REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS  AGREEMENT  (this  "Agreement"),  dated  as  of
                                              ---------
February 10,  2004,  by  and  between CITADEL SECURITY SOFTWARE INC., a Delaware
corporation  (the "Company"), and each of the entities whose names appear on the
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signature  pages  hereof.  Such  entities  are  each  referred  to  herein as an
"Investor"  and,  collectively,  as  the  "Investors".
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     The  Company  has  agreed,  on  the terms and subject to the conditions set
forth  in  the Securities Purchase Agreement, dated as of February 10, 2004 (the
"Securities  Purchase  Agreement"),  to  issue  and  sell to each Investor named
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therein  Series  A  5.0% Convertible Preferred Stock (the "Preferred Stock") and
                                                           ---------------
Warrants  (the  "Warrants").
                 --------

     The  shares of Preferred Stock are convertible into shares (the "Conversion
                                                                      ----------
Shares")  of  the Company's common stock, par value $0.01 per share (the "Common
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Stock").  The Warrants are exercisable into shares of Common Stock (the "Warrant
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Shares")  in  accordance  with  their  terms.
------

     In  order  to  induce  each  Investor to enter into the Securities Purchase
Agreement,  the  Company has agreed to provide certain registration rights under
the  Securities  Act  of  1933,  as  amended  (the  "Securities Act"), and under
                                                     --------------
applicable  state  securities  laws.  Capitalized  terms  used  herein  and  not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase  Agreement.

     In  consideration  of  each  Investor entering into the Securities Purchase
Agreement,  and  other  good  and  valuable  consideration,  the  receipt  and
sufficiency  of  which  are  hereby  acknowledged, the parties agree as follows:

1.     DEFINITIONS.
       -----------

     For purposes of this Agreement, the following terms shall have the meanings
specified:

          (a)      "Effective  Date"  means  the  date on which the Registration
                    ---------------
     Statement  is  declared effective by the Securities and Exchange Commission
     (the  "Commission");
            ----------

          (b)     "Filing  Deadline"  means  the  thirtieth  (30th) calendar day
                   ----------------
     following  the  Closing  Date;

          (c)     "Holder"  means  any  person  owning  or  having  the right to
                   ------
     acquire,  through  conversion  of  the  Preferred  Stock or exercise of the
     Warrants  or  otherwise,  Registrable  Securities, including initially each
     Investor  and  thereafter  any  permitted  assignee  thereof;

          (d)     "Registrable  Securities"  means the Conversion Shares and the
                   -----------------------
     Warrant  Shares  and  any other shares of Common Stock issuable pursuant to
     the terms of the Preferred Stock or the Warrants, and any shares of capital
     stock  issued  or  issuable  from  time  to  time (with any adjustments) in
     replacement  of,  in exchange for or otherwise in respect of the Conversion
     Shares  or  the  Warrant  Shares;


<PAGE>
          (e)     "Registration Deadline" means the one hundred and thirty fifth
                   ---------------------
     (135th)  calendar  day  following  the  Closing  Date;

          (f)     "Registration  Period"  has the meaning set forth in paragraph
                   --------------------
2(b)  below;  and

          (g)     "Registration  Statement"  means the Registration Statement to
                   -----------------------
be  filed  hereunder relating to resales of the Registrable Securities issued or
issuable  under  the  Preferred  Stock  or  the  Warrants.

     2.     REGISTRATION.
            ------------

          (a)     Registration Statement.  On or before the Filing Deadline, the
                  ----------------------
Company  shall  prepare and file with the Commission a Registration Statement on
Form S-3 as a "shelf" registration statement under Rule 415 under the Securities
Act  ("Rule  415")  covering  the  resale  of  a number of shares of Registrable
       ---------
Securities  equal  to one hundred and twenty six and 25/100 percent (126.25%) of
the  number  of  shares of Common Stock issuable on the Closing Date pursuant to
the  conversion  of  the  Preferred Stock and the exercise of the Warrants (such
number  to  be  determined  using  the  Conversion  Price  or Exercise Price, as
applicable, in effect on such dates and without regard to any restriction on the
ability  of any Holder to convert such Holder's Preferred Stock or exercise such
Holder's  Warrant  as  of such date). The Registration Statement shall state, to
the  extent  permitted by Rule 416 under the Securities Act, that it also covers
such  indeterminate  number  of  additional shares of Common Stock as may become
issuable upon the conversion of the Preferred Stock and exercise of the Warrants
in  order  to  prevent  dilution resulting from stock splits, stock dividends or
similar  events.  If  the  Company  is  not  eligible  to use Form S-3, then the
Company  shall  prepare  and file a Registration Statement on such form as it is
eligible to use; provided that the Company shall use its best efforts as soon as
practicable following the date on which it becomes eligible to use Form S-3 (but
in  no  event  later than ten (10) Business Days after such date) to convert the
Registration  Statement  to  a Form S-3, or file a new registration statement on
such  form,  covering  at  least  one  hundred and twenty six and 25/100 percent
(126.25%)  of  the number of shares of Common Stock issuable on the date of such
conversion  or  filing pursuant to the conversion of the Preferred Stock and the
exercise  of  the  Warrants  (such  number to be determined using the Conversion
Price  or  Exercise  Price,  as  applicable, in effect on such dates and without
regard  to any restriction on the ability of any Holder to convert such Holder's
Preferred  Stock  or  exercise  such  Holder's  Warrant  as  of  such  date).

