Document:

INSIDER PLEDGE AND ESCROW AGREEMENT

      THIS INSIDER  PLEDGE AND ESCROW  AGREEMENT (the  "Agreement")  is made and
entered  into as of March 8, 2006  (the  "Effective  Date")  by and among  BARRY
BROOKSTEIN (the "Pledgor"),  MONTGOMERY  EQUITY PARTNERS,  LTD. (the "Pledgee"),
COMPLIANCE  SYSTEMS  CORPORATION,  a Delaware  corporation (the "Company"),  and
DAVID GONZALEZ, ESQ., as escrow agent ("Escrow Agent").

                                    RECITALS:

      WHEREAS,  the Company shall issue and sell to the Pledgee,  as provided in
the Securities  Purchase Agreement of even date herewith between the Company and
the  Pledgee  (the  "Securities  Purchase  Agreement"),  and the  Pledgee  shall
purchase  up  to  One  Million  Dollars   ($1,000,000)  of  secured  convertible
debentures  (the  "Convertible  Debentures"),  which shall be  convertible  into
shares of the Company's  common  stock,  par value $0.001 per share (the "Common
Stock") (as converted, the "Conversion Shares"); and

      WHEREAS, to induce the Pledgee to enter into the transaction  contemplated
by the Securities Purchase Agreement,  the Convertible Debentures,  the Investor
Registration  Rights Agreement of even date herewith between the Company and the
Pledgee (the "Investor  Registration  Rights  Agreement"),  and the  Irrevocable
Transfer Agent Instructions among the Company,  the Pledgee, the Transfer Agent,
and the Escrow  Agent (the  "Transfer  Agent  Instructions")  (the  "Transaction
Documents"),  the  Pledgor  has  agreed to  irrevocably  pledge  to the  Pledgee
10,932,319 shares (the "Pledged Shares") of Common Stock  beneficially  owned by
the Pledgor in accordance with this Agreement.

      NOW,  THEREFORE,  for  and  in  consideration  of  the  mutual  covenants,
agreements, warranties, and representations herein contained, and for other good
and  valuable  consideration,  the  receipt and  sufficiency  of which is hereby
acknowledged, the parties hereto hereby agree as follows:

                              TERMS AND CONDITIONS

1.  Obligations  Secured.  The  obligations  secured  hereby  are  any  and  all
obligations of the Company now existing or hereinafter  incurred to the Pledgee,
whether oral or written and whether arising before,  on or after the date hereof
including,  without limitation,  those obligations of the Company to the Pledgee
under the  Transaction  Documents and any other amounts now or hereafter owed to
the Pledgee by the Company thereunder (collectively, the "Obligations").

2. Pledge and Transfer of Pledged  Shares.  The Pledgor hereby grants to Pledgee
an  irrevocable,  first  priority  security  interest in all  Pledged  Shares as
security for the Company's Obligations. Simultaneously with the execution of the
Transaction  Documents,  the  Pledgor  shall  deliver to the Escrow  Agent stock
certificates  made out in favor of the Pledgor  representing the Pledged Shares,
together with duly executed stock powers or other appropriate transfer documents
with  medallion  bank  guarantees  and  executed  in blank by the  Pledgor  (the
"Transfer Documents"),  and such stock certificates and Transfer Documents shall
be held by the Escrow Agent until the full payment of all Obligations due to the
Pledgee,  including  the  repayment  of all  amounts  owed by the Company to the
Pledgee  under  the  Convertible   Debentures  (whether  outstanding  principal,
interest, legal fees, or any other amounts owed to the Pledgee by the Company).

<PAGE>

3. Rights Relating to Pledged Shares. Upon the occurrence of an Event of Default
(as defined  herein),  the Pledgee shall be entitled to vote the Pledged Shares,
receive dividends and other  distributions  thereon,  and enjoy all other rights
and  privileges  incident  to the  ownership  of the  number of  Pledged  Shares
actually released from escrow in accordance with Section 6.1 hereof.

4.  Release  of  Pledged  Shares  from  Pledge.  Upon  the full  payment  of all
Obligations  due to the Pledgee under the Transaction  Documents,  including the
repayment  of  all  amounts  owed  by  the  Company  to the  Pledgee  under  the
Convertible Debentures (whether outstanding principal, interest, legal fees, and
any other amounts owed to the Pledgee by the Company),  the parties hereto shall
notify the Escrow Agent to such effect in writing. Promptly upon receipt of such
written  notice,  the Escrow  Agent shall  return to the  Pledgor  the  Transfer
Documents and the certificates  representing  the Pledged Shares  (collectively,
the "Pledged Materials"), whereupon any and all rights of Pledgee in the Pledged
Materials shall be terminated.

5. Event of  Default.  An "Event of  Default"  shall be deemed to have  occurred
under this Agreement upon an Event of Default under the Convertible Debentures.

