THIS  WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN  REGISTERED  UNDER  THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"),  OR  ANY  STATE  SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED  UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES  LAWS  SHALL  BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM
REGISTRATION  UNDER  THE  SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. SUBJECT TO COMPLIANCE
WITH  THE  REQUIREMENTS  OF  THE  SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
BE  PLEDGED  OR  HYPOTHECATED  IN  CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER  LOAN  SECURED  BY  THIS  WARRANT  OR  ANY OF THE SECURITIES ISSUABLE UPON
EXERCISE  OF  THIS  WARRANT.

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                         CITADEL SECURITY SOFTWARE INC.

Issue Date: February 10, 2004                                 Warrant No. ____

     THIS  CERTIFIES  that  Satellite Strategic  Finance  Associates, LLC or any
                            ---------------------------------------------
subsequent  holder hereof (the "Holder"), has the right to purchase from CITADEL
                                ------
SECUIRTY  SOFTWARE  INC.,  a
Delaware  corporation  (the  "Company"),  up  to  1,200,000  fully  paid  and
                              -------
nonassessable  shares  of  the Company's common stock, par value $0.01 per share
(the  "Common  Stock"), subject to adjustment as provided herein, at a price per
       -------------
share  equal  to the Exercise Price (as defined below), at any time beginning on
the  date  on which this Warrant is issued (the "Issue Date") and ending at 6:00
                                                 ----------
p.m., eastern time, on the date that is the fifth (5th) anniversary of the Issue
Date  (the  "Expiration Date").  This Warrant is issued pursuant to a Securities
             ---------------
Purchase  Agreement,  dated  as  of  February 10, 2004 (the "Securities Purchase
                                     ------------            -------------------
Agreement").  Capitalized terms used herein and not otherwise defined shall have
---------
the  respective  meanings  set  forth  in  the  Securities  Purchase  Agreement.

     1.     Exercise.
            --------

     (a)     Right to Exercise; Exercise Price.  The Holder shall have the right
             ---------------------------------
to  exercise  this  Warrant  at any time and from time to time during the period
beginning  on  the Issue Date and ending on the Expiration Date as to all or any
part  of  the shares of Common Stock covered hereby (the "Warrant Shares").  The
                                                          --------------
"Exercise  Price"  for  each  Warrant  Share  purchased  by  the Holder upon the
 ---------------
exercise  of  this Warrant shall be equal to $5.15 subject to adjustment for the
events  specified  in  Section  6  below.


<PAGE>
     (b)     Exercise  Notice.  In  order  to  exercise this Warrant, the Holder
             ----------------
shall  send  by  facsimile transmission, at any time prior to 6:00 p.m., eastern
time,  on  the  Business  Day on which the Holder wishes to effect such exercise
(the "Exercise Date"), to the Company an executed copy of the notice of exercise
      -------------
in  the form attached hereto as Exhibit A (the "Exercise Notice"), and a copy of
                                                ---------------
the  original  Warrant,  and, in the case of a Cash Exercise (as defined below),
shall  forward to the Company the Exercise Price. The Exercise Notice shall also
state  the name or names (with address) in which the shares of Common Stock that
are  issuable  on  such exercise shall be issued. In the case of a dispute as to
the  calculation  of the Exercise Price or the number of Warrant Shares issuable
hereunder  (including,  without  limitation,  the  calculation of any adjustment
pursuant to Section 6 below), the Company shall promptly issue to the Holder the
number  of  Warrant  Shares  that are not disputed and shall submit the disputed
calculations  to  its  certified  public accounting firm within two (2) Business
Days  following  the  date  on  which  the  Exercise  Notice is delivered to the
Company. The Company shall cause such accountant to calculate the Exercise Price
and/or the number of Warrant Shares issuable hereunder and to notify the Company
and  the  Holder of the results in writing no later than three (3) Business Days
following  the  day  on which such accountant received the disputed calculations
(the  "Dispute  Procedure").  Such  accountant's  calculation  shall  be  deemed
       ------------------
conclusive absent manifest error. The fees of any such accountant shall be borne
by  the  party  whose  calculations  were  most  at  variance with those of such
accountant.

     (c)     Holder of Record.  The Holder shall, for all purposes, be deemed to
             ----------------
have  become the holder of record of the Warrant Shares specified in an Exercise
Notice  on  the  Exercise  Date  specified  therein, irrespective of the date of
delivery  of  such  Warrant  Shares.  Except  as  specifically  provided herein,
nothing  in this Warrant shall be construed as conferring upon the Holder hereof
any  rights  as  a  stockholder  of  the  Company  prior  to  the Exercise Date.

     (d)     Cancellation  of  Warrant.  This Warrant shall be canceled upon its
             -------------------------
exercise  and,  if  this Warrant is exercised in part, the Company shall, at the
time  that it delivers Warrant Shares to the Holder pursuant to such exercise as
provided  herein,  issue  a new warrant, and deliver to the Holder a certificate
representing  such  new  warrant,  with  terms identical in all respects to this
Warrant  (except  that  such new warrant shall be exercisable into the number of
shares  of  Common  Stock  with  respect  to  which  this  Warrant  shall remain
unexercised);  provided,  however, that the Holder shall be entitled to exercise
               --------   -------
all  or  any portion of such new warrant at any time following the time at which
this Warrant is exercised, regardless of whether the Company has actually issued
such  new  warrant  or  delivered  to  the  Holder  a  certificate  therefore.

