Exhibit 4.1

                               FACTORING AGREEMENT

     This  Agreement,  dated October 28, 2005 (the "Effective Date"), is between
Citadel  Security  Software  Inc.  with  offices at Two Lincoln Center, 5420 LBJ
Freeway,  Ste.  1600, Dallas, TX 75240 (hereinafter called "Seller"), and Allied
Capital  Partners,  L.P., with offices at 5151 Belt Line Rd., Suite 500, Dallas,
Texas  75254  (hereinafter  called  "Allied").

     The  Seller  desires to sell its Accounts to Allied on the following terms,
conditions  and  provisions  and,  therefore,  it  is  agreed  as  follows:

     1.   Definitions.  As  used  in  this  Agreement and all other documents or
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          instruments  executed and delivered in connection with this Agreement:

          1.1  The  capitalized  words  used  herein (singular, plural or in any
               tense)  shall have the same definitions as those set forth in the
               Uniform  Commercial  Code  as  adopted  by  the  State  of Texas,
               effective  July  1,  2001.

          1.2  "Without  Recourse"  shall  mean  the  Seller  of Accounts is not
               obligated  to  pay or repurchase an Account sold to Allied unless
               Seller breaches its warranties or representations concerning such
               Account.  "With Recourse" or "Recourse" means Seller shall pay or
               repurchase  Accounts  acquired  by  Allied  that  are  not  paid
               according  to  the  terms  of  the  invoice.

          1.3  "Face  Amount"  shall  mean  the  total  amount  of each Account,
               including  taxes,  delivery  charges,  etc.

          1.4  An  Account  shall  be deemed to be "Disputed" if (i) the Account
               Debtor  disputes  any  of  the terms of an Account, including the
               amount  owing,  timely  delivery  of the goods, conformity of the
               goods  or  services to the order, or any other aspect of the sale
               giving rise to the Account for any reason whatsoever, even if the
               dispute  has  no  merit, is in bad faith or is unreasonable, (ii)
               the  Account  contains  mistakes,  is  not correct or was sent in
               error,  or (iii) all of the following three conditions exist: (a)
               the  Account  is not paid within 90 days of its invoice date, (b)
               the  Account  Debtor  will  not  communicate  the  reason  for
               non-payment  to  Allied,  and  (c)  the  Seller fails to produce,
               within  such  time  period,  good  and  sufficient  evidence that
               nonpayment  is due to the Account Debtor's financial inability to
               pay,  the  pendency  of a bankruptcy proceeding by or against the
               Account  Debtor  or  some reason other than a dispute of the type
               referred  to  above.

          1.5  "New  Commitment"  shall  mean  any written commitment Seller may
               receive  during  the Term of this Agreement from a third party to
               provide  factoring  to Seller, which commitment Seller intends to
               accept.

          1.6  "Discount"  shall  mean  the  sum  of  the  following, subject to
               adjustment  as  set  forth below: (i) 1.50% of the Face Amount of
               each  Account up to a limit of $625,000 sold to Allied under this
               Agreement  for the Initial Payment Period and (ii)0.050% for each
               1 day period (or portion thereof) that the Account remains unpaid
               after  the Initial Payment Period (as hereinafter defined), until
               the  earlier of (a) the date it is paid in full or repurchased by
               the  Seller  in  accordance  with  this  Agreement, or (b) if the
               Account is not one that the Seller is or becomes obligated to pay
               or  repurchase,  150  days  from  the  date of the invoice of the
               Account.  In  the  event the Wall Street Journal Prime shall have
               increased or decreased on the first business day of each calendar
               quarter  during  the  Term  from  its  percentage as of the first
               business  day  of  the  previous  calendar  quarter, or as of the
               Effective  Date if this term is applied on the first business day
               of the calendar quarter immediately following the Effective Date,
               the  Discount  shall  increase  or  decrease  proportionally.

          1.7  "Initial  Payment  Period"  shall mean the period of 30 days from
               the  date  Allied  has purchased an Account under this Agreement.

          1.8  "Purchase  Price"  shall mean the Face Amount of the Account less
               the  Discount.

          1.9  "Wall Street Journal Prime" shall mean the "prime rate" quoted by
               The  Wall  Street  Journal  as  the national average base rate on
               loans  posted  by  at  least  75%  of the nation's largest banks.



Other  words  used  herein,  which  are  capitalized, shall have the definitions
prescribed  herein.  Variations  of  words  defined  herein  shall have the same
meaning  as  the  defined  terms.