6. Remedies.

      a. Upon and  anytime  after the  occurrence  of an Event of  Default,  the
Pledgee shall have the right acquire the Pledged  Shares in accordance  with the
following procedure:  (a) the Pledgee shall provide written notice of such Event
of  Default  (the  "Default  Notice")  to the Escrow  Agent,  with a copy to the
Pledgor; (b) in a Default Notice the Pledgee shall specify the number of Pledged
Shares to be issued to the Plegdee, provided however, that the Pledgee shall not
have the right to acquire  such number of Pledged  Shares  which would cause the
Pledgee, together with its affiliates, to beneficially own in excess of 9.99% of
the  outstanding  capital  of  the  Pledgor  (unless  the  Pledgee  waives  such
limitation by providing 65 days'  advance  written  notice);  and (c) as soon as
practicable  after receipt of a Default  Notice,  the Escrow Agent shall deliver
the  specified  number of  Pledged  Shares  along with the  applicable  Transfer
Documents  to the  Pledgor's  Transfer  Agent  with  instructions  to issue such
Pledged Shares to the Pledgee in accordance with the Irrevocable  Transfer Agent
Instructions of even date herewith,  among the Pledgee,  the Pledgor, the Escrow
Agent, and the Transfer Agent.

      b. Upon receipt of the Pledged  Shares issued to the Pledgee,  the Pledgee
shall have the right to (i) sell the Pledged Shares and to apply the proceeds of
such  sales,  net of any selling  commissions,  to the  Obligations  owed to the
Pledgee by the  Pledgor  under the  Transaction  Documents,  including,  without
limitation,  outstanding principal,  interest, legal fees, and any other amounts
owed to the Pledgee, and exercise all other rights and (ii) any and all remedies
of a secured party with respect to such  property as may be available  under the
Uniform  Commercial  Code as in effect in the State of New  Jersey.  The Pledgee
shall have the  absolute  right to sell or dispose of the Pledged  Shares in any
manner it sees fit and shall have no liability to the Pledgor or any other party
for selling or disposing of such Pledged  Shares even if other  methods of sales
or  dispositions  would or allegedly  would result in greater  proceeds than the
method actually used.

                                        2

<PAGE>

      c. Each  right,  power  and  remedy of the  Pledgee  provided  for in this
Agreement or any other  Transaction  Document shall be cumulative and concurrent
and shall be in  addition  to every  other  such  right,  power or  remedy.  The
exercise or  beginning  of the exercise by the Pledgee of any one or more of the
rights,  powers  or  remedies  provided  for in  this  Agreement  or  any  other
Transaction  Document  or now or  hereafter  existing  at law or in equity or by
statute or otherwise  shall not preclude the  simultaneous  or later exercise by
the  Pledgee of all such other  rights,  powers or  remedies,  and no failure or
delay on the part of the  Pledgee to exercise  any such  right,  power or remedy
shall operate as a waiver thereof.  No notice to or demand on the Pledgor in any
case shall  entitle  it to any other or  further  notice or demand in similar or
other  circumstances  or constitute a waiver of any of the rights of the Pledgee
to any other further action in any circumstances  without demand or notice.  The
Pledgee  shall have the full power to enforce or to assign or contract is rights
under this Agreement to a third party.

7. Representations, Warranties and Covenants.

      a. The Pledgor represents, warrants and covenants that:

            (i) Pledgor is, and at the time when pledged  hereunder will be, the
legal,  beneficial  and record  owner of, and has (and will have) good and valid
title to, all Pledged  Shares  pledged  hereunder,  subject to no pledge,  lien,
mortgage, hypothecation,  security interest, charge, option or other encumbrance
whatsoever;

            (ii) Pledgor has full power, authority and legal right to pledge all
the Pledged Shares pledged pursuant to this Agreement; and

            (iii) all the Pledged Shares have been duly and validly issued,  are
fully paid and  non-assessable  and are  subject to no  options to  purchase  or
similar rights.

      b. The Pledgor covenants and agrees to take all reasonable steps to defend
the Pledgee's  right,  title and security  interest in and to the Pledged Shares
and  the  proceeds  thereof  against  the  claims  and  demands  of all  persons
whomsoever  (other  than the  Pledgee  and the Escrow  Agent);  and the  Pledgor
covenants  and  agrees  that it will have like  title to and right to pledge any
other  property  at any time  hereafter  pledged to the  Pledgee  as  Collateral
hereunder  and will  likewise  take all  reasonable  steps to  defend  the right
thereto and security interest therein of the Pledgee.

      c. The Pledgor  covenants and agrees to take no action which would violate
or be inconsistent with any of the terms of any Transaction  Document,  or which
would have the effect of  impairing  the  position or  interests  of the Pledgee
under any Transaction Document.

      d. The Pledgor represents, warrants and covenants that (i) the Pledgor has
been the  beneficial  owner of the Pledged  Shares for a period of not less than
two (2) years as computed in accordance with Rule 144(d)  promulgated  under the
Securities  Act of 1933,  as  amended,  and (ii)  this  Agreement  is made  with
recourse. Upon an Event of Default, the Pledgee shall be deemed to have acquired
the Pledged Shares on the date they were acquired by the Pledgor. The Pledgor is
an  "affiliate"  of the  Company,  as  such  term  is  defined  in  Rule  144(a)
promulgated under the Securities Act of 1933, as amended.

