

         

        Section
          5.12  Plans.
          Except
          as disclosed to the Lender in writing prior to the date hereof, no Credit
          Party
          or ERISA Affiliate (a) maintains or has maintained any Pension Plan,
          (b) contributes or has contributed to any Multiemployer Plan or (c)
          provides or has provided post-retirement medical or insurance benefits
          with
          respect to employees or former employees (other than benefits required
          under
          Section 601 of ERISA, Section 4980B of the IRC or applicable state law).
          No
          Credit Party or ERISA Affiliate has received any notice or has any knowledge
          to
          the effect that it is not in full compliance with any of the requirements
          of
          ERISA, the IRC or applicable state law with respect to any Plan. No Reportable
          Event exists in connection with any Pension Plan. Each Plan which is intended
          to
          qualify under the IRC is so qualified, and no fact or circumstance exists
          which
          may have an adverse effect on the Plan’s tax-qualified status. No Credit Party
          or ERISA Affiliate has (x) any accumulated funding deficiency (as defined
          in Section 302 of ERISA and Section 412 of the IRC) under any Plan, whether
          or
          not waived, (y) any liability under Section 4201 or 4243 of ERISA for any
          withdrawal, partial withdrawal, reorganization or other event under any
          Multiemployer Plan or (z) any liability or knowledge of any facts or
          circumstances which could result in any liability to the Pension Benefit
          Guaranty Corporation, the Internal Revenue Service, the Department of Labor
          or
          any participant in connection with any Plan (other than routine claims
          for
          benefits under the Plan).

         

        
          
             

          

          
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        Section
          5.13  Default.
          Each
          Credit Party is in compliance with all provisions of all agreements,
          instruments, decrees and orders to which it is a party or by which it or
          its
          property is bound or affected, the breach or default of which could have
          a
          Material Adverse Effect.

         

        Section
          5.14  Environmental
          Matters.

         

        (a) Except
          as
          disclosed on Schedule
          5.14,
          there
          are not present in, on or under the Premises any Hazardous Substances in
          such
          form or quantity as to create any material liability or obligation for
          any
          Credit Party or the Lender under the common law of any jurisdiction or
          under any
          Environmental Law, and no Hazardous Substances have ever been stored, buried,
          spilled, leaked, discharged, emitted or released in, on or under the Premises
          in
          such a way as to create any such material liability.

         

        (b) Except
          as
          disclosed on Schedule
          5.14,
          no
          Credit Party has disposed of Hazardous Substances in such a manner as to
          create
          any material liability under any Environmental Law.

         

        (c) Except
          as
          disclosed on Schedule
          5.14,
          there
          have not existed in the past, nor to the best of each Credit Party’s knowledge
          are there any threatened or impending requests, claims, notices, investigations,
          demands, administrative proceedings, hearings or litigation relating in
          any way
          to the Premises or any Credit Party, alleging, material liability under,
          violation of, or noncompliance with any Environmental Law or any license,
          permit
          or other authorization issued pursuant thereto.

         

        (d) Except
          as
          disclosed on Schedule
          5.14,
          each
          Credit Party’s business is and has in the past always been conducted in
          accordance with all Environmental Laws and all licenses, permits and other
          authorizations required pursuant to any Environmental Law and necessary
          for the
          lawful and efficient operation of such businesses are in such Credit Party’s
          possession and are in full force and effect, and no Credit Party has been
          denied
          insurance on grounds related to potential environmental liability. No permit
          required under any Environmental Law is scheduled to expire within 12 months
          and
          there is no threat that any such permit will be withdrawn, terminated,
          limited
          or materially changed.

         

        
          
             

          

          
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        (e) Except
          as
          disclosed on Schedule
          5.14,
          the
          Premises are not and never have been listed on the National Priorities
          List, the
          Comprehensive Environmental Response, Compensation and Liability Information
          System or any similar federal, state or local list, schedule, log, inventory
          or
          database.

         

        (f) Each
          Credit Party has delivered to the Lender all environmental assessments,
          audits,
          reports, permits, licenses and other documents within such Credit Party’s
          possession or control describing or relating in any way to the Premises
          or such
          Credit Party’s business.

         

        Section
          5.15  Intentionally
          Deleted.

         

        Section
          5.16  Financing
          Statements.
          Each
          Credit Party has authorized the filing of UCC and PPSA financing statements
          sufficient when filed to perfect the Security Interest and the other security
          interests created by the Security Documents. When such financing statements
          are
          filed in the offices noted therein, the Lender will have a valid and perfected
          security interest in all Collateral which is capable of being perfected
          by
          filing financing statements.

         

        Section
          5.17  Rights
          to Payment.
          Each
          right to payment and each instrument, document, chattel paper and other
          agreement constituting or evidencing Collateral is (or, in the case of
          all
          future Collateral, will be when arising or issued) the valid, genuine and
          legally enforceable obligation, subject to no defense, setoff or counterclaim,
          of the account debtor or other obligor named therein or in the applicable
          Credit
          Party’s records pertaining thereto as being obligated to pay such
          obligation.

         

        Section
          5.18  Financial
          Solvency.
          Both
          before and after giving effect to all of the transactions contemplated
          in the
          Loan Documents, no Credit Party or its Subsidiaries:

         

        (a) Was
          or
          will be insolvent, as that term is used and defined in Section 101(32)
          of the
          United States Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer
          Act;

         

        (b) Has
          unreasonably small capital or is engaged or about to engage in a business
          or a
          transaction for which any remaining assets of such Credit Party or such
          Subsidiary are unreasonably small;

         

        (c) By
          executing, delivering or performing its obligations under the Loan Documents
          or
          other documents to which it is a party or by taking any action with respect
          thereto, intends to, nor believes that it will, incur debts beyond its
          ability
          to pay them as they mature;

         

        (d) By
          executing, delivering or performing its obligations under the Loan Documents
          or
          other documents to which it is a party or by taking any action with respect
          thereto, intends to hinder, delay or defraud either its present or future
          creditors; and

         

        (e) At
          this
          time contemplates filing a petition in bankruptcy or for an arrangement
          or
          reorganization or similar proceeding under any law of any jurisdiction,
          nor, to
          the best knowledge of any Credit Party , is the subject of any actual,
          pending
          or threatened bankruptcy, insolvency or similar proceedings under any law
          of any
          jurisdiction.

         

        
          
             

          

          
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              31 -

            
              

            

          

          
             

          

        

         

        Section
          5.19  Additional
          Representations and Warranties.
          Without
          limiting any representation or warranty herein contained, each of the
          representations and warranties set forth in the Transaction Agreement is
          true
          and correct in all material respects to the extent applicable to any Credit
          Party, in each case as if fully set forth herein.

         

        Article
          VI

         

        COVENANTS

         

        So
          long
          as the Obligations shall remain unpaid, or this Agreement shall remain
          in
          effect, each Credit Party will comply with the following requirements,
          unless
          the Lender shall otherwise consent in writing:

         

        Section
          6.1  Reporting
          Requirements.
          Each
          Credit Party will deliver, or cause to be delivered, to the Lender each
          of the
          following, each of which shall be in form and detail acceptable to the
          Lender:

         

        (a) Annual
          Financial Statements.
          As soon
          as available, and in any event within 120 days after the end of each fiscal
          year
          of Workstream and its Subsidiaries, their audited financial statements
          with the
          unqualified opinion of independent certified public accountants selected
          by it
          and acceptable to the Lender, which annual financial statements shall include
          its balance sheet as at the end of such fiscal year and the related statements
          of income, retained earnings and cash flows for the fiscal year then ended,
          prepared, if the Lender so requests, on a consolidating and consolidated
          basis
          to include any Subsidiary, all in reasonable detail and prepared in accordance
          with GAAP, together with (i) copies of all management letters prepared by
          such accountants; and (ii) a certificate of the Borrower Representative’s chief
          financial officer, as applicable, substantially in the form of Exhibit
          C
          hereto,
          stating (A) that such financial statements have been prepared in accordance
          with GAAP and fairly represent the financial position and the results of
          operations of Workstream and its Subsidiaries, (B) whether or not such
          Officer has knowledge of the occurrence of any Default or Event of Default
          not
          theretofore reported and remedied and, if so, stating in reasonable detail
          the
          facts with respect thereto, and (C) all relevant facts in reasonable detail
          to evidence, and the computations as to, whether or not the Credit Parties
          are
          in compliance with the Financial Covenants.

         

        (b) Monthly
          Financial Statements.
          As soon
          as available and in any event within 30 days after the end of each month,
          an
          unaudited/internal balance sheet and statements of income and retained
          earnings
          of Workstream and its Subsidiaries as at the end of and for such month
          and for
          the year to date period then ended, prepared, if the Lender so requests,
          on a
          consolidating and consolidated basis to include any Subsidiary, in reasonable
          detail and stating in comparative form the figures for the corresponding
          date
          and periods in the previous year, all prepared in accordance with GAAP,
          subject
          to normal recurring year-end audit adjustments and the absence of footnote
          disclosures required by GAAP and which fairly represent the financial position
          and the results of operations of Workstream and its Subsidiaries; and
          accompanied by a certificate of the Borrower Representative’s chief financial
          officer, substantially in the form of Exhibit
          B
          hereto
          stating (i) that such financial statements have been prepared in accordance
          with GAAP, subject to normal recurring year-end audit adjustments and the
          absence of footnote disclosures required by GAAP, and fairly represent
          the
          financial position and the results of operations of Workstream and its
          Subsidiaries, (ii) whether or not such Officer has knowledge of the
          occurrence of any Default or Event of Default not theretofore reported
          and
          remedied and, if so, stating in reasonable detail the facts with respect
          thereto, and (iii) all relevant facts in reasonable detail to evidence, and
          the computations as to, whether or not the Credit Parties are in compliance
          with
          the Financial Covenants.

