WORKSTREAM INC
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>14
<FILENAME>v02617_ex10-3.txt
<TEXT>
                                                                    EXHIBIT 10.3

                     STANDARD SECURITIES CAPITAL CORPORATION

                                AGENCY AGREEMENT

December 9, 2003

Workstream Inc.
495 March Road, Suite 300
Ottawa, Ontario
K2K 3G1

Attention:  Mr. Michael Mullarkey, President and Chief Executive Officer

Dear Sirs:

RE:      PRIVATE PLACEMENT OF COMMON SHARES AT A PRICE OF $1.60 PER COMMON SHARE

      Standard  Securities  Capital  Corporation (the "AGENT")  understands that
Workstream Inc. (the "CORPORATION")  desires to issue and sell to Purchasers (as
defined below) in the Designated  Province (as defined below) up to US$4,000,000
worth of Common Shares (the "OFFERING").

      The form of agreement between the Corporation and each Purchaser providing
for the  subscription  by each  Purchaser  of Common  Shares (the  "SUBSCRIPTION
AGREEMENT") is attached as Exhibit "A".

1. INTERPRETATION

1.1 Unless  expressly  provided  otherwise,  where used in this Agreement or any
schedule  hereto,  the  following  terms  shall  have  the  following  meanings,
respectively:

      "AGENT" shall have the meaning  ascribed thereto in the first paragraph of
      this Agreement;

      "AGENT'S  COUNSEL"  means Fraser  Milner  Casgrain LLP or such other legal
      counsel as the Agent may appoint;

      "AGENT'S  EXPENSES"  has the meaning  ascribed  thereto in Section 10.1 of
      this Agreement;

      "AGENT'S FEE" has the meaning ascribed to such term in Section 5.1;

      "ALTERNATIVE  TRANSACTION"  means (a) an  issuance  of  securities  of the
      Corporation or securities  convertible,  exchangeable or exercisable  into
      such securities in the capital of the Corporation,  in excess of 5% of the
      total value or number of securities  currently  outstanding in the capital
      of the Corporation, but excluding securities issuable upon the conversion,
      exchange  or  exercise  of  securities  outstanding  on the  date  hereof,
      including,  for greater certainty, the Compensation Warrant Shares; or (b)

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      a merger, amalgamation,  arrangement,  reorganization, joint venture, sale
      of all or  substantially  all  assets,  exchange of assets  involving  the
      Corporation or any material  subsidiary of the  Corporation or any similar
      transaction other than as set out in this Agreement;

      "APPLICABLE SECURITIES LAWS" means, collectively,  the applicable Canadian
      Securities Laws and U.S. Securities Laws;

      "AUDITORS"   means   PricewaterhouseCoopers   LLP,  the  auditors  of  the
      Corporation;

      "BUSINESS DAY" means any day other than a Saturday, Sunday or statutory or
      civic holiday in Toronto, Ontario;

      "CANADIAN SECURITIES LAWS" means, collectively, the securities laws of the
      Designated  Province the respective  regulations  and rules made and forms
      prescribed  thereunder  together  with  all  applicable  published  policy
      statements,  blanket orders, rulings and notices of the Ontario Securities
      Commissions and the SEC;

      "CLAIM" has the meaning ascribed to such term in Section 11.1;

      "CLOSING"  means the closing of the  Offering of the Common  Shares on the
      Closing Date;

      "CLOSING DATE" means December 9, 2003 or such earlier or later date as the
      Corporation and the Agent may agree;

      "COMMON  SHARE" or "COMMON  SHARES" means the common shares in the capital
      of the Corporation;

      "COMPENSATION WARRANTS" and "COMPENSATION WARRANT SHARES" have the meaning
      ascribed to such terms in Section 5.1;

      "CORPORATION" means Workstream Inc. (and any predecessor corporation);

      "CORPORATION'S COUNSEL" means Perley-Robertson, Hill and McDougall LLP;

      "DESIGNATED PROVINCE" means Ontario;

      "FINANCIAL INFORMATION" means:

      (a)   the audited consolidated financial statements of the Corporation for
            the  period   ending  May  31,  2003   consisting   of  the  audited
            consolidated balance sheets,  consolidated statements of operations,
            consolidated   statements  of   comprehensive   loss,   consolidated
            statements of shareholders' equity,  consolidated statements of cash
            flows  together  with  the  notes  to  the  consolidated   financial
            statements; and

      (b)   the  unaudited  interim  consolidated  financial  statements  of the
            Corporation  for the period ending August 31, 2003 consisting of the
            interim   unaudited   consolidated   three  month  balance   sheets,
            consolidated  statements of operations,  consolidated  statements of
            comprehensive loss, and consolidated  statements of cash flows as at

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                                     - 3 -


            such date,  and together with the Notes to the interim  consolidated
            financial statements for such period;

      "GROSS  PROCEEDS"  means the aggregate  gross proceeds to the  Corporation
      from the sale of Common Shares to Purchasers pursuant to the Offering;

      "G.S.T." means taxes, interest,  penalties and fines imposed under Part IX
      of the Excise Tax Act (Canada) and the regulations made thereunder;

      "INCLUDING" means including without limitation;

      "INDEMNIFIED PARTY" has the meaning giving to is in Section 11.1;

      "INTELLECTUAL  PROPERTY  RIGHTS"  means  all  patent  rights,  trademarks,
      copyrights,  industrial designs and technical  information  (including any
      claims or rights to sue for past  infringement  of same),  relating to the
      business of the Corporation owned by or licensed to the Corporation;

      "KNOWLEDGE"  and  "TO  THE  KNOWLEDGE  OF"  mean,  when  referring  to the
      Corporation,  the actual knowledge of the directors and executive officers
      of the  Corporation  and of its  Subsidiaries  and,  when  referring to an
      individual,  the actual  knowledge of such individual and, in either case,
      the actual knowledge that any such person shall have acquired upon due and
      reasonable inquiry in the circumstances;

      "LEGAL COSTS" has the meaning ascribed to such term in Section 10.1;

      "MATERIAL  ADVERSE EFFECT" means an effect which is materially  adverse to
      the business, assets or properties, condition, (financial or otherwise) or
      results of operations of the Corporation or any of its Subsidiaries, taken
      as a whole;

      "MATERIAL  CHANGE" means a change in the business,  results of operations,
      assets,  condition  (financial or otherwise) or capital of the Corporation
      or any of its  Subsidiaries  that would  reasonably  be expected to have a
      significant   effect  on  the  market   price  or  value  of  any  of  the
      Corporation's  securities  and  includes a decision  to  implement  such a
      change  made  by  the  Corporation's  board  of  directors  or  by  senior
      management  of  the  Corporation  who  believe  that  confirmation  of the
      decision by the board of directors is probable;

      "MATERIAL  FACT"  means  a  fact  that  significantly  affects,  or  would
      reasonably be expected to have a significant effect on the market price or
      value of any of the Corporation's securities;

      "MISREPRESENTATION"  means (i) an untrue  statement of a material fact, or
      (ii) an omission to state a material fact that is required to be stated or
      that is necessary to make a statement  not  misleading in the light of the
      circumstances in which it was made;

      "NET PROCEEDS"  means the Gross Proceeds minus the Agent's Fee and Agent's
      Expenses including the Legal Costs;


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      "NON-DISCLOSURE   AGREEMENT"  means  the  non-disclosure  agreement  dated
      December 1, 2003 between the Corporation and the Agent;

      "OFFERED  SECURITIES"  shall  mean,   collectively,   the  Common  Shares,
      Compensation Warrants and the Compensation Warrant Shares;

      "OFFERING" has the meaning ascribed to such term in the first paragraph of
      this Agreement;

      "OUTSTANDING CONVERTIBLE SECURITIES" means all options,  including options
      granted or proposed to be granted to  officers,  directors,  employees  or
      consultants,  warrants,  other  rights  to  acquire  securities  and other
      convertible  securities  of the  Corporation  or  any of its  Subsidiaries
      outstanding as at the date of this  Agreement,  whether issued pursuant to
      an  established  plan  or  otherwise,   and  including  any  agreement  or
      understanding with respect to the issuance or granting of the same;

      "PERSON"  includes  any  individual,   corporation,  limited  partnership,
      general  partnership,  joint stock company or  association,  joint venture
      association,  company,  trust, bank, trust company, land trust, investment
      trust,   society  or  other  entity,   organization,   syndicate   whether
      incorporated or not, trustee,  estate trustee,  executor or other legal or
      personal  representative,  and  governments  and  agencies  and  political
      subdivisions thereof;

      "PRIVATE  PLACEMENT  EXEMPTIONS"  means the  registration  and  prospectus
      exemptions  available pursuant to the Canadian Securities Laws pursuant to
      which the Common Shares are to be issued in the Designated Province;

      "PURCHASERS" means, collectively,  each of the purchasers of Common Shares
      pursuant to the Offering;