          (b)     Effectiveness.  The  Company  shall  use  its  best efforts to
                  -------------
cause  the  Registration  Statement  to  become effective as soon as practicable
following  the  filing  thereof,  but  in  no  event later than the Registration
Deadline. The Company shall respond promptly to any and all comments made by the
staff  of  the Commission on the Registration Statement, and shall submit to the
Commission,  within one (1) Business Day after the Company learns that no review
of  the  Registration  Statement  will be made by the staff of the Commission or
that  the  staff  of  the Commission has no further comments on the Registration
Statement,  as  the case may be, a request for acceleration of the effectiveness
of the Registration Statement to a time and date not later than two (2) Business
Days  after  the  submission of such request; provided that at any time prior to


                                      -2-
<PAGE>
the  end  of  the  Registration  Deadline, the Company may delay its request for
effectiveness  for a period of up to ten days if the Company is required to file
an  Exchange  Act  report  within such ten (10) day period that would require an
amendment  to the Registration Statement or a supplement to the Prospectus to be
used  in  connection with the Registration Statement.  The Company will maintain
the  effectiveness  of  the Registration Statement until the earlier to occur of
(i)  the  date  on  which  all of the Registrable Securities eligible for resale
thereunder have been publicly sold pursuant to either the Registration Statement
or  Rule  144  and  (ii)  the  date  on  which all of the Registrable Securities
remaining to be sold under the Registration Statement (in the reasonable opinion
of  counsel  to  the  Holder)  may  be immediately sold to the public under Rule
144(k)  or  any successor provision, assuming that all Warrant Shares are issued
by  means  of  a  cashless exercise of the Warrants (the period beginning on the
Closing  Date  and  ending  on  the  earlier to occur of (i) or (ii) above being
referred  to  herein  as  the  "Registration  Period").
                                --------------------

          (c)     Registration  Default.  If  (A)  the Registration Statement is
                  ---------------------
not  filed  on  or  before  the  Filing  Deadline  or  declared effective by the
Commission  on  or  before the Registration Deadline, (B) after the Registration
Statement  has  been declared effective by the Commission and during a period in
which  an  Allowed  Delay  (as  hereinafter  defined) is not in effect, sales of
Registrable  Securities  cannot  be  made  by  a  Holder  under the Registration
Statement  for any reason not within the exclusive control of such Holder (other
than  such  Registrable  Securities as are then freely saleable pursuant to Rule
144(k)),  or  (C)  an  amendment  to  the  Registration  Statement,  or  a  new
registration  statement, required to be filed pursuant to the terms of paragraph
4(k)  below is not filed on or before the date required by such paragraph, (each
of  (A),  (B) and (C) being referred to herein as a "Registration Default"), the
                                                     --------------------
Company  shall  make cash payments to each Holder equal to one percent (1.0%) of
the  Liquidation  Preference of the Preferred Stock then held by such Holder for
each thirty (30) day period in which a Registration Default occurs (prorated for
any  period  of  less  than thirty days). Each such payment shall be made within
five  (5)  Business Days following the last day of the calendar month in which a
Registration  Default occurs. Any such payment shall be in addition to any other
remedies  available  to each Holder at law or in equity, whether pursuant to the
terms hereof, the Securities Purchase Agreement, the Certificate of Designation,
or  otherwise.