         

        
          
             

          

          
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        (c) Collateral
          Reports.
          No
          later than the second Business Day of each week, a current accounts receivable
          detail report, and no later than the second Business Day of each month
          a detail
          accounts receivable aging report, in each case, as of the end of the immediately
          preceding week or month (as the case may be) and such other reports reasonably
          requested by Lender in accordance with the current reporting procedures
          of the
          Credit Parties, in each case, certified as true and correct by an Officer
          of the
          Borrower Representative. The Borrowers shall also provide the information
          required by the immediately preceding sentence to the Lender, together
          with
          agings of the Borrowers’ Accounts, on a monthly basis within 10 days after the
          end of each month, calculated as of the last day of the month most recently
          ended. In addition, the Borrowers shall provide to the Lender promptly,
          and in
          any event within five Business Days following any request by the Lender,
          such
          other information regarding the Collateral as the Lender may request, in
          each
          case in such form and detail as the Lender may reasonably request.

         

        (d) Projections.
          No
          later than 30 days prior to the last day of each fiscal year, the projected
          balance sheets, income statements, and statements of cash flow of Workstream
          and
          its Subsidiaries for each month of the succeeding fiscal year, each in
          reasonable detail. Such items will be certified by the Borrower Representative’s
          chief financial officer as being the most accurate projections available
          and
          identical to the projections used by the Credit Parties for internal planning
          purposes and be delivered with a statement of underlying assumptions and
          such
          supporting schedules and information as the Lender may in its discretion
          require.

         

        (e) Litigation.
          Immediately after becoming aware of the commencement thereof, notice in
          writing
          of all litigation and of all proceedings before any governmental or regulatory
          agency affecting any Credit Party (i) of the type described in Section
          5.14(c)
          or
          (ii) which seek a monetary recovery against any Credit Party in excess of
          $50,000.

         

        (f) Defaults.
          When
          any Officer of a Credit Party becomes aware of the probable occurrence
          of any
          Default or Event of Default, no later than three days after such Officer
          becomes
          aware of such Default or Event of Default, notice of such occurrence, together
          with a detailed statement by a responsible Officer of such Credit Party
          of the
          steps being taken by any Credit Party to cure the effect thereof.

         

        (g) Plans.
          As soon
          as possible, and in any event within 30 days after any Credit Party knows
          or has reason to know that any Reportable Event with respect to any Pension
          Plan
          has occurred, a statement of the Borrower Representative’s chief financial
          officer setting forth details as to such Reportable Event and the action
          which
          the Credit Parties propose to take with respect thereto, together with
          a copy of
          the notice of such Reportable Event to the Pension Benefit Guaranty Corporation.
          As soon as possible, and in any event within 10 days after any Credit Party
          fails to make any quarterly contribution required with respect to any Pension
          Plan under Section 412(m) of the IRC, the Borrower Representative will
          deliver
          to the Lender a statement of the Borrower Representative’s chief financial
          officer setting forth details as to such failure and the action which the
          Credit
          Parties propose to take with respect thereto, together with a copy of any
          notice
          of such failure required to be provided to the Pension Benefit Guaranty
          Corporation. As soon as possible, and in any event within ten days after
          any
          Credit Party knows or has reason to know that it has or is reasonably expected
          to have any liability under Sections 4201 or 4243 of ERISA for any withdrawal,
          partial withdrawal, reorganization or other event under any Multiemployer
          Plan,
          the Borrower Representative will deliver to the Lender a statement of the
          Borrower Representative’s chief financial officer setting forth details as to
          such liability and the action which the Credit Parties propose to take
          with
          respect thereto.

         

        
          
             

          

          
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        (h) Officers
          and Directors.
          Promptly upon knowledge thereof, notice of any change in the persons
          constituting any Credit Party’s Executive Officers and Directors.

         

        (i) Collateral.
          Promptly upon knowledge thereof, notice of any material loss of or material
          damage to any Collateral or of any substantial adverse change in any Collateral
          or the prospect of payment thereof.

         

        (j) Commercial
          Tort Claims.
          Promptly upon knowledge thereof, notice of any commercial tort claims it
          may
          bring against any Person, including the name and address of each defendant,
          a
          summary of the facts, an estimate of the applicable Credit Party’s damages,
          copies of any complaint or demand letter submitted by such Credit Party,
          and
          such other information as the Lender may request.

         

        (k) Intellectual
          Property.

         

        (i) Thirty
          days’ prior written notice of its intent to acquire material Intellectual
          Property Rights, and, except for transfers permitted under Section
          6.18,
          thirty
          days’ prior written notice of its intent to dispose of material Intellectual
          Property Rights. Upon request, each Credit Party shall provide the Lender
          with
          copies of all proposed documents and agreements concerning such
          rights.

         

        (ii) Promptly
          upon knowledge thereof, notice of (A) any Infringement of its Intellectual
          Property Rights by others, (B) claims that any Credit Party is Infringing
          another Person’s Intellectual Property Rights and (C) any threatened
          cancellation, termination or material limitation of its Intellectual Property
          Rights.

         

        (iii) Promptly
          upon receipt, copies of all registrations and filings with respect to its
          Intellectual Property Rights.

         

        (l) Reports
          to Owners.
          Promptly upon their distribution, copies of all financial statements, reports
          and proxy statements which any Credit Party shall have sent to its
          Owners.

         

        (m) SEC
          Filings.
          Promptly (and in any event within two Business Days) after the sending
          or filing
          thereof, copies of all regular and periodic reports which any Credit Party
          shall
          file with the Securities and Exchange Commission or any securities
          exchange.

         

        
          
             

          

          
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        (n) Tax
          Returns of the Credit Parties.
          As soon
          as possible, and in any event no later than five days after they are due to
          be filed, copies of the state and federal income tax returns and all schedules
          thereto of each Credit Party.

         

        (o) Tax
          Returns and Personal Financial Statements of Guarantors.
          As soon
          as possible and in any event no later than April 30th
          of each
          year, the current personal financial statement and state and federal income
          tax
          returns and all schedules thereto of each Guarantor that is an
          individual.

         

        (p) Violations
          of Law.
          Promptly upon knowledge thereof, notice of any Credit Party’s violation of any
          law, rule or regulation, the non-compliance with which could have a Material
          Adverse Effect.

         

        (q) Other
          Reports.
          From
          time to time, with reasonable promptness, any and all schedules with respect
          to
          Accounts, Inventory or Equipment, collection reports, deposit records,
          copies of
          invoices to account debtors, shipment documents and delivery receipts for
          goods
          sold and such other materials, reports, records or information as the Lender
          may
          request. In addition, the Credit Parties shall deliver to the Lender a
          written
          report, in form satisfactory to the Lender, of Qualified Cash at such time
          or
          times as may be requested by the Lender, together with such supporting
          detail as
          the Lender may reasonably require.

         

        Section
          6.2  Financial
          Covenants.
          The
          Credit Parties shall maintain Minimum Liquidity at all times.

         

        Section
          6.3  Permitted
          Liens; Financing Statements.

         

        (a) No
          Credit
          Party will create, incur or suffer to exist any Lien on any of its assets,
          now
          owned or hereafter acquired; excluding,
          however,
          from
          the operation of the foregoing, the following (each a “Permitted Lien”;
          collectively, “Permitted Liens”):

         

        (i) Liens
          securing the promissory note of Workstream and Workstream USA dated December
          30,
          2004, payable to ProAct Technologies Corp. in the original principal amount
          of
          $1,530,000, which the Credit Parties hereby represent and warrant are in
          the
          maximum approximate remaining outstanding amount of $275,000 as of the
          Closing
          Date (but which amount the Credit Parties dispute); other Liens
          which are in existence on the date hereof to the extent (but only to the
          extent)
          listed in Schedule
          6.3
          hereto,
          all of which other Liens, in the aggregate, are immaterial;

         

        (ii) The
          Security Interest and Liens created by the Security Documents; or otherwise
          in
          favor of the Lender;

         

        (iii) Purchase
          money Liens relating to the acquisition of machinery and equipment of the
          Credit
          Parties not exceeding the lesser of cost or fair market value thereof not
          exceeding $150,000 in the aggregate during any fiscal year, and
          so
          long as no Default Period is then in existence and none would exist immediately
          after such acquisition;

         

        
          
             

          

          
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              35 -

            
              

            

          

          
             

          

        

         

        (iv) Liens
          for
          taxes, assessments, or similar charges, incurred in the ordinary course
          of
          business that are not yet due and payable; 

         

        (v) Pledges
          or deposits made in the ordinary course of business to secure payment of
          workmen’s compensation, or to participate in any fund in connection with
          workmen’s compensation, unemployment insurance, old-age pensions or other social
          security programs; 

         

        (vi) Liens
          of
          mechanics, materialmen, warehousemen, carriers, or other like liens, securing
          obligations incurred in the ordinary course of business that are not yet
          due and
          payable;

         

        (vii) Good
          faith pledges or deposits made in the ordinary course of business to secure
          performance of bids, tenders, contracts (other than for the repayment of
          borrowed money) or leases, not in excess of ten percent (10%) of the aggregate
          amount due thereunder, or to secure statutory obligations, or surety, appeal,
          indemnity, performance or other similar bonds required in the ordinary
          course of
          business; 

         

        (viii) Encumbrances
          consisting of zoning restrictions, easements or other restrictions on the
          use of
          real property, none of which materially impairs the use of such property
          by any
          Credit Party in the operation of its business, and none of which is violated
          in
          any material respect by existing or proposed structures or land use;
          and

         

        (ix) The
          following, if the validity or amount thereof is being contested in good
          faith by
          appropriate and lawful proceedings, so long as levy and execution thereon
          have
          been stayed and continue to be stayed and they do not, in the aggregate,
          materially detract from the value of the property of any Credit Party,
          or
          materially impair the use thereof in the operation of its business:

         

        (A) Claims
          or
          liens for taxes, assessments or charges due and payable and subject to
          interest
          or penalty; 

         

        (B) Claims,
          liens and encumbrances upon, and defects or title to, real or personal
          property,
          including any attachment of personal or real property or other legal process
          prior to adjudication of a dispute on the merits; 

         

        (C) Claims
          or
          liens of mechanics, materialmen, warehousemen, carriers, or other like
          liens;
          and

         

        (D) Adverse
          judgments on appeal.