      "REGISTRATION  RIGHTS  AGREEMENT" has the meaning ascribed to such term in
      Section ;

      "SEC" means the United States Securities and Exchange Commission;

      "SEC FILINGS" means the Corporation's most recent Form 10-K for the fiscal
      year  ended  May 31,  2003  and all  other  reports,  schedules,  forms or
      statements filed by the Corporation or its subsidiaries with the SEC under
      the 1933 Act or the 1934 Act on or during the 18 months preceding the date
      hereof;

      "SELLING GROUP" has the meaning ascribed to such term in Section 2.3;

      "STOCK  EXCHANGES"  means the NASDAQ Small Cap Market and the Boston Stock
      Exchange;

      "SUBSCRIPTION AGREEMENTS" means, collectively, the subscription agreements
      entered into between the Purchasers and the  Corporation in respect of the
      purchase of Common Shares, a form of which is attached as Exhibit "A";


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      "SUBSIDIARY" or "SUBSIDIARIES" has the meaning as ascribed to such term in
      the Canada Business Corporations Act;

      "TIME OF CLOSING" means the Closing Date;

      "TRANSACTION  DOCUMENTS" has the meaning  ascribed to such term in Section
      6.1(ee);

      "U.S.  SECURITIES LAWS" means,  collectively,  the 1933 Act, the 1934 Act,
      all  applicable  federal and state  securities  laws in the United States,
      including all "Blue Sky" laws, and all  regulations  and forms  prescribed
      thereunder,  together with all  applicable  published  policy  statements,
      releases  and  rulings  of the  SEC and any  applicable  state  securities
      regulatory authorities;

      "1933 ACT" means the Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder;

      "1934 ACT" means the Securities Exchange Act of 1934, as amended,  and the
      rules and regulations promulgated thereunder.

1.2 The division of this Agreement into  sections,  subsections,  paragraphs and
other  subdivisions  and  the  insertion  of  headings  are for  convenience  of
reference only and shall not affect the construction or  interpretation  of this
Agreement.  Unless  something in the subject  matter or context is  inconsistent
therewith,  references  herein to sections,  subsections,  paragraphs  and other
subdivisions are to sections, subsections,  paragraphs and other subdivisions of
this Agreement.

1.3 This  Agreement  shall be governed by and construed in  accordance  with the
laws of the  Province  of  Ontario  and the  federal  laws of Canada  applicable
therein and time shall be of the essence hereof.

1.4 Unless  otherwise  stated herein,  all amounts  expressed herein in terms of
money refer to the lawful  currency of the United  States and all payments to be
made hereunder shall be made in such currency.

1.5 The following are the  Schedules  and Exhibits  attached to this  Agreement,
which  schedules and exhibits  (including  the  representations,  warranties and
covenants  set out  therein)  are  deemed  to be a part  hereof  and are  hereby
incorporated by reference herein:

      Schedule 6.1(q)              -     Contingent Liabilities
      Schedule 6.1(mm)             -     Encumbrances
      Exhibit "A"                  -     Subscription Agreement
      Exhibit "B"                  -     Legal Opinions
      Exhibit "C"                  -     Registration Rights Agreement

2. GENERAL TERMS AND CONDITIONS

2.1  Subject to the terms and  conditions  of this  Agreement,  the  Corporation
hereby  appoints the Agent as, and the Agent  hereby  agrees to act as, the sole

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and exclusive  agent of the Corporation to offer for sale in Canada on behalf of
the  Corporation up to  US$4,000,000  worth of Common Shares at a price of $1.60
per Common Share, and to use its commercially reasonable best efforts to solicit
and procure Purchasers of the Common Shares on behalf of the Corporation.

The Agent acknowledges that the Offering may be done  concurrently,  or within a
short time  thereafter,  with an United  States  offering of up to $1,000,000 of
Common Shares.

2.2 Contemporaneously  with the sale of the Common Shares, the Corporation,  the
Agent and each of the Purchasers will execute and deliver a Registration  Rights
Agreement in the form attached hereto as Exhibit "C" ( the "REGISTRATION  RIGHTS
AGREEMENT"),  pursuant to which the  Corporation  will agree to provide  certain
registration rights under the 1933 Act.

2.3 It is understood and agreed by the parties that the Agent shall act as agent
only and at no time shall the Agent have any  obligation  whatsoever to purchase
any Common  Shares.  The Agent shall have the right to form a selling group (the
"SELLING  GROUP")  consisting of other registered  securities  dealers acting as
sub-agents upon the terms and conditions set out in a selling group agreement to
be entered into  between the Agent and the members of the Selling  Group and the
Agent shall have the right to determine such terms and conditions, provided that
they are not inconsistent  with the terms and conditions of this Agreement,  and
that any fee charged by any such member shall not exceed the Agent's Fee set out
in  Section  5.1 and shall be payable  by the  Agent.  The Agent  shall have the
exclusive right to control all compensation  arrangements between the members of
the Selling Group.

2.4 The Agent  acknowledges  and agrees that any offer to purchase Common Shares
may be accepted or  rejected,  in whole or in part,  by the  Corporation  acting
reasonably.

2.5 The  Corporation  agrees  that the Common  Shares  shall be offered for sale
solely through the Agent in accordance with this Agreement,  except those Common
Shares  offered  for sale in the  Designated  Province  through  members  of the
Selling Group acting as sub-agents qualified to trade in Common Shares under the
laws of the Designated Province appointed or authorized by the Agent as provided
herein.

2.6 The Agent agrees not to solicit offers to purchase or sell the Common Shares
in such a manner as to require  registration of the Common Shares, or the filing
of a  prospectus  with  respect  to the  Common  Shares,  under  the laws of any
jurisdiction outside the Designated Province including,  without limitation, the
United  States,  and not to solicit offers to purchase or sell the Common Shares
in Canada except in the Designated Province and only in accordance with Canadian
Securities Laws. The Agent will ensure that any agreements between the Agent and
any other investment dealers or brokers, including without limitation members of
the Selling Group,  contain  equivalent  restrictions to those contained in this
section.

3. NATURE OF TRANSACTION

3.1 Each  Purchaser  resident in the Designated  Province shall purchase  Common
Shares under a Private  Placement  Exemption so that the purchases of the Common
Shares will be exempt from the registration  and prospectus  requirements of the
Canadian  Securities  Laws. The Corporation  hereby agrees to use all reasonable
commercial   efforts  to  secure  compliance  with  all  securities   regulatory
requirements on a timely basis in connection with the distribution of the Common

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Shares to the Purchasers,  including,  without limitation,  by filing within the
periods  stipulated  under Canadian  Securities  Laws, and at the  Corporation's
expense, all private placement forms required to be filed by the Corporation and
the  Purchasers,  respectively,  in connection  with the Offering and paying all
filing fees required to be paid in connection therewith so that the distribution
of the Common  Shares may  lawfully  occur  without  the  necessity  of filing a
registration  statement  or a  prospectus  or any  similar  document  under  the
Applicable  Securities  Laws,  including,  an offering  memorandum as defined in
Ontario  Securities  Commission  Rule  14-501.  The Agent  agrees to assist  the
Corporation in all reasonable  respects to secure compliance with all regulatory
requirements  in  connection  with the  Offering.  The  Agent  will  notify  the
Corporation  with  respect  to  the  identity  of  each  Purchaser  as  soon  as
practicable and with a view to leaving  sufficient time to allow the Corporation
to secure compliance with all relevant regulatory  requirements under Applicable
Securities Laws relating to the sale of the Common Shares.

4. COVENANTS AND REPRESENTATIONS OF THE AGENT

4.1 The  Agent  covenants  with the  Corporation  that it will (and will use its
reasonable efforts to cause the members of the Selling Group to ensure that they
will):  (i) conduct its activities in connection  with arranging for the sale of
the Common Shares in compliance  with the Applicable  Securities  Laws; (ii) not
deliver to any  prospective  Purchaser  any  document  or  material  without the
consent of the  Corporation;  (iii) not  solicit  offers to purchase or sell the
Common  Shares so as to require  registration  thereof or filing of a prospectus
with respect thereto under the laws of any jurisdiction  outside of Canada where
the  solicitation  or sale of the  Common  Shares  would  result in any  ongoing
disclosure   requirements  in  such   jurisdiction,   or  in  any   registration
requirements in such jurisdiction except for the filing of a notice or report of
the   solicitation  or  sale;  (iv)  obtain  from  each  Purchaser  an  executed
Subscription  Agreement in the form attached  hereto as Appendix  "A",  together
with all documentation as may be necessary in connection with  subscriptions for
Common Shares;  and (v) not make any  representations or warranties with respect
to the  Corporation  or the  Common  Shares,  other  than  as set  forth  in the
Subscription  Agreement,  this  Agreement or in publicly  available  information
filed by the Corporation.

4.2 Neither the Agent nor any of its  affiliates,  nor any person  acting on its
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D under the 1933 Act) in  connection  with the
Offering.