                                        3

<PAGE>

8. Concerning the Escrow Agent.

      a. The  Escrow  Agent  undertakes  to  perform  only  such  duties  as are
expressly set forth herein and no implied  duties or  obligations  shall be read
into this Agreement against the Escrow Agent.

      b. The Escrow Agent may act in reliance  upon any writing or instrument or
signature  which it, in good  faith,  believes  to be  genuine,  may  assume the
validity and accuracy of any statement or assertion  contained in such a writing
or  instrument,  and may assume that any person  purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner, and execution, or validity of
any instrument deposited in this escrow, nor as to the identity,  authority,  or
right of any  person  executing  the same;  and its  duties  hereunder  shall be
limited to the safekeeping of such certificates,  monies,  instruments, or other
document  received by it as such escrow holder,  and for the  disposition of the
same in accordance with the written instruments accepted by it in the escrow.

      c.  Pledgee and the Pledgor  hereby  agree,  to defend and  indemnify  the
Escrow Agent and hold it harmless from any and all claims, liabilities,  losses,
actions, suits, or proceedings at law or in equity, or any other expenses, fees,
or charges of any character or nature which it may incur or with which it may be
threatened by reason of its acting as Escrow Agent under this Agreement;  and in
connection  therewith,  to  indemnify  the  Escrow  Agent  against  any  and all
expenses,  including attorneys' fees and costs of defending any action, suit, or
proceeding  or resisting  any claim (and any costs  incurred by the Escrow Agent
pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a
lien on all property deposited hereunder, for indemnification of attorneys' fees
and court  costs  regarding  any suit,  proceeding  or  otherwise,  or any other
expenses,  fees, or charges of any character or nature, which may be incurred by
the Escrow Agent by reason of disputes arising between the makers of this escrow
as to the correct interpretation of this Agreement and instructions given to the
Escrow  Agent  hereunder,  or  otherwise,  with the right of the  Escrow  Agent,
regardless of the instructions aforesaid, to hold said property until and unless
said  additional  expenses,  fees, and charges shall be fully paid. Any fees and
costs  charged by the Escrow  Agent for serving  hereunder  shall be paid by the
Pledgor.

      d. If any of the parties shall be in disagreement about the interpretation
of this Agreement, or about the rights and obligations,  or the propriety of any
action contemplated by the Escrow Agent hereunder,  the Escrow Agent may, at its
sole  discretion  deposit  the  Pledged  Materials  with the Clerk of the United
States District Court of New Jersey,  sitting in Newark,  New Jersey,  and, upon
notifying all parties concerned of such action, all liability on the part of the
Escrow  Agent  shall  fully  cease and  terminate.  The  Escrow  Agent  shall be
indemnified  by the  Pledgor,  the Company and Pledgee for all costs,  including
reasonable  attorneys'  fees in connection  with the aforesaid  proceeding,  and
shall be fully  protected in suspending  all or a part of its  activities  under
this Agreement  until a final decision or other  settlement in the proceeding is
received.

                                        4

<PAGE>

      e. The Escrow  Agent may consult  with  counsel of its own choice (and the
costs of such  counsel  shall be paid by the Pledgor and Pledgee) and shall have
full and complete  authorization and protection for any action taken or suffered
by it  hereunder  in good  faith  and in  accordance  with the  opinion  of such
counsel.  The Escrow Agent shall not be liable for any mistakes of fact or error
of judgment,  or for any actions or omissions of any kind,  unless caused by its
willful misconduct or gross negligence.

      f. The Escrow Agent may resign upon ten (10) days'  written  notice to the
parties in this Agreement.  If a successor  Escrow Agent is not appointed within
this ten (10) day period,  the Escrow  Agent may  petition a court of  competent
jurisdiction to name a successor.

9. Conflict  Waiver.  The Pledgor hereby  acknowledges  that the Escrow Agent is
general counsel to the Pledgee, a partner in the general partner of the Pledgee,
and counsel to the Pledgee in connection with the transactions  contemplated and
referred herein.  The Pledgor agrees that in the event of any dispute arising in
connection  with this Agreement or otherwise in connection  with any transaction
or  agreement  contemplated  and  referred  herein,  the Escrow  Agent  shall be
permitted to continue to represent  the Pledgee and the Pledgor will not seek to
disqualify such counsel and waives any objection Pledgor might have with respect
to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement.