         

        (b) No
          Credit
          Party will amend any financing or registration statements in favor of the
          Lender
          except as permitted by law. Any authorization by the Lender to any Person
          to
          amend financing statements in favor of the Lender shall be in
          writing.

         

        Section
          6.4  Indebtedness.
          No
          Credit Party will incur, create, assume or permit to exist any Indebtedness
          or
          liability on account of deposits or advances or any Indebtedness for borrowed
          money or letters of credit, or any other Indebtedness or liability evidenced
          by
          notes, bonds, debentures or similar obligations, except:

         

        
          
             

          

          
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              36 -

            
              

            

          

          
             

          

        

         

        (a) Debt
          arising hereunder;

         

        (b) Debt
          under the promissory note referred to in clause (i) of Section
          6.3(a)
          (which
          note shall not be amended); Debt under a promissory note in the original
          principal amount of $500,000, made by one or more Credit Parties to the
          order of
          Exxceed, Inc. (which note shall not be amended), of which approximately
          $249,000
          remains outstanding as of the Closing Date; and other Debt in existence
          on the
          date hereof, to the extent (and only to the extent and in the amount),
          listed in
Schedule
          6.4
          hereto
          and not paid off at Closing (all of which other Debt is immaterial in the
          aggregate);

         

        (c) Debt
          relating to Permitted Liens; and

         

        (d) Any
          Subordinated Debt which Lender may hereafter, in its sole discretion, agree
          to
          permit.

         

        Section
          6.5 Guaranties

         

        .
          No
          Credit Party will assume, guarantee, endorse or otherwise become directly
          or
          contingently liable in connection with any obligations of any other Person,
          except:

         

        (a) the
          endorsement of negotiable instruments by a Credit Party for deposit or
          collection or similar transactions in the ordinary course of business;
          and

         

        (b) guaranties,
          endorsements and other direct or contingent liabilities in connection with
          the
          obligations of other Persons, in existence on the date hereof to the extent
          (and
          only to the extent and in the amount) listed in Schedule
          6.5
          hereto,
          all of which are immaterial in the aggregate.

         

        Section
          6.6  Investments
          and Subsidiaries.
          No
          Credit Party will make or permit to exist any loans or advances to, or
          make any
          investment or acquire any interest whatsoever in, any Affiliate of such
          Credit
          Party or other Person, including any partnership or joint venture, nor
          purchase
          or hold beneficially any stock or other securities or evidence of Indebtedness
          of any other Person or Affiliate of such Credit Party, except:

         

        (a) Investments
          in direct obligations of the United States of America or any agency or
          instrumentality thereof whose obligations constitute full faith and credit
          obligations of the United States of America having a maturity of one year
          or
          less, commercial paper issued by U.S. corporations rated “A-1” or “A-2” by
          Standard & Poor’s Ratings Services or “P-1” or “P-2” by Moody’s
          Investors Service or certificates of deposit or bankers’ acceptances having a
          maturity of one year or less issued by members of the Federal Reserve System
          having deposits in excess of $100,000,000 (which certificates of deposit
          or
          bankers’ acceptances are fully insured by the Federal Deposit Insurance
          Corporation);

         

        (b) Ordinary
          operating amounts such as travel advances or loans to the Credit Parties’
Officers and employees not exceeding at any one time an aggregate of $50,000,
          and prepaid rent not exceeding one month or security deposits; and

         

        
          
             

          

          
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              37 -

            
              

            

          

          
             

          

        

         

        (c) Current
          (but not any future) investments in the Subsidiaries in existence on the
          date
          hereof and listed in Schedule
          5.5
          hereto.

         

        Without
          limiting the foregoing, no Credit Party shall create any new Subsidiary
          or cease
          to own 100% of the equity interests in its Subsidiaries.

         

        Section
          6.7  Dividends
          and Distributions.
          No
          Credit Party will declare or pay any dividends (other than dividends payable
          solely in stock of such Credit Party) on any class of its stock or make
          any
          payment on account of the purchase, redemption or other retirement of any
          shares
          of such stock or make any distribution in respect thereof, either directly
          or
          indirectly, in each case other than ordinary course intercompany dividends
          and
          distributions necessary for normal operations, consistent with past practice,
          but in no event in any way or manner or amount which would have any material
          adverse impact on Lender’s rights to the Collateral or its security interests or
          position. Notwithstanding the foregoing, no Credit Party shall make any
          cash
          dividend or distribution to Workstream if, as a result thereof, the sum
          of cash
          and investments described in Section
          6.6(a)
          held at
          such time by Workstream shall exceed $1,000,000, all of which constitutes
          Qualified Cash or is held in a Securities Account in accordance with
Section
          6.10(f).

         

        Section
          6.8  Salaries.
          Excluding stock options, no Credit Party will increase the salary, bonus,
          commissions, consultant fees or other compensation of any Director, Officer
          or
          consultant, or any member of their families, by more than 10% in any one
          year,
          either individually or for all such persons in the aggregate.

         

        Section
          6.9  Restricted
          Payments.
          No
          Credit Party shall make any Restricted Payment.

         

        Section
          6.10    Books
          and Records; Collateral Examination, Inspection and Appraisals; Deposit
          Account
          Agreements and Securities Account Agreements.

         

        (a) Each
          Credit Party will keep accurate books of record and account for itself
          pertaining to the Collateral and pertaining to its business and financial
          condition and such other matters as the Lender may from time to time request
          in
          which true and complete entries will be made in accordance with GAAP and,
          upon
          the Lender’s request, will permit any officer, employee, attorney, accountant or
          other agent of Lender to audit, review, make extracts from or copy any
          and all
          company and financial books and records at all times during ordinary business
          hours, to send and discuss with account debtors and other obligors requests
          for
          verification of amounts owed to the Credit Parties, and to discuss the
          Credit
          Parties’ affairs with any of their respective Directors, Officers, employees or
          agents.

         

        (b) Each
          Credit Party hereby irrevocably authorizes all accountants and third parties
          to
          disclose and deliver to Lender or its designated agent, at such Credit
          Party’s
          expense, all financial information, books and records, work papers, management
          reports and other information in their possession regarding such Credit
          Party.

         

        (c) Each
          Credit Party will permit the Lender or its employees, accountants, attorneys
          or
          agents, to examine and inspect any Collateral or any other property of
          such
          Credit Party at any time during ordinary business hours.

         

        
          
             

          

          
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              38 -

            
              

            

          

          
             

          

        

         

        (d) The
          Lender may also, from time to time, obtain at the Credit Parties’ expense an
          appraisal of all or any part of the Collateral by an appraiser acceptable
          to the
          Lender in its sole discretion. 

         

        (e) Each
          Credit Party shall
          cause all cash and all collections and proceeds from accounts receivable
          and the
          sale of Collateral (to the extent permitted hereby) to be deposited into
          a
          Deposit Account in the ordinary course of business and consistent with
          past
          practices and shall have valid and effective Deposit Account Agreements
          in place
          at all times with respect to all of its Deposit Accounts (other than any
          payroll
          account so long as such payroll account is a zero balance account) while
          any
          Obligation remains outstanding. No Depository Accounts shall be established,
          used or maintained by any Credit Party unless it complies with the foregoing.
          With respect to each Deposit Account that is subject to a Deposit Account
          Agreement, from and after the occurrence of an Event of Default, the Lender
          shall have the right, at any time and from time to time, to exercise its
          rights
          under such Deposit Account Agreement, including, for the avoidance of doubt,
          the
          exclusive right to give instructions to the financial institution at which
          such
          Deposit Account is maintained as to the disposition of funds or other property
          on deposit therein or credited thereto. In connection with its exercise
          of such
          rights, without limiting the generality of the foregoing, the Lender may,
          at its
          option, apply or direct the application of funds or other property on deposit
          in
          or credited to any such Deposit Account to the repayment of the Obligations,
          whether or not then due and payable. The Lender hereby covenants and agrees
          that
          it will not send any such notice to a financial institution at which any
          such
          Deposit Account is maintained directing the disposition of funds or other
          property therein unless and until the occurrence of an Event of
          Default.

         

        (f) Each
          Credit Party shall have valid and effective Securities Account Agreements
          in
          place at all times with respect to all of its Securities Accounts while
          any
          Obligation remains outstanding or, with respect to any Securities Account
          maintained by such Credit Party with a securities intermediary in Canada,
          at the
          Lender’s option, an alternative arrangement satisfactory to the Lender which,
          in
          the Lender’s judgment, provides equivalent benefits to the Lender under
          applicable Canadian law as the Lender would have as a secured party by
          virtue of
          a Securities Account Agreement under U.S. law. No Securities Accounts shall
          be
          established, used or maintained by any Credit Party unless it complies
          with the
          foregoing.