     2.   Offer  to  Sell.  Seller may, at its option, offer to sell, assign and
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          transfer  to  Allied its existing and hereinafter arising, acquired or
          created  Accounts.  Any such offer shall be made on an assignment form
          prescribed  by  Allied  (the  "Schedule")  sent to Allied at its above
          stated  office and accompanied by a copy of (i) each invoice, (ii) the
          bill  of  lading, shipping documents or other proof of delivery, (iii)
          the  contract  or  purchase  order  (or  purchase  order  number which
          corresponds  with  the  invoice), and (iv) such other documentation as
          may  be  requested  by Allied for each Account listed on the Schedule.

     3.   Acceptance  of  Offer.  Allied  may  accept  Seller's  offer  to  sell
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          Accounts  at its above stated office by either (i) paying the Purchase
          Price  (less  the Reserve, defined below) with respect to all Accounts
          appearing  on  the  Schedule  submitted  to  Allied,  or


                                                                   _____ INITIAL
<PAGE>
Exhibit 4.1

          (ii)  by  marking  out  the  Accounts which appear on the Schedule and
          which Allied is unwilling to purchase, paying the Purchase Price (less
          the  Reserve)  for  the  remaining Accounts, and sending a copy of the
          Schedule  to  Seller  which shows which Accounts were rejected. Allied
          shall  not  be obligated to purchase any Account that Seller offers to
          sell  to  Allied.

     4.   Reserve.  Allied  may,  at  its  sole  option  and  discretion,  defer
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          making  payment  to  Seller of a portion of the Purchase Price payable
          for  all  Accounts  purchased under this Agreement which have not been
          paid  by the Account Debtor or paid or repurchased by Seller's payment
          of  the Repurchase Price to Allied, up to an aggregate amount equal to
          18.50%  of  the Face Amount of all such Accounts provided, however, if
          the Face Amount of any Account sold to Allied exceeds $625,000, Allied
          may,  in  lieu of the 18.50% deferral, defer making payments to seller
          of  that  portion  of the Purchase Price payable on such Account which
          exceeds $500,000 (the "Reserve"). The Reserve shall not bear interest.
          The  remaining  portion of the Purchase Price payable for each Account
          purchased  hereunder  and  which  constitutes  part  of the Reserve is
          payable  by  Allied  to  Seller,  on request of Seller (limited to one
          request  per  week),  after the earlier of (i) the date the Account is
          paid  to  Allied, or (ii) 150 days from the date of the invoice of the
          Account,  unless  the  Reserve  is increased as herein provided or the
          Account  is  or becomes one that the Seller is obligated to repurchase
          or  pay.  Notwithstanding  the preceding limitation on the Reserve, in
          the  event  Seller  breaches  any  representation,  warranty,  term,
          condition or provision of this Agreement, or if in Allied's reasonable
          judgment  it  is  necessary  to increase the Reserve to protect Allied
          from  losses  due  to  a  Dispute  of  any  Account,  returns or other
          contingencies,  or  Seller's  unsatisfied obligations and liabilities,
          Allied  is  entitled  to  increase  the  amount of the Reserve without
          Seller's consent. If any Account owned by Allied is not paid within 75
          days  of  the  date of the invoice related thereto, Allied may presume
          that  the  Account  may be Disputed and may increase the Reserve by an
          amount  equal to that portion of the Purchase Price previously paid by
          Allied  plus the Discount. In the event Allied notifies Seller that it
          has increased the Reserve, Seller shall immediately refund to Allied a
          portion  of  the  Purchase  Price  previously  paid  by Allied for the
          purchase  of  Seller's Accounts which is equal to the increased amount
          of  the  Reserve.  After  the Term of this Agreement defined below has
          expired  and  Seller  has paid its liabilities to Allied and fulfilled
          its obligations arising hereunder, Allied shall pay the balance of the
          Purchase  Price  payable  for  all  Accounts purchased hereunder which
          constitutes  Reserve (if any) to Seller. The purpose of the Reserve is
          to  provide  Allied  with  additional  collateral to secure payment of
          Seller's  liabilities  and performance of Seller's obligations arising
          under  this  Agreement.  Allied  shall be entitled to offset or recoup
          from  the  Reserve  the  amount  of any liabilities owing by Seller to
          Allied, whether presently existing or hereinafter arising, and whether
          or  not  arising  under this Agreement, including, but not limited to,
          Seller's obligation to repurchase Accounts or to pay Accounts pursuant
          to  the  provisions  of  this  Agreement. Seller acknowledges that the
          Reserve  is not a cash deposit, but represents the balance of Allied's
          liability  to Seller for payment of the Purchase Price, subject to its
          right  of  offset  or  recoupment  and  its  security  interest in the
          Reserve.  Allied  shall  provide  Seller  with  a monthly statement of
          accounting  of  transactions  affecting  the  Reserve.

