EXHIBIT 4.3


                               EXCHANGE AGREEMENT

     This  EXCHANGE  AGREEMENT (this "Agreement") is made and entered into as of
                                      ---------
May  __,  2005,  by  and  among  CITADEL  SECURITY  SOFTWARE  INC.,  a  Delaware
corporation  (the  "Company"),  and  SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC
                    -------
(the  "Holder").
       ------

                                    RECITALS

     WHEREAS,  pursuant  to  a  Securities Purchase Agreement dated February 10,
2004  (the  "Series  A  Purchase  Agreement"), the Company issued a warrant (the
             ------------------------------
"Series  A Warrant") and preferred stock (the "Series A Preferred Stock") to the
 -----------------                             ------------------------
Holder;

     WHEREAS,  the  Company  has  entered  into a Securities Purchase Agreement,
dated  as  of  the  date  hereof,  with the Holder and the other investors named
therein  (the  "Series B Purchase Agreement") (capitalized terms used herein and
                ---------------------------
not  otherwise  defined  have  the respective meanings specified in the Series B
Purchase  Agreement);  and

     WHEREAS,  on  the  terms  and  subject  to the conditions set forth in this
Agreement, the Company wishes to exchange the Series A Warrant for a new warrant
in the form attached hereto as Exhibit A (the "Series C Warrant") and, effective
                               ---------       ----------------
upon  such  exchange,  to  cancel the Series A Warrant, and the Holder wishes to
accept  such  exchange,  pursuant to the exemption from registration provided by
Section 3(a)(9) ("Section 3(a)(9)") under the Securities Act of 1933, as amended
                  ---------------
(the  "Securities  Act").
       ---------------

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the mutual promises hereunder and for
other  good  and  valuable  consideration, the receipt and adequacy of which are
hereby  acknowledged by all parties, the parties hereto hereby agree as follows:

     1.   Exchange.  Subject  to the terms and conditions of this Agreement, the
          --------
Holder  shall  exchange  and deliver to the Company the Series A Warrant against
delivery  by the Company of the Series C Warrant (the "Exchange").  The Series C
                                                       --------
Warrant  will  be  exercisable  into  up  to  one  million  two hundred thousand
(1,200,000)  shares of Common Stock (subject to adjustment as provided therein),
will have an exercise price of $1.75 (subject to adjustment as provided therein)
and  will  expire  on  the  ten  (10)  year anniversary of the Exchange Date (as
defined  below).

     2.   Closing.  The  Exchange  shall  take  place  at the offices of Duval &
          -------
Stachenfeld  LLP, 300 East 42nd Street, Third Floor, New York, NY 10017 at 10:00
a.m.  on  May  9, 2005 (the "Exchange Date"), or at such other time and place as
                             -------------
the  Company  and  the  Holder  mutually  agree  upon, orally or in writing (the
"Closing").
 -------


<PAGE>
     3.   Representations  and  Warranties  of  the Company.  The Company hereby
          -------------------------------------------------
represents  and  warrants  to  the  Holder  that:

          (a)  Representations  and  Warranties.  All of the representations and
               --------------------------------
warranties made by it in Article III of the Series B Purchase Agreement are true
                         -----------
and correct as of the Exchange Date as though made on and as of such date;