4.3 The Agent (i) is an  "Accredited  Investor," as such term is defined in Rule
501 of Regulation D of the 1933 Act.

4.4 The Agent  acknowledges  that it has been  afforded the  opportunity  to ask
questions of, and receive  answers from, the  Corporation  concerning the Common
Shares and the terms and conditions of the Offering and to obtain any additional
information  the Agent may consider  necessary in making an informed  investment
decision or in order to verify the accuracy of any information set forth in this
Agency Agreement or otherwise provided to the Agent.


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5. AGENT'S COMPENSATION

5.1 In  consideration  of the Agent's services to be rendered to the Corporation
in connection  herewith,  including,  without  limitation,  soliciting offers to
purchase the Common Shares,  acting as financial  advisor to the  Corporation in
respect  of the  sale  of the  Common  Shares,  preparation  of the  Transaction
Documents,  performing  administrative work in connection with such matters, and
all other  services  arising  out of this  Agreement,  the  Corporation  agrees,
subject to and upon the terms and conditions set out herein,  to pay or cause to
be paid (and issue or cause to be  issued) to the Agent at the Time of  Closing:
(a) a cash fee (the  "AGENT'S  FEE")  equal to 7.0% of the  amount  of the Gross
Proceeds (or the Canadian  currency  equivalent  thereof);  and (b) Common Share
purchase warrants (the "COMPENSATION WARRANTS") to purchase the number of Common
Shares  as is equal  to 10% of the  number  of  Common  Shares  sold  under  the
Offering.  Each  Compensation  Warrant  shall  entitle the Agent to purchase one
Common Share  (collectively,  the  "COMPENSATION  WARRANT SHARES") at a price of
$1.60  per  Compensation  Warrant  Share  for a  period  of  twenty-four  months
following  the Closing  Date.  The issuance of  Compensation  Warrants  shall be
subject to receipt of the necessary regulatory approvals.

5.2 The parties  confirm that in the event the Agent appoints  other  registered
dealers as sub-agents to assist in the Offering,  then such sub-agents  shall be
entitled in place of the Agent to receive Compensation Warrants as part of their
compensation  directly registered in such sub-agent's names on the same basis as
the Agent is entitled to receive Compensation Warrants.

5.3  It  is  the
understanding  of both the Corporation and the Agent that G.S.T. is not exigible
on any portion of the  Agent's  Fee.  However,  should it be  determined  by the
Canada Customs and Revenue Agency that G.S.T. should have been charged on all or
any part of the Agent's  Fee, the  Corporation  shall pay to the Agent an amount
equal to the G.S.T.  determined to be exigible.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

6.1 The Corporation  hereby  represents,  warrants and covenants to and with the
Agent and the Purchasers and acknowledges  that the Agent and the Purchasers are
relying upon such  representations,  warranties  and covenants in completing the
Closing as follows:

      (a)   the  proceeds of the sale of the Common  Shares shall be used by the
            Corporation to repay debt, for working capital and general corporate
            purposes, including payment of the costs incurred by the Corporation
            in connection with the Offering;

      (b)   it will as soon as  practicable  after the Closing  Date and, in any
            event,   within   applicable   time  periods  under  the  Applicable
            Securities  Laws,  file such  documents as may be required under the
            Applicable  Securities Laws relating to the private placement of the
            Common  Shares  which shall  include,  but not be limited to,  those
            filing  requirements  as  prescribed  by  OSC  Rule  45-501  and  as
            prescribed  by  CSA   Multilateral   Instrument   45-102  Resale  of
            Securities,  and  pay  all  filing  fees  required  to  be  paid  in
            connection therewith;

      (c)   it will use its commercially  reasonable best efforts to ensure that
            the Common Shares and the  Compensation  Warrant Shares  issuable on

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            the  exercise  of the  Compensation  Warrants,  will be  listed  for
            trading on the Stock Exchanges upon their issue;

      (d)   as soon as practicable after the Closing Date, the Corporation shall
            make  application  for  listing of the Common  Shares on the Toronto
            Stock Exchange and to take all commercially reasonable steps to have
            the application approval as promptly as practicable;

      (e)   promptly  following the Closing Date, but in any event no later than
            45 days  following the Closing Date, the  Corporation  shall prepare
            and  file  with  the SEC a Form  S-3 or,  if  Form  S-3 is not  then
            available  to effect a resale of the  Common  Shares,  on such other
            form of  registration  statement  as is then  available  to  effect,
            subject to approval by the SEC, a registration for the resale of the
            Common  Shares,  such  that  such  Common  Shares  shall  be  freely
            tradeable securities;

      (f)   it  has  complied  and  will  comply  with  all  of  the  Applicable
            Securities  Laws  in  connection  with  the  Offering.  Neither  the
            Corporation nor anyone acting on its behalf, directly or indirectly,
            has or will sell,  offer to sell or solicit offers to buy the Common
            Shares or similar  securities  to, or solicit  offers  with  respect
            thereto  from,  or  enter  into  any  preliminary  conversations  or
            negotiations relating thereto with, any person (other than the Agent
            Purchasers),  so as to bring  the  issuance  and sale of the  Common
            Shares  under  the  registration  or  prospectus  provisions  of the
            Applicable  Securities Laws.  Neither the Corporation nor any of its
            affiliates,  nor any  person  acting  on its or  their  behalf,  has
            engaged in any form of general  solicitation or general  advertising
            in connection with the offer or sale of Common Shares;

      (g)   the Corporation and each of its material Subsidiaries: (i) have been
            incorporated  and  organized  and are validly  existing  and in good
            standing  under  the  laws  of  their  respective  jurisdictions  of
            incorporation;  and (ii)  have all  requisite  corporate  power  and
            authority  and are  qualified  and  authorized  to  carry  on  their
            respective businesses as now conducted and to own, lease and operate
            their respective  properties and assets, in all jurisdictions  where
            such  qualification  or  authorization is required except where such
            failure  to be so  qualified  or the  absence  of any such  licence,
            registration or qualification  does not and will not have a material
            adverse effect;

      (h)   the  Corporation  is  eligible  to  use  Form  S-3 to  register  the
            Registrable  Securities (as such term is defined in the Registration
            Rights  Agreement)  for sale by  Purchasers as  contemplated  by the
            Registration Rights Agreement;

      (i)   the  Corporation and each of its material  Subsidiaries  are current
            and up-to-date with all filings  required to be made by each of them
            respectively  under all  applicable  laws of Canada  and the  United
            States, as applicable;

      (j)   the  Corporation  and  its  Subsidiaries,   collectively,   are  the
            registered  and   beneficial   owners  of  all  of  the  issued  and

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            outstanding  securities of the  Subsidiaries  which  securities have
            been issued as fully paid and  non-assessable  and which  securities
            are  free and  clear  of all  mortgages,  liens,  charges,  pledges,
            security interest encumbrances, claims or demands whatsoever;

      (k)   the  Corporation and each of the material  Subsidiaries  are, in all
            material  respects,   conducting  their  respective   businesses  in
            compliance with all applicable  laws,  rules and regulations and, in
            particular,  all applicable licensing,  food, drug and environmental
            legislation  or other  lawful  requirement  of any  governmental  or
            regulatory  bodies applicable to the Corporation or its Subsidiaries
            of each jurisdiction in which its business is carried on and is duly
            licensed,  registered or qualified in all  jurisdictions in which it
            owns,  leases or  operates  its  property  or carries on business to
            enable  its  business  to be  carried  on as now  conducted  and its
            property  and assets to be owned,  leased and  operated and all such
            licences,  registrations and qualifications are and will at the Time
            of Closing be valid,  subsisting and in good standing,  except where
            such failure to be so qualified or the absence of any such  licence,
            registration or qualification  does not and will not have a material
            adverse effect;

      (l)   the  Corporation and each of the material  Subsidiaries  possess all
            franchises,  certificates,  authority, permits or licences issued by
            the appropriate state,  provincial,  municipal or federal regulatory
            agencies or bodies  necessary  to conduct the  business now owned or
            operated by each of them and neither the  Corporation nor any of its
            material   Subsidiaries  has  received  any  notice  of  proceedings
            relating to the revocation or modification of any such  certificate,
            authority,   permit  or  licence   which,   if  the  subject  of  an
            unfavourable  decision,  ruling or  finding  would  have a  material
            adverse effect ;

      (m)   except as  disclosed in the SEC Filings,  the  Corporation  does not
            have any Outstanding Convertible Securities;  (n) the Corporation is
            authorized  to issue an  unlimited  number of Common  Shares  and an
            unlimited  number of Class A Preferred  Shares issuable in series of
            which, as of the date hereof, 23,200,659 Common Shares and 0 Class A
            Preferred  Shares  are  issued  and  outstanding  as fully  paid and
            non-assessable;