         

        Section
          6.11  Account
          Verification.
          The
          Lender or its agent may at any time and from time to time send or require
          any
          Credit Party to send requests for verification of accounts or notices of
          assignment to account debtors and other obligors. The Lender or its agent
          may
          also at any time and from time to time telephone account debtors and other
          obligors to verify accounts.

         

        Section
          6.12  Compliance
          with Laws.

         

        (a) The
          Borrowers and each Guarantor shall (i) comply with the requirements of
          applicable laws and regulations, the non-compliance with which would materially
          and adversely affect its business or its financial condition and (ii) use
          and keep the Collateral, and require that others use and keep the Collateral,
          only for lawful purposes, without violation of any federal, state or local
          law,
          statute or ordinance.

         

        
          
             

          

          
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              39 -

            
              

            

          

          
             

          

        

         

        (b) Without
          limiting the foregoing undertakings, the Borrowers and each Guarantor
          specifically agrees that it will comply with all applicable Environmental
          Laws
          and obtain and comply with all permits, licenses and similar approvals
          required
          by any Environmental Laws, and will not generate, use, transport, treat,
          store
          or dispose of any Hazardous Substances in such a manner as to create any
          material liability or obligation under the common law of any jurisdiction
          or any
          Environmental Law.

         

        (c) The
          Borrowers and each Guarantor shall (i) ensure, and cause each Subsidiary
          to
          ensure, that no Owner (excluding any Owner of Workstream) shall be listed
          on the
          Specially Designated Nationals and Blocked Person List or other similar
          lists
          maintained by the Office of Foreign Assets Control (“OFAC”), the Department of
          the Treasury or included in any Executive Orders, (ii) not use or permit
          the use
          of the proceeds of any Advance or any other financial accommodation from
          the
          Lender to violate any of the foreign asset control regulations of OFAC
          or other
          applicable law, (iii) comply, and cause each Subsidiary to comply, with
          all
          applicable Bank Secrecy Act laws and regulations, as amended from time
          to time,
          and (iv) otherwise comply with the USA Patriot Act as required by federal
          law
          and the Lender’s policies and practices.

         

        (d) The
          Borrowers and each Guarantor shall comply with all applicable laws, rules,
          regulations and reporting and informational requirements of the Securities
          and
          Exchange Commission and any applicable securities exchange or trading market
          on
          which its securities are listed or traded.

         

        Section
          6.13  Payment
          of Taxes and Other Claims.
          The
          Borrowers and each Guarantor will pay or discharge, when due, (a) all
          taxes, assessments and governmental charges levied or imposed upon it or
          upon
          its income or profits, upon any properties belonging to it (including the
          Collateral) or upon or against the creation, perfection or continuance
          of the
          Security Interest, prior to the date on which penalties attach thereto,
          (b) all federal, state and local taxes required to be withheld by it,
          (c) all lawful claims for labor, materials and supplies which, if unpaid,
          might by law become a Lien upon any of its properties; (d) all rental payments,
          lease payments, utilities expenses, taxes, insurance premiums and other
          amounts
          owing with respect to the Premises; and (e) each account payable due to
          a Person
          holding a Permitted Lien (as a result of such payable) on any Collateral;
          provided,
          however,
          that
          the Borrowers and the Guarantors shall not be required to pay any such
          tax,
          assessment, charge, rent, claim or account whose amount, applicability
          or
          validity is being contested in good faith by appropriate proceedings and
          for
          which cash reserves in amounts satisfactory to the Lender have been set
          aside.

         

        Section
          6.14  Maintenance
          of Properties.

         

        (a) The
          Borrowers and each Guarantor will keep and maintain the Collateral and
          all of
          its other properties necessary or useful in its business in good condition,
          repair and working order (normal wear and tear excepted) and will from
          time to
          time replace or repair any worn, defective or broken parts; provided,
          however,
          that
          nothing in this Section
          6.14
          shall
          prevent any Credit Party from discontinuing the operation and maintenance
          of any
          of its properties if such discontinuance is, in its good faith judgment,
          desirable in the conduct of the its business and not disadvantageous in
          any
          material respect to the Lender. The Borrowers and each Guarantor will take
          use
          its best efforts to protect and maintain its Intellectual Property
          Rights.

         

        
          
             

          

          
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              40 -

            
              

            

          

          
             

          

        

         

        (b) The
          Borrowers and each Guarantor will defend the Collateral against all Liens,
          claims or demands of all Persons (other than the Lender) claiming the Collateral
          or any interest therein. The Borrowers and each Guarantor will keep all
          Collateral free and clear of all Liens except Permitted Liens. Each Credit
          Party
          will take all commercially reasonable steps necessary to prosecute any
          Person
          Infringing its Intellectual Property Rights and to defend itself against
          any
          Person accusing such Credit Party of Infringing any Person’s Intellectual
          Property Rights.

         

        Section
          6.15  Insurance.
          The
          Borrowers and the Guarantors will obtain and at all times maintain insurance
          with insurers acceptable to Lender, in such amounts, on such terms (including
          any deductibles) and against such risks as may from time to time be reasonably
          required by the Lender. Without limiting the generality of the foregoing,
          the
          Borrowers and the Guarantors will at all times maintain business interruption
          insurance including coverage for force majeure and keep all tangible Collateral
          insured against risks of fire (including so-called extended coverage),
          theft,
          collision (for Collateral consisting of motor vehicles) and such other
          risks and
          in such amounts as the Lender may reasonably request, with any loss payable
          to
          the Lender to the extent of its interest, and all policies of such insurance
          shall contain a lender’s loss payable endorsement for the Lender’s benefit. All
          policies of liability insurance required hereunder shall name the Lender
          as an
          additional insured.

         

        Section
          6.16  Preservation
          of Existence.
          The
          Borrowers and the Guarantors will preserve and maintain its existence and
          all of
          its rights, privileges and franchises necessary or desirable in the normal
          conduct of its business and shall conduct its business in an orderly, efficient
          and regular manner.

         

        Section
          6.17  Delivery
          of Instruments, etc.
          Upon
          request by the Lender, the Borrowers and each Guarantor will promptly deliver
          to
          the Lender in pledge all instruments, documents and chattel paper constituting
          Collateral, duly endorsed or assigned.

         

        Section
          6.18 Sale
          or Transfer of Assets; Suspension of Business Operations.
          The
          Borrowers and each Guarantor will not sell, lease, assign, transfer or
          otherwise
          dispose of (a) the stock of any Subsidiary, (b) all or substantially
          all of its assets, or (c) any Collateral or any interest therein (whether
          in one transaction or in a series of transactions) to any other Person
          other
          than (i) the sale or licensing of Inventory and Intellectual Property Rights
          in
          the ordinary course of business, (ii) the disposition of equipment being
          replaced in the ordinary course of business, or having a book value which
          is
          less than $10,000 and no longer necessary to the conduct of any Credit
          Party’s
          business, and (iii) the disposition of Intellectual Property Rights permitted
          by
          the next sentence, and will not liquidate, dissolve or suspend business
          operations. No Credit Party will transfer any part of its ownership interest
          in
          any Intellectual Property Rights and will not permit any agreement under
          which
          it has licensed Licensed Intellectual Property to lapse, except that such
          Credit
          Party may transfer such rights or permit such agreements to lapse if it
          shall
          have reasonably determined that the applicable Intellectual Property Rights
          are
          no longer useful in or are immaterial to its business. If any Credit Party
          transfers any Intellectual Property Rights for value other than in the
          ordinary
          course of its business, such Credit Party will pay over the proceeds to
          the
          Lender for application to the Obligations. No Credit Party will license
          any
          other Person to use any such Credit Party’s Intellectual Property Rights, except
          that they may grant licenses in the ordinary course of its
          business.

         

        
          
             

          

          
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              41 -

            
              

            

          

          
             

          

        

         

        Section
          6.19  Consolidation
          and Merger; Asset Acquisitions.
          No
          Credit Party will consolidate with or merge into any Person, or permit
          any other
          Person to merge into it, or acquire (in a transaction analogous in purpose
          or
          effect to a consolidation or merger) all or substantially all the assets
          of any
          other Person.

         

        Section
          6.20  Sale
          and Leaseback.
          No
          Credit Party will enter into any arrangement, directly or indirectly, with
          any
          other Person whereby it shall sell or transfer any real or personal property,
          whether now owned or hereafter acquired, and then or thereafter rent or
          lease as
          lessee such property or any part thereof or any other property which the
          it
          intends to use for substantially the same purpose or purposes as the property
          being sold or transferred.

         

        Section
          6.21  Restrictions
          on Nature of Business.
          No
          Credit Party will engage in any line of business materially different from
          that
          engaged in as of the Agreement Date and will not purchase, lease or otherwise
          acquire assets not related to its business. Each Credit Party shall preserve
          and
          maintain its separate and distinct identity. Without limiting the generality
          of
          the foregoing, each Credit Party shall (i) maintain an office through which
          its
          business shall be conducted separate and apart from that of any of the
          other
          Credit Parties or any of their respective Affiliates, (ii) maintain
          separate employees (in sufficient numbers in light of its contemplated
          business operations) and books and accounts from those of any other Credit
          Party
          or any other Person, (iii) except as permitted by this Agreement, not commingle
          funds or assets with those of any other Credit Party or any other Person,
          (iv)
          conduct its business and hold its assets in its own name, (v) hold itself
          out as an entity separate and distinct from any Affiliate and not as a
          division,
          department or part of any other Person, and (vi) maintain an arm’s length
          relationship with any Affiliate.