     2.     Delivery  of  Warrant  Shares  Upon  Exercise.  Upon  receipt  of an
            ---------------------------------------------
Exercise  Notice pursuant to Section 1 above, the Company shall, (A) in the case
of  a Cash Exercise no later than the close of business on the later to occur of
(i)  the  third (3rd) Business Day following the Exercise Date set forth in such
Exercise  Notice  and  (ii)  such  later  date  on  which the Company shall have
received  payment  of the Exercise Price, (B) in the case of a Cashless Exercise
(as  defined  below),  no  later  than  the close of business on the third (3rd)
Business  Day following the Exercise Date set forth in such Exercise Notice, and
(C)  with respect to Warrant Shares that are the subject of a Dispute Procedure,
the  close  of  business  on  the  third  (3rd)  Business  Day  following  the
determination made pursuant to Section 1(b) (each of the dates specified in (A),
(B)  or (C) being referred to as a "Delivery Date"), issue and deliver or caused
                                    -------------
to  be  delivered  to


                                        2
<PAGE>
the  Holder  the  number  of  Warrant  Shares as shall be determined as provided
herein. The Company shall effect delivery of Warrant Shares to the Holder by, as
long  as the Transfer Agent participates in the Depository Trust Company ("DTC")
                                                                           ---
Fast  Automated  Securities  Transfer program ("FAST"), crediting the account of
                                                ----
the  Holder  or  its  nominee  at  DTC  (as specified in the applicable Exercise
Notice)  with  the  number  of Warrant Shares required to be delivered, no later
than the close of business on such Delivery Date. In the event that the Transfer
Agent  is  not a participant in FAST, or if the Warrant Shares are not otherwise
eligible for delivery through FAST, or if the Holder so specifies in an Exercise
Notice or otherwise in writing on or before the Exercise Date, the Company shall
effect  delivery  of  Warrant  Shares by delivering to the Holder or its nominee
physical  certificates representing such Warrant Shares, no later than the close
of  business  on  such  Delivery  Date.

     3.     Failure  to  Deliver  Warrant  Shares.
            -------------------------------------

     (a)     In  the  event  that the Company fails for any reason to deliver to
the  Holder  the  number  of Warrant Shares specified in the applicable Exercise
Notice  on  or  before  the Delivery Date therefore (an "Exercise Default"), and
                                                         ----------------
such  default  continues  for  seven  (7)  Business Days following delivery of a
written  notice  of such default by the Holder to the Company, the Company shall
pay  to  the  Holder payments ("Exercise Default Payments") in the amount of (i)
                                -------------------------
(N/365)  multiplied  by  (ii) the aggregate Exercise Price of the Warrant Shares
         --------------
which  are the subject of such Exercise Default multiplied by (iii) the lower of
                                                -------------
fifteen  percent  (15%)  and  the  maximum rate permitted by applicable law (the
"Default  Interest  Rate"),  where "N" equals the number of days elapsed between
 -----------------------
the  original  Delivery Date of such Warrant Shares and the date on which all of
such Warrant Shares are issued and delivered to the Holder. Cash amounts payable
hereunder  shall  be  paid  on  or  before  the  fifth (5th) Business Day of the
calendar  month  following  the calendar month in which such amount has accrued.

     (b)     In  the  event  that  the  Holder  has  not  received  certificates
representing  the  Warrant Shares by the seventh (7th) Business Day following an
Exercise  Default,  the  Holder  may,  upon  written  notice  to the Company (an
"Exercise  Default Notice"), regain on the date of such notice the rights of the
 ------------------------
Holder  under  the exercised portion of this Warrant that is the subject of such
Exercise  Default, in which case the Exercise Price upon any subsequent exercise
of  such  portion  of this Warrant will be equal to the lesser of (x) the lowest
Exercise  Price  occurring  during the period beginning on related Delivery Date
and  ending on the date on which the Exercise Default Notice is delivered to the
Company and (y) the Exercise Price in effect on the applicable Exercise Date (it
being  understood  that  the  Holder  may deliver an Exercise Notice at any time
following  delivery  of  an  Exercise  Default  Notice to the Company).  In such
event,  the  Holder  shall  retain  all of the Holder's rights and remedies with
respect  to  the  Company's  failure  to  deliver such Warrant Shares (including
without  limitation  the right to receive the cash payments specified in Section
3(a)  above).

     (c)     Nothing  herein  shall  limit  the  Holder's right to pursue actual
damages  for  the  Company's  failure to issue and deliver Warrant Shares on the
applicable Delivery Date (including, without limitation, damages relating to any
purchase  of  Common  Stock by the Holder to make delivery on a sale effected in
anticipation of receiving Warrant Shares upon exercise, such damages to be in an
amount equal to (A) the aggregate amount paid by the Holder for the


                                        3
<PAGE>
Common  Stock  so  purchased  minus (B) the aggregate amount of net proceeds, if
                              -----
any,  received  by  the Holder from the sale of the Warrant Shares issued by the
Company  pursuant  to  such  exercise),  and  the Holder shall have the right to
pursue  all  remedies  available  to  it at law or in equity (including, without
limitation,  a  decree  of  specific  performance  and/or  injunctive  relief);
provided,  however,  that,  in  the  event,  following  an Exercise Default, the
--------   -------
Company delivers to the Holder the Warrant Shares that are required to be issued
by  the  Company  pursuant  to  such exercise, the Holder shall use commercially
reasonable  efforts  to  sell  such  shares  promptly  following  such delivery.