          (d)     Allowed  Delay.  The  Company  may  delay  the  disclosure  of
                  --------------
material  non-public  information,  and  suspend  the  availability  of  the
Registration  Statement, for no more than (i) five (5) consecutive Business Days
or  (ii) twenty (20) calendar days in any twelve (12) month period, in the event
of  a  proposed  merger,  reorganization  or  similar  transaction involving the
Company,  as  long as its board of directors (A) has determined, upon the advice
of  counsel,  that  such  information  would  be  required to be disclosed in an
offering  registered under the Securities Act and (B) reasonably deems it in the
Company's  best interests not to disclose such information publicly (an "Allowed
                                                                         -------
Delay").  In addition, until the Company becomes eligible to file a registration
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statement on Form S-3, each time the Company files a post-effective amendment to
the  Registration  Statement  for  the  purpose  of  updating  the  Registration
Statement  in  connection with the public filing by the Company of any report or
other  document with the Commission (such post-effective amendment, an "Updating
                                                                        --------
Amendment"),  the  Company may also suspend the availability of the Registration
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Statement  until  such  Updating  Amendment  is  declared effective and any such
suspension  shall  also  be  deemed an Allowed Delay for all purposes under this
Agreement  as  long as such Updating Amendment is filed within five (5) Business
Days  following  the  event  or


                                      -3-
<PAGE>
circumstance  requiring  such amendment and the Company promptly responds to any
comments made thereon by the staff of the Commission. The Company shall promptly
(i)  notify  each  Holder  in  writing  of  the existence of material non-public
information  giving rise to an Allowed Delay (but in no event, without the prior
written consent of such Holder, shall the Company disclose to such Holder any of
the  facts or circumstances regarding any material non-public information), (ii)
advise  each  Holder  in  writing  to  cease  all  sales  under the Registration
Statement  until  the  termination  of  the  Allowed Delay and (iii) notify each
Holder  in  writing immediately upon the termination or expiration of an Allowed
Delay.

          (e)     Allocation  of  Conversion  Shares  and  Warrant  Shares.  The
                  --------------------------------------------------------
initial  number  of  Conversion  Shares  and  Warrant  Shares  included  in  any
Registration  Statement and each increase in the number thereof included therein
shall  be  allocated pro rata among the Holders based on the aggregate number of
                     --------
Registrable  Securities  issuable  to  each  Holder at the time the Registration
Statement  covering  such  initial  number of Registrable Securities or increase
thereof  is  declared  effective by the Commission (such number to be determined
using  the  Conversion Price or Exercise Price, as applicable, in effect at such
time and without regard to any restriction on the ability of a Holder to convert
such  Holder's  Preferred  Stock  or  exercise  such Holder's Warrant as of such
date).  In  the  event  that  a  Holder sells or otherwise transfers any of such
Holder's  Registrable Securities, each transferee shall be allocated the portion
of  the  then  remaining  number  of  Registrable  Securities  included  in such
Registration  Statement  allocable  to  the  transferor.

          (f)     Registration of Other Securities.  During the period beginning
                  --------------------------------
on  the  date hereof and ending on the Effective Date, the Company shall refrain
from  filing  any  new  registration  statement (other than (i) the Registration
Statement  or  (ii)  a  registration statement on Form S-8 with respect to stock
option  plans  and  agreements and stock plans currently in effect and disclosed
pursuant  to  the  terms  of  the  Securities  Purchase  Agreement).

     3.     PIGGYBACK  REGISTRATION.
            ------------------------

     If  at any time prior to the expiration of the Registration Period, (i) the
Company  proposes to register shares of Common Stock under the Securities Act in
connection  with  the  public  offering  of  such  shares  for cash (a "Proposed
                                                                        --------
Registration")  other  than  a registration statement on Form S-8 or Form S-4 or
------------
any  successor  or  other  forms  promulgated  for  similar  purposes and (ii) a
Registration Statement covering the sale of all of the Registrable Securities is
not  then  effective and available for sales thereof by the Holders, the Company
shall,  at  such time, promptly give each Holder written notice of such Proposed
Registration.  Each Holder shall have ten (10) Business Days from its receipt of
such notice to deliver to the Company a written request specifying the amount of
Registrable  Securities  that  such  Holder  intends  to  sell and such Holder's
intended  method  of  distribution.  Upon  receipt  of such request, the Company
shall use its best efforts to cause all Registrable Securities which the Company
has  been requested to register to be registered under the Securities Act to the
extent  necessary  to  permit their sale or other disposition in accordance with
the  intended  methods  of distribution specified in the request of such Holder;
provided, however, that the Company shall have the right to postpone or withdraw
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any  registration  effected pursuant to this Section 3 without obligation to the
Holder.  If, in connection with any underwritten public offering for the account
of  the  Company or for stockholders of the Company that have contractual rights
to  require  the  Company  to  register  shares  of  Common  Stock, the managing
underwriter(s)  thereof  shall