         

        Section
          6.22  Accounting.
          The
          Borrowers and each Guarantor will not adopt any material change in accounting
          principles other than as required by GAAP. The Borrowers and each Guarantor
          will
          not adopt, permit or consent to any change in their fiscal year, which
          runs from
          June 1 through May 31.

         

        Section
          6.23  Plans.
          Unless
          disclosed to the Lender pursuant to Section 5.12, no Credit Party or ERISA
          Affiliate will (a) adopt, create, assume or become a party to any Pension
          Plan,
          (b) incur any obligation to contribute to any Multiemployer Plan, (c) incur
          any
          obligation to provide post-retirement medical or insurance benefits with
          respect
          to employees or former employees (other than benefits required by law)
          or (d)
          amend any Plan in a manner that would materially increase its funding
          obligations.

         

        Section
          6.24  Place
          of Business; Name.
          No
          Credit Party will transfer its chief executive office or principal place
          of
          business, or move, relocate, close or sell any business location, in each
          case
          without at least thirty (30) days’ prior written notice to the Lender and after
          the Lender’s written acknowledgment (which shall not be unreasonably withheld,
          delayed or conditioned) that any reasonable action requested by the Lender
          in
          connection therewith, including to continue the perfection of any Liens
          in favor
          of the Lender in any Collateral, has been completed or taken, and provided
          that
          any such new location shall be in the United States or Canada. No Credit
          Party
          will permit any tangible Collateral or any records pertaining to the Collateral
          to be located in any state or area in which, in the event of such location,
          a
          financing statement covering such Collateral would be required to be, but
          has
          not in fact been, filed in order to perfect the Security Interest. No Credit
          Party will change its name, type of organization or jurisdiction of
          organization, in each case without at least thirty (30) days’ prior written
          notice to the Lender and after the Lender’s written acknowledgment (which shall
          not be unreasonably withheld, delayed or conditioned) that any reasonable
          action
          requested by the Lender in connection therewith, including to continue
          the
          perfection of any Liens in favor of the Lender in any Collateral, has been
          completed or taken, and provided that any such new location shall be in
          the
          United States or Canada.

         

        
          
             

          

          
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        Section
          6.25  Amendments
          to Certain Documents.
          No
          Credit Party will amend any instruments or agreements evidencing any
          Subordinated Debt (if any).

         

        Section
          6.26 Performance
          by the Lender.
          If any
          Credit Party at any time fails to perform or observe any of the foregoing
          covenants contained in this Article VI
          or
          elsewhere herein or in any other Loan Document, and if such failure shall
          continue for a period of ten calendar days after the Lender gives such
          Credit
          Party written notice thereof (or in the case of the agreements contained
          in
          Section 6.9, Section 6.13, Section 6.14(b) and Section 6.15 immediately
          upon the
          occurrence of any such failure, without notice or lapse of time), the Lender
          may, but need not, perform or observe such covenant on behalf and in the
          name,
          place and stead of such Credit Party (or, at the Lender’s option, in the
          Lender’s name) and may, but need not, take any and all other actions which the
          Lender may reasonably deem necessary to cure or correct such failure (including
          the payment of taxes, the satisfaction of Liens, the payment of rent, the
          performance of obligations owed to account debtors or other obligors, the
          procurement and maintenance of insurance, the execution of assignments,
          security
          agreements and financing statements, and the endorsement of instruments);
          and
          the Borrowers shall thereupon pay to the Lender on demand the amount of
          all
          monies expended and all costs and expenses (including reasonable attorneys’ fees
          and legal expenses) incurred by the Lender in connection with or as a result
          of
          the performance or observance of such agreements or the taking of such
          action by
          the Lender, together with interest thereon from the date expended or incurred
          at
          the Default Rate. To facilitate the Lender’s performance or observance of such
          covenants of the Credit Parties, each Credit Party hereby irrevocably appoints
          the Lender, or the Lender’s delegate, acting alone, as such Credit Party’s
          attorney in fact (which appointment is coupled with an interest) with the
          right
          (but not the duty) from time to time to create, prepare, complete, execute,
          deliver, endorse or file in the name and on behalf of such Credit Party
          any and
          all instruments, documents, assignments, security agreements, financing
          statements, applications for insurance and other agreements and writings
          required to be obtained, executed, delivered or endorsed by such Credit
          Party
          hereunder or under any other Loan Document.

         

        Article
          VII

         

        EVENTS
          OF DEFAULT, RIGHTS AND REMEDIES

         

        Section
          7.1  Events
          of Default.“Event
          of Default”, wherever used herein, means any one of the following
          events:

         

        
          
             

          

          
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              43 -

            
              

            

          

          
             

          

        

         

        (a) Default
          in the payment of interest when due unless cured within five (5) days after
          the
          due date for payment thereof, or in the payment of any other Obligations
          when
          they become due and payable;

         

        (b) (i)
          Default in the performance, or breach, of Section
          6.2;
          or (ii)
          if Qualified Cash shall be less than $11,500,000 but greater than $10,000,000,
          and shall remain at less than $11,500,000 for a period of thirty (30)
          consecutive days; or (iii) any default in the performance, or breach, of
          any
          other covenant or agreement of any Credit Party contained in this Agreement,
          any
          Security Document or any other Loan Document (other than any provision
          embodied
          in or covered by any other clause of this Section
          7.1,
          including, without limitation, clauses (i) and (ii) of this Section
          7.1(b))
          shall
          occur, which default or breach, if curable, is not cured within thirty
          (30)
          days; 

         

        (c) A
          Change
          of Control Transaction, a Fundamental Change or a Triggering Event shall
          occur;

         

        (d) Any
          Credit Party shall be or become insolvent, or admit in writing its or his
          inability to pay its or his debts as they mature, or make an assignment
          for the
          benefit of creditors; or any Credit Party shall apply for or consent to
          the
          appointment of any receiver, trustee, or similar officer for it or him
          or for
          all or any substantial part of its or his property; or such receiver, trustee
          or
          similar officer shall be appointed without the application or consent of
          such
          Credit Party; or any Credit Party shall institute (by petition, application,
          answer, consent or otherwise) any bankruptcy, insolvency, reorganization,
          arrangement, readjustment of debt, dissolution, liquidation or similar
          proceeding relating to it or him under the laws of any jurisdiction; or
          any
          judgment, writ, warrant of attachment or execution or similar process shall
          be
          issued or levied against a substantial part of the property of any Credit
          Party
          ;

         

        (e) An
          involuntary petition shall be filed or an action or proceeding otherwise
          commenced seeking reorganization, arrangement, consolidation or readjustment
          of
          the debts of any Credit Party or for any other relief under the United
          States
          Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
          act or
          law, state or federal, now or hereafter existing;

         

        (f) Any
          representation or warranty made by any Credit Party or any other Person
          other
          than the Lender in this Agreement, any guaranty or in any other Loan Document,
          or any information provided to the Lender by or on behalf of any Credit
          Party
          with respect to the Collateral or the financial condition of any Credit
          Party
          (including, without limitation, any information set forth on any financial
          statement) shall prove to have been incorrect in any material respect when
          such
          representation or warranty is made or deemed to have been made or when
          such
          information is provided;

         

        (g) The
          rendering against any Credit Party of an arbitration award, final judgment,
          decree or order for the payment of money in excess of $50,000 and the
          continuance of such arbitration award, judgment, decree or order unsatisfied
          and
          in effect for any period of 30 consecutive days without a stay of
          execution;

         

        
          
             

          

          
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              44 -

            
              

            

          

          
             

          

        

         

        (h) A
          default
          or event of default under any bond, debenture, note or other evidence of
          material Indebtedness of any Credit Party owed to any Person other than
          the
          Lender, or under any indenture or other instrument under which any such
          evidence
          of Indebtedness has been issued or by which it is governed, or under any
          material lease or other contract, and the expiration of the applicable
          period of
          grace, if any, specified in such evidence of Indebtedness, indenture, other
          instrument, lease or contract;

         

        (i) Any
          Reportable Event, which the Lender determines in good faith might constitute
          grounds for the termination of any Pension Plan or for the appointment
          by the
          appropriate United States District Court of a trustee to administer any
          Pension
          Plan, shall have occurred and be continuing 30 days after written notice to
          such effect shall have been given to any Credit Party by the Lender; or
          a
          trustee shall have been appointed by an appropriate United States District
          Court
          to administer any Pension Plan; or the Pension Benefit Guaranty Corporation
          shall have instituted proceedings to terminate any Pension Plan or to appoint
          a
          trustee to administer any Pension Plan; or any Credit Party or any ERISA
          Affiliate shall have filed for a distress termination of any Pension Plan
          under
          Title IV of ERISA; or any Credit Party or any ERISA Affiliate shall have
          failed
          to make any quarterly contribution required with respect to any Pension
          Plan
          under Section 412(m) of the IRC, which the Lender determines in good faith
          may
          by itself, or in combination with any such failures that the Lender may
          determine are likely to occur in the future, result in the imposition of
          a Lien
          on any Credit Party’s assets in favor of the Pension Plan; or any withdrawal,
          partial withdrawal, reorganization or other event occurs with respect to
          a
          Multiemployer Plan which results or could reasonably be expected to result
          in a
          material liability of any Credit Party to the Multiemployer Plan under
          Title IV
          of ERISA;

         

        (j) Any
          Credit Party shall liquidate, dissolve, terminate or suspend its business
          operations or otherwise fail to operate its business in the ordinary course,
          merge with another organization; or sell or attempt to sell all or substantially
          all of its assets;

         

        (k) Default
          in the payment of any amount owed by any Credit Party to the Lender other
          than
          any Debt arising hereunder which default shall continue beyond any applicable
          grace period;

         

        (l) Any
          Guarantor in favor of the Lender shall repudiate, purport to revoke or
          fail to
          perform his or its obligations under the applicable guaranty in favor of
          the
          Lender, any individual Guarantor shall die or any other Guarantor shall
          cease to
          exist; or

         

        (m) Any
          Credit Party shall take or participate in any action which is prohibited
          under
          the provisions of any Subordination Agreement or make any payment on the
          Subordinated Debt that is not permitted under the provisions of the applicable
          Subordination Agreement.