     4.     Exercise  Limitations.  In no event shall the Holder be permitted to
            ---------------------
exercise  this  Warrant,  or part thereof, if, upon such exercise, the number of
shares of Common Stock beneficially owned by the Holder (other than shares which
would  otherwise  be  deemed  beneficially  owned  except for being subject to a
limitation  on  conversion  or exercise analogous to the limitation contained in
this Section 4), would exceed 4.99% of the number of shares of Common Stock then
issued and outstanding. As used herein, beneficial ownership shall be determined
in  accordance  with  Section  13(d)  of the Securities Exchange Act of 1934, as
amended,  and  the rules thereunder. To the extent that the limitation contained
in  this  Section  4 applies, the submission of an Exercise Notice by the Holder
shall  be  deemed  to  be  the  Holder's  representation  that  this  Warrant is
exercisable  pursuant  to  the terms hereof and the Company shall be entitled to
rely  on  such  representation  without making any further inquiry as to whether
this Section 4 applies. Nothing contained herein shall be deemed to restrict the
right  of  a  Holder  to exercise this Warrant, or part thereof, at such time as
such exercise will not violate the provisions of this Section 4.  This Section 4
may  not  be  amended  unless  such  amendment  is  approved by the holders of a
majority  of  the  Common  Stock  then outstanding; provided, however, that this
                                                    --------  -------
Section  4 shall not apply, effective upon written notice from the Holder to the
Company,  at  any  time after the public announcement of a Major Transaction (as
defined  below).

     5.     Payment  of  the  Exercise Price; Cashless Exercise.  The Holder may
            ---------------------------------------------------
pay  the  Exercise Price in either of the following forms or, at the election of
Holder,  a  combination  thereof:

     (a)     through  a  cash  exercise  (a  "Cash  Exercise")  by  delivering
                                              --------------
immediately  available  funds,  or

     (b)     if  an  effective  Registration  Statement is not available for the
resale  of  all of the Warrant Shares issuable hereunder at the time an Exercise
Notice  is  delivered  to  the Company, through a cashless exercise (a "Cashless
                                                                        --------
Exercise").  The  Holder  may  effect  a  Cashless Exercise by surrendering this
--------
Warrant  to the Company and noting on the Exercise Notice that the Holder wishes
to  effect a Cashless Exercise, upon which the Company shall issue to the Holder
the  number  of  Warrant  Shares  determined  as  follows:

               X  = Y  x  (A-B)/A

where:         X  = the number of Warrant Shares to be issued to the Holder;


                                        4
<PAGE>
               Y  =  the  number  of  Warrant  Shares with respect to which this
                     Warrant is being exercised;

               A  =  the  Market  Price  as  of  the  Exercise  Date;  and

               B  =  the  Exercise  Price.

For  purposes  of  Rule  144,  it  is intended and acknowledged that the Warrant
Shares  issued  in  a Cashless Exercise transaction shall be deemed to have been
acquired  by  the Holder, and the holding period for the Warrant Shares required
by  Rule  144  shall  be  deemed  to  have  been  commenced,  on the Issue Date.

     6.     Anti-Dilution Adjustments; Distributions; Other Events. The Exercise
            ------------------------------------------------------
Price  and  the  number of Warrant Shares issuable hereunder shall be subject to
adjustment  from  time to time as provided in this Section 6.  In the event that
any adjustment of the Exercise Price or the number of Warrant Shares as required
herein  results  in  a fraction of a cent or fraction of a share, as applicable,
such  Exercise  Price or number of Warrant Shares shall be rounded up or down to
the  nearest  cent  or  share,  as  applicable.

     (a)     Subdivision or Combination of Common Stock.  If the Company, at any
             ------------------------------------------
time  after  the  Issue  Date,  subdivides  (by any stock split, stock dividend,
recapitalization,  reorganization,  reclassification or otherwise) its shares of
Common  Stock into a greater number of shares, then after the date of record for
effecting  such  subdivision,  the Exercise Price in effect immediately prior to
such  subdivision  will be proportionately reduced.  If the Company, at any time
after  the  initial  issuance of this Warrant, combines (by reverse stock split,
recapitalization,  reorganization,  reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record for
effecting  such  combination,  the Exercise Price in effect immediately prior to
such  combination  will  be  proportionally  increased.