                                      -4-
<PAGE>
impose  a  limitation  on  the  number  of  shares  of Common Stock which may be
included  in  a  registration  statement  because,  in  the  judgment  of  such
underwriter(s),  marketing or other factors dictate such limitation is necessary
to  facilitate  such offering, then the Company shall be obligated to include in
the  registration  statement  only  such  limited  portion  of  the  Registrable
Securities  with  respect to which each Holder has requested inclusion hereunder
as  such  underwriter(s)  shall  permit. Any exclusion of Registrable Securities
shall  be  made  pro  rata  among  the  Holders  seeking  to include Registrable
Securities  in  a  registration  statement,  in  proportion  to  the  number  of
Registrable Securities sought to be included by such Holders; provided, however,
that the Company shall not exclude any Registrable Securities unless the Company
has  first  excluded  all  outstanding  securities, the holders of which are not
entitled  to  inclusion  of such securities in the registration statement or are
not  entitled  to  pro  rata  inclusion  with  the  Registrable  Securities; and
provided,  further,  that,  after  giving  effect  to  the immediately preceding
proviso,  any  exclusion  of  Registrable Securities shall be made pro rata with
holders  of  other securities having the right to include such securities in the
registration  statement.  In  no  event shall the Company include any securities
other  than  the  Registrable Securities on the Registration Statement or on any
registration statement filed by the Company on behalf of the Holders pursuant to
the  terms  hereof  (other  than  in  connection  with the exercise of currently
outstanding  piggyback  registration  rights  as  disclosed  in  the  Securities
Purchase  Agreement).

     4.     OBLIGATIONS  OF  THE  COMPANY.
            -----------------------------

     In  addition  to  performing  its  obligations hereunder, including without
limitation  those  pursuant  to  paragraphs 2(a), (b) and (c) above, the Company
shall:

          (a)     prepare  and  file  with  the  Commission  such amendments and
supplements  to the Registration Statement and the prospectus used in connection
with  the  Registration  Statement  as  may  be  necessary  to  comply  with the
provisions  of  the  Securities  Act  or  to  maintain  the effectiveness of the
Registration  Statement  during  the Registration Period (subject to any Allowed
Delays),  or  as may be reasonably requested by a Holder in order to incorporate
information  concerning  such  Holder  or  such  Holder's  intended  method  of
distribution;

          (b)      after the Common Stock has been listed on the Nasdaq National
Market,  the  Nasdaq  SmallCap Market, the New York Stock Exchange, or any other
market  or  exchange,  secure  the listing of all Registrable Securities on such
market  of  exchange,  and provide each Holder with reasonable evidence thereof;

          (c)     upon  the effectiveness of the Registration Statement, furnish
to  each  Holder  such  number  of  copies  of  the  prospectus  included in the
Registration  Statement,  including a preliminary prospectus, in conformity with
the  requirements of the Securities Act, and such other documents as such Holder
may  reasonably  request in order to facilitate the disposition of such Holder's
Registrable  Securities;

          (d)     use all commercially reasonable efforts to register or qualify
the  Registrable  Securities  under  the  securities  or "blue sky" laws of such
jurisdictions  within  the  United  States  as  shall be reasonably requested in
writing  from  time to time by a Holder, and do any and all other acts or things
which  may  be  necessary  or  advisable to enable such Holder to consummate the
public  sale


                                      -5-
<PAGE>
or  other  disposition  of  the  Registrable  Securities  in such jurisdictions;
provided  that the Company shall not be required in connection therewith or as a
condition  thereto  to  qualify  to  do business or to file a general consent to
service  of  process  in  any  such  jurisdiction;

          (e)     in  the  event  of  an  underwritten  public  offering  of the
Registrable  Securities,  enter  into  (together  with  all Holders proposing to
distribute  Registrable  Securities  through  such underwriting) and perform its
obligations  under  an  underwriting  agreement,  in  usual  and  customary form
reasonably  acceptable  to  the  Company,  with the managing underwriter of such
offering;

          (f)     notify  each  Holder  immediately  after becoming aware of the
occurrence  of  any  event  (but shall not, without the prior written consent of
such  Holder,  disclose  to  such Holder any facts or circumstances constituting
material non-public information) as a result of which the prospectus included in
the  Registration  Statement, as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary  to  make  the  statements  therein  not  misleading  in  light of the
circumstances then existing, and (except during an Allowed Delay) as promptly as
practicable  prepare,  and file with the Commission and furnish to each Holder a
reasonable  number  of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an untrue statement
of  material fact or omit to state a material fact required to be stated therein
or  necessary  to  make  the  statements  therein not misleading in light of the
circumstances  then  existing;