         

        Section
          7.2  Rights
          and Remedies.
          During
          any Default Period, the Lender may exercise any or all of the following
          rights
          and remedies:

         

        (a) The
          Lender may declare its commitment to make Advances hereunder (if any) to
          be
          terminated, whereupon the same shall forthwith terminate;

         

        
          
             

          

          
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              45 -

            
              

            

          

          
             

          

        

         

        (b) The
          Lender may declare the Obligations to be forthwith due and payable, whereupon
          all Obligations shall become and be forthwith due and payable, without
          presentment, notice of dishonor, protest or further notice of any kind,
          all of
          which the Credit Parties hereby expressly waive;

         

        (c) The
          Lender may, without notice to the Credit Parties and without further action,
          apply any and all money owing by the Lender to any Credit Party to the
          payment
          of the Obligations;

         

        (d) The
          Lender may exercise and enforce any and all rights and remedies available
          upon
          default to a secured party under the UCC or the PPSA, as applicable, including
          the right to take possession of Collateral, or any evidence thereof, proceeding
          without judicial process or by judicial process (without a prior hearing
          or
          notice thereof, which the Credit Parties hereby expressly waive), the right
          to
          notify account debtors to pay the Lender directly (and the Credit Parties
          shall
          join in any such notice if the Lender so requests), and the right to sell,
          lease
          or otherwise dispose of any or all of the Collateral at public or private
          sale
          (with or without giving any warranties as to the Collateral, title to the
          Collateral or similar warranties), and, in connection therewith, the Credit
          Parties will on demand assemble the Collateral and make it available to
          the
          Lender at a place to be designated by the Lender which is reasonably convenient
          to both parties;

         

        (e) The
          Lender may exercise and enforce its rights and remedies under the other
          Loan
          Documents;

         

        (f) The
          Lender may draw on any letter of credit of which Lender is the beneficiary
          as
          security for the Advances and/or any other Obligations and/or apply any
          cash
          Collateral to the Obligations; and

         

        (g) The
          Lender may exercise any other rights and remedies available to it by law
          or
          agreement.

         

        Notwithstanding
          the foregoing, upon the occurrence of an Event of Default described in
          Section
          7.1(d)
          or
Section
          7.1(e),
          the
          Obligations shall be immediately due and payable automatically without
          presentment, demand, protest or notice of any kind. If the Lender sells
          any of
          the Collateral on credit, the Obligations will be reduced only to the extent
          of
          payments actually received. If the purchaser fails to pay for the Collateral,
          the Lender may resell the Collateral and shall apply any proceeds actually
          received to the Obligations.

         

        Section
          7.3  Certain
          Notices.
          If
          notice to any Credit Party of any intended disposition of Collateral or
          any
          other intended action is required by law in a particular instance, such
          notice
          shall be deemed commercially reasonable if given (in the manner specified
          in
Section
          8.3)
          at
          least ten calendar days before the date of intended disposition or other
          action.

         

        Article
          VIII

         

        MISCELLANEOUS

         

        Section
          8.1  No
          Waiver; Cumulative Remedies; Compliance with Laws.
          No
          failure or delay by the Lender in exercising any right, power or remedy
          under
          the Loan Documents shall operate as a waiver thereof, nor shall any single
          or
          partial exercise of any such right, power or remedy preclude any other
          or
          further exercise thereof or the exercise of any other right, power or remedy
          under the Loan Documents. The remedies provided in the Loan Documents are
          cumulative and not exclusive of any remedies provided by law. The Lender
          may
          comply with any applicable state, provincial, federal or foreign law
          requirements in connection with a disposition of the Collateral and such
          compliance will not be considered adversely to affect the commercial
          reasonableness of any sale of the Collateral.

         

        
          
             

          

          
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              46 -

            
              

            

          

          
             

          

        

         

        Section
          8.2  Amendments,
          etc.
          No
          amendment, modification, termination or waiver of any provision of any
          Loan
          Document or consent to any departure by any Credit Party therefrom or any
          release of a Security Interest shall be effective unless the same shall
          be in
          writing and signed by the Lender, and then such waiver or consent shall
          be
          effective only in the specific instance and for the specific purpose for
          which
          given. No notice to or demand on any Credit Party in any case shall entitle
          any
          Credit Party to any other or further notice or demand in similar or other
          circumstances.

         

        Section
          8.3  Notices;
          Communication of Confidential Information; Requests for
          Accounting

         

        Except
          as
          otherwise expressly provided herein, all notices, requests, demands and
          other
          communications provided for under the Loan Documents shall be in writing
          and
          shall be (a) personally delivered, (b) sent by registered or certified
          first class United States mail, return receipt requested, (c) sent by
          overnight courier of national reputation, or (d) transmitted by facsimile,
          in each case delivered or sent to the party to whom notice is being given
          to the
          business address or facsimile number set forth below or, as to each party,
          at
          such other business address or facsimile number as it may hereafter designate
          in
          writing to the other party pursuant to the terms of this Section. All such
          notices, requests, demands and other communications shall be deemed to
          be an
          authenticated record communicated or given on (d) the date received if
          personally delivered, (e) two days after being deposited in the mail if
          delivered by mail, (f) the date delivered if delivered by overnight
          courier, or (g) the date of transmission if sent by facsimile. All notices,
          financial information, or other business records sent by either party to
          this
          Agreement may be transmitted, sent, or otherwise communicated via such
          medium as
          the sending party may deem appropriate and commercially reasonable. Notices
          shall be sent in accordance with the following information unless changed
          by
          written notice hereunder:

         

         

        
          	 	If to any Credit
                  Party: 	
                  Workstream Inc.

                  
                    495
                      March Road

                    Ottawa,
                      Ontario, Canada K2K-3G1

                    Telephone:
                      613-270-0619

                    Facsimile:
                      613-236-9819

                    Attention:
                      CEO

                  

                
	 	 	 
	 	If to Lender:	
                  Hilco
                    Financial, LLC

                  5
                    Revere Drive, Suite 206

                  Northbrook,
                    Illinois 60062

                  Telephone:
                    847-509-1100

                  Facsimile:
                    847-509-1150

                  Attention:
                    CEO

                

        

         

        
          
             

          

          
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              47 -

            
              

            

          

          
             

          

        

         

        
          	 	With a copy to:	
                  Greenberg
                    Traurig, LLP 

                  77
                    W. Wacker Drive

                  Suite
                    2400

                  Chicago,
                    Illinois 60601

                  Telephone:
                    312-456-8400

                  Facsimile:
                    312-456-8435

                  Attention:
                    Peter H. Lieberman, Esq.

                  Jonathan
                    A. Ain, Esq.

                

        

         

        Section
          8.4  Further
          Documents.
          The
          Borrowers and each Guarantor will from time to time execute, deliver, endorse
          and authorize the filing of any and all instruments, documents, conveyances,
          assignments, security agreements, financing statements, control agreements
          and
          other agreements and writings that the Lender may reasonably request in
          order to
          secure, protect, perfect or enforce the Security Interest or the Lender’s rights
          under the Loan Documents (but any failure to request or assure that the
          Borrowers or any Guarantor executes, delivers, endorses or authorizes the
          filing
          of any such item shall not affect or impair the validity, sufficiency or
          enforceability of the Loan Documents and the Security Interest, regardless
          of
          whether any such item was or was not executed, delivered or endorsed in
          a
          similar context or on a prior occasion). Simultaneously herewith, the Credit
          Parties shall execute and deliver to Lender the so-call “Pre-filing Letter” and
          if requested as soon as practicable hereafter the Patent, Trademark and
          Copyright Security Agreement. In addition, the disclosure letter described
          above
          shall update and contain all schedules referred to in this Agreement, whether
          or
          not in Article V, or any other Transaction Document (as defined in the
          Transaction Agreement) or Loan Document.

         

        Section
          8.5  Costs
          and Expenses.
          The
          Borrowers shall pay on demand all costs and expenses, including reasonable
          attorneys’ fees, bank wire fees and lockbox fees, incurred by the Lender in
          connection with the negotiation, preparation and execution of the Loan
          Documents
          (which costs are included in the sum payable pursuant to Section 4(f) of
          the
          Transaction Agreement), the amendment, collection and enforcement of the
          Loan
          Documents and the Obligations, and the creation, perfection, protection,
          satisfaction, foreclosure or enforcement of the Security Interest (other
          than
          such creation and perfection in connection with the Closing, the costs
          and
          expenses of which also are included in the sum payable under Section 4(f)
          of the
          Transaction Agreement).