     5.   Seller's  Repurchase  Obligation.  In  addition to all other rights of
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          Allied  hereunder,  Allied  may  require  that  Seller  repurchase, by
          payment  of  the  Repurchase Price together with any other unpaid fees
          then  owing  to Allied, any Account that has been purchased by Allied:
          (i)  for  which  Seller  has  breached  its warranty or representation
          concerning  such  Account  as  set  forth  herein;  or  (ii) which was
          purchased  by Allied With Recourse. If any Account purchased by Allied
          is  one that Seller is or becomes obligated to pay or repurchase under
          this  Agreement  and  is  not  paid within the Initial Payment Period,
          Allied,  at  Allied's  sole  discretion,  may  elect  to:  (i)  retain
          ownership  of  the  Account  until  the earlier of either the date the
          Account  is  paid  by  the Account Debtor or 90 days after the invoice
          date  of the Account, or (ii) at any time require Seller to repurchase
          the  Account  at  the  Repurchase  Price.  The  purchase price for any
          Account, which Seller is required to repurchase from Allied under this
          Agreement  is the Face Amount of the Account (the "Repurchase Price").
          If Seller ever becomes obligated to repurchase an Account from Allied,
          it  shall  not  become the owner of such Account until it has paid the
          Repurchase  Price  to  Allied.

     6.   Minimum  Sales.  If  Seller  fails  to  offer  to  sell  and assign to
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          Allied  a  monthly  minimum  of $0 in Accounts which are acceptable to
          Allied,  Seller will pay to Allied the difference between the Discount
          on  all  Accounts purchased by Allied from Seller during the month and
          $0.

     7.   Recourse.  Except  as  provided below, all Accounts sold and purchased
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          hereunder  are  sold  With  Recourse  on Seller. Allied and Seller may
          agree  in  writing  that  the Accounts of a specific Account Debtor or
          specific  Accounts  shall  be  purchased  Without  Recourse on Seller.
          However,  notwithstanding  anything  contained  herein  or in any such
          agreement  to  the  contrary, Allied shall never be considered to have
          agreed  to purchase an Account from the Seller which has a Face Amount
          in  excess of $250,000, unless Allied and Seller have signed a written
          agreement stating that such specific and identifiable Account has been
          purchased  by  Allied  Without  Resources  on  Seller.

     8.   Account  Warranties.  Seller  warrants,  represents,  covenants  and
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          agrees  that the presently existing and hereafter arising, acquired or
          created Accounts of Seller sold to Allied or in which Allied obtains a
          security  interest: (i) are not and will not be Disputed; (ii) will be
          paid  when  due  (unless  the Account was purchased Without Recourse);
          (iii)  are owned solely by Seller, which has the power to transfer the
          Accounts,  and  that  its title to the Accounts is free of all adverse
          claims,  liens,  security  interests  and  restrictions  on  transfer,
          encumbrance  or  pledge, except as created by this Agreement; (iv) set
          forth  the correct and complete terms of sale, which have not been and
          will not be altered or amended; (v) are valid and owing, and all goods
          and  services  giving  rise  to  the  Accounts  have  been provided or
          delivered  in  accordance  with  Seller's  agreement  with the Account
          Debtor;  (vi)  will  not be paid by a preference payment or fraudulent
          transfer (as defined by the Bankruptcy Code or the relevant law of any
          state);  (vii)  are  not  and shall not become subject to a defense or
          claim  in  recoupment  or  setoff that can be asserted against Allied;
          (viii)  are  not  owing  by  Account  Debtors  that  were  subject  to
          insolvency  or  bankruptcy proceedings concerning which Seller had any
          notice  as of the date the Account is sold, or in which Seller owns an
          interest  of  any  kind; (ix) shall be reflected on Seller's books and
          records  in  accordance  with generally accepted accounting principles
          and  disclosures  required  by the Securities and Exchange Commission;
          and  (x) shall be evidenced by an invoice, and each invoice shall have
          printed on the face thereof a statement, approved by Allied, notifying
          the  Account  Debtor  that  the  invoice has been sold and assigned to


                                                                   _____ INITIAL
<PAGE>
Exhibit 4.1

          Allied and is payable only to Allied (or jointly to Allied and Seller)
          at  the  address designated in such notice and that, if the Account is
          paid,  the  Account  will  be paid by the Account Debtor in accordance
          with  such  instructions. The warranties and representations set forth
          herein  shall  apply as of the date each Account is sold hereunder and
          shall continue with respect to each Account until each such Account is
          paid. If Seller breaches any warranty, covenant or agreement set forth
          above,  Seller  shall  repurchase  the  applicable  Account  for  the
          Repurchase Price, or pay the Account; such payment or repurchase shall
          cure  Seller's  default  for  breach  of warranty with respect to such
          Account.