      (o)   the minute books of the Corporation,  which have been made available
            to the Agent or their  counsel,  are  complete  and  accurate in all
            material  respects and the excerpts of the corporate records of each
            of the  Subsidiaries  which have been made available to the Agent or
            their counsel are accurate in all material respects;

      (p)   except as disclosed in the SEC Filings, since May 31, 2003:

            (i)   has not been any material change in the assets, liabilities or
                  obligations  (absolute,  accrued,  contingent or otherwise) of
                  the Corporation,  on a consolidated  basis,  that has not been
                  publicly  disclosed  in  the  manner  required  by  Applicable
                  Securities Laws;


<PAGE>
                                     - 11 -


            (ii)  there has not been any material change in the capital stock or
                  long-term debt of the  Corporation  that has not been publicly
                  disclosed  in the manner  required  by  Applicable  Securities
                  Laws;

            (iii) there  has not  been  any  material  change  that has not been
                  publicly  disclosed  in  the  manner  required  by  Applicable
                  Securities Laws; and

            (iv)  except as has been publicly  disclosed in the manner  required
                  by Applicable  Securities Laws since its last fiscal year end,
                  the  Corporation and each of its  Subsidiaries  has carried on
                  its respective business in the ordinary course;

      (q)   except  as  disclosed  in  the  SEC  Filings  or  in  the  Financial
            Information or as set forth in Schedule 6.1(q),  the Corporation and
            its  Subsidiaries  do  not  have  any  liabilities,   contingent  or
            otherwise, except those included in the ordinary course of business,
            consistent  (as to amount  and  nature)  with past  practices  since
            August 31, 2003,  none of which,  individually  or in the aggregate,
            have had or could  reasonably be expected to have a material adverse
            effect;

      (r)   the Financial  Information fairly presents, in all material respects
            and to the  knowledge of the  Corporation  and its  Subsidiaries  in
            accordance  with  generally  accepted  accounting  principles in the
            United  States  consistently  applied,  the  financial  position and
            condition of the Corporation and the  Subsidiaries as at their dates
            and  the  results  of the  operations  of the  Corporation  and  the
            Subsidiaries  for the periods then ended and reflect all liabilities
            (absolute,  accrued, contingent or otherwise) of the Corporation and
            the Subsidiaries as at their dates, except, in the case of unaudited
            interim statements, to the extent that they may exclude footnotes or
            may be condensed or summary statements;

      (s)   except  as set  forth  in  Schedule  6.1 (q),  there  is no  action,
            proceeding or  investigation  (whether or not  purportedly  by or on
            behalf of the Corporation or any of its Subsidiaries) pending or, to
            the  knowledge  of the  Corporation  or  any  of  its  Subsidiaries,
            threatened  against  or  affecting  the  Corporation  or  any of its
            Subsidiaries, at law or in equity (whether in any court, arbitration
            or similar tribunal) or before or by any federal, provincial, state,
            municipal or other  governmental  department,  commission,  board or
            agency,  domestic or foreign,  which in any way will have a material
            adverse  effect,  or which  questions  the  validity  of the  Common
            Shares, the Compensation  Warrants,  the Compensation Warrant Shares
            or  of  the  issuance  thereof  as  fully  paid  and  non-assessable
            securities  or any  action  taken or to be taken by the  Corporation
            pursuant  to or in  connection  with  this  Agreement.  There are no
            judgments, awards, orders, decrees or executions outstanding against
            the Corporation or any of its Subsidiaries, its or their business or
            any of its or their property or assets;

      (t)   the  execution  and  delivery of this  Agreement,  the  Subscription
            Agreements,  the  Registration  Rights  Agreement,  the certificates
            representing  the  Compensation  Warrants  by the  Corporation,  the
            performance  and compliance  with the terms of this  Agreement,  the
            Subscription  Agreements,  the Registration Rights Agreement and the

<PAGE>
                                     - 12 -


            Compensation  Warrants,  the offer and sale of the Common Shares and
            the  issuance  of the  Compensation  Warrants  and the  Compensation
            Warrant  Shares  by the  Corporation,  will not:  (i)  result in any
            material  breach of, or be in conflict  with or constitute a default
            under,  or create a state of facts  which,  after notice or lapse of
            time,  or  both,  would  constitute  a  default  under  any  term or
            provision  of  the  constating   documents  or  resolutions  of  the
            Corporation;  or (ii) would  constitute  a default or an event which
            with notice or lapse of time or both would  become a default  under,
            or give to others any rights of termination, amendment, acceleration
            or cancellation  of any mortgage,  deed of trust,  note,  indenture,
            contract,  agreement,  instrument,  lease or other document to which
            the  Corporation is a party or by which it is bound or any judgment,
            decree,  order,  statute,  rule  or  regulation  applicable  to  the
            Corporation; or (iii) create or impose a lien, charge or encumbrance
            on any property of the Company under any agreement or any commitment
            to which the  Corporation  is a part or by which the  Corporation is
            bound or by which any of its  respective  properties  or assets  are
            bound; or (iv) result in a violation of any federal,  state local or
            other foreign statute, rule, regulation,  order, judgement or decree
            (including  any federal or state  securities  laws and  regulations)
            applicable to the  Corporation or any  Subsidiaries  or by which any
            property or asset of the Corporation or any  Subsidiaries  are bound
            or affected,  except,  in all cases,  for such conflicts.  Defaults,
            termination, amendments, accelerations, cancellations and violations
            as would  not,  individually  or in the  aggregate,  have a material
            adverse effect;


      (u)   the issued and  outstanding  Common Shares are listed for trading on
            the Stock Exchanges,  the Corporation is not in default or breach of
            any of the rules,  policies or by-laws of the Stock  Exchanges which
            default or breach  would have a material  adverse  effect,  no order
            ceasing or suspending  trading in any securities of the  Corporation
            or prohibiting  the sale of the Common  Shares,  the issuance of the
            Compensation  Warrants  or the  Compensation  Warrant  Shares or the
            trading  of any of the  Corporation's  issued  securities  has  been
            issued and no  proceedings  for such  purpose are pending or, to the
            knowledge of the Corporation, threatened;

      (v)   no  consent,   approval,   authorization,   order,  registration  or
            qualification under any federal,  state,  provincial or local law or
            regulation  or of any  court  or  governmental  agency  or  body  is
            required  for the  sale  and  delivery  of the  Common  Shares,  the
            issuance of the Compensation  Warrants or the  Compensation  Warrant
            Shares or the  consummation  by the  Corporation of its  obligations
            under this Agreement,  except (i) those that are required to be made
            under  Applicable  Securities  Laws,  and (ii) for the  consent  and
            conditional  approval of the Stock  Exchanges  (subject  only to the
            usual filing  requirements),  which consent and approval  shall have
            been obtained prior to the Time of Closing;

      (w)   the auditors of the Corporation who audited the financial statements
            of the Corporation most recently delivered to the securityholders of
            the  Corporation and who delivered their report with respect thereto
            are  independent  public  accountants  as required by the Applicable
            Securities Laws;


<PAGE>
                                     - 13 -


      (x)   the Corporation and each of its Subsidiaries have established on its
            books and records  reserves that are adequate for the payment of all
            taxes  not yet due and  payable  and there are no liens for taxes on
            the assets of the Corporation or any of its Subsidiaries and, to the
            knowledge of the Corporation, there are no audits pending of the tax
            returns  of the  Corporation  or any  of its  Subsidiaries  (whether
            federal,  state,  provincial,  local or  foreign)  and  there are no
            claims  which have been or may be asserted  relating to any such tax
            returns,  which audits and claims,  if determined  adversely,  would
            result in the assertion by any governmental agency of any deficiency
            that does not and will not have a material adverse effect;

      (y)   all taxes  (including  income tax,  capital tax,  goods and services
            tax,  sales  tax,  payroll  taxes,  employer  health  tax,  workers'
            compensation  payments,  custom  and land  transfer  taxes,  duties,
            royalties,  levies,  imposts,  assessments,  deductions,  charges or
            withholdings and all liabilities with respect thereto  including any
            penalty and interest  payable with  respect  thereto  (collectively,
            "TAXES")  due  and  payable  by  the  Corporation  and  each  of its
            Subsidiaries  have been paid,  other than those being  contested  in
            good faith and for which  adequate  reserves  have been  provided or
            where  the  failure  to  pay  such  tax  or  assessment  would  not,
            individually or in the aggregate have a material adverse effect. All
            tax returns,  declarations,  remittances and filings  required to be
            filed by the Corporation and each of its material  Subsidiaries have
            been filed with all  appropriate  governmental  authorities  and all
            such returns, declarations, remittances and filings are complete and
            accurate in all material  respects.  No domestic or foreign taxation
            authority   has  asserted  or,  to  the   Corporation's   knowledge,
            threatened  to assert any  assessment,  claim or liability for taxes
            due or to become due in connection with any review or examination of
            the  tax  returns  of  the   Corporation  or  any  of  its  material
            Subsidiaries   (including,   without  limitation,   any  predecessor
            companies)  filed for any year which  would have a material  adverse
            effect;