10. Notices. Unless otherwise provided herein, all demands,  notices,  consents,
service of process,  requests  and other  communications  hereunder  shall be in
writing and shall be  delivered in person or by overnight  courier  service,  or
mailed by certified mail, return receipt requested, addressed:

If to the Company, to:          Compliance Systems Corporation
                                90 Pratt Oval
                                Glen Cove, NY 11542
                                Attention:  Dean Garfinkel
                                Telephone:  (516) 656-5155
                                Facsimile:  (516) 676-2420

With a copy to:                 Kirkpatrick & Lockhart Nicholson Graham, LLP
                                201 South Biscayne Boulevard, Suite 2000
                                Miami, Florida 33131
                                Attention:  Clayton E. Parker, Esq.
                                Telephone:  (305) 539-3306
                                Facsimile:  (305) 328-7095

If to the Pledgee:              Montgomery Equity Partners, Ltd.
                                101 Hudson Street, Suite 3700
                                Jersey City, NJ 07302
                                Attention:  Mark A. Angelo
                                Telephone:  (201) 985-8300
                                Facsimile:  (201) 985-8744

                                        5

<PAGE>

With copy to:                   Montgomery Equity Partners, Ltd.
                                101 Hudson Street, Suite 3700
                                Jersey City, NJ 07302
                                Attention:  David Gonzalez, Esq.
                                Telephone:  (201) 985-8300
                                Facsimile:  (201) 985-1964

If to the Pledgor, to:          Barry Brookstein
                                c/o Compliance Systems Corporation
                                90 Pratt Oval
                                Glen Cove, NY 11542
                                Telephone:  (516) 656-5155
                                Facsimile:  (516) 676-2420

Any such notice  shall be  effective  (a) when  delivered,  if delivered by hand
delivery or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.

11. Binding Effect. All of the covenants and obligations  contained herein shall
be binding upon and shall inure to the benefit of the respective parties,  their
successors and assigns.

12. Governing Law; Venue; Service of Process.  The validity,  interpretation and
performance of this Agreement shall be determined in accordance with the laws of
the State of New Jersey  applicable to contracts made and to be performed wholly
within that state  except to the extent that  Federal law  applies.  The parties
hereto agree that any  disputes,  claims,  disagreements,  lawsuits,  actions or
controversies  of any type or nature  whatsoever  that,  directly or indirectly,
arise from or relate to this Agreement,  including,  without limitation,  claims
relating to the  inducement,  construction,  performance  or termination of this
Agreement,  shall be  brought  in the state  superior  courts  located in Hudson
County, New Jersey or Federal district courts located in Newark, New Jersey, and
the parties  hereto  agree not to challenge  the  selection of that venue in any
such proceeding for any reason,  including,  without limitation,  on the grounds
that such venue is an inconvenient  forum. The parties hereto specifically agree
that  service  of process  may be made,  and such  service  of process  shall be
effective if made, pursuant to Section 8 hereto.

13.  Enforcement  Costs. If any legal action or other  proceeding is brought for
the enforcement of this  Agreement,  or because of an alleged  dispute,  breach,
default  or   misrepresentation  in  connection  with  any  provisions  of  this
Agreement,  the  successful or prevailing  party or parties shall be entitled to
recover  reasonable  attorneys'  fees,  court costs and all expenses even if not
taxable as court costs (including,  without limitation, all such fees, costs and
expenses  incident  to  appeals),  incurred  in that  action or  proceeding,  in
addition to any other relief to which such party or parties may be entitled.

14. Remedies  Cumulative.  No remedy herein conferred upon any party is intended
to be  exclusive  of any other  remedy,  and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, by statute, or otherwise.  No single or
partial  exercise  by any party of any right,  power or remedy  hereunder  shall
preclude any other or further exercise thereof.

                                        6

<PAGE>

15.  Counterparts.  This Agreement may be executed in one or more  counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute the same instrument.

16. No  Penalties.  No provision of this  Agreement  is to be  interpreted  as a
penalty upon any party to this Agreement.

17.  JURY  TRIAL.  EACH  OF  THE  PLEDGEE  AND  THE  PLEDGOR  HEREBY  KNOWINGLY,
VOLUNTARILY AND  INTENTIONALLY  WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY
JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION BASED HEREON,  OR ARISING
OUT OF,  UNDER OR IN ANY WAY  CONNECTED  WITH THE DEALINGS  BETWEEN  PLEDGEE AND
PLEDGOR, THIS PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,  STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY  HERETO OR THERETO IN EACH CASE  WHETHER NOW
EXISTING  OR  HEREAFTER  ARISING,  AND  WHETHER  IN  CONTRACT,  TORT,  EQUITY OR
OTHERWISE.

       [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY BLANK]

                                        7

<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto have duly  executed this Insider
Pledge and Escrow Agreement as of the date first above written.

                              PLEDGEE:

                              MONTGOMERY EQUITY PARTNERS, LTD.

                              By:   Yorkville Advisors, LLC
                              Its:  General Partner

                              By:
                                 -----------------------------
                                 Name:  Mark Angelo
                                 Title: Portfolio Manager

                              PLEDGOR:

                              By:
                                 -----------------------------
                              Name: Barry Brookstein

                              COMPLIANCE SYSTEMS CORPORATION

                              By:
                                 -----------------------------
                              Name: Dean Garfinkel
                              Title: Chairman

                              ESCROW AGENT

                              By:
                                 ---------------------------
                              Name: David Gonzalez, Esq.