     9.   Other  Warranties  and  Covenants  of Seller. Seller further warrants,
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          represents,  covenants and agrees that as of the Effective Date and at
          all  times  during the Term of this Agreement: (i) Seller is and shall
          be  able  to  pay  its  debts  as  they  become due; (ii) Seller's (a)
          principal  executive  office  is  located  in  the State of Texas, (b)
          Seller's  Jurisdiction  of  Organization  or state of incorporation or
          charter  is  the  State of Delaware and (c) exact legal name is as set
          forth  in  the  first paragraph of this Agreement, and Seller does not
          operate under any trade name or assumed name (iii) Allied is and shall
          remain  Seller's sole factor, and Seller will not sell its Accounts to
          any  other  person,  firm  or  corporation during the Term; (iv) after
          written  notice by Allied to Seller and automatically, without notice,
          after Seller's default under this Agreement, Seller shall not, without
          the  prior  written  consent of Allied in each instance, (a) grant any
          extension  of time for payment of any Accounts or any other Collateral
          which  includes  a  monetary  obligation, (b) compromise or settle any
          Accounts  or  any  such other Collateral for less than the full amount
          thereof,  (c)  release in whole or in part any Account Debtor or other
          person liable for payment of Accounts or any other such Collateral, or
          (d)  grant  any  credits,  discounts,  allowances,  deductions, return
          authorizations  or  the  like with respect to any Accounts or any such
          other  Collateral; (v) before sending any invoice to an Account Debtor
          with  respect to an Account that has been sold to Allied, Seller shall
          mark  the  same  with  a  notice  of  assignment as may be required by
          Allied;  (vi) Seller maintains and shall continue to maintain complete
          and  accurate  business  records  of  the  type normally maintained by
          businesses  similar  to Seller, and all financial records, statements,
          books  and  other  documents  shall  be  made  available  for Allied's
          inspection  and  shall be true and accurate in all respects; (vii) the
          Accounts  and  Collateral  are  and shall at all times remain free and
          clear  of  liens,  claims  and  encumbrances  other  than the security
          interests granted to Allied hereunder; (viii) Seller insures and shall
          continue  to  insure its business and its assets in a manner customary
          for  businesses  of  the  type  of  Seller's business, and Seller will
          insure  its  inventory and goods in transit for their full value; (ix)
          Seller  will  not  sell, encumber or move the Collateral except in the
          ordinary  course of its business, without the prior written consent of
          Allied; (x) Seller is and shall remain in compliance with all federal,
          state  and  local  tax  laws,  rules and regulations and shall furnish
          Allied  with evidence thereof on demand; (xi) Seller will preserve its
          present  legal  formation and existence and not, in one transaction or
          series  of  related  transactions,  merge into or consolidate with any
          other  entity,  change the form of its legal existence, or sell all or
          substantially  all of its assets; and (xii) Seller will not change the
          state  where  it  is  located,  will  not change the state where it is
          incorporated  or  organized  and  will  not  change its organizational
          documents,  and will not change its name without providing Allied with
          at  least 30 days prior written notice. Seller also agrees that, if an
          Account  purchased by Allied authorizes the Account Debtor to discount
          the  Face  Amount  of the Account for prompt payment, the Seller shall
          pay  to  Allied  an  amount equal to the discount taken by the Account
          Debtor (even if not properly taken) and Allied is authorized to offset
          such  discount  against  the  Reserve.

     10.  Notice  to  Allied.  Seller  shall  immediately notify Allied of (i) a
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          Dispute  of  any Account sold or encumbered under this Agreement, (ii)
          any  other  breach  of  warranty  or default in Seller's covenants and
          agreements  set  forth herein, (iii) Seller's discovery of evidence of
          Insolvency  of an Account Debtor, and (iv) the filing and service of a
          lawsuit  or  adversary  proceeding  related to an Account purchased by
          Allied  or the payment related thereto (including, but not limited to,
          preference or fraudulent transfer litigation), (v) any claim of a lien
          in  the  Collateral  of Allied (including federal tax liens), (vi) any
          change  in  ownership of Seller, and (vii) Seller's failure to pay any
          tax  it  may  owe  at  any  time  for  any  reason,  when  due.

     11.  Security  Interest  in  Collateral.  To  secure  Seller's  payment  to
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          Allied of all amounts owing to Allied hereunder or damages arising due
          to  Seller's  breach  of  the  terms,  warranties, representations, or
          conditions  of  this  Agreement  or any other agreement by and between
          Allied  and  Seller,  whether now or hereafter owing to Allied, Seller
          grants  to Allied a Security Interest in all of its presently existing
          and  hereinafter  arising, acquired or created: Accounts together with
          all purchase orders and all rights, titles, and interests of Seller in
          the product and/or service represented by such Account and all amounts
          owing  to  Seller hereunder, including the Purchase Price and Reserve,
          and all Proceeds thereof. Seller agrees as follows with respect to the
          aforementioned Collateral: (i) Allied shall have the right at any time
          and  in  its  sole  discretion  to enforce Seller's rights against the
          Account Debtors and obligors; (ii) Seller will not pledge, hypothecate
          or encumber the Collateral during the Term of this Agreement and while
          it  is  indebted  or  otherwise  obligated to Allied; (iii) Allied may
          exercise  all  rights and remedies of an unpaid seller with respect to
          Accounts,  Supporting  Obligations,  and  Chattel  Paper  constituting
          Collateral hereunder, including the right of replevin, reclamation and
          stoppage  in  transit;  (iv)  Seller  has  the  risk  of  loss  of the
          Collateral;  and  (v)  Allied  shall  have  no  duty  to  collect  the
          Collateral  or  preserve  or  enforce  any  rights  relating  to  the
          Collateral.