      (z)   neither the Corporation,  any of its material  Subsidiaries  nor, to
            the Corporation's  knowledge,  any other party, is in default in the
            observance or  performance of any term or obligation to be performed
            by it under any material contract, joint venture agreement,  license
            or other  instrument  and no event has occurred which with notice or
            lapse of time or both would  constitute such a default,  in any such
            case, which default or event would have a material adverse effect;

      (aa)  all  information  and  statements  contained  in the SEC Filings and
            other materials  filed by or on behalf of the  Corporation  with any
            securities  regulatory  authority as with the Stock  Exchanges  were
            true and  correct in all  material  respects  as of the date of such
            issuance or filing, and, the information contained therein as of the
            date thereof did not contain any untrue  statement of material  fact
            or omit to state a material  fact  required to be stated  therein or
            necessary   to  make  the   statements   therein  in  light  of  the
            circumstances under which they were made not misleading;

      (bb)  all necessary corporate action has been taken to authorize the issue
            and sale of,  and the  delivery  of  certificates  representing  the
            Common Shares to the Purchasers and upon receipt by the  Corporation
            of the purchase price as  consideration  for the issue of the Common

<PAGE>
                                     - 14 -


            Shares,  such Common Shares will be validly issued as fully paid and
            non-assessable;

      (cc)  this  Agreement,  the  Subscription  Agreements,   the  Compensation
            Warrants,  and all  other  contracts  and  instruments  required  in
            connection  with the issue and  distribution  of the  Common  Shares
            (collectively,  the "TRANSACTION  DOCUMENTS")  shall comply with the
            provisions  of  the  laws  of  the  Corporation's   jurisdiction  of
            incorporation,  as  applicable,  and the  regulations  of the  Stock
            Exchanges,  and,  on or prior  to the  Closing  Date,  shall be duly
            authorized,  executed and delivered by the  Corporation and shall be
            valid and binding  obligations  of the  Corporation  enforceable  in
            accordance with their  respective  terms,  subject to any applicable
            bankruptcy,  reorganization,  winding-up,  insolvency, moratorium or
            other  laws  of  general  application,  the  unavailability  of  any
            equitable  remedies,  and that the enforcement of any rights against
            the  Corporation  under this  Agreement with respect to indemnity or
            contribution  may be limited by applicable law and may or may not be
            ordered by a court on grounds of public policy.  The Corporation has
            the  corporate  power and  authority  to enter into the  Transaction
            Documents and to perform its obligations thereunder;

      (dd)  the  Corporation  has the power and  authority  to issue the  Common
            Shares,  and at the Time of Closing,  the Common Shares will be duly
            and validly authorized, allotted and reserved for issuance and, upon
            receipt of the purchase  price for the Common  Shares,  will be duly
            and validly issued and outstanding;

      (ee)  the  Corporation  has the corporate power and authority to issue the
            Compensation Warrants to the Agent, and at the Time of Closing,

            (i)   the Compensation Warrants will be duly and validly created and
                  authorized and will be duly and validly issued and outstanding
                  and will  constitute  valid  and  binding  obligations  of the
                  Corporation in accordance with their terms; and

            (ii)  the  Compensation  Warrant  Shares  will be duly  and  validly
                  authorized,  allotted  and reserved  for  issuance  and,  upon
                  exercise of the Compensation Warrants in accordance with their
                  terms, will be issued as fully paid and non-assessable shares;

      (ff)  other than the Agent, there is no person acting or purporting to act
            at the request of the Corporation, who is entitled to any brokerage,
            agency or other fiscal  advisory or similar fee in  connection  with
            the Offering;

      (gg)  the  Corporation  will promptly notify the Agent in writing if there
            shall  occur any  material  change or change in a material  fact (in
            either case, whether actual, anticipated, contemplated or threatened
            and other  than a change or  change in fact  relating  solely to the
            Agent) or any event or development  involving a prospective material
            change or a change in a material  fact or any other change in any or

<PAGE>
                                     - 15 -


            all  of  the  business,  affairs,   operations,   assets  (including
            information or data relating to the estimated value or book value of
            assets), liabilities (contingent or otherwise),  capital, ownership,
            control or management of the Corporation,  on a consolidated  basis.
            The Corporation  will promptly notify the Agent in writing with full
            particulars   of  any  such  actual,   anticipated,   threatened  or
            prospective change referred to in this paragraph;

      (hh)  neither the Corporation nor any Subsidiary is aware of any licensing
            or   environmental   legislation,   regulation,   by-law  or  lawful
            requirement  presently  in force which the  Corporation  anticipates
            that it or any of its Subsidiaries will be unable to comply with, to
            the extent that compliance is necessary,  which would  reasonably be
            likely to result in a material adverse effect;

      (ii)  with  respect  to  Intellectual  Property  Rights  not  owned by the
            Corporation,   to  the  knowledge  of  the   Corporation,   no  such
            Intellectual  Property Rights are used by the Corporation other than
            with the consent of or licence from the rightful owner thereof;

      (jj)  the  Intellectual  Property  Rights owned by the  Corporation are in
            full force and effect, all required  registration or other fees have
            been paid to  maintain  the  Intellectual  Property  Rights in those
            jurisdictions where the Intellectual Property Rights are used;

      (kk)  with respect to Intellectual Property Rights created or developed by
            the  Corporation,  to the knowledge of the  Corporation,  the use of
            such  rights does not  infringe  any third  party  rights,  and such
            rights have only been created by persons who have an  obligation  to
            assign all of their rights therein to the Corporation; and

      (ll)  the  Intellectual   Property  Rights  are  complete  to  the  extent
            necessary  to enable the  Business to be carried on in all  material
            respects in the manner in which it is carried on by the  Corporation
            at the date hereof;

      (mm)  the  Corporation  and the  Subsidiaries  are the absolute  legal and
            beneficial  owner of, and have good and marketable  title to, all of
            their respective  interests in their  respective  material assets as
            described in the SEC Filings, free of all mortgages, liens, charges,
            pledges,  security  interests,   encumbrances,   claims  or  demands
            whatsoever except as disclosed in Schedule 6.1 (mm), the SEC Filings
            or in the Financial  Information  or which,  to the knowledge of the
            Corporation,   has  been   incurred  by  the   Corporation   or  its
            Subsidiaries  since  August  31,  2003 in their  ordinary  course of
            business, and no other property rights are necessary for the conduct
            of the business of the Corporation or any of the  Subsidiaries,  the
            Corporation  and the  Subsidiaries do not know of any claim or basis
            for a claim that might or could  adversely  affect their  respective
            rights to use,  transfer or otherwise  exploit such property  rights
            and  none of the  Corporation  or any of the  Subsidiaries  have any
            responsibility or obligation to pay any commission, royalty, licence
            fee or similar  payment to any person with  respect to the  property
            rights thereof;


<PAGE>
                                     - 16 -


      (nn)  any and all material agreements pursuant to which the Corporation or
            any of the material  Subsidiaries  holds their respective assets are
            validly existing agreements in full force and effect, enforceable in
            accordance with their respective  terms,  none of the Corporation or
            any  of  the  Subsidiaries  is in  material  default  of  any of the
            provisions of any such agreements nor has any such material  default
            been alleged; and

      (oo)  any press release  relating to the Offering shall be in the form and
            content  agreed  to by the  Agent  acting  reasonably  and  promptly
            provided that nothing shall prevent the  Corporation  from complying
            with Applicable Securities Laws.

7. CONDITIONS TO PURCHASE OBLIGATION

7.1 The following are  conditions of the  Purchasers'  obligations  to close the
purchase of the Common Shares from the Corporation as contemplated hereby, which
conditions the  Corporation  covenants to exercise its  commercially  reasonable
best  efforts  to have  fulfilled  at or prior  to the  Closing  Date and  which
conditions  may be waived in writing in whole or in part by the Agent on its own
behalf and on behalf of the Purchasers:

      (a)   the  Corporation  shall  have made  and/or  obtained  the  necessary
            filings, approvals, consents and acceptances to or from, as the case
            may  be,  the SEC and the  Stock  Exchanges  required  to be made or
            obtained by the  Corporation in connection  with the Offering and in
            order to complete  the same,  on terms which are  acceptable  to the
            Corporation and the Agent,  acting reasonably,  prior to the Closing
            Date;

      (b)   the  Common  Shares  and  Compensation   Warrant  Shares  issued  in
            connection  with the  Offering  shall have been  accepted for and/or
            reserved  for listing by the Stock  Exchanges,  subject to the usual
            conditions and payment of the applicable  additional listing fees to
            the Stock Exchanges;

      (c)   the Corporation  Shall have executed and delivered the  Registration
            Rights Agreement;

      (d)   the Corporation shall have provided to the Agent a lock-up agreement
            executed by Michael  Mullarkey  restricting him from making any sale
            of securities of the  Corporation for a period ending on the earlier
            of: (i) the dated registration statement filed by the Corporation in
            respect of the Common Shares and Compensation  Warrant Shares issued
            pursuant to the Offering becomes effective;  and (ii) 120 days after
            the  closing  of the  terms  of the  Registration  Rights  Agreement
            becomes  effective;  and (ii) 120 days after the Closing  Date,  the
            foregoing  restrictions  shall  not  apply to the  tendering  of any
            securities of the Corporation made pursuant to a bona fide take-over
            bid made to all securityholders of the Corporation.