     (b)     Distributions.  If  the  Company  shall  declare  or  make  any
             -------------
distribution  of  its  assets  (or  rights  to acquire its assets) to holders of
Common  Stock  as  a  partial  liquidating  dividend or otherwise (including any
dividend  or  distribution  to  the Company's stockholders in cash or shares (or
rights  to acquire shares) of capital stock of a subsidiary) (a "Distribution"),
                                                                 ------------
the  Company  shall deliver written notice of such Distribution (a "Distribution
                                                                    ------------
Notice")  to the Holder at least fifteen (15) Business Days prior to the earlier
------
to  occur  of  (i) the record date for determining stockholders entitled to such
Distribution (the "Record Date") and (ii) the date on which such Distribution is
                   -----------
made (the "Distribution Date").  The Holder shall be entitled to receive, at its
           -----------------
option (to be exercised by written notice delivered to the Company following the
date  on which a Distribution Notice is delivered to the Holder), either (A) the
same  amount and type of assets being distributed in such Distribution as though
the  Holder  were a holder on the Record Date therefore of a number of shares of
Common Stock into which this Warrant is exercisable as of such Record Date (such
number  of  shares  to  be  determined  at the Exercise Price then in effect and
without  giving  effect  to  any  limitations on such exercise contained in this
Warrant or the Securities Purchase Agreement) or (B) a reduction in the Exercise
Price as of the Record Date therefore, such reduction to be effected by reducing
the  Exercise  Price  in  effect  on  the Business Day immediately preceding the
Record  Date  by  an  amount  equal  to  the  fair  market


                                        5
<PAGE>
value  of the assets to be distributed divided by the number of shares of Common
                                       ----------
Stock  as to which such Distribution is to be made, such fair market value to be
reasonably  determined in good faith by the independent members of the Company's
Board  of  Directors.  Notwithstanding  anything  herein to the contrary, if the
Holder  does not notify the Company of whether the Holder has elected clause (A)
or  (B)  in  the  preceding  sentence  on or prior to the Distribution Date, the
Holder  shall  be  deemed  to have elected clause (B) of the preceding sentence.

     (c)     Dilutive  Issuances.
             -------------------

          (i)     Adjustment  Upon Dilutive Issuance.  If, at any time after the
                  ----------------------------------
Issue Date, the Company issues or sells, or in accordance with subparagraph (ii)
of  this  Section  6(c),  is deemed to have issued or sold, any shares of Common
Stock  for  no  consideration  or  for  a  consideration per share less than the
Exercise Price on the date of such issuance or sale (or deemed issuance or sale)
(a  "Dilutive  Issuance"), then the Exercise Price shall be adjusted as follows:
     ------------------

               (A)     If  such  Dilutive Issuance occurs prior to the Effective
     Date  (as  defined  in  the  Registration Rights Agreement), then effective
     immediately  upon  the  Dilutive  Issuance,  the  Exercise  Price  shall be
     adjusted  so  as  to  equal the consideration received or receivable by the
     Company (on a per share basis) for the additional shares of Common Stock so
     issued,  sold or deemed issued or sold in such Dilutive Issuance (which, in
     the  case  of  a deemed issuance or sale, shall be calculated in accordance
     with  subparagraph (ii) below). Notwithstanding the foregoing, prior to the
     Effective  Date, the Company shall not engage in any transaction that would
     result  in the issuance or deemed issuance of shares of Common Stock (other
     than  Excluded  Securities  (as  defined  below)  for  no  consideration.

          (B)     If  such  Dilutive  Issuance  occurs on or after the Effective
     Date,  then  effective immediately upon the Dilutive Issuance, the Exercise
     Price  shall be adjusted so as to equal an amount determined by multiplying
     such  Exercise  Price  by  the  following  fraction:

               N0 + N1
               -------
               N0 + N2

     where:

               N0 = the  number  of  shares  of  Common  Stock  outstanding
                    immediately  prior  to the issuance, sale or deemed issuance
                    or  sale  of  such additional shares of Common Stock in such
                    Dilutive Issuance (without taking into account any shares of
                    Common  Stock issuable upon conversion, exchange or exercise
                    of any securities or other instruments which are convertible
                    into  or  exercisable  or  exchangeable  for  Common  Stock
                    ("Convertible  Securities")  or  options,  warrants or other
                      -----------------------
                    rights  to  purchase  or  subscribe  for  Common  Stock  or
                    Convertible  Securities  ("Purchase  Rights");
                                               ----------------


                                        6
<PAGE>
               N1 = the  number  of  shares  of Common Stock which the aggregate
                    consideration, if any, received or receivable by the Company
                    for  the  total  number  of such additional shares of Common
                    Stock  so  issued,  sold  or  deemed  issued or sold in such
                    Dilutive  Issuance  (which, in the case of a deemed issuance
                    or sale, shall be calculated in accordance with subparagraph
                    (ii)  below)  would purchase at the Exercise Price in effect
                    immediately  prior  to  such  Dilutive  Issuance;  and

               N2 = the  number  of  such  additional  shares of Common Stock so
                    issued,  sold  or  deemed  issued  or  sold in such Dilutive
                    Issuance.

               Notwithstanding  the  foregoing,  no  adjustment  shall  be  made
     pursuant  hereto  if  such  adjustment  would  result in an increase in the
     Exercise  Price.