                                       8IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                  March 8, 2006

West Coast Stock Transfer, Inc.
Suite 302, 850 West Hastings Street
Vancouver, British Columbia

Canada V6C 1E1

      RE:   COMPLIANCE SYSTEMS CORPORATION

Ladies and Gentlemen:

      Reference  is made to that  certain  Securities  Purchase  Agreement  (the
"Securities  Purchase  Agreement")  dated of even date  herewith  by and between
Compliance Systems Corporation,  a Nevada corporation  (formerly GSA Publishing,
Inc.) (the  "Company"),  and the Buyers set forth on Schedule I attached thereto
(collectively  the  "Buyers")  and those  certain  Pledge and Escrow  Agreements
(collectively,  the "Pledge Agreements")  between each of (i) the Company,  (ii)
Dean Garfinkel,  and (iii) Barry Brookstein,  and the Buyers and David Gonzalez,
as escrow  agent (the  "Escrow  Agent").  Pursuant  to the  Securities  Purchase
Agreement,  the Company shall sell to the Buyers,  an the Buyers shall  purchase
from the Company, convertible debentures (collectively, the "Debentures") in the
aggregate  principal  amount of One Million Dollars  ($1,000,000),  plus accrued
interest,  which are convertible  into shares of the Company's common stock, par
value $0.001 per share (the "Common  Stock"),  at the Buyers  discretion.  These
instructions  relate to the  following  stock or  proposed  stock  issuances  or
transfers:

      1.    The Company has agreed to issue to the Buyers shares of the
            Company's Common Stock upon conversion of the Debentures
            ("Conversion Shares") plus the shares of Common Stock to be issued
            to the Buyers upon conversion of accrued interest and liquidated
            damages into Common Stock (the "Interest Shares")

      2.    The Company, Dean Garfinkel and Barry Brookstein have prepared, or
            will promptly prepare a stock certificate representing shares (the
            "Escrowed Shares") of the Common Stock that have been or are being
            delivered to the Escrow Agent pursuant to the Pledge Agreements.

This letter shall serve as our irrevocable authorization and direction to West
Coast Stock Transfer, Inc. (the "Transfer Agent") to do the following:

      1. Conversion Shares.

<PAGE>

            a.    Instructions Applicable to Transfer Agent. With respect to the
                  Conversion Shares and the Interest Shares,  the Transfer Agent
                  shall issue the Conversion  Shares and the Interest  Shares to
                  the Buyers  from time to time upon  delivery  to the  Transfer
                  Agent of a properly  completed  and duly  executed  Conversion
                  Notice (the "Conversion  Notice"), in the form attached hereto
                  as  Exhibit  I,  delivered  on  behalf of the  Company  to the
                  Transfer  Agent  by  the  Escrow  Agent.  Upon  receipt  of  a
                  Conversion  Notice,  the Transfer Agent shall within three (3)
                  Trading Days  thereafter  (i) issue and  surrender to a common
                  carrier for overnight  delivery to the address as specified in
                  the Conversion  Notice, a certificate,  registered in the name
                  of the Buyers or their designees,  for the number of shares of
                  Common  Stock to which the  Buyers  shall be  entitled  as set
                  forth in the Conversion Notice or (ii) provided Transfer Agent
                  are participating in The Depository Trust Company ("DTC") Fast
                  Automated Securities Transfer Program, upon the request of the
                  Buyers, credit such aggregate number of shares of Common Stock
                  to which the Buyers  shall be entitled to the Buyers' or their
                  designees'  balance  account  with  DTC  through  its  Deposit
                  Withdrawal At Custodian  ("DWAC")  system  provided the Buyers
                  causes its bank or broker to  initiate  the DWAC  transaction.
                  For purposes  hereof "Trading Day" shall mean any day on which
                  the Nasdaq Market is open for customary trading.

            b.    The  Company  hereby  confirms to the  Transfer  Agent and the
                  Buyers that  certificates  representing the Conversion  Shares
                  shall not bear any legend restricting  transfer and should not
                  be  subject  to  any  stop-transfer   restrictions  and  shall
                  otherwise be freely  transferable  on the books and records of
                  the Company; provided that counsel to the Company delivers (i)
                  the Notice of  Effectiveness  set forth in Exhibit II attached
                  hereto and (ii) an opinion of counsel in the form set forth in
                  Exhibit III attached hereto, and that if the Conversion Shares
                  and the Interest  Shares are not registered for sale under the
                  Securities Act of 1933, as amended,  then the certificates for
                  the  Conversion  Shares  and  Interest  Shares  shall bear the
                  following legend:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
                  ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
                  TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
                  OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
                  THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
                  OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
                  RULE 144 UNDER SAID ACT."

                                       2
<PAGE>

            c.    In the event that  counsel to the Company  fails or refuses to
                  render an opinion as required to issue the  Conversion  Shares
                  in  accordance  with the preceding  paragraph  (either with or
                  without restrictive legends, as applicable),  then the Company
                  irrevocably and expressly  authorizes counsel to the Buyers to
                  render such  opinion.  The Transfer  Agent shall accept and be
                  entitled to rely on such  opinion for the  purposes of issuing
                  the Conversion Shares.

            d.    Instructions  Applicable  to  Escrow  Agent.  Upon the  Escrow
                  Agent's  receipt of a  properly  completed  conversion  notice
                  substantially  in  the  form  attached  as an  exhibit  to the
                  Debentures, the Escrow Agent shall, within one (1) Trading Day
                  thereafter,  send to the Transfer Agent a Conversion Notice in
                  the form attached hereto as Exhibit I, which shall  constitute
                  an  irrevocable  instruction  to the Transfer Agent to process
                  such  Conversion  Notice in accordance with the terms of these
                  instructions.