     12.  Inspection  of  Records.  Any  agent  of Allied may audit, check, make
          -----------------------
          abstracts  from  or  copies  of  the  books,  records,  receipts,
          correspondence,  memoranda,  and  other papers or data relating to the
          Collateral,  Accounts  purchased under this Agreement, the obligations
          of  Seller  to  Allied  and  any other transactions between Seller and
          Allied,  or  generally  audit  all  of  Seller's  books and records at
          Seller's  place  of  business  upon  Allied's demand therefore. Seller
          shall  at  all  times  maintain  a  complete  set of books and records
          containing  up-to-date  posting  of  all  of  its  cash  and  accrual
          transactions  of  any  nature.

     13.  Property  of  Allied/Proceeds  and  Returned  Goods  Held  in  Trust.
          --------------------------------------------------------------------
          After  Allied  has  purchased  an  Account  from  Seller,  (i)  the


                                                                   _____ INITIAL
<PAGE>
Exhibit 4.1

          Account  and  all  proceeds thereof shall become the sole and absolute
          property of Allied, (ii) Allied may at any time in its sole discretion
          notify  all  Account Debtors of Accounts purchased by Allied that such
          Accounts have been sold and assigned to Allied and are payable only to
          Allied  at  the  address  provided  by  Allied,  (iii)  Seller  shall
          immediately  make  proper  entries on its books and records disclosing
          the  absolute  sale  of such Accounts to Allied, (iv) Seller shall not
          hinder,  delay  or  interfere  with  payment  of  Accounts  and  shall
          cooperate with and assist Allied in connection with Allied's handling,
          collection  or  other  dealings with the Accounts and Account Debtors,
          including,  without  limitation, assisting Allied in obtaining written
          confirmation,  statements  or  agreements  from  Account Debtors which
          specify or confirm any information requested by Allied with respect to
          the  Accounts,  and (v) Seller shall hold any check, commercial paper,
          notes,  cash  or  other forms of payment of any Account sold to Allied
          which  may come into Seller's possession or under its control (even if
          such  payment  is  payable  to  Seller)  in  trust  for the benefit of
                                                   ---------
          Allied  and shall immediately turn over and deliver to Allied all such
          payments,  in  kind,  and  in  the  exact  form received. Seller shall
          endorse  any  instrument  or other form of payment which is payable to
          Seller,  but  which is paid on an Account sold to Allied hereunder. In
          the  event  of  the  return or non-acceptance, in whole or in part, of
          property,  the  sale of which resulted in Accounts which were sold and
          assigned  to  Allied,  the  Seller  shall  hold such property in trust
                                                                        --------
          for  Allied,  give  to  Allied  immediate  notice  of  such  return or
          non-acceptance, immediately turn over such property to the custody and
          control  of  Allied, and legibly mark such merchandise as the property
          of  Allied;  thereafter,  upon  demand,  Seller  shall repurchase such
          property  from  and  pay to Allied the invoice price thereof, and upon
          such  payment  the  Seller shall be entitled to the redelivery of such
          property.  If  Seller  fails  to  make  such  purchase  and  payment
          immediately  upon  demand, it shall be in default hereunder and Allied
          shall  be  entitled  (in  addition to its other remedies) to sell such
          property at public or private sale and to charge Seller's account with
          the  difference  between  the  invoice  price of such property and the
          amount  realized upon the sale, plus all charges, fees and commissions
          upon  such  sale. Allied may become a bidder and purchaser at any such
          sale.

     14.  Breach  of  Trust  Fee.  Seller's  strict  adherence to the provisions
          ----------------------
          of  Paragraph 13 is essential in order for Allied to purchase Seller's
          Accounts  at  the  Discount  and  on the other terms set forth in this
          Agreement.  Seller agrees that the provisions of such paragraph are of
          the  essence  of  this  Agreement and agrees to implement policies and
          procedures  to  ensure  its  consistent  and prompt performance of its
          obligations  hereunder.  In  the event Seller breaches its obligations
          under  such  paragraph for reasons other than excusable neglect (which
          shall  be  determined  solely  by  Allied  in  its  sole  judgment and
          discretion),  (i)  Allied may immediately terminate this Agreement and
          charge  the  Termination  Fee,  as defined in Paragraph 17 below, (ii)
          Seller  shall  pay  to  Allied a fee equal to 15% of the amount of any
          payment  or other property which was received by Seller as property of
          Allied  in  addition  to  all other amounts owing to Allied, and (iii)
          Seller,  at Allied's option, shall immediately repurchase all Accounts
          acquired  by  Allied  which  are  then owing by the Account Debtors by
          payment  of the Repurchase Price to Allied, even if such Accounts were
          purchased  Without  Recourse.