          (ii)     Effect  On Exercise Price Of Certain Events.  For purposes of
                   -------------------------------------------
determining  the  adjusted Exercise Price under subparagraph (i) of this Section
6(c),  the  following  will  be  applicable:

               (A)     Issuance  Of  Purchase  Rights.  If the Company issues or
                       ------------------------------
     sells  any Purchase Rights, whether or not immediately exercisable, and the
     price  per  share  for  which Common Stock is issuable upon the exercise of
     such  Purchase  Rights  (and  the  price  of  any conversion of Convertible
     Securities, if applicable) is less than the Exercise Price in effect on the
     date  of  issuance  or sale of such Purchase Rights, then the maximum total
     number  of  shares  of  Common Stock issuable upon the exercise of all such
     Purchase  Rights  (assuming  full  conversion,  exercise  or  exchange  of
     Convertible  Securities,  if  applicable)  shall,  as  of  the  date of the
     issuance  or  sale of such Purchase Rights, be deemed to be outstanding and
     to  have  been issued and sold by the Company for such price per share. For
     purposes  of  the preceding sentence, the "price per share for which Common
     Stock  is  issuable  upon  the  exercise  of such Purchase Rights" shall be
     determined by dividing (x) the total amount, if any, received or receivable
     by  the  Company  as  consideration  for  the  issuance or sale of all such
     Purchase  Rights,  plus the minimum aggregate amount (without giving effect
     to  anti-dilution  provisions) of additional consideration, if any, payable
     to  the Company upon the exercise of all such Purchase Rights, plus, in the
                                                                    ----
     case  of Convertible Securities issuable upon the exercise of such Purchase
     Rights,  the  minimum  aggregate amount of additional consideration payable
     upon  the  conversion,  exercise  or  exchange  of  all  such  Convertible
     Securities  (determined in accordance with the calculation method set forth
     in  subparagraph  (ii)(B) below), by (y) the maximum total number of shares
     of  Common  Stock  issuable  upon  the exercise of all such Purchase Rights
     (assuming  full conversion, exercise or exchange of Convertible Securities,
     if  applicable).  Except  as  provided  in  Section  6(c)(ii)(C) hereof, no
     further  adjustment  to  the  Exercise  Price shall be made upon the actual
     issuance  of such Common Stock upon the exercise of such Purchase Rights or
     upon  the  conversion,  exercise  or  exchange  of  Convertible  Securities
     issuable  upon  exercise  of  such  Purchase  Rights.


                                        7
<PAGE>
               (B)     Issuance  Of  Convertible  Securities.  If  the  Company
                       -------------------------------------
     issues  or  sells  any  Convertible  Securities, whether or not immediately
     convertible, exercisable or exchangeable, and the price per share for which
     Common Stock is issuable upon such conversion, exercise or exchange is less
     than  the  Exercise Price in effect on the date of issuance or sale of such
     Convertible  Securities,  then the maximum total number of shares of Common
     Stock  issuable  upon  the  conversion,  exercise  or  exchange of all such
     Convertible  Securities (without giving effect to anti-dilution provisions)
     shall,  as  of  the  date  of  the  issuance  or  sale  of such Convertible
     Securities, be deemed to be outstanding and to have been issued and sold by
     the  Company  for  such  price  per share. If the Convertible Securities so
     issued  or  sold  do not have a fluctuating conversion or exercise price or
     exchange  ratio,  then  for  the  purposes  of  the  immediately  preceding
     sentence, the "price per share for which Common Stock is issuable upon such
     conversion,  exercise  or exchange" shall be determined by dividing (A) the
     total  amount,  if  any,  received  or  receivable  by  the  Company  as
     consideration  for the issuance or sale of all such Convertible Securities,
     plus  the  minimum  aggregate  amount  of additional consideration, if any,
     payable  to  the  Company  upon the conversion, exercise or exchange of all
     such  Convertible Securities (determined in accordance with the calculation
     method  set  forth  in this subparagraph (ii)(B)), by (B) the maximum total
     number  of shares of Common Stock issuable upon the exercise, conversion or
     exchange  of all such Convertible Securities. If the Convertible Securities
     so  issued  or  sold  have  a  fluctuating  conversion or exercise price or
     exchange  ratio (a "Variable Rate Convertible Security"), then for purposes
                         ----------------------------------
     of  the  first  sentence of this subparagraph (ii)(B), the "price per share
     for  which  Common  Stock  is  issuable  upon  such conversion, exercise or
     exchange"  shall  be deemed to be the lowest price per share which would be
     applicable  (assuming  all  holding  period  and  other  conditions  to any
     discounts  contained  in  such Variable Rate Convertible Security have been
     satisfied)  if  the  conversion  price  of  such  Variable Rate Convertible
     Security  on the date of issuance or sale thereof were seventy-five percent
     (75%)  of  the  actual conversion price on such date (the "Assumed Variable
                                                                ----------------
     Market Price"), and, further, if the conversion price of such Variable Rate
     ------------
     Convertible  Security at any time or times thereafter is less than or equal
     to  the  Assumed  Variable Market Price last used for making any adjustment
     under  this  Section  6(c)  with  respect  to any Variable Rate Convertible
     Security,  the Exercise Price in effect at such time shall be readjusted to
     equal  the Exercise Price which would have resulted if the Assumed Variable
     Market  Price  at  the  time  of  issuance of the Variable Rate Convertible
     Security had been seventy-five percent (75%) of the actual conversion price
     of  such  Variable  Rate  Convertible  Security existing at the time of the
     adjustment required by this sentence. No further adjustment to the Exercise
     Price  shall  be  made  upon  the actual issuance of such Common Stock upon
     conversion,  exercise  or  exchange  of  such  Convertible  Securities.