          (b)  Authorization;  Enforceability.  All corporate action on the part
               ------------------------------
of  the  Company,  its  officers,  directors  and stockholders necessary for the
authorization,  execution and delivery of this Agreement, the performance of all
obligations  of  the  Company  hereunder  and  the  authorization,  issuance and
delivery  of  the  Series C Warrant has been taken or will be taken prior to the
Closing,  and  this Agreement, when executed and delivered by the Company, shall
constitute  the valid and legally binding obligation of the Company, enforceable
against  the  Company  in  accordance  with  its  terms except (i) as limited by
applicable  bankruptcy,  insolvency,  reorganization,  moratorium,  fraudulent
conveyance,  or  other  laws of general application relating to or affecting the
enforcement  of creditors' rights generally, or (ii) as limited by laws relating
to  the  availability  of  specific  performance,  injunctive  relief,  or other
equitable  remedies.  The  Series  C  Warrant,  when  issued  to  the  Holder in
accordance with this Agreement, shall be duly and validly issued, fully-paid and
nonassessable,  free  and  clear of any Liens imposed by or through the Company.
This  Agreement  and the transactions contemplated hereby will not conflict with
any  term  or  provision of any of the Company's organizational documents, or of
agreement,  order or decree to which it is party or may be subject. The issuance
of  the  Series  C  Warrant  hereunder  will  not  be  subject to or trigger any
preemptive,  "poison pill", anti-dilution, "reset" or similar rights on the part
of  its  security  holders  or  third  parties.

          (c)  No  Conflict.  The  terms of this Agreement, and the consummation
               ------------
of  the  transactions  contemplated hereby, do not violate, contravene, conflict
with  or  constitute a default or create a lien, charge or encumbrance under any
organizational  documents of the Company, any agreements to which the Company is
a party or to which its assets are bound, or any order or decree of any court or
regulatory  body.

     4.   Representations  and  Warranties  of  the  Holder.  The  Holder hereby
          -------------------------------------------------
represents  and  warrants  that:

          (a)  Due Organization.  The Holder is duly organized, validly existing
               ----------------
and in good standing under the laws of its jurisdiction of organization.

          (b)  Authorization;  Enforceability.  All  action  on  the part of the
               ------------------------------
Holder,  its  officers,  directors,  members  and  partners  necessary  for  the
authorization,  execution and delivery of this Agreement, the performance of all
obligations of the Holder hereunder has been taken or will be taken prior to the
Closing,  and  this  Agreement, when executed and delivered by the Holder, shall
constitute  the  valid and legally binding obligation of the Holder, enforceable
against  the  Holder  in  accordance  with  its  terms  except (i) as limited by
applicable  bankruptcy,  insolvency,  reorganization,  moratorium,  fraudulent
conveyance,  or  other  laws of general application relating to or affecting the
enforcement  of creditors' rights generally, or (ii) as limited by laws relating
to  the  availability  of  specific  performance,  injunctive  relief,  or other
equitable  remedies.


                                        2
<PAGE>
          (c)  Investment  Intent.  The  Holder  is entering into this Agreement
               ------------------
for  its  own  account  and  not with a view to the distribution of the Series C
Warrant,  and  has  no  present  arrangement  to sell the Series C Warrant to or
through  any  person  or  entity;  provided,  however,  that  by  making  such
representations,  the Holder does not agree to hold the Series C Warrant for any
minimum or other specific term and reserves the right to dispose of the Series C
Warrant,  and  to  enter  into  other  transactions with respect to the Series C
Warrant,  at  any  time in accordance with the federal and state securities laws
applicable  to  such  disposition  or  transaction.

          (d)  Ownership  of  Warrants.  As of the date hereof , the Holder owns
               -----------------------
the  Series  A  Warrant beneficially and of record, free and clear of any liens,
claims  or  encumbrances  created  by  or  through  the  Holder.

     5.   Conditions  to Exchange.  (a) The obligation of the Company to deliver
          -----------------------
the  Series  C  Warrant to the Holder pursuant to the Exchange is subject to the
satisfaction,  as  of  the  Exchange  Date, of each of the following conditions,
provided  that  such  conditions  are  for the Company's sole benefit and may be
waived  by  the  Company  in  its  sole  discretion:

          (i)  the  representations  and  warranties  of  the  Holder  in  this
     Agreement  shall be true and correct as of the date when made and as of the
     Exchange  Date  as though made at that time (except for representations and
     warranties  that  speak  as  of  a  specific  date);

         (ii)  the  Holder shall have performed, satisfied and complied with the
     covenants,  agreements  and  conditions  required  by  this Agreement to be
     performed,  satisfied  or  complied  with  by the Holder at or prior to the
     Exchange  Date;  and

        (iii)  the  Holder  shall  have  tendered  the  Series  A Warrant to the
     Company  in  the  form  required  by  this  Agreement.