         

        Section
          8.6  Indemnity.
          In
          addition to the payment of expenses pursuant to Section
          8.5,
          the
          Borrowers shall indemnify, defend and hold harmless the Lender, and any
          of its
          participants, parent corporations, subsidiary corporations, affiliated
          corporations, successor corporations, and all present and future officers,
          directors, employees, attorneys and agents of the foregoing (the “Indemnitees”)
          from and against any of the following (collectively, “Indemnified
          Liabilities”):

         

        (a) Any
          and
          all transfer taxes, documentary taxes, assessments or charges made by any
          governmental authority by reason of the execution and delivery of the Loan
          Documents or the making of the Advances;

         

        
          
             

          

          
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              48 -

            
              

            

          

          
             

          

        

         

        (b) Any
          claims, loss or damage to which any Indemnitee may be subjected if any
          representation or warranty contained in Section
          5.14
          proves
          to be incorrect in any respect or as a result of any violation of the covenant
          contained in Section
          6.12(b);
          and

         

        (c) Any
          and
          all other liabilities, losses, damages, penalties, judgments, suits, claims,
          costs and expenses of any kind or nature whatsoever (including the reasonable
          fees and disbursements of counsel) in connection with the foregoing and
          any
          other investigative, administrative or judicial proceedings, whether or
          not such
          Indemnitee shall be designated a party thereto, which may be imposed on,
          incurred by or asserted against any such Indemnitee, in any manner related
          to or
          arising out of or in connection with the making of the Advances and the
          Loan
          Documents or the use or intended use of the proceeds of the
          Advances.

         

        If
          any
          investigative, judicial or administrative proceeding arising from any of
          the
          foregoing is brought against any Indemnitee, upon such Indemnitee’s request, the
          Borrowers, or counsel designated by the Borrowers and satisfactory to the
          Indemnitee, will resist and defend such action, suit or proceeding to the
          extent
          and in the manner directed by the Indemnitee, at the Borrowers’ sole costs and
          expense. Each Indemnitee will use reasonable efforts to cooperate in the
          defense
          of any such action, suit or proceeding. If the foregoing undertaking to
          indemnify, defend and hold harmless may be held to be unenforceable because
          it
          violates any law or public policy, the Borrowers shall nevertheless make
          the
          maximum contribution to the payment and satisfaction of each of the Indemnified
          Liabilities which is permissible under applicable law. The Borrowers’ obligation
          under this Section
          8.6
          shall
          survive the termination of this Agreement and the discharge of the Borrowers’
other obligations hereunder.

         

        Section
          8.7  Participants.
          The
          Lender and its participants, if any, are not partners or joint venturers,
          and
          the Lender shall not have any liability or responsibility for any obligation,
          act or omission of any of its participants. All rights and powers specifically
          conferred upon the Lender may be transferred or delegated to any of the
          Lender’s
          participants, successors or assigns.

         

        Section
          8.8  Execution
          in Counterparts; Facsimile Execution.
          This
          Agreement and other Loan Documents may be executed in any number of
          counterparts, each of which when so executed and delivered shall be deemed
          to be
          an original and all of which counterparts, taken together, shall constitute
          but
          one and the same instrument. Delivery of an executed counterpart of this
          Agreement or any other Loan Document by facsimile shall be equally as effective
          as delivery of an original executed counterpart of this Agreement or such
          other
          Loan Document. Any party delivering an executed counterpart of this Agreement
          or
          any other Loan Document by facsimile also shall deliver an original executed
          counterpart of this Agreement or such other Loan Document but the failure
          to
          deliver an original executed counterpart shall not affect the validity,
          enforceability, and binding effect of this Agreement or such other Loan
          Document. To the fullest extent permitted by applicable law, each Credit
          Party
          waives notice of the Lender’s acceptance of this Agreement and the other Loan
          Documents.

         

        Section
          8.9  Retention
          of Credit Parties’ Records.
          The
          Lender shall have no obligation to maintain any electronic records or any
          documents, schedules, invoices, agings, or other papers delivered to the
          Lender
          by any Credit Party or in connection with the Loan Documents for more than
          10
          days after receipt by the Lender. If there is a special need to retain
          specific
          records, the applicable Credit Party must inform the Lender of its need
          to
          retain those records with particularity, which must be delivered in accordance
          with the notice provisions of Section 8.3 within 10 days of the Lender
          taking
          control of same.

         

        
          
             

          

          
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              49 -

            
              

            

          

          
             

          

        

         

        Section
          8.10  Binding
          Effect; Assignment; Complete Agreement.

         

        (a) The
          Loan
          Documents shall be binding upon and inure to the benefit of the Credit
          Parties
          and the Lender and their respective successors and assigns, except that
          no
          Credit Party shall have the right to assign its rights hereunder or thereunder
          or any interest herein or therein without the Lender’s prior written
          consent.

         

        (b) This
          Agreement, together with the Loan Documents, comprises the complete and
          integrated agreement of the parties on the subject matter hereof and supersedes
          all prior agreements, written or oral, on the subject matter hereof. To
          the
          extent that any provision of this Agreement contradicts other provisions
          of the
          Loan Documents, this Agreement shall control.

         

        Section
          8.11  Severability
          of Provisions.
          Any
          provision of this Agreement which is prohibited or unenforceable shall
          be
          ineffective to the extent of such prohibition or unenforceability without
          invalidating the remaining provisions hereof.

         

        Section
          8.12  Headings.
          Article, Section and subsection headings in this Agreement are included
          herein
          for convenience of reference only and shall not constitute a part of this
          Agreement for any other purpose.

         

        Section
          8.13  Governing
          Law; Jurisdiction, Venue.
          The Loan
          Documents shall be governed by and construed in accordance with the substantive
          laws (other than conflict of law provisions and principles) of the State
          of
          Illinois. Each Credit Party hereby consents to the non-exclusive jurisdiction
          of
          any United States Federal Court sitting in or with direct or indirect
          jurisdiction over the Northern District of Illinois or any Illinois state
          court
          sitting in Cook County, Chicago, Illinois in any action, suit or other
          proceeding arising out of or relating to this Agreement or any of the other
          Loan
          Documents, and each Credit Party irrevocably agrees that all claims and
          demands
          in respect of any such action, suit or proceeding may be heard and determined
          in
          any such court and irrevocably waives any objection it may now or hereafter
          have
          as to the venue of any such action, suit or proceeding brought in any such
          court
          or that such court is an inconvenient forum. Each Credit Party waives personal
          service of any and all process upon it and consents that all such service
          of
          process may be made by registered mail (return receipt requested) directed
          to
          such Credit Party at such Credit Party’s address for notices pursuant to this
          Agreement, and service so made shall be deemed to be completed five (5)
          days
          after the same shall have been so deposited in the United States mails.
          Nothing
          herein shall limit the right of the Lender to bring proceedings against
          any
          Credit Party or any of its Affiliates in the courts of any other jurisdiction.
          Any judicial proceeding commenced by any Credit Party against the Lender
          or any
          other holder of any Obligations, or any Affiliate of the Lender or any
          other
          holder of any Obligations, involving, directly or indirectly, any matter
          in any
          way arising out of, related to or connected with any Loan Document shall
          be
          brought only in a United States Federal Court sitting in or with direct
          jurisdiction over the Northern District of Illinois or any Illinois state
          court
          sitting in Cook County, Chicago, Illinois. Nothing in this Agreement shall
          be
          deemed or operate to affect the right of the Lender to serve legal process
          in
          any other manner permitted by law or to preclude the enforcement by the
          Lender
          of any judgment or order obtained in such forum or the taking of any action
          under this Agreement to enforce same in any other appropriate forum or
          jurisdiction.

         

        
          
             

          

          
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              50 -

            
              

            

          

          
             

          

        

         

        Section
          8.14  Waiver
          of Jury Trial.
          TO
          THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH CREDIT PARTY AND THE
          LENDER
          HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN
          ANY
          ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT,
          OR
          OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
          DOCUMENT, THE OBLIGATIONS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
          OR
          THEREBY OR EITHER PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION, OR
          ENFORCEMENT HEREOF OR THEREOF. EACH CREDIT PARTY AND THE LENDER ACKNOWLEDGES
          THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE
          OF
          THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF
          COUNSEL
          OF ITS CHOOSING.

         

        Article
          IX

         

        CROSS-GUARANTY

         

        Section
          9.1  Cross-Guaranty.
          Each
          Borrower hereby agrees that such Borrower is jointly and severally liable
          for,
          and hereby absolutely and unconditionally guarantees to the Lender and
          its
          successors and assigns, the full and prompt payment (whether at stated
          maturity,
          by acceleration or otherwise) and performance of, all Obligations owed
          or
          hereafter owing to the Lender by each other Borrower. Each Borrower agrees
          that
          its guaranty obligation hereunder is a continuing guaranty of payment and
          performance and not of collection, that its obligations under this
          Section 9 shall not be discharged until payment and performance, in full,
          of the Obligations has occurred, and that its obligations under this Section
          9
          shall be absolute and unconditional, irrespective of, and unaffected
          by, 

         

        (a) the
          genuineness, validity, regularity, enforceability or any future amendment
          of, or
          change in, this Agreement, any other Loan Document or any other agreement,
          document or instrument to which any Borrower is or may become a
          party;

         

        (b) the
          absence of any action to enforce this Agreement (including this Section
          9)
          or any
          other Loan Document or the waiver or consent by the Lender with respect
          to any
          of the provisions thereof;

         

        (c) the
          existence, value or condition of, or failure to perfect or delay in perfecting
          its Lien against, any security for the Obligations or any action, or the
          absence
          of any action, by the Lender in respect thereof (including the release
          of any
          such security); 

         

        (d) the
          insolvency of any Credit Party; or

         

        (e) any
          other
          action or circumstances that might otherwise constitute a legal or equitable
          discharge or defense of a surety or guarantor.