      2. Escrowed Shares.

            a.    With respect to the Escrowed Shares,  upon an event of default
                  as set forth in the Pledge Agreements,  the Escrow Agent shall
                  send written notice to the Transfer Agent ("Escrow Notice") to
                  transfer  such  number  of  Escrow  Shares as set forth in the
                  Escrow Notice to the Buyers. Upon receipt of an Escrow Notice,
                  the  Transfer  Agent shall  promptly  transfer  such number of
                  Escrow  Shares  to the  Buyers  as shall  be set  forth in the
                  Escrow  Notice  delivered to the Transfer  Agent by the Escrow
                  Agent.  Further,  the Transfer Agent shall  promptly  transfer
                  such  shares  from the  Buyers  to any  subsequent  transferee
                  promptly  upon  receipt of written  notice  from the Buyers or
                  their  counsel.  If the Escrow Shares are not  registered  for
                  sale under the  Securities  Act of 1933, as amended,  then the
                  certificates  for the Escrow  Shares shall bear the legend set
                  forth in Section 1b.

            b.    In the event that  counsel to the Company  fails or refuses to
                  render an opinion as may be required by the Transfer  Agent to
                  affect a transfer of the Escrow Shares (either with or without
                  restrictive   legends,   as  applicable),   then  the  Company
                  irrevocably and expressly  authorizes counsel to the Buyers to
                  render such  opinion.  The Transfer  Agent shall accept and be
                  entitles   to  rely  on  such   opinion  for  the  purpose  of
                  transferring the Escrow Shares.

      3. All Shares.

            a.    The  Transfer  Agent shall  reserve for issuance to the Buyers
                  the Conversion Shares and the Escrowed Shares. All such shares
                  shall  remain in reserve  with the  Transfer  Agent  until the
                  Buyers  provides  the  Transfer  Agent  instructions  that the
                  shares or any part of them shall be taken out of  reserve  and
                  shall no longer be subject to the terms of these instructions.

                                       3
<PAGE>

            b.    The Transfer  Agent shall rely  exclusively  on the Conversion
                  Notice or the Escrow  Notice and shall have no  liability  for
                  relying on such instructions.  Any Conversion Notice or Escrow
                  Notice  delivered  hereunder  shall  constitute an irrevocable
                  instruction  to the  Transfer  Agent to process such notice or
                  notices in accordance  with the terms thereof.  Such notice or
                  notices may be  transmitted to the Transfer Agent by facsimile
                  or any commercially reasonable method.

            c.    The  Company  hereby  confirms to the  Transfer  Agent and the
                  Buyers that no instructions other than as contemplated  herein
                  will be given to Transfer Agent by the Company with respect to
                  the matters  referenced  herein. The Company hereby authorizes
                  the Transfer Agent, and the Transfer Agent shall be obligated,
                  to  disregard  any  contrary  instructions  received  by or on
                  behalf of the Company.

      Certain  Notice  Regarding the Escrow Agent.  The Company and the Transfer
Agent hereby acknowledge that the Escrow Agent is general counsel to the Buyers,
a partner of the  general  partner  of the  Buyers and  counsel to the Buyers in
connection with the transactions  contemplated and referred herein.  The Company
and the  Transfer  Agent  agree  that in the  event of any  dispute  arising  in
connection  with this Agreement or otherwise in connection  with any transaction
or  agreement  contemplated  and  referred  herein,  the Escrow  Agent  shall be
permitted  to continue to  represent  the Buyers and neither the Company nor the
Transfer Agent will seek to disqualify such counsel.

      The Company  hereby agrees that it shall not replace the Transfer Agent as
the Company's transfer agent without the prior written consent of the Buyers.

      Any attempt by Transfer  Agent to resign as the Company's  transfer  agent
hereunder shall not be effective until such time as the Company  provides to the
Transfer Agent written notice that a suitable replacement has agreed to serve as
transfer agent and to be bound by the terms and conditions of these  Irrevocable
Transfer Agent Instructions.

      The Company herby confirms and the Transfer Agent  acknowledges that while
any portion of the Debenture  remains unpaid and unconverted the Company and the
Transfer Agent shall not, without the prior consent of the Buyers, (i) issue any
Common Stock or Preferred Stock without consideration or for a consideration per
share  less than the  closing  bid  price  determined  immediately  prior to its
issuance,  (ii) issue any Preferred Stock,  warrant,  option,  right,  contract,
call, or other  security or instrument  granting the holder thereof the right to
acquire Common Stock without consideration or for a consideration per share less
than the closing bid price of the Common Stock determined  immediately  prior to
its issuance, (iii) issue any S-8 shares of the Company's Common Stock.