     (b)  The obligation of the Holder hereunder to deliver the Series A Warrant
to  the  Company  pursuant to the Exchange is subject to the satisfaction, as of
the  Exchange  Date,  of  each  of  the following conditions, provided that such
conditions  are for the Holder's sole benefit and may be waived by the Holder in
its  sole  discretion:

          (i)  the  Common Stock into which the Series C Warrant are exercisable
     shall be authorized for quotation on the Nasdaq SmallCap Market, trading in
     the  Common  Stock  shall  not  have  been suspended by the Nasdaq SmallCap
     Market,  and  the  Company shall not have received notice of any pending or
     threatened  proceeding  or other action to delist or suspend trading in the
     Common  Stock;

         (ii)  the  representations  and  warranties  of  the  Company  in  this
     Agreement  and in the Series B Purchase Agreement shall be true and correct
     as of the date when made and as of the Exchange Date as though made at that
     time (except for representations and warranties that speak as of a specific
     date),  and  the  Company shall have performed, satisfied and complied with
     the covenants, agreements and conditions required by this Agreement and the
     Series  B Purchase Agreement to be performed, satisfied or complied with by
     the  Company  on  or  prior  to  the  Exchange  Date;


                                        3
<PAGE>
        (iii)  the  Holder  shall  have  received  the  opinion of the Company's
     counsel  dated  as  of  the  Exchange  Date,  in  form, scope and substance
     reasonably  satisfactory  to  the  Holder;

         (iv)  the  Company  shall  have  delivered  to  the Holder the Series C
     Warrant  in  the  form  required  by  this  Agreement;

          (v)  the  Company's  Board of Directors shall have adopted resolutions
     approving  this  Agreement  and  the  transactions contemplated hereby (the
     "Resolutions"),  and  the Resolutions shall be in full force and effect and
      -----------
     shall  not  have  been  amended  or  revised  in any respect from the forms
     attached  to  the  certificate delivered pursuant to clause (vi) below; and

         (vi)  the  Company  shall  have  delivered to the Holder a certificate,
     executed  by  the  Company's  Secretary  or  Assistant Secretary, dated the
     Exchange  Date,  and  attached  to  which  shall be a certified copy of its
     Certificate  of  Incorporation, a copy of it Bylaws as currently in effect,
     and the Resolutions, such certificate to state that the Resolutions and the
     Company's  Certificate  of  Incorporation and Bylaws are each in full force
     and  effect  on  the Exchange Date, and have not been amended or revised in
     any  respect  from  the  forms  attached  thereto.

     6.   Agreements.  The  parties  agree  as  follows:
          ----------

          (a)  Issuance  of  Shares.  The  issuance  of  the  Series  C  Warrant
               --------------------
pursuant  to  the  Exchange  shall be made in compliance with the provisions and
requirements of Section 3(a)(9) and any applicable state securities law.

          (b)  Delivery  of  Series A Warrant.  On the Exchange Date, the Holder
               ------------------------------
shall  deliver  its  Series  A  Warrant  to  the Company, and shall execute such
documents  and  take such further action as may be reasonably necessary in order
to  transfer  to  the  Company  all  right,  title  and interest to the Series A
Warrant.  Upon delivery to the Company, the Series A Warrant shall terminate and
be  cancelled  and  shall  have  no  further  force  or  effect.

          (c)  Delivery  of Series C Warrant.  On the Exchange Date, the Company
               -----------------------------
shall  deliver a warrant in the form of the Series C Warrant, dated the Exchange
Date,  to  the  Holder.