               (C)     Change In Option Price Or Conversion Rate.  If there is a
                       -----------------------------------------
     change at any time in (x) the amount of additional consideration payable to
     the  Company  upon  the  exercise of any Purchase Rights; (y) the amount of
     additional  consideration,  if  any,  payable  to  the  Company  upon  the
     conversion,  exercise  or  exchange  of  any  Convertible  Securities  the
     adjustment  for  which  is  not otherwise covered under Section 6(c)(ii)(B)
     above;  or (z) the rate at which any Convertible Securities are convertible
     into  or  exercisable  or  exchangeable  for Common Stock, then in any such
     case,  the  Exercise  Price  in  effect at the time of such change shall be
     readjusted  to  the  Exercise  Price  which  would


                                        8
<PAGE>
     have  been  in  effect at such time had such Purchase Rights or Convertible
     Securities  still  outstanding  provided  for  such  changed  additional
     consideration or changed conversion, exercise or exchange rate, as the case
     may  be,  at  the  time  initially  issued  or  sold.

               (D)     Calculation  Of  Consideration  Received.  If  any Common
                       ----------------------------------------
     Stock,  Purchase  Rights  or  Convertible Securities are issued or sold for
     cash,  the  consideration received therefore will be the amount received by
     the  Company  therefore.  In  case  any  Common  Stock,  Purchase Rights or
     Convertible  Securities  are issued or sold for a consideration part or all
     of  which shall be other than cash, including in the case of a strategic or
     similar  arrangement in which the other entity will provide services to the
     Company, purchase services from the Company or otherwise provide intangible
     consideration  to  the  Company, the amount of the consideration other than
     cash  received  by  the  Company  (including  the  net present value of the
     consideration  expected  by  the  Company  for  the  provided  or purchased
     services)  shall  be  the  fair  market value of such consideration, except
     where  such  consideration consists of securities, in which case the amount
     of  consideration  received  by the Company will be the average of the last
     sale  prices thereof on the principal market for such securities during the
     period  of  ten  Trading Days immediately preceding the date of receipt. In
     case any Common Stock, Purchase Rights or Convertible Securities are issued
     in  connection with any merger or consolidation in which the Company is the
     surviving corporation, the amount of consideration therefore will be deemed
     to  be the fair market value of such portion of the net assets and business
     of  the  non-surviving corporation as is attributable to such Common Stock,
     Purchase  Rights  or  Convertible  Securities,  as  the  case  may  be. The
     independent  members  of  the  Company's Board of Directors shall calculate
     reasonably  and  in good faith, using standard commercial valuation methods
     appropriate  for  valuing  such  assets,  the  fair  market  value  of  any
     consideration other than cash or securities; provided, however, that if the
     Holder  does  not  agree to such fair market value calculation within three
     Business Days after receipt thereof from the Company, then such fair market
     value  shall  be  determined in good faith by an investment banker or other
     appropriate  expert  of  national  reputation  selected  by  the Holder and
     reasonably  acceptable  to the Company, with the costs of such appraisal to
     be  borne  by  the  Company.

          (iii)     Exceptions To Adjustment Of Exercise Price.  Notwithstanding
                    ------------------------------------------
the  foregoing,  no  adjustment  to the Exercise Price shall be made pursuant to
this  Section  6(c)  upon the issuance of any Excluded Securities.  For purposes
hereof,  "Excluded  Securities"  means  (I)  securities  purchased  under  the
          --------------------
Securities  Purchase  Agreement;  (II)  securities  issued  upon  conversion  or
exercise  of  the  Preferred Stock or the Warrants; (III) shares of Common Stock
issuable or issued to employees, consultants or directors from time to time upon
the exercise of options, in such case granted or to be granted in the discretion
of  the  Board  of  Directors  pursuant  to  one  or  more stock option plans or
agreements  or  restricted  stock  plans or agreements in effect as of the Issue
Date  and  up to an additional 500,000 shares of Common Stock issuable or issued
to  employees or directors from time to time upon the exercise of options, which
may  be  granted  in the discretion of the Board of Directors pursuant to one or
more  stock  option  plans or agreements or restricted stock plans or agreements
approved by the independent directors of  the Board of Directors after the Issue
Date;  (IV)  shares  of  Common Stock issued in connection with any stock split,
stock  dividend  or  recapitalization  of  the Company; and (V) shares of Common
Stock  issued  in  connection  with  the  acquisition  by  the  Company  of  any
corporation  or other


                                        9
<PAGE>
entity occurring after the Effective Date and as long as a fairness opinion with
respect  to  such  acquisition  is  rendered  by  an investment bank of national
recognition.

          (iv)     Notice  Of  Adjustments.  Upon  the  occurrence  of  each
                   -----------------------
adjustment  or  readjustment of the Exercise Price pursuant to this Section 6(c)
resulting  in  a  change in the Exercise Price by more than one percent (1%), or
any  change  in  the  number  or type of stock, securities and/or other property
issuable  upon  exercise  of  this  Warrant,  the Company, at its expense, shall
promptly  compute  such  adjustment  or  readjustment  or change and prepare and
furnish  to  the  Holder  a  certificate  setting  forth  such  adjustment  or
readjustment  or  change  and  showing  in  detail  the  facts  upon  which such
adjustment  or  readjustment  or  change  is based.  The Company shall, upon the
written  request  at  any  time  of  the  Holder,  furnish  to the Holder a like
certificate  setting  forth  (i) such adjustment or readjustment or change, (ii)
the  Exercise  Price  at  the  time  in effect and (iii) the number of shares of
Common  Stock  and  the amount, if any, of other securities or property which at
the  time  would  be  received  upon  exercise  of  this  Warrant.