          (g)     use  all  commercially  reasonable  efforts  to  prevent  the
issuance  of  any  stop order or other order suspending the effectiveness of the
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof  at the earliest possible time and to notify each Holder of the issuance
of  such  order  and  the  resolution  thereof;

          (h)     furnish  to  each  Holder,  on  the date that the Registration
Statement,  or  any  successor  registration statement, becomes effective, (x) a
letter,  dated  such date, from the Company addressed to such Holder, confirming
such effectiveness and, to the knowledge of the Company, the absence of any stop
order,  and  (y) in the case of an underwriting, (A) a copy of an opinion, dated
such date, of such outside counsel, in such form and substance as is required to
be  given to the underwriters, and (B) a copy of a letter, dated such date, from
the  Company's  independent  certified  public  accountants,  in  such  form and
substance  as  is  required  to  be given by the Company's independent certified
public  accountants  to  such  underwriters;

          (i)     provide  to  each  Holder  and  its  representatives,  upon
reasonable  prior  notice and execution of a reasonable non-disclosure agreement
by  Holder,  the  opportunity  to  conduct a reasonable inquiry of the Company's
financial  and other records during normal business hours and make available its
officers  for  questions  regarding information which such Holder may reasonably
request  in  order  to  fulfill  any  due  diligence  obligation  on  its  part;

          (j)     permit  counsel  for  each  Holder  to review the Registration
Statement  and  all amendments and supplements thereto, and any comments made by
the  staff  of  the  Commission  concerning  such Holder and/or the transactions
contemplated  by  the Transaction Documents and the Company's responses thereto,
within a reasonable period of time (but in no event less than three (3)


                                      -6-
<PAGE>
Business Days after such Holder has received such documents) prior to the filing
thereof  with  the  Commission (or, in the case of comments made by the staff of
the Commission, within a reasonable period of time following the receipt thereof
by  the  Company);  and

          (k)     in the event that, at any time, the number of shares available
under  the  Registration  Statement  is insufficient to cover one hundred twenty
five  percent  125%  of  the  Registrable  Securities issuable under the related
Preferred  Stock and Warrants (such number to be determined using the Conversion
Price  or  Exercise  Price,  as  applicable,  in effect at such time and without
regard  to any restriction on the ability of any Holder to convert such Holder's
Preferred  Stock  or  exercise such Holder's Warrant) the Company shall promptly
amend  the  Registration  Statement or file a new registration statement, in any
event  as soon as practicable, but not later than the tenth (10th) day following
notice  from  a Holder of the occurrence of such event, so that the Registration
Statement  or  such new registration statement, or both, covers no less than one
hundred  fifty  percent (150%) of the Registrable Securities eligible for resale
thereunder  and  issuable  under  the related Preferred Stock and Warrants (such
number  to  be  determined  using  the  Conversion  Price  or Exercise Price, as
applicable, in effect at the time of such amendment or filing and without regard
to  any  restriction  on  the  ability  of  any  Holder to convert such Holder's
Preferred  Stock  or exercise such Holder's Warrant).  The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to become
effective  as soon as practicable following the filing thereof. Any Registration
Statement  filed pursuant to this paragraph 4(k) shall state that, to the extent
permitted by Rule 416 under the Securities Act, such Registration Statement also
covers  such  indeterminate  number  of additional shares of Common Stock as may
become  issuable  upon  conversion  of  the  Preferred Stock and exercise of the
Warrants  in  order  to  prevent  dilution  resulting  from  stock splits, stock
dividends or similar events. Unless and until such amendment or new Registration
Statement  becomes  effective,  each  Holder  shall have the rights described in
Section  2(c)  above.