      (e)   the  Corporation's  board of  directors  shall have  authorized  and
            approved this Agreement, the Registration Rights Agreement, the form
            of Subscription  Agreements,  the form of Compensation  Warrants and
            all other agreements and instruments prepared in connection with the

<PAGE>
                                     - 17 -


            Offering,  the  sale  of the  Common  Shares,  the  issuance  of the
            Compensation   Warrant  Shares  and  all  matters  relating  to  the
            foregoing;

      (f)   as at the Closing Date, the  Corporation  will deliver a certificate
            addressed  to the Agent and to the  Purchasers,  signed by its Chief
            Executive Officer certifying that:

            (i)   there has been no adverse  material change (whether  financial
                  or otherwise) in the business,  affairs,  operations,  assets,
                  liabilities  (contingent  or  otherwise)  or  capital  of  the
                  Corporation  on a consolidated  basis,  since August 31, 2003,
                  which has not been generally disclosed;

            (ii)  since  August 31,  2003,  no material  change,  except for the
                  Offering,  has occurred  with  respect to which the  requisite
                  material change  statement or report has not been filed and no
                  such disclosure has been made on a confidential basis;

            (iii) the   representations   and  warranties  of  the   Corporation
                  contained in this  Agreement  are true and correct at the Time
                  of  Closing,  with the same force and effect as if made by the
                  Corporation  as at the Time of Closing  after giving effect to
                  the transactions contemplated hereby;

            (iv)  the  Corporation  has  complied  with  all the  covenants  and
                  satisfied all the terms and  conditions  of this  Agreement on
                  its part to be complied with or satisfied  except as waived in
                  writing by the Agent at or prior to the Time of Closing;

            (v)   no  order,  ruling  or  determination  having  the  effect  of
                  suspending  the sale or ceasing the trading of the  securities
                  of  the   Corporation   (including   the  Common   Shares  and
                  Compensation  Warrant  Shares)  has been issued or made by the
                  Stock Exchanges, the SEC or any other regulatory authority and
                  is  continuing in effect and no  proceedings  for that purpose
                  have been instituted or are pending or to the knowledge of the
                  Corporation,   contemplated   or   threatened   by  the  Stock
                  Exchanges, the SEC or any other regulatory authority;

            (vi)  the  charter  documents,   including  any  amendments  thereto
                  attached  to the  officer's  certificate  are  full,  true and
                  correct copies and are in full force and effect; and

            (vii) such other  matters as the Agent or the  Agent's  Counsel  may
                  reasonably request.

      (g)   the  Corporation  will have caused an opinion to be delivered by the
            Corporation's  Counsel,  addressed to the Agent, Agent's Counsel and
            the Purchasers  dated as of the Closing Date,  substantially  in the
            form of the legal  opinion  annexed as Exhibit  "B".  In giving such
            opinion,  Corporation's  Counsel  shall be entitled to rely,  to the

<PAGE>
                                     - 18 -


            extent  appropriate  in  the   circumstances,   upon  local  counsel
            including  United States counsel and shall be entitled as to matters
            of fact not within its knowledge to rely upon a certificate  of fact
            from  responsible  persons in a position to have  knowledge  of such
            facts  and  their   accuracy   including   a   certificate   of  the
            Corporation's  registrar  and transfer  agent as to the  outstanding
            securities of the Corporation; and

      (h)   the  delivery  by  the  Corporation  of  such  other   certificates,
            statutory  declarations,   agreements  or  materials,  in  form  and
            substance satisfactory to the Agent and Agent's Counsel as the Agent
            and Agent's Counsel may reasonably request.

8. CLOSING

8.1 The Offering  will be completed on the Closing Date at the offices of Fraser
Milner  Casgrain LLP, 1 First  Canadian  Place,  100 King Street West,  Toronto,
Ontario and  Perley-Robertson,  Hill and McDougall  LLP, 90 Sparks  Street,  4th
floor, Ottawa,  Ontario at the Time of Closing or such other place, date or time
as may be mutually agreed to; provided that if the Corporation has not been able
to comply with any of the  covenants  or  conditions  set out herein,  or in any
Subscription  Agreement,  required to be complied with by the Time of Closing or
such  other  date  and  time  as may  be  mutually  agreed  to,  the  respective
obligations  of  the  parties  will  terminate   without  further  liability  or
obligation except for payment of expenses,  indemnity and contribution  provided
for in this Agreement.

8.2 At the Time of Closing, the Corporation shall deliver to the Agent on behalf
of the Purchaser:

      (a)   certificates  duly registered as the Agent may in writing direct and
            not  inconsistent  with  the  terms  hereof  or of any  Subscription
            Agreement  representing  the  Common  Shares  and  the  Compensation
            Warrants;

      (b)   the requisite  legal opinion and  certificates  as  contemplated  in
            Section 7.1 above; and

      (c)   such  further  documentation  as may be  contemplated  herein  or as
            Agent's  Counsel  or  the  applicable  regulatory   authorities  may
            reasonably require.

8.3 At the Time of Closing, the Agent shall deliver to the Corporation:

      (a)   the Subscription  Agreements and other documentation  required to be
            provided  by or  on  behalf  of  the  Purchasers  pursuant  to  this
            Agreement and the Subscription Agreements; and

      (b)   a certified  cheque,  bank draft or  solicitor's  trust  cheque made
            payable  to the  Corporation  in the  amount  of  the  Net  Proceeds
            (subject to Section 10).

9. TERMINATION OF OBLIGATIONS

9.1 Without limiting any of the foregoing  provisions of this Agreement,  and in
addition to any other  remedies  which may be available to it, the Agent (on its
own  behalf  and on behalf of the  Purchasers)  shall be  entitled,  at its sole

<PAGE>
                                     - 19 -


discretion acting reasonably,  to terminate and cancel, without any liability on
its  part  (or  on the  part  of  the  Purchasers),  its  obligations  (and  the
obligations  of the  Purchasers)  under this  Agreement  to purchase  the Common
Shares,  by giving written notice to the  Corporation at any time through to the
Time of Closing on the Closing Date if:

      (a)   any  order to cease or  suspend  trading  in any  securities  of the
            Corporation,  or prohibiting or restricting the  distribution of any
            of the Common Shares,  the  Compensation  Warrants or any securities
            issuable   thereunder,   is  made,  or  proceedings  are  announced,
            commenced  or  threatened  for the making of any such order,  by the
            Ontario  Securities  Commission,  the SEC, the Stock Exchanges or by
            any other competent authority,  and has not been rescinded,  revoked
            or withdrawn;

      (b)   any order or ruling is issued,  any inquiry,  investigation or other
            proceeding   (whether   formal  or  informal)  in  relation  to  the
            Corporation  or any of the  directors  or officers  thereof is made,
            threatened  or  announced  by any officer or official of the Ontario
            Securities  Commission,  the SEC or the  Stock  Exchanges  or  other
            competent  authority  or any law or  regulation  is  promulgated  or
            changed which, in the reasonable  opinion of the Agent,  operates to
            prevent or restrict  trading in the Common Shares of the Corporation
            or distribution of the Offered Securities;

      (c)   there should  develop,  occur or come into effect or  existence  any
            event,  including  without limiting the generality of the foregoing,
            an act of terrorism,  action,  state,  condition or major  financial
            occurrence  of national  or  international  consequence,  any law or
            regulation, or any other occurrence of any nature whatsoever, which,
            in the Agent's sole reasonable opinion has a material adverse effect
            or would reasonably be likely to have a material adverse effect,  or
            involve,  the  financial  markets  or the  business,  operations  or
            affairs of the Corporation (on a consolidated  basis),  such that it
            would not be practical (in the Agent's sole  reasonable  opinion) to
            market the Common Shares;

      (d)   there should occur any material  change or change in a material fact
            which, in the sole opinion of the Agent would be reasonably expected
            to have a material  adverse  effect on the market  price or value of
            the Common Shares;

      (e)   the Agent  determines  that the  Corporation  is in breach of, or in
            default under or in non-compliance with any material representation,
            warranty, term, covenant or condition of this Agreement; or

      (f)   as a result  of  investigations  after  the date  hereof,  the Agent
            determines that there exists any fact or circumstance  not generally
            disclosed  to the  public by the  Corporation,  at the date  hereof,
            which  would  have in the  Agent's  opinion,  acting  reasonably,  a
            significant  adverse  effect on the market price or the value of the
            Common Shares,

the occurrence or non-occurrence of any of the foregoing events or circumstances
to be determined in the sole discretion of the Agent, acting reasonably.