     (d)     Major  Transactions.  In  the  event  of  a  merger, consolidation,
             -------------------
business  combination,  tender  offer,  exchange  of  shares,  recapitalization,
reorganization,  redemption  or other similar event, as a result of which shares
of  Common  Stock  of  the Company shall be changed into the same or a different
number  of shares of the same or another class or classes of stock or securities
or  other  assets of the Company or another entity or the Company shall sell all
or  substantially  all  of  its  assets  (each  of  the foregoing being a "Major
                                                                           -----
Transaction"),  the  Company  will  give  the  Holder  at least thirty (30) days
-----------
written  notice  prior  to  the  closing of such Major Transaction, and: (i) the
Holder  shall  be  permitted to exercise this Warrant in whole or in part at any
time prior to the record date for the receipt of such consideration and shall be
entitled  to receive, for each share of Common Stock issuable to Holder for such
exercise,  the  same  per  share  consideration  payable to the other holders of
Common  Stock  in connection with such Major Transaction, and (ii) if and to the
extent that the Holder retains any portion of this Warrant following such record
date, the Company will cause the surviving or, in the event of a sale of assets,
purchasing entity, as a condition precedent to such Major Transaction, to assume
the  obligations of the Company under this Warrant, with such adjustments to the
Exercise Price and the securities covered hereby as may be necessary in order to
preserve  the  economic  benefits  of  this  Warrant  to  the  Holder.

     (e)     Adjustments; Additional Shares, Securities or Assets.  In the event
             ----------------------------------------------------
that  at any time, as a result of an adjustment made pursuant to this Section 6,
the Holder of this Warrant shall, upon exercise of this Warrant, become entitled
to  receive  securities  or  assets  (other  than  Common  Stock) then, wherever
appropriate,  all references herein to shares of Common Stock shall be deemed to
refer  to  and  include  such  shares  and/or  other  securities  or assets; and
thereafter  the number of such shares and/or other securities or assets shall be
subject  to  adjustment  from  time to time in a manner and upon terms as nearly
equivalent  as  practicable to the provisions of this Section 6.  Any adjustment
made  herein  other  than  pursuant  to  Section  6(c)  hereof that results in a
decrease  in the Exercise Price shall also effect a proportional increase in the
number  of  shares  of  Common  Stock  into  which  this Warrant is exercisable.

     7.     Fractional  Interests.
            ---------------------


                                       10
<PAGE>
          No  fractional shares or scrip representing fractional shares shall be
issuable upon the exercise of this Warrant, but on exercise of this Warrant, the
Holder  hereof  may purchase only a whole number of shares of Common Stock.  If,
on exercise of this Warrant, the Holder hereof would be entitled to a fractional
share  of Common Stock or a right to acquire a fractional share of Common Stock,
the  Company  shall,  in  lieu  of issuing any such fractional share, pay to the
Holder  an  amount  in cash equal to the product resulting from multiplying such
fraction  by  the  Market  Price  as  of  the  Exercise  Date.

     8.   Transfer  of  this  Warrant.
          ---------------------------

          The  Holder may sell, transfer, assign, pledge or otherwise dispose of
this  Warrant, in whole or in part, as long as such sale or other disposition is
made  pursuant  to  an effective registration statement or an exemption from the
registration  requirements  of the Securities Act, and applicable state security
laws,  and is otherwise made in accordance with the applicable provisions of the
Securities  Purchase  Agreement.  Upon  such  transfer or other disposition, the
Holder  shall deliver this Warrant to the Company together with a written notice
to the Company, substantially in the form of the Transfer Notice attached hereto
as  Exhibit  B (the "Transfer Notice"), indicating the person or persons to whom
                     ---------------
this  Warrant  shall  be  transferred  and,  if less than all of this Warrant is
transferred,  the  number  of  Warrant  Shares to be covered by the part of this
Warrant to be transferred to each such person. Within three (3) Business Days of
receiving  a Transfer Notice and the original of this Warrant, the Company shall
deliver to the transferee designated by the Holder a Warrant or Warrants of like
tenor  and  terms for the appropriate number of Warrant Shares and, if less than
all  this  Warrant is transferred, shall deliver to the Holder a Warrant for the
remaining  number  of  Warrant  Shares.

     9.   Benefits  of  this  Warrant.
          ---------------------------

          This Warrant shall be for the sole and exclusive benefit of the Holder
of  this  Warrant  and nothing in this Warrant shall be construed to confer upon
any  person  other than the Holder of this Warrant any legal or equitable right,
remedy  or  claim  hereunder.

     10.  Loss,  theft,  destruction  or  mutilation  of  Warrant.
          -------------------------------------------------------

          Upon  receipt  by  the  Company  of  evidence  of  the  loss,  theft,
destruction  or  mutilation  of this Warrant, and (in the case of loss, theft or
destruction)  of  indemnity  reasonably  satisfactory  to  the Company, and upon
surrender of this Warrant, if mutilated, the Company shall execute and deliver a
new  Warrant  of  like  tenor  and  date.