     5.     OBLIGATIONS  OF  EACH  HOLDER.
            -----------------------------

     In connection with the registration of Registrable Securities pursuant to a
Registration  Statement,  each  Holder  shall:

          (a)  timely  furnish  to  the  Company  in  writing  such  information
regarding  itself  and  the  intended  method of disposition of such Registrable
Securities  as  the  Company  shall  reasonably  request  in order to effect the
registration  thereof;

          (b)  upon  receipt  of any notice from the Company of the happening of
any  event  of  the  kind  described  in  paragraphs  4(f)  or 4(g), immediately
discontinue  any  sale  or  other  disposition  of  such  Registrable Securities
pursuant  to  such  Registration  Statement  until the filing of an amendment or
supplement  as  described  in  paragraph  4(f)  or  withdrawal of the stop order
referred  to  in  paragraph  4(g),  and  use  commercially reasonable efforts to
maintain  the  confidentiality  of  such  notice  and  its  contents;

          (c)  in  the  event  of  an  underwritten offering of such Registrable
Securities  in  which  such  Holder  participates,  enter  into  a customary and
reasonable  underwriting  agreement  and  execute


                                      -7-
<PAGE>
such  other  documents  as  the  Company  and  the managing underwriter for such
offering  may  reasonably  request;

          (d)  to the extent required by applicable law, deliver a prospectus to
the  Investor  of  such  Registrable  Securities;

          (e)  notify  the  Company  when  it  has  sold  all of the Registrable
Securities  held  by  it;  and

          (f)  notify  the Company in the event that any information supplied by
such  Holder  in writing for inclusion in such Registration Statement or related
prospectus  is  untrue  or  omits to state a material fact required to be stated
therein  or  necessary  to  make such information not misleading in light of the
circumstances  then  existing;  immediately  discontinue  any  sale  or  other
disposition  of  such  Registrable  Securities  pursuant  to  such  Registration
Statement  until  the filing of an amendment or supplement to such prospectus as
may be necessary so that such prospectus does not contain an untrue statement of
material  fact or omit to state a material fact required to be stated therein or
necessary  to  make  the  statements  therein  not  misleading  in  light of the
circumstances  then  existing; and use commercially reasonable efforts to assist
the Company as may be appropriate to make such amendment or supplement effective
for  such  purpose.

     6.     INDEMNIFICATION.
            ---------------

     In the event that any Registrable Securities are included in a Registration
Statement  under  this  Agreement:

          (a)     To  the  extent  permitted by law, the Company shall indemnify
and  hold  harmless  each Holder, the officers, directors, employees, agents and
representatives  of  such  Holder,  and  each  person, if any, who controls such
Holder  within  the meaning of the Securities Act or the Securities Exchange Act
of  1934,  as amended (the "Exchange Act"), against any losses, claims, damages,
                            ------------
liabilities  or  reasonable  out-of-pocket  expenses  (whether joint or several)
(collectively,  including  legal  or  other  expenses  reasonably  incurred  in
connection  with investigating or defending same, "Losses"), insofar as any such
                                                   ------
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any  preliminary  prospectus  or  final  prospectus  contained  therein  or  any
amendments  or  supplements thereto, or (ii) the omission or alleged omission to
state  therein  a  material  fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading.  Subject  to the provisions of paragraph 6(c) below, the
Company  will  reimburse such Holder, and each such officer, director, employee,
agent,  representative  or  controlling  person,  for  any  legal  or  other
out-of-pocket  expenses  as  reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such  settlement  is  effected without the consent of the Company (which consent
shall  not  be  unreasonably  withheld),  nor  shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss is (i) based upon
and is in conformity with written information furnished by such person expressly
for use in such Registration Statement or (ii) based on a failure of such person
to  deliver  or  cause  to  be  delivered  the final prospectus contained in the
Registration  Statement  and  made


                                      -8-
<PAGE>
available  by  the  Company,  if  such  delivery  is required by applicable law.

          (b)     To  the  extent  permitted by law, each Holder who is named in
such  Registration  Statement as a selling stockholder, acting severally and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees,  agents  and representatives of the Company, and each person, if any,
who  controls  the  Company  within  the  meaning  of  the Securities Act or the
Exchange Act, against any Losses to the extent (and only to the extent) that any
such  Losses are based upon and in conformity with written information furnished
by  such Holder expressly for use in such Registration Statement. Subject to the
provisions  of  paragraph  6(c)  below,  such Holder will reimburse any legal or
other  expenses  as  reasonably  incurred  by  the Company and any such officer,
director,  employee, agent, representative, or controlling person, in connection
with  investigating  or  defending  any  such  Loss; provided, however, that the
foregoing  indemnity  shall  not apply to amounts paid in settlement of any such
Loss  if  such  settlement is effected without the consent of such Holder (which
consent  shall not be unreasonably withheld); and provided, further, that, in no
event  shall  any  indemnity  under this subsection 6(b) exceed the net proceeds
resulting  from the sale of the Registrable Securities sold by such Holder under
such  Registration  Statement.