<PAGE>
                                     - 20 -


      The Agent shall make reasonable  efforts to give notice to the Corporation
(in  writing  or by other  means)  of the  occurrence  of any of the  events  or
circumstances referred to in this section,  provided that neither the giving nor
the failure to give such notice shall in any way affect the Agent's  entitlement
to exercise this right at any time through to the Time of Closing.

      The Agent may exercise  any or all of the rights  provided for in Sections
9, 11, 12, 13 and 14 of this  Agreement  notwithstanding  any  material  change,
event or state of facts and  notwithstanding  any act or thing  taken or done by
the Agent or any  inaction by the Agent (other than acts or things taken or done
or any inaction,  by or on the part of the Agent,  in breach of this  Agreement)
whether before or after the occurrence of any material change, event or state of
facts  including,  without  limitation,  any  act of the  Agent  related  to the
Offering of the Common Shares for sale and the Agent shall only be considered to
have waived or be estopped  from  exercising  or relying  upon any of its rights
under or  pursuant  to  Sections 9, 11, 12, 13 and 14 if such wavier of estoppel
was in writing  and the Agent  specifically  waives or estops  such  exercise or
reliance.

      The  Agent's  rights  of  termination  contained  in this  section  are in
addition to any other  rights or remedies it may have in respect of any default,
act or failure to act or  non-compliance by the Corporation in respect of any of
the matters contemplated by this Agreement.

9.2 The  Corporation  may terminate  this  Agreement by notice in writing to the
Agent at or prior to the Time of Closing if the Corporation  determines,  acting
reasonably,  that  the  Agent  is  in  breach  of  or  in  default  under  or in
non-compliance with any material representation or warranty, or in default under
or in  non-compliance  with any  material  term,  covenant or  condition of this
Agreement.  No such termination  however shall discharge or otherwise affect any
obligation of the Corporation under Sections 11 and 12 of this Agreement.

9.3 Either the Corporation or the Agent may terminate its obligations under this
Agreement  by notice in  writing  to the other if  Closing  does not occur on or
before  December  9,  2003,  unless  the  party  seeking  to  so  terminate  its
obligations  under this  agreement has delayed the Closing  beyond such date. No
such termination  however shall discharge or otherwise affect any obligations of
the Corporation under Sections 10, 11 and 12 of this Agreement.

10. EXPENSES

10.1 The  Corporation  shall pay all costs and expenses  incurred in  connection
with  the  Offering,  including  without  limitation,  the  reasonable  fees and
expenses  of the Agents as set forth in  reasonable  detail in an  invoice,  all
expenses of or incidental to the creation, issuance, sale or distribution of the
Common  Shares,  and the  auditor's,  transfer  agent's  and  filing  fees.  The
Corporation  shall also pay Agents'  Counsel with regard to its reasonable  fees
(which shall be capped at CDN$30,000 unless otherwise agreed to by the Agent and
the Corporation) and disbursements of Agent's Counsel incurred in respect of the
Offering  as set forth in  reasonable  detail in an invoice,  together  with the
applicable G.S.T. (the "LEGAL COSTS"). This cap on Legal Costs is based upon the

<PAGE>
                                     - 21 -


premise  that  the  form  of  Subscription   Agreement,   Compensation   Warrant
Certificate and  Registration  Rights Agreement shall be that of Agent's Counsel
subject to any comments  and/or  proposed  amendments of the Corporation and its
counsel,  acting  reasonably.  The fees and expenses referred to in this Section
10.1  are  collectively  referred  to as the  "AGENTS'  EXPENSES".  The  Agents'
Expenses  shall be  payable  by the  Corporation  at the Time of  Closing on the
Closing Date or upon the  Corporation  receiving an invoice or invoices from the
Agent. The Agents'  Expenses shall be payable by the Corporation  whether or not
the Offering is completed.

11.  INDEMNITY

11.1 The  Corporation  covenants  and  agrees  to  indemnify  the  Agent and its
directors,  officers,  employees,  partners,  agents,  advisors and shareholders
(each being hereinafter referred to as an "INDEMNIFIED PARTY"),  against, and to
reimburse  the  Agent  promptly  upon  demand  for any  legal or other  expenses
reasonably  incurred by the Agent in connection with investigating or defending,
all losses (excluding loss of profits), claims, actions, damages, liabilities or
expenses  (collectively,  a "CLAIM")  caused or incurred in connection with this
Offering by reason of:

      (a)   any statement,  other than a statement relating solely to the Agent,
            contained in this  Agreement or the  Subscription  Agreements  which
            constitutes a misrepresentation;

      (b)   any order made or inquiry,  investigation or proceeding commenced or
            threatened by any Securities Commission or other competent authority
            based upon any misrepresentation or alleged misrepresentation in the
            SEC Filings (other than a statement included in reliance upon and in
            conformity  with  information  furnished to the Corporation by or on
            behalf of the Agent  specifically for use therein) which prevents or
            restricts  the trading in the Common Shares or the  distribution  of
            the Common Shares, in any of the Designated Provinces;

      (c)   the non-compliance or alleged non-compliance by the Corporation with
            any Applicable Securities Laws in connection with the Offering; or

      (d)   any breach of any  representation  or  warranty  of the  Corporation
            contained  herein or the failure of the  Corporation  to comply with
            any of its obligations hereunder,

and will  reimburse  each  Indemnified  Party promptly upon demand for any legal
expenses  reasonably  incurred in connection with investigating or defending any
Claims or in enforcing the indemnity.

11.2 The  indemnification  contained  in this  Section  11 does not and will not
apply to the extent that a court of competent  jurisdiction  in a final judgment
that has become non-appealable determines that:

      (a)   the  Indemnified  Party  has  been  negligent  or  dishonest  or has
            committed any fraudulent  act or was guilty of wilful  misconduct in
            the course of their  performance  of their  obligations  or breached
            applicable  laws or  materially  breached  any of the  terms of this
            Agreement;

      (b)   the  Indemnified  Party  has  breached  any  material  terms of this
            Agreement; and


<PAGE>
                                     - 22 -


      (c)   the  Claim,  as to which  indemnification  is  claimed  directly  or
            indirectly, was directly caused by the negligence, dishonesty, fraud
            or wilful misconduct referred to in paragraph (a).

11.3 If any Claim shall be asserted  against an Indemnified  Party in respect of
which indemnity may be sought from the Corporation pursuant to the provisions of
Section 11.1 or if any  potential  Claim  contemplated  hereby shall come to the
knowledge of an Indemnified  Party, the Indemnified  Party shall promptly notify
the Corporation in writing;  but the omission to so notify the Corporation  will
not relieve the  Corporation  from any  liability it may  otherwise  have to the
Indemnified  Party pursuant to Section 11.1. The  Corporation  shall be entitled
but not obligated to  participate  in or assume the defence  thereof;  provided,
however,  that the defence  shall be through  legal  counsel  acceptable  to the
Indemnified Party, acting reasonably.  In addition,  the Indemnified Party shall
also  have  the  right  to  employ  separate  counsel  in any  such  action  and
participate  in the defence  thereof and the fees and  expenses of such  counsel
shall be borne by the Indemnified Party unless:

      (a)   the employment  thereof has been specifically  authorized in writing
            by the Corporation;

      (b)   the   Indemnified   Party  has  been   advised   by   counsel   that
            representation  of the Corporation and the Indemnified  Party by the
            same  counsel  would be  inappropriate  due to actual  or  potential
            differing interests between them; or

      (c)   the Corporation has failed within a reasonable time after receipt of
            such written notice to assume the defense of such action or claim;

provided  that in no event  shall the  Corporation  be  required  to assume  the
reasonable  fees and  expenses  of more  than one  counsel  for all  Indemnified
Parties. Neither party shall effect any settlement of any such Claim or make any
admission of  liability  without the written  consent of the other  party,  such
consent to be  promptly  considered  and not to be  unreasonably  withheld.  The
indemnity  hereby  provided  for shall remain in full force and effect and shall
not be limited to or affected by any other  indemnity  in respect of any matters
specified herein obtained by the Indemnified Party from any other person.

11.4 To the extent that any Indemnified  Party is not a party to this Agreement,
the  Agent  shall  obtain  and hold  the  right  and  benefit  of the  indemnity
provisions of Section 11.1 in trust for and on behalf of such Indemnified Party.