     15.  Power  of  Attorney.  Seller  makes,  constitutes  and appoints Allied
          -------------------
          as  Seller's  true  and  lawful  attorney-in-fact  with  power  of
          substitution  and with power and authority to: (i) endorse the name of
          Seller  or  of  any  of its officers or agents upon any notes, checks,
          drafts,  money  orders, or other instruments of payment; (ii) sign and
          endorse  the  name  of  Seller  or any of its agents upon any invoice,
          freight or express bill, bill of lading, storage or warehouse receipt,
          drafts  against  Account  Debtors, assignments, verifications, demands
          under  letters  of  credit  and  notices  in  connection with Accounts
          acquired  by  Allied or which are Collateral under this Agreement, and
          any  instrument  or  document  relating  thereto or to Seller's rights
          therein;  (iii)  execute  any  agreement compromising and settling any
          Dispute  or  collection  of  any  Account  owned by Allied or owned by
          Seller,  if  Seller  is  in default hereunder, on terms and conditions
          acceptable  to  Allied  in its sole discretion; (iv) bring suit in the
          name  of  Seller or Allied to collect any Account; (v) amend the terms
          of  any  Account  owned  by Allied or owned by Seller, if Seller is in
          default  hereunder;  (vi)  execute any financing statements (including
          amendments)  to  perfect  Allied's  Security  Interest granted by this
          Agreement;  (vii) execute and file in the name of Seller or Allied, or
          both,  mechanics'  liens  and all related notices and claims under any
          payment  bond, in connection with goods or services sold by Seller for
          the  improvement of realty; (viii) notify any Account Debtor obligated
          with  respect  to  any Account purchased by Allied that the underlying
          Account has been assigned to Allied by Seller and that payment thereof
          is  to be made to the order of and directly and solely to Allied; (ix)
          communicate  directly  with  Account  Debtors to verify the amount and
          validity  of any Account and to collect payment; (x) if Allied (in its
          sole  and  absolute  discretion)  declares  Seller  to  be  in default
          hereunder,  give  written  notice  to such office and officials of the
          United  States Post Office to effect such change or changes of address
          that all mail addressed to Seller may be delivered directly to Allied.
          Seller's  attorney-in-fact  is  hereby  granted  full  power to do all
          necessary  things  to accomplish the above as fully and effectively as
          could  Seller;  and  (xi) exercise reclamation rights of Seller and to
          file  a  claim  in a bankruptcy proceeding of an Account Debtor (which
          Seller  requests  Allied  to  do).  Seller  ratifies  all  that  the
          attorney-in-fact  shall  lawfully  do  or  cause  to be done by virtue
          hereof.  The  power  of  attorney shall be irrevocable for the Term of
          this  Agreement  and  all  transactions  hereunder.

     16.  Default.  Except  as  specifically  provided  herein,  the  following
          -------
          events  shall  constitute  a  default under this Agreement: (i) Seller
          fails to pay any amounts owing hereunder or fails to fulfill its other
          obligations  under this Agreement or fails to make payments or fulfill
          obligations  under  any other agreements that it may have with Allied,
          (ii)  Seller's warranties or representations set forth herein prove to
          be  untrue  or  false in any respect, howsoever minor, (iii) Seller or
          any  guarantor of the payment and performance of obligations hereunder
          becomes  subject  to  any  debtor-relief  proceedings,  (iv)  any such
          guarantor  fails  to  perform  or  observe  any  of  such  guarantor's
          obligations to Allied or to notify Allied of its intention to rescind,
          modify, terminate, or revoke any guaranty, or any such guaranty ceases
          to  be  in  full  force  and  effect for any reason whatsoever, or (v)
          Allied,  for  any  reason,  in  good faith, deems itself insecure with
          respect  to  the  prospect  of  repayment  or  performance  of  the


                                                                   _____ INITIAL
<PAGE>
Exhibit 4.1

          obligations  of  Seller.  All warranties and representations of Seller
          under  this  Agreement  are continuing warranties and representations.