          (c)     Promptly  after  receipt  by  an  indemnified party under this
Section  6  of  notice  of  the  commencement  of  any  action  (including  any
governmental action), such indemnified party will, if a claim in respect thereof
is  to  be  made against any indemnifying party under this Section 6, deliver to
the  indemnifying  party  a  written  notice of the commencement thereof and the
indemnifying  party  shall  have  the  right to participate in and to assume the
defense  thereof  with  counsel  mutually satisfactory to the parties; provided,
however,  that  an  indemnified  party  shall  have  the right to retain its own
counsel,  with the reasonably incurred fees and expenses of one such counsel for
all  indemnified parties to be paid by the indemnifying party, if representation
of  such  indemnified  party  by  the counsel retained by the indemnifying party
would be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests between such indemnified party and any
other  party  represented  by  such  counsel in such proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement  of  any  such  action, to the extent prejudicial to its ability to
defend  such  action,  shall relieve such indemnifying party of any liability to
the  indemnified party under this Section 6 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not relieve
it  of  any  liability  that it may have to any indemnified party otherwise than
under this Section 6 or with respect to any other action unless the indemnifying
party  is  materially  prejudiced  as  a  result  of  not receiving such notice.

          (d)     In  the  event that the indemnity provided in paragraph (a) or
(b)  of  this  Section  6  is  unavailable  or  insufficient to hold harmless an
indemnified  party  for any reason, the Company and each Holder agree, severally
and  not  jointly, to contribute to the aggregate Losses to which the Company or
such  Holder  may be subject in such proportion as is appropriate to reflect the
relative  fault of the Company and such Holder in connection with the statements
or  omissions  which resulted in such Losses; provided, however, that in no case
shall  such  Holder  be responsible for any amount in excess of the net proceeds
resulting  from  the  sale  of  the  Registrable Securities sold by it under the
Registration  Statement.  Relative  fault  shall  be  determined by reference to
whether any alleged untrue statement or omission relates to information provided
by  the  Company  or  by such


                                      -9-
<PAGE>
Holder.  The  Company  and  each  Holder  agree  that  it  would not be just and
equitable  if  contribution  were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred  to  above.  Notwithstanding  the  provisions of this paragraph (d), no
person  guilty  of  fraudulent  misrepresentation (within the meaning of Section
11(f)  of  the Securities Act) shall be entitled to contribution from any person
who  is  not  guilty  of such fraudulent misrepresentation. For purposes of this
Section  6,  each  person who controls a Holder within the meaning of either the
Securities  Act  or the Exchange Act and each officer, director, employee, agent
or  representative  of such Holder shall have the same rights to contribution as
such  Holder,  and  each  person  who controls the Company within the meaning of
either  the  Securities  Act  or  the  Exchange  Act and each officer, director,
employee,  agent  or representative of the Company shall have the same rights to
contribution  as  the  Company, subject in each case to the applicable terms and
conditions  of  this  paragraph  (d).

          (e)     Notwithstanding  the  foregoing,  to  the  extent  that  the
provisions  on  indemnification  and  contribution  contained in an underwriting
agreement entered into in connection with an underwritten public offering are in
conflict  with  the  foregoing  provisions,  the  provisions in the underwriting
agreement  shall  control.

          (f)     Unless  otherwise  superceded  by  an  underwriting  agreement
entered into in connection with an underwritten public offering, the obligations
of the Company and each Holder under this Section 6 shall survive the conversion
of  the  Preferred Stock and exercise of the Warrants in full, the completion of
any  offering  or  sale  of  Registrable  Securities  pursuant to a Registration
Statement  under  this  Agreement,  or  otherwise.

     7.     REPORTS.
            -------

          With  a  view  to making available to each Holder the benefits of Rule
144  under  the  Securities  Act  ("Rule  144")  and  any  other similar rule or
                                    ---------
regulation  of  the  Commission  that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company agrees
to:

          (a)     make and keep public information available, as those terms are
understood  and  defined  in  Rule  144;

          (b)     file  with  the  Commission in a timely manner all reports and
other  documents  required  of  the  Company  under  the  Securities Act and the
Exchange  Act;  and

          (c)     furnish  to  such  Holder,  so  long  as  such Holder owns any
Registrable Securities, promptly upon written request (i) a written statement by
the  Company,  if  true, that it has complied with the reporting requirements of
Rule  144,  the  Securities  Act  and  the  Exchange Act, (ii) to the extent not
publicly  available  through the Commission's EDGAR database, a copy of the most
recent  annual  or  quarterly  report  of the Company and such other reports and
documents  so  filed  by the Company, and (iii) such other information as may be
reasonably  requested by such Holder in connection with such Holder's compliance
with  any  rule or regulation of the Commission which permits the selling of any
such  securities  without  registration.