          (d)  Registration  Rights.  The  Company and the Holder agree that the
               --------------------
shares  of  common  stock  issuable  under  the Series C Warrant shall be deemed
"Registrable  Securities"  and  "Warrant Shares", as those terms are used in the
Registration  Rights  Agreement,  and the Registration Rights Agreement shall be
deemed  amended  to  include  such  shares.

          (e)  Amendment  of  Series  A Preferred Stock Terms.  On or before the
               ----------------------------------------------
Business  Day  immediately  following  receipt  by  the  Company  of Stockholder
Approval,  the  Company will file an amendment (the "Series A Amendment") to the
                                                     ------------------
certificate of designation relating to the Series A Preferred Stock (the "Series
                                                                          ------
A  Certificate")  solely  for  the  purpose  of  (i)  eliminating the accrual of
--------------
dividends  from  and  after  the  Exchange Date and (ii) lowering the Conversion
Price (as defined therein) to $3.00 (subject to adjustment as provided therein).
The  Holder  acknowledges  and  agrees


                                        4
<PAGE>
that,  until  Stockholder Approval is obtained, the Conversion Price (as defined
in  the Series A Certificate) shall not be subject to adjustment pursuant to the
anti-dilution  provisions of the Series A Certificate to an amount that is lower
than  the  Floor  Price  (as  such  price  may be adjusted in the event of stock
splits,  stock  dividends  and  similar  events).

          (f)  Waiver  of  Dividends.  The Holder agrees to waive the receipt of
               ---------------------
all  dividends  that  have accrued and remain unpaid as of the Exchange Date, or
that will accrue from the Exchange Date through September 9, 2005, on the Series
A  Preferred  Stock;  provided,  however,  that  if  the Company does not obtain
Stockholder  Approval  or  file  the Series A Amendment as required hereby on or
before  September  9,  2005,  such  waiver  will expire and all such accrued but
unpaid dividends will become immediately due and payable in cash.

          (g)  Transaction  Documents.  This  Agreement  shall  be  deemed  to
               ----------------------
constitute  a  "Transaction  Document" for the purposes of the Series B Purchase
Agreement  as  though  it  were specifically included in the definition thereof.

     7.   Miscellaneous.
          -------------

          (a)  Severability.  In  the event that any provision of this Agreement
               ------------
becomes  or  is  declared  by  a  court of competent jurisdiction to be illegal,
unenforceable  or  void,  this Agreement shall continue in full force and effect
without  said  provision; provided that in such case the parties shall negotiate
in  good  faith  to  replace  such  provision.

          (b)  Successors  and  Assigns.  The  terms  and  conditions  of  this
               ------------------------
Agreement  shall  inure  to  the  benefit  of and be binding upon the respective
successors  and  permitted  assigns  of the parties.  Nothing in this Agreement,
express  or implied, is intended to confer upon any party other than the parties
hereto  or  their  respective  successors  and  permitted  assigns  any  rights,
remedies,  obligations  or  liabilities  under  or  by reason of this Agreement,
except  as  expressly  provided in this Agreement.  Neither party may assign its
rights  or  obligations  under  this  Agreement.

          (c)  Governing Law; Jurisdiction.  This Agreement shall be governed by
               ---------------------------
and  construed  under  the laws of the State of New York applicable to contracts
made  and  to  be  performed  entirely within the State of New York.  Each party
hereby  irrevocably  submits  to the non-exclusive jurisdiction of the state and
federal  courts  sitting in City and County of New York, for the adjudication of
any  dispute  hereunder  or  in  connection  herewith  or  with  any transaction
contemplated  hereby  or  discussed  herein,  and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or  proceeding  is  brought  in  an inconvenient forum or that the venue of such
suit,  action  or  proceeding  is improper.  In any claim or action commenced in
connection  with  a dispute hereunder, the prevailing party shall be entitled to
reimbursement  of  all  reasonable  legal  fees  and  expenses.