     17.  Term.  Unless  sooner  terminated  by  either  of  the parties hereto,
          ----
          the  initial  Term  of  this Agreement shall commence on the Effective
          Date  and  continue  for  twelve months thereafter, and this Agreement
          shall automatically renew for additional twelve-month renewal Terms at
          the  end of the initial Term and each renewal Term unless either party
          hereto gives written notice to the other at least 30 days prior to the
          end  of  the  original  Term  or any renewal Term that the Term is not
          renewed.  (Such  initial  Term and renewal Term is the "Term.") Allied
          may  terminate  this  Agreement  at  any  time (i) if the Seller is in
          default  under  this Agreement, by giving written notice to Seller, or
          (ii)  by  giving  30  days  advance written notice to Seller. Provided
          Seller  is  not  in  default  hereunder,  Seller  may  terminate  this
          Agreement  at  any  time  by  giving  30  days prior written notice to
          Allied,  accompanied by the Termination Fee. A fee of 4% of $3,000,000
          shall  be  paid by Seller to Allied if this Agreement is terminated by
          Seller  (except  as  hereinafter  provided)  or  if  this Agreement is
          terminated  by  Allied  due  to Seller's breach of any warranty, term,
          condition  or  provision  of  this  Agreement (the "Termination Fee");
          provided,  however,  the Termination Fee is waived if Seller is not in
          default  and  obtains a bank loan, secured by its Accounts, or obtains
          proceed  from  equity  financing  and  pays  all of its obligations to
          Allied from the proceeds. The Termination Fee is not a penalty, but is
          a  reasonable  estimate of the damages Allied is likely to suffer as a
          result  of termination, and constitutes agreed liquidated damages. All
          obligations  hereunder  shall  continue  in full force and effect with
          respect  to  all  transactions  entered  into and obligations, whether
          absolute  or  contingent,  existing  or incurred before the end of the
          Term.

     18.  Right  of  First  Offer. Seller hereby agrees that in the event Seller
          -----------------------
          receives a New Commitment, Seller will (i) advise Allied in writing of
          the  identity  of  the  offeror of the New Commitment and the complete
          terms  of  the  New Commitment, and (ii) accept Allied's commitment if
          Allied  elects,  in  its  sole  discretion,  to  offer  to modify this
          Agreement  to  contain  the  same  terms  as  the  New  Commitment.

     19.  Miscellaneous.  The  parties  agree  to  the  following  additional
          -------------
          terms:

          19.1     This Agreement shall be binding upon and inure to the benefit
          of  both  parties  and  their  legal  representatives,  successors and
          assigns.

          19.2     This  Agreement shall be construed and enforced in accordance
          with  and  governed  by  the laws of the State of Texas. Venue for the
          institution  of any legal proceeding shall be in Dallas County, Texas.
          Each  sale of an Account to Allied under this Agreement is an "Account
          Purchase  Transaction"  as  defined by section 306.001(1) of the Texas
          Finance  Code  and  is  subject  to such subtitle of the Texas Finance
          Code.

          19.3     If any term of this Agreement is held to be illegal, invalid,
          or  unenforceable, such determination shall not affect the validity of
          the  remaining  terms.  Time  is  of  the  essence  of this Agreement.

          19.4     Seller  authorizes  Allied  to  file  a  Financing  Statement
          describing  the above described Collateral (and all amendments thereto
          and  renewals  thereof)  any  place  Allied  may  deem  necessary  or
          appropriate,  with  or without the signature of Seller thereon. Allied
          may  enforce  and foreclose its Security Interest in the Collateral in
          accordance  with  its  rights under the Texas Uniform Commercial Code.

          19.5     All  notices  under  this  Agreement  shall be in writing and
          delivered  personally,  faxed  or  mailed  by  certified  mail, return
          receipt  requested,  or  postage  prepaid.  The  parties shall use the
          addresses  or  fax  number set forth below for all notices, unless the
          party giving the notice has received written notice from the recipient
          of  a  change  of  address or fax number at least 10 days prior to the
          notice  given  under  this  Agreement.

                          ALLIED CAPITAL PARTNERS, L.P.
                                  PO BOX 676649
                              DALLAS, TX 75267-6649
                    HAND DELIVERY OR OVERNIGHT DELIVERY ONLY:
                          5151 BELTLINE ROAD, STE. 500
                                DALLAS, TX 75254
                             FACSIMILE: 972-404-0060

                                     SELLER:
                         CITADEL SECURITY SOFTWARE INC.
                               TWO LINCOLN CENTRE
                           5420 LBJ FREEWAY, STE. 1600
                                DALLAS, TX 75240
                             FACSIMILE: 214-520-9496

          19.6     Seller  waives  all  notices of default, opportunity to cure,
          presentment,  demand,  protest,  and  notice  of  dishonor.


                                                                   _____ INITIAL
<PAGE>
Exhibit 4.1

          19.7     This  Agreement  constitutes the entire understanding between
          the  parties.  It  may  not  be  changed  or  terminated  except in an
          instrument  signed  by  both  parties.