                                      -10-
<PAGE>
     8.     MISCELLANEOUS.
            -------------

          (a)     Expenses of Registration.  Except as otherwise provided in the
                  ------------------------
Securities  Purchase Agreement, all reasonable expenses, other than underwriting
discounts and commissions and fees and expenses of counsel and other advisors to
each  Holder,  incurred  in  connection  with  the  registrations,  filings  or
qualifications  described  herein,  including  (without  limitation)  all
registration,  filing and qualification fees, printers' and accounting fees, the
fees  and  disbursements  of  counsel  for  the  Company,  and  the  fees  and
disbursements  incurred  in  connection with the opinion and letter described in
paragraph  4(h)  hereof,  shall  be  borne  by  the  Company.

          (b)     Amendment;  Waiver.  Except  as  expressly  provided  herein,
                  ------------------
neither  this  Agreement  nor  any  term  hereof may be amended or waived except
pursuant  to  a written instrument executed by the Company and the Holders of at
least  two-thirds  (2/3)  of  the  Registrable  Securities into which all of the
Preferred  Stock  and  Warrants  then outstanding are convertible or exercisable
(without regard to any limitation on such conversion or exercise). Any amendment
or  waiver effected in accordance with this paragraph shall be binding upon each
Holder,  each  future  Holder  and  the  Company.

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

          If to the Company:

          Citadel Security Software Inc.
          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


                                      -11-
<PAGE>
          Fax:  (972) 458-0301

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

          (d)     Assignment.  Upon  the  transfer  of  any  Preferred  Stock,
                  ----------
Warrants  or  Registrable  Securities  by  a  Holder,  the rights of such Holder
hereunder  with  respect  to  such  securities  so transferred shall be assigned
automatically  to the transferee thereof, and such transferee shall thereupon be
deemed  to  be  a  "Holder"  for purposes of this Agreement, as long as: (i) the
Company  is,  within  a  reasonable  period  of  time  following  such transfer,
furnished  with  written notice of the name and address of such transferee, (ii)
the  transferee  agrees  in  writing  with the Company to be bound by all of the
provisions  hereof,  and  (iii)  such  transfer  is  made in accordance with the
applicable requirements of the Securities Purchase Agreement; provided, however,
                                                              --------  -------
that  the registration rights granted in this Agreement shall not be transferred
to  any  person  or  entity  that  receives  any  Preferred  Stock,  Warrants or
Registrable  Securities  in  a  public  transaction  pursuant  to  an  effective
registration  statement  under  the  Securities  Act  or  pursuant  to Rule 144.

          (e)     Counterparts.  This Agreement may be executed in counterparts,
                  ------------
each  of  which  shall be deemed an original, and all of which together shall be
deemed  one  and the same instrument.  This Agreement, once executed by a party,
may  be  delivered  to  any  other  party  hereto  by  facsimile  transmission.

          (f)     Governing  Law.  This  Agreement  shall  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.

          (g)     Holder  of Record.  A person is deemed to be a Holder whenever
                  -----------------
such  person owns or is deemed to own of record such Registrable Securities.  If
the  Company receives conflicting instructions, notices or elections from two or
more  persons with respect to the same Registrable Securities, the Company shall
act  upon the basis of instructions, notice or election received from the record
owner  of  such  Registrable  Securities.

          (h)     Entire  Agreement.  This  Agreement,  the  Securities Purchase
                  -----------------
Agreement,  the  Certificate  of  Designation,  the  Warrants,  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 Agreement, the Securities Purchase
Agreement,  the  Certificate  of  Designation,  the  Warrants,  and  the  other
Transaction  Documents  supersede  all prior agreements and understandings among
the  parties  hereto  with  respect  to  the  subject matter hereof and thereof.

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

          (j)     Third Party Beneficiaries.  This Agreement is intended for the
                  -------------------------
benefit  of  the  parties  hereto  and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by,  any  other  person.


                                      -12-
<PAGE>
                           [Signature Pages to Follow]





                                      -13-
<PAGE>


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

CITADEL SECURITY SOFTWARE INC.


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


INVESTOR NAME: Satellite Strategic Finance Associates, LLC
               -------------------------------------------

By:  _________________________
     Name:
     Title:




                                      -14-
<PAGE>