      If the  Corporation  has pursuant to Section 11.3 assumed the defence with
respect to a Claim,  the  Corporation  hereby  agrees to take all  necessary and
reasonable  steps  to  ensure  that  no  default   judgement  or  other  default
proceedings  are brought  against an Indemnified  Party in any  jurisdiction  in
respect of any Claim brought or made in connection  with any matter set forth in
Section 11.1 and, where required for that purpose,  will consent to or submit to
the  jurisdiction  of any  court  and  defend  any such  Claim on  behalf of any

<PAGE>
                                     - 23 -


Indemnified Party in any such  jurisdiction,  provided that nothing herein shall
limit the Corporation's  right or ability to contest,  at its expense, on behalf
of  an  Indemnified  Party  the  appropriate   jurisdiction  or  forum  for  the
determination  of any such Claim so long as default  judgement or other  default
proceedings are not in the interim brought by a party making such Claim.

12. CONTRIBUTION

12.1 In the event  that the  indemnity  provided  for in  Section 11 is, for any
reason, illegal, unenforceable or otherwise unavailable, in whole or in part, as
being  contrary  to public  policy or for any  other  reason,  the Agent and the
Corporation  shall contribute to the aggregate of all losses,  claims,  actions,
costs, damages,  expenses or liabilities  (including any legal or other costs or
expenses  reasonably  incurred  by the  Indemnified  Party  in  connection  with
investigating  or  defending  any Claim which is the subject of this section but
excluding loss of profits or  consequential  damages) of the nature provided for
above such that the Agent shall be responsible  for that portion  represented by
the  percentage  that the Agent's Fee  payable by the  Corporation  to the Agent
bears to the Gross Proceeds and the  Corporation  shall be  responsible  for the
balance,  provided  that, in no event,  shall the Agent be  responsible  for any
amount in excess of the amount of the  Agent's Fee  actually  received by it. In
the event that the Corporation  may be held to be entitled to contribution  from
the Agent under the provisions of any statute or law, the Corporation  shall, in
respect of the Agent,  be limited to contribution in an amount not exceeding the
lesser of: (i) the portion of the full amount of losses, claims' costs, damages,
expenses and liabilities,  giving rise to such  contribution for which the Agent
is  responsible,  as  determined  above,  and (ii) the amount of the Agent's Fee
actually received by the Agent. Notwithstanding the foregoing, a party guilty of
fraud, fraudulent misrepresentation,  or gross negligence, shall not be entitled
to contribution  from the other party. Any party entitled to contribution  will,
promptly after receiving  notice of commencement of any claim,  action,  suit or
proceeding  against such party in respect of which a claim for  contribution may
be made against the other party under this section,  notify such party from whom
contribution may be sought.  In no case shall such party from whom  contribution
may be sought  be liable  under  this  Agreement  unless  such  notice  has been
provided  but the  omission  to so notify such party shall not relieve the party
from whom  contribution  may be sought  from any  other  obligation  it may have
otherwise than under this section.  The right to  contribution  provided in this
section  shall  be in  addition  and not in  derogation  of any  other  right to
contribution which the Agent or the Corporation may have by statute or otherwise
by law.

12.2 If any of the provisions of Section 12.1 is determined to be void, voidable
or unenforceable,  in whole or in part, such  determination  shall not affect or
impair or be deemed to affect or impair the  validity of any other  provision of
this  Agreement  and such void,  voidable or  unenforceable  provision  shall be
severable from this Agreement.

13. SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS

13.1  All   warranties,   representations,   covenants  and  agreements  of  the
Corporation herein contained, or contained in documents submitted or required to
be  submitted  pursuant to this  Agreement,  shall  survive the  purchase by the
Purchasers of the Common Shares and shall  continue in full force and effect for
the benefit of the  Purchasers  for a period of one year  following  the Closing
Date.  Notwithstanding the foregoing, the provisions contained in this Agreement

<PAGE>
                                     - 24 -


in any way related to the  indemnification  of the Agent by the Corporation,  or
the  contribution  obligations of the Agent or those of the  Corporation,  shall
survive  and  continue  in  full  force  and  effect,  until  liability  to  the
Indemnified  Parties  arising  out  of the  transactions  contemplated  by  this
Agreement has been extinguished by operation of law.

14. ALTERNATIVE TRANSACTION

14.1 If the  Corporation  enters into an agreement  with respect to or otherwise
completes an Alternative  Transaction prior to the Closing Date, the Corporation
shall pay to Agent, as a commission, an aggregate amount equal to the greater of
$100,000 and 3% of the total value of the Alternative  Transaction by bank draft
or certified funds forthwith upon the completion of the Alternative Transaction.
The parties  agree that this  payment will  constitute  a payment of  liquidated
damage and not a penalty and shall be accepted by the Agent in full satisfaction
of all claims  against the  Corporation  which the Agent may have in  connection
with the  Alternative  Transaction  and the  failure to complete  the  Offering,
except a claim for indemnity or  contribution  pursuant to Section 11 or Section
12, as applicable of this Agreement.

15. Restrictions on Offerings

15.1 Other than in connection with the Offering, the Corporation agrees that for
a period ending 90 days after the Closing  Date, it shall not sell or issue,  or
negotiate or enter into any  agreement to sell or issue or announce an intention
to do so, any  Common  Shares or any  securities  exchangeable,  convertible  or
exercisable  into Common Shares  without the consent of the Agent,  such consent
not to be unreasonably  withheld;  provided that the foregoing will not restrict
the  Corporation  from  (a)  granting  options  pursuant  to  the  Corporation's
incentive  stock option plan or the issuance of Common Shares on the exercise of
such options or the issuance of Common Shares under any Outstanding  Convertible
Securities; or (b) selling up to an additional $1,000,000 worth of Common Shares
in the United States.

16. GENERAL CONTRACT PROVISIONS

16.1 Any notice or other communication to be given hereunder shall be in writing
and shall be given by delivery or by telecopier, as follows:

                  if to the Corporation:

                  Workstream Inc.
                  495 March Road, Suite 300
                  Ottawa, Ontario
                  K2K 3G1

                  Attention:  Mr. Michael Mullarkey
                  Fax:  (613) 270-0774


<PAGE>
                                     - 25 -


                  with a copy to:

                  Perley-Robertson, Hill and McDougall LLP
                  90 Sparks Street, 4th Floor
                  Ottawa, Ontario
                  K1P 1E2

                  Attention: Michael Gerrior
                  Fax:  (613) 238-8775

                  or if to the Agent:

                  Standard Securities Capital Corporation
                  24 Hazelton Avenue
                  Toronto, Ontario
                  M5R 2E2

                  Attention: Mark Marcello
                  Fax:  (416) 515-0477

                  with a copy to:

                  Fraser Milner Casgrain LLP
                  Suite 4100
                  1 First Canadian Place
                  100 King Street West
                  Toronto, ON M5X 1B2

                  Attention: Rubin Rapuch
                  Fax:  (416) 863-4592

      and if so given,  shall be deemed to have  been  given and  received  upon
      receipt by the  addressee  or a  responsible  officer of the  addressee if
      delivered,  or four hours after  being  telecopied  and receipt  confirmed
      during normal business hours at the location of the recipient, as the case
      may be. Any party may,  at any time,  give notice in writing to the others
      in the manner  provided  for above of any change of address or  telecopier
      number.

16.2 This Agreement and the other  documents  herein  referred to (including the
Subscription Agreements and the Non-Disclosure  Agreement) constitute the entire
agreement  between the Agent and the Corporation  relating to the subject matter
hereof and  supersede all prior  agreements,  understandings,  negotiations  and
discussions, whether written or oral, between the Agent and the Corporation with
respect to their  respective  rights and obligations in respect of the Offering,
including the Letter Agreement dated December 2, 2003.

17. SUCCESSORS

17.1 This  Agreement  shall  enure to the  benefit  of,  be  binding  upon,  the
Corporation and the Agent and their respective  successors (including successors
by reason of  amalgamation,  merger,  business  combination or arrangement)  and

<PAGE>
                                     - 26 -


legal  representatives  and nothing  expressed or mentioned in this Agreement is
intended  and shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement,  or any provisions
herein contained,  this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive  benefit of such persons and
for the benefit of no other person.

18. COUNTERPARTS

18.1 This  Agreement  may be  executed by any one or more of the parties to this
Agreement in any number of counterparts,  including by facsimile  transmissions,
each of  which  shall be  deemed  to be an  original,  including  those  sent by
facsimile transmission,  but all such counterparts shall together constitute one
and the same instrument.



                            [Signatures on next page]



<PAGE>
                                     - 27 -



If this Agreement  accurately reflects the terms of the transaction which we are
to  enter  into and if such  terms  are  agreed  to by the  Corporation,  please
communicate your acceptance by executing where indicated below and returning one
originally executed copy to the Agent.

Yours very truly,

STANDARD SECURITIES CAPITAL CORPORATION


By:      /s/ Mark Marcello
         ---------------------------------------------
         Name:   Mark Marcello
         Title:  Managing Director, Investment Banking


      The foregoing  accurately  reflects the terms of the transaction  which we
are to enter into and such terms are agreed to with  effect as of the date first
above written.


WORKSTREAM INC.


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


</TEXT>
</DOCUMENT>