          19.8     Allied  shall  not be deemed to have waived any of its rights
          and  remedies  unless the waiver is in writing and signed by Allied. A
          waiver  by  Allied  of  a  right or remedy under this Agreement on one
          occasion  shall  not constitute a waiver of the right or remedy on any
          subsequent  occasion.

          19.9     Each  statement  of  Seller's  account  which Allied sends to
          Seller  shall  be  deemed  acceptable  and  binding upon Seller unless
          Allied  receives written notice from Seller stating in detail and with
          particularity  any  exception  thereto  within  30 days after the date
          thereof.

          19.10     Seller  shall  reimburse  Allied  for  the  following  costs
          incurred  by  Allied  in  the course of performing its functions under
          this  Agreement: credit research, certified mail postage, UCC searches
          and  UCC  filing  fees,  and  wire  transfer  fees. The cost of credit
          reports  and  all  other  costs shall be reimbursed at Allied's actual
          cost.  Seller  also  agrees  to  reimburse Allied the actual amount of
          costs  and expenses, including reasonable attorney's fees, incurred by
          Allied  in  protecting,  preserving  or  enforcing  any lien, security
          interest, title, collateral or other right granted by Seller to Allied
          or  arising  under  applicable  law,  whether  or not suit is brought,
          including  but  not  limited to the defense of fraudulent transfer and
          preference  claims,  enforcement  of this Agreement or recovery of any
          damages incurred by Allied as a result of the Seller's default. Seller
          shall  also reimburse Allied for its actual costs in assuring Seller's
          compliance  with  this  Agreement, such as the cost of the federal tax
          lien  search,  UCC  searches  and Secretary of State Confirmations and
          certificates.

          19.11     Seller agrees to execute any further documents and to take
          any  further  actions  reasonably  requested  by Allied to evidence or
          perfect  the  Security  Interest  granted herein or the assignments of
          Accounts  pursuant  hereto,  or  to  give  effect to any of the rights
          granted  to  Allied  under  this Agreement. If Allied (in its sole and
          absolute  discretion)  declares  Seller  to  be  in default hereunder,
          Allied may, at any time: (i) notify any Account Debtor to make payment
          of any Account directly to Allied, regardless of whether such Accounts
          have  been  purchased  by  Allied  or  Allied  has a Security Interest
          therein,  and (ii) initiate electronic debit or credit entries through
          the  ACH  system  to  Seller's  bank accounts or other deposit account
          maintained  by  Seller, wherever located, to collect all amounts owing
          to  Allied  by  Seller.

          19.12     Seller  has  signed this agreement and submits the Agreement
          to Allied for acceptance at Allied's offices in Dallas, Dallas County,
          Texas. Seller and Allied shall make all payments and perform all other
          obligations  arising  hereunder  at  Dallas  County,  Texas,  and this
          Agreement  is  made  and  entered into at Dallas County, Texas. Dallas
          County,  Texas,  shall  be  the venue for any litigation arising under
          this Agreement. In the event it becomes necessary for Allied to obtain
          a  temporary  restraining order or other injunctive relief in order to
          enforce the provisions of this Agreement, Seller hereby agrees to such
          an  order,  and  the  parties  agree that the Court may require a bond
          which  does  not  exceed the sum of $1,000.00 as a condition therefor,
          and  such  bond  shall  be reasonable and adequate in all respects and
          under  all  circumstances.

          19.13     All amounts payable to Allied by Seller under this Agreement
          are  payable  on  demand  by  Allied,  except  amounts  payable  under
          Paragraph  13  of  this  Agreement,  for  which no demand is required;
          Allied  is  authorized,  at  its  sole option, to collect any payments
          owing  by  Seller  to  Allied under this Agreement by debit, offset or
          recoupment  from  or  against  the  Reserve. In the event Seller is in
          default  under  any of the terms of this Agreement, Allied may, at its
          option,  require  Seller  to  repurchase all unpaid Accounts that were
          purchased  by  Allied,  even  if  such Accounts were purchased Without
          Recourse.  Interest  shall accrue on all past due sums owing to Allied
          by Seller at 18% per annum if Seller is a corporation or 10% per annum
          if  Seller  is  not  a  corporation.


Seller:
CITADEL SECURITY SOFTWARE INC.

By:      /s/ Steven B. Solomon
        -------------------------
Name:   Steve Solomon
Title:  CEO
Date:   October 31, 2005

Accepted at Dallas, Dallas County, Texas by Allied on the ______ day of ______,
2005.

ALLIED  CAPITAL PARTNERS, L.P.
BY:   Tramel Capital Corporation
Its:  General Partner

By:
        ----------------------------------------
Name:   Clay Tramel
Title:  President


                                                                   _____ INITIAL