     11.  Notice  or  Demands.
          -------------------

          Any notice, demand or request required or permitted to be given by the
Company  or the Holder pursuant to the terms of this Warrant shall be in writing
and  shall  be  deemed  delivered (i) when delivered personally or by verifiable
facsimile  transmission,  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


                                       11
<PAGE>
the  U.S.  mail (certified or registered mail, return receipt requested, postage
prepaid),  addressed  as  follows:

          If to the Company:

          Citadel  Security  Software  Inc.
          8750 N. Central Expy.
          Suite 100
          Dallas, TX 75231
          Attn: Steven B. Solomon, Chief Executive Officer
          Phone: (214) 750-2454
          Fax: (214) 520-0034

          with a copy to:

          David Allen Wood, P.C.
          12770 Coit Road, Suite 1100
          Dallas, Texas 75251
          Attn:  David A. Wood
          Tel:   (972) 458-0300
          Fax: (972) 458-0301


and  if  to  the Holder, to such address as shall be designated by the Holder in
writing  to  the  Company.


     12.  Applicable  Law.
          ---------------

          This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts  made  and  to  be  performed  entirely  within the State of New York.

     13.  Amendments.
          ----------

          No  amendment,  modification  or  other  change  to,  or waiver of any
provision  of,  this  Warrant may be made unless such amendment, modification or
change  is  (A) set forth in writing and is signed by the Company and the Holder
and  (B) agreed to in writing by the holders of at least two-thirds (2/3) of the
number  of shares into which the Warrants are exercisable (without regard to any
limitation contained herein on such exercise), it being understood that upon the
satisfaction  of  the  conditions  described  in (A) and (B) above, each Warrant
(including  any  Warrant  held  by  the Holder who did not execute the agreement
specified  in  (B)  above)  shall  be  deemed  to  incorporate  any  amendment,
modification,  change  or  waiver  effected  thereby  as  of  the effective date
thereof.

     14.   Entire  Agreement.
           -----------------


                                       12
<PAGE>
     This  Warrant,  the  Securities  Purchase  Agreement,  the Certificate  of
Designation,  the  Registration  Rights  Agreement,  and  the  other Transaction
Documents  constitute the entire agreement among the parties hereto with respect
to  the  subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This  Warrant,  the  Securities Purchase Agreement, the Certificate of
Designation,  the  Registration  Rights  Agreement,  and  the  other Transaction
Documents  supersede  all  prior agreements and understandings among the parties
hereto  with  respect  to  the  subject  matter  hereof  and  thereof.

     15.   Headings.
           --------

     The  headings  in  this Agreement are for convenience of reference only and
shall  not  limit  or  otherwise  affect  the  meaning  hereof.


                           [Signature Page to Follow]





                                       13
<PAGE>
     IN WITNESS WHEREOF, the Company has duly executed and delivered this
Warrant as of the Issue Date.



                              CITADEL SECURITY SOFTWARE INC.


                              By:     /s/     Steven B. Solomon
                                      -------------------------------
                                      Name:   Steven B. Solomon
                                      Title:  Chief Executive Officer






                                       14
<PAGE>




                                                            EXHIBIT A to WARRANT
                                                            --------------------

                                 EXERCISE NOTICE
                                 ---------------


     The  undersigned  Holder  hereby  irrevocably  exercises  the  right  to
purchase___________  of the shares of Common Stock ("Warrant Shares") of Citadel
                                                     --------------
Security  Software  Inc.  evidenced  by  the  attached  Warrant (the "Warrant").
                                                                      -------
Capitalized  terms  used  herein  and  not  otherwise  defined  shall  have  the
respective  meanings  set  forth  in  the  Warrant.

     1.     Form  of  Exercise  Price.  The  Holder  intends that payment of the
Exercise  Price  shall  be  made  as:

          ______  a  Cash  Exercise  with  respect  to _________________ Warrant
                     --------------
Shares;  and/or

          ______  a  Cashless Exercise with respect to _________________ Warrant
                     -----------------
Shares,  as  permitted  by  Section  5(b)  of  the  attached  Warrant.


     2.     Payment of Exercise Price.  In the event that the Holder has elected
a  Cash  Exercise with respect to some or all of the Warrant Shares to be issued
pursuant  hereto,  the  Holder  shall  pay  the  sum of $________________ to the
Company  in  accordance  with  the  terms  of  the  Warrant.



Date:  ______________________


____________________________________
     Name  of  Registered  Holder

By:  _______________________________
     Name:
     Title:



                                       15
<PAGE>
                                                            EXHIBIT B to WARRANT
                                                            --------------------

                                 TRANSFER NOTICE
                                 ---------------



FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns  and  transfers  unto  the  person  or  persons named below the right to
purchase __________ shares of the Common Stock of Citadel Security Software Inc.
evidenced  by  the  attached  Warrant.


Date:  ______________________


____________________________________
     Name  of  Registered  Holder

By:  _______________________________
     Name:
     Title:

Transferee Name and Address:

____________________________________

____________________________________

____________________________________




                                       16
<PAGE>