                                       4
<PAGE>

        The Company and the Transfer Agent hereby  acknowledge  and confirm that
complying  with the terms of this  Agreement does not and shall not prohibit the
Transfer Agent from satisfying any and all fiduciary responsibilities and duties
it may owe to the Company.

      The Company and the Transfer Agent  acknowledge that the Buyers is relying
on the  representations and covenants made by the Company and the Transfer Agent
hereunder  and are a material  inducement to the Buyers  purchasing  convertible
debentures under the Securities Purchase Agreement. The Company and the Transfer
Agent further acknowledge that without such representations and covenants of the
Company and the Transfer Agent made hereunder, the Buyers would not purchase the
Debentures.

      Each party hereto  specifically  acknowledges and agrees that in the event
of a breach or threatened breach by a party hereto of any provision hereof,  the
Buyers  will  be  irreparably  damaged  and  that  damages  at law  would  be an
inadequate  remedy if these  Irrevocable  Transfer Agent  Instructions  were not
specifically enforced.  Therefore, in the event of a breach or threatened breach
by a party hereto, including,  without limitation,  the attempted termination of
the  agency  relationship  created  by this  instrument,  the  Buyers  shall  be
entitled,  in  addition  to all  other  rights  or  remedies,  to an  injunction
restraining such breach,  without being required to show any actual damage or to
post any bond or other security,  and/or to a decree for specific performance of
the provisions of these Irrevocable Transfer Agent Instructions.

        [SIGNATURE PAGE FOLLOWS: REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       5
<PAGE>

      IN  WITNESS  WHEREOF,  the  parties  have  caused  this  letter  agreement
regarding  Irrevocable  Transfer  Agent  Instructions  to be duly  executed  and
delivered as of the date first written above.

                                          COMPANY:

                                          COMPLIANCE SYSTEMS CORPORATION

                                          By:
                                             -----------------------------------
                                          Name: Dean Garfinkel
                                          Title:      Chairman

                                          --------------------------------------
                                          David Gonzalez, Esq.

ACKNOWLEDGED, AGREED TO AND ACCEPTED:

WEST COAST STOCK TRANSFER, INC.

By:_________________________________
Name:_______________________________
Title:______________________________

                                       6
<PAGE>

                                  SCHEDULE I-1

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

                                                  Address/Facsimile
Name               Signature                      Number of Buyers
----               ---------                      -----------------

Montgomery Equity  By:   Yorkville Advisors, LLC  101 Hudson Street - Suite 3700
Partners, Ltd.     Its:  General Partner          Jersey City, NJ  07303
                                                  Facsimile:  (201) 985-8266

                    By: ---------------------

                    Name: Mark Angelo
                    Its: Portfolio Manager

                                  SCHEDULE I-I

<PAGE>

                                    EXHIBIT I

                  TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                            FORM OF CONVERSION NOTICE

      Reference is made to the Securities  Purchase  Agreement (the  "Securities
Purchase  Agreement") between Compliance Systems  Corporation,  (the "Company"),
and the Buyers set forth on Schedule I attached  thereto dated March 8, 2006. In
accordance  with  and  pursuant  to  the  Securities  Purchase  Agreement,   the
undersigned  hereby  elects to convert  convertible  debentures  into  shares of
common stock,  par value $0.001 per share (the "Common  Stock"),  of the Company
for the amount indicated below as of the date specified below.

Conversion Date:                                 _______________________________

Amount to be converted:                          $______________________________

Conversion Price:                                $______________________________

Shares of Common Stock Issuable:                 _______________________________

Amount of Debenture unconverted:                 $______________________________

Amount of Interest Converted:                    $______________________________

Conversion Price of Interest:                    $______________________________

Shares of Common Stock Issuable:                 _______________________________

Amount of Liquidated Damages:                    $______________________________

Conversion Price of Liquidated Damages:          $______________________________

Shares of Common Stock Issuable:

Total Number of shares of Common Stock to be issued:

                                   EXHIBIT I-1

<PAGE>

Please  issue  the  shares  of  Common  Stock in the  following  name and to the
following address:

Issue to:                                        _______________________________

Authorized Signature:                            _______________________________

Name:                                            _______________________________

Title:                                           _______________________________

Phone #:                                         _______________________________

Broker DTC Participant Code:                     _______________________________

Account Number*:                                 _______________________________

    * Note that receiving broker must initiate transaction on DWAC System.