         

        
          
             

          

          
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              51 -

            
              

            

          

          
             

          

        

         

        Each
          Borrower shall be regarded, and shall be in the same position, as principal
          debtor with respect to the Obligations guaranteed hereunder.

        

        Section
          9.2  Waivers
          by Borrowers.
          Each
          Borrower expressly waives all rights it may have now or in the future under
          any
          statute, or at common law, or at law or in equity, or otherwise, to compel
          the
          Lender to marshal assets or to proceed in respect of the Obligations guaranteed
          hereunder against any other Credit Party, any other party or against any
          security for the payment and performance of the Obligations before proceeding
          against, or as a condition to proceeding against, such Borrower. It is
          agreed
          between each Borrower and the Lender that the foregoing waivers are of
          the
          essence of
          the
          transaction contemplated by this Agreement and the other Loan Documents
          and
          that, but for the provisions of this Section 9 and such waivers, the Lender
          would decline to enter into this Agreement.

         

        Section
          9.3  Benefit
          of Guaranty.
          Each
          Borrower agrees that the provisions of this Section 9 are for the benefit
          of the
          Lender and its successors, transferees, endorsees and assigns, and nothing
          herein contained shall impair, as between any other Borrower and the Lender,
          the
          obligations of such other Borrower under the Loan Documents.

         

        Section
          9.4  Waiver
          of Subrogation, Etc.
          Notwithstanding anything to the contrary in this Agreement or in any other
          Loan
          Document, and except as set forth in Section 9.7, each Borrower hereby
          expressly and irrevocably waives any and all rights at law or in equity
          to
          subrogation, reimbursement, exoneration, contribution, indemnification
          or set
          off and any and all defenses available to a surety, guarantor or accommodation
          co-obligor. Each Borrower acknowledges and agrees that this waiver is intended
          to benefit the Lender and shall not limit or otherwise affect such Borrower’s
          liability hereunder or the enforceability of this Section 9, and that the
          Lender and its successors and assigns are intended third party beneficiaries
          of
          the waivers and agreements set forth in this Section 9.4.

         

        Section
          9.5  Election
          of Remedies.
          If the
          Lender may, under applicable law, proceed to realize its benefits under
          any of
          the Loan Documents giving the Lender a Lien upon any Collateral, whether
          owned
          by any Borrower or by any other Person, either by judicial foreclosure
          or by
          non-judicial sale or enforcement, the Lender may, at its sole option, determine
          which of its remedies or rights it may pursue without affecting any of
          its
          rights and remedies under this Section 9. If, in the exercise of any of
          its
          rights and remedies, the Lender shall forfeit any of its rights or remedies,
          including its right to enter a deficiency judgment against any Borrower
          or any
          other Person, whether because of any applicable laws pertaining to “election of
          remedies” or the like, each Borrower hereby consents to such action by the
          Lender and waives any claim based upon such action, even if such action
          by the
          Lender shall result in a full or partial loss of any rights of subrogation
          that
          each Borrower might otherwise have had but for such action by the Lender.
          Any
          election of remedies that results in the denial or impairment of the right
          of
          the Lender to seek a deficiency judgment against any Borrower shall not
          impair
          any other Borrower’s obligation to pay the full amount of the Obligations. In
          the event the Lender shall bid at any foreclosure or trustee’s sale or at any
          private sale permitted by law or the Loan Documents, the Lender may bid
          all or
          less than the amount of the Obligations and the amount of such bid need
          not be
          paid by the Lender but shall be credited against the Obligations. The amount
          of
          the successful bid at any such sale, whether the Lender or any other party
          is
          the successful bidder, shall be conclusively deemed to be the fair market
          value
          of the Collateral and the difference between such bid amount and the remaining
          balance of the Obligations shall be
          conclusively deemed to be the amount of the Obligations guaranteed under
          this
          Section 9, notwithstanding that any present or future law or court decision
          or
          ruling may have the effect of reducing the amount of any deficiency claim
          to
          which the Lender might otherwise be entitled but for such bidding at any
          such
          sale.

         

        
          
             

          

          
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              52 -

            
              

            

          

          
             

          

        

         

        Section
          9.6  Limitation.
          Notwithstanding any provision herein contained to the contrary, each Borrower’s
          liability under this Section 9 (which liability is in any event in addition
          to
          amounts for which such Borrower is primarily liable under Article II) shall
          be
          limited to an amount not to exceed as of any date of determination the
          greater
          of:

         

        (a) the
          net
          amount of all Advances advanced to any other Borrower under this Agreement
          and
          then re-loaned or otherwise transferred to, or for the benefit of, such
          Borrower; and

         

        (b) the
          amount that could be claimed by the Lender from such Borrower under this
          Section
          9
          without
          rendering such claim voidable or avoidable under Section 548 of Chapter
          11 of
          the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
          Act, Uniform Fraudulent Conveyance Act or similar statute or common law
          after
          taking into account, among other things, such Borrower’s right of contribution
          and indemnification from each other Borrower under Section
          9.7.

         

        Section
          9.7  Contribution
          with Respect to Guaranty Obligations. 

         

        (a) To
          the
          extent that any Borrower shall make a payment under this Section
          9
          of all
          or any of the Obligations (other than Advances made to that Borrower for
          which
          it is primarily liable) (a “Guarantor
          Payment”)
          that,
          taking into account all other Guarantor Payments then previously or concurrently
          made by any other Borrower, exceeds the amount that such Borrower would
          otherwise have paid if each Borrower had paid the aggregate Obligations
          satisfied by such Guarantor Payment in the same proportion that such Borrower’s
“Allocable Amount” (as defined below) (as determined immediately prior to such
          Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
          Borrowers as determined immediately prior to the making of such Guarantor
          Payment, then, following the Termination Date, such Borrower shall be entitled
          to receive contribution and indemnification payments from, and be reimbursed
          by,
          each other Borrower for the amount of such excess, pro rata based upon
          their
          respective Allocable Amounts in effect immediately prior to such Guarantor
          Payment.

         

        (b) As
          of any
          date of determination, the “Allocable Amount” of any Borrower shall be equal to
          the maximum amount of the claim that could then be recovered from such
          Borrower
          under this Section
          9
          without
          rendering such claim voidable or avoidable under Section 548 of Chapter
          11 of
          the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
          Act, Uniform Fraudulent Conveyance Act or similar statute or common
          law.

         

        (c) This
          Section
          9.7
          is
          intended only to define the relative rights of Borrowers and nothing set
          forth
          in this Section
          9.7
          is
          intended to or shall impair the obligations of Borrowers, jointly and severally,
          to pay any amounts as and when the same shall become due and payable in
          accordance with the terms of this Agreement, including Section
          9.1.
          Nothing
          contained in Section
          9.10
          shall
          limit the liability of any Borrower to pay the Advances made directly or
          indirectly to that Borrower and accrued interest, fees and expenses with
          respect
          thereto for which such Borrower shall be primarily liable.

         

        
          
             

          

          
            -
              53 -

            
              

            

          

          
             

          

        

         

        (d) The
          parties hereto acknowledge that the rights of contribution and indemnification
          hereunder shall constitute assets of the Borrower to which such contribution
          and
          indemnification is owing.

         

        (e) The
          rights of the indemnifying Borrowers against other Credit Parties under
          this
Section
          9.7
          shall be
          exercisable from and after the Termination Date.

         

        Section
          9.8 Liability
          Cumulative.
          The
          liability of Borrowers under this Section 9 is in addition to and shall
          be
          cumulative with all liabilities of each Borrower to the Lender under this
          Agreement and the other Loan Documents to which such Borrower is a party
          or in
          respect of any Obligations or obligation of the other Borrowers, without
          any
          limitation as to amount, unless the instrument or agreement evidencing
          or
          creating such other liability specifically provides to the
          contrary.

         

        

         

        [SIGNATURES
          ON FOLLOWING PAGE]

         

        

        
          
             

          

          
            -
              54 -

            
              

            

          

          
             

          

        

        IN
          WITNESS WHEREOF, the parties hereto have caused this Loan and Security
          Agreement
          to be executed by their respective officers thereunto duly authorized as
          of the
          date first above written.

         

        
          	 	 	 
	 	BORROWERS:
	 	 
	 	WORKSTREAM USA,
                  INC.
	 
 	 
 	 
 
	 	By:  	/s/ ael
                  Mullarkey
	 	
                  
Name:
                  Michael Mullarkey
	 	Title:
                  President 

        

        

        
          	 	 	 
	 	PAULA
                  ALLEN HOLDINGS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Mullarkey
	 	
                  
Name:
                  Michael Mullarkey
	 	Title:
                  Chief Executive
                  Officer

        

        

         

        
          	 	 	 
	 	THE
                  OMNI
                  PARTNERS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Mullarkey
	 	
                  
Name:
                  Michael Mullarkey
	 	Title:
                  Chief Executive Officer

        
          	 	 	 
	 	6FIGUREJOBS.COM,
                  INC. 
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Mullarkey
	 	
                  
Name:
                  Michael Mullarkey
	 	Title:
                  Chief Executive Officer

        
          	 	 	 
	 	GUARANTOR:
	 	 
	 	WORKSTREAM INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Mullarkey
	 	
                  
Name:
                  Michael Mullarkey
	 	
                  Title:
                    Chief Executive
                    Officer

                

        

         

        
          	 	 	 
	 	LENDER:
	 	 
	 	HILCO FINANCIAL,
                  LLC
	 
 	 
 	 
 
	 	By:  	/s/ David
                  B. Chisholm
	 	
                  
Name:
                  David B. Chisholm
	 	Title:
                  Chief Executive
                  Officer

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