          (d)  Counterparts.  This  Agreement  may  be executed in any number of
               ------------
counterparts,  each  of  which  shall  be  deemed  an original, and all of which
together  shall  constitute  one  and  the  same  instrument.

          (e)  Headings.  The  headings  used  in  this  Agreement  are used for
               --------
convenience only and are not to be considered in construing or interpreting this
Agreement.


                                        5
<PAGE>
          (f)  Other Definitional Provisions.  All definitions contained in this
               -----------------------------
Agreement  are  applicable equally to the singular and plural forms of the terms
defined.  The  words  "hereof",  "herein"  and  "hereunder" and words of similar
                       ------     ------         ---------
import referring to this Agreement refer to this Agreement as a whole and not to
any  particular  provision  of  this  Agreement.

          (g)  Notices.  Any  notice, demand or request required or permitted to
               -------
be given by the Company or the Investors pursuant to the terms of this Agreement
shall  be in writing and shall be deemed delivered (i) when delivered personally
or  by  verifiable  facsimile  transmission  (immediately  followed  by  written
confirmation delivered according to another mechanism provided by this section),
unless  such delivery is made on a day that is not a Business Day, in which case
such  delivery  will  be  deemed to be made on the next succeeding Business Day,
(ii)  on the next Business Day after timely delivery to an overnight courier and
(iii)  on  the  Business  Day  actually  received  if deposited in the U.S. mail
(certified  or  registered  mail,  return  receipt  requested, postage prepaid),
addressed  as  follows:

          If  to  the  Company:

          Citadel  Security  Software  Inc.
          Two  Lincoln  Centre,  Suite  1600
          5420  LBJ  Freeway
          Dallas,  TX  75240
          Attn: Steven B. Solomon
          Phone: (214) 750-2454
          Fax:  (214)  520-0034

          with  a  copy  to:

          Wood  &  Sartain,  LLP
          12655 North Central Expressway, Suite 325
          Dallas,  Texas  75243
          Attn:  David A. Wood
          Tel:   (972) 458-0300
          Fax:   (972) 701-0302

     and if to the Holder, to such address for the Holder as shall appear on the
signature  page  hereof executed by the Holder, or as shall be designated by the
Holder  in  writing  to  the  Company  in  accordance  with  this  Section 7(g).
                                                                   ------------

          (h)  Entire Agreement; Amendments.  This Agreement constitutes the
               ----------------------------
entire agreement between the parties with regard to the subject matter hereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties.  Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by all the parties hereto, and no provision hereof may be
waived other than by a written instrument signed by the party against whom
enforcement of any such waiver is sought.


                                        6
<PAGE>
          (i)  No Strict Construction.  The language used in this Agreement is
               ----------------------
and will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any
party.

          (j)  Authorization.  The parties hereby represent and warrant to each
               -------------
other that the signatories hereto have full power and authority to sign this
Agreement for and on behalf of the entities for which they purport to be signing
and that their signatures hereto shall be binding and enforceable upon the
purported parties hereto.




                           [Signature Pages to Follow]


                                        7
<PAGE>
     IN  WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date  first-above  written.

CITADEL  SECURITY  SOFTWARE  INC.


By:  __________________________
     Name:
     Title:


SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

By:  Satellite Asset Management, L.P., its Manager


     By:  __________________________
          Name:
          Title:

ADDRESS:

     c/o Satellite Asset Management, L.P.
     623 Fifth Avenue, 20th Floor
     New York, New York 10022
     Tel:    212-209-2000
     Fax:    212-209-2021

     With  a  copy  to:

     Duval & Stachenfeld  LLP
     300 East 42nd Street
     New York, New York  10017
     Attn:  Robert L. Mazzeo, Esq.
     Tel:   212-883-1700
     Fax:   212-883-8883


Number of Warrant Shares Issuable
Upon Exercise of Series C Warrant: _______________