                                       2
<PAGE>

                                   EXHIBIT II

                  TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                         FORM OF NOTICE OF EFFECTIVENESS

                            OF REGISTRATION STATEMENT

_________, 2006

________________
________________
________________

Attention: _______________________________

RE:   COMPLIANCE SYSTEMS CORPORATION

Ladies and Gentlemen:

      We are counsel to Compliance  Systems  Corporation,  (the "Company"),  and
have represented the Company in connection with that certain Securities Purchase
Agreement,  dated as of March 8, 2006  (the  "Securities  Purchase  Agreement"),
entered  into by and among the  Company  and the Buyers set forth on  Schedule I
attached thereto  (collectively the "Buyers")  pursuant to which the Company has
agreed to sell to the Buyers up to One Million  Dollars  ($1,000,000) of secured
convertible debentures,  which shall be convertible into shares (the "Conversion
Shares") of the Company's  common stock, par value $0.001 per share (the "Common
Stock"),  in accordance  with the terms of the  Securities  Purchase  Agreement.
Pursuant to the Securities Purchase Agreement, the Company also has entered into
a Registration Rights Agreement, dated as of March 8, 2006, with the Buyers (the
"Investor  Registration Rights Agreement") pursuant to which the Company agreed,
among other things,  to register the Conversion  Shares under the Securities Act
of 1933,  as  amended  (the  "1933  Act").  In  connection  with  the  Company's
obligations under the Securities  Purchase Agreement and the Registration Rights
Agreement,  on _______,  2006, the Company filed a Registration  Statement (File
No.  ___-_________)  (the  "Registration  Statement")  with the  Securities  and
Exchange Commission (the "SEC") relating to the sale of the Conversion Shares.

      In  connection  with the  foregoing,  we advise the Transfer  Agent that a
member of the SEC's staff has advised us by  telephone  that the SEC has entered
an order declaring the  Registration  Statement  effective under the 1933 Act at
____ P.M. on __________, 2006 and we have no knowledge, after telephonic inquiry
of a member of the SEC's staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are pending before,  or
threatened  by, the SEC and the  Conversion  Shares are available for sale under
the 1933 Act pursuant to the Registration Statement.

                                  EXHIBIT II-1

<PAGE>

      The Buyers has  confirmed  it shall  comply with all  securities  laws and
regulations   applicable  to  it  including   applicable   prospectus   delivery
requirements upon sale of the Conversion Shares.

                                    Very truly yours,

                                    By:_______________________________

                                  EXHIBIT II-2

<PAGE>

                                   EXHIBIT III

                  TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                 FORM OF OPINION

________________ 2006

VIA FACSIMILE AND REGULAR MAIL

________________
________________
________________

Attention: _______________

      RE:   COMPLIANCE SYSTEMS CORPORATION

Ladies and Gentlemen:

      We have acted as special counsel to Compliance  Systems  Corporation  (the
"Company"),  in  connection  with the  registration  of  ___________shares  (the
"Shares") of its common stock with the Securities and Exchange  Commission  (the
"SEC"). We have not acted as your counsel.  This opinion is given at the request
and with the consent of the Company.

      In rendering  this opinion we have relied on the accuracy of the Company's
Registration Statement on Form SB-2, as amended (the "Registration  Statement"),
filed by the Company with the SEC on _________  ___, 2006. The Company filed the
Registration  Statement on behalf of certain selling  stockholders (the "Selling
Stockholders").  This opinion relates solely to the Selling  Shareholders listed
on Exhibit  "A" hereto and  number of Shares  set forth  opposite  such  Selling
Stockholders'  names. The SEC declared the Registration  Statement  effective on
__________ ___, 2006.

      We  understand  that the  Selling  Stockholders  acquired  the Shares in a
private offering exempt from  registration  under the Securities Act of 1933, as
amended. Information regarding the Shares to be sold by the Selling Shareholders
is  contained  under the  heading  "Selling  Stockholders"  in the  Registration
Statement,  which information is incorporated herein by reference.  This opinion
does not relate to the issuance of the Shares to the Selling  Stockholders.  The
opinions set forth herein  relate  solely to the sale or transfer by the Selling
Stockholders  pursuant to the  Registration  Statement under the Federal laws of
the United States of America.  We do not express any opinion  concerning any law
of any state or other jurisdiction.

                                  EXHIBIT III-1

<PAGE>

      In  rendering  this  opinion  we have  relied  upon  the  accuracy  of the
foregoing statements.

      Based on the  foregoing,  it is our  opinion  that the  Shares  have  been
registered with the Securities and Exchange  Commission under the Securities Act
of 1933,  as  amended,  and that  ________  may remove the  restrictive  legends
contained on the Shares. This opinion relates solely to the number of Shares set
forth opposite the Selling Stockholders listed on Exhibit "A" hereto.

      This opinion is furnished to Transfer  Agent  specifically  in  connection
with the issuance of the Shares,  and solely for your  information  and benefit.
This letter may not be relied upon by  Transfer  Agent in any other  connection,
and it may not be relied  upon by any other  person  or entity  for any  purpose
without our prior written consent.  This opinion may not be assigned,  quoted or
used  without our prior  written  consent.  The  opinions  set forth  herein are
rendered  as of the date hereof and we will not  supplement  this  opinion  with
respect to changes in the law or factual matters subsequent to the date hereof.

Very truly yours,

                                  EXHIBIT III-2

<PAGE>

                                    EXHIBIT A

                         (LIST OF SELLING STOCKHOLDERS)

Name:                                                        No. of Shares:
------------------------------------------------------------------------------

                                   EXHIBIT A-1

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