Document:

EXHIBIT  4.2

                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS AGREEMENT (this "Agreement"), dated as of May 9, 2005,
                                           ---------
by  and  between  CITADEL  SECURITY  SOFTWARE  INC., a Delaware corporation (the
"Company"),  and  each of the entities whose names appear on the signature pages
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hereof.  Such  entities  are  each  referred  to  herein  as  an "Investor" and,
                                                                  --------
collectively,  as  the  "Investors".
                         ---------

     The  Company  has  agreed,  on  the terms and subject to the conditions set
forth  in  the  Securities  Purchase  Agreement,  dated  as  of May 9, 2005 (the
"Securities  Purchase  Agreement"),  to  issue  and  sell to each Investor named
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therein  Series  B  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.
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     For purposes of this Agreement, the following terms shall have the meanings
specified:

          (a)  "Commission"  means  the  Securities  and  Exchange  Commission;
                ----------

          (b)  "Filing Deadline" means each of (i) the First Filing Deadline and
                ---------------
     (ii) if the Put Option Closing occurs, the Second Filing Deadline;

          (c)  "First  Effective  Date"  means  the  date  on  which  the  First
                ----------------------
     Registration Statement is declared effective by the Commission;

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

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          (e)  "Initial Preferred Stock" means the Preferred Stock issued at the
                -----------------------
     Initial  Closing.

          (f)  "First Registration  Deadline"  means the earlier to occur of (i)
                ----------------------------
     one  hundred  twentieth  (120th) calendar day following the Initial Closing
     Date  and (ii) the third (3rd) Business Day immediately following the first
     date  on which the Company is notified that the Commission has no comments,
     or  no  further  comments,  to  the  First  Registration  Statement;

          (g)  "First  Registration  Statement"  means  a registration statement
                ------------------------------
     prepared  in  compliance  with  the Securities Act and pursuant to Rule 415
     under  the  Securities  Act ("Rule 415") or any successor rule and filed by
                                   --------
     the Company pursuant to paragraph 2(a) hereof;

          (h)  "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;

          (i)  "Initial  Effective  Date"  means  the  date  on  which the First
                ------------------------
     Registration Statement is declared effective by the Commission;

          (j)  "Put  Option Preferred Stock" means the Preferred Stock issued at
                ---------------------------
     the  Put  Option  Closing;

          (k)  "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;

          (l)  "Registration  Deadline"  means  each  of  the  (i)  the  First
                ----------------------
     Registration Deadline and (ii) if the Put Option Closing occurs, the Second
     Registration  Deadline;

          (m)  "Registration Period" has the meaning set forth in paragraph 2(d)
                -------------------
     below;

          (n)  "Registration  Statement"  means  any  registration  statement
                -----------------------
     required to be filed pursuant to the terms of this Agreement;

          (o)  "Second Effective  Date"  means  the  date  on  which  the Second
                ----------------------
     Registration Statement is declared effective by the Commission;

          (p)  "Second Filing Deadline"  means the thirtieth (30th) calendar day
                ----------------------
     following  the  Put  Option  Closing  Date;

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          (q)  "Second Registration Deadline"  means the earlier to occur of (i)
                ----------------------------
     one hundred twentieth (120th) calendar day following the Put Option Closing
     Date  and (ii) the third (3rd) Business Day immediately following the first
     date  on which the Company is notified that the Commission has no comments,
     or no further comments, to the Second Registration Statement; and

          (r)  "Second  Registration  Statement"  means a registration statement
                -------------------------------
     prepared  in compliance with the Securities Act and pursuant to Rule 415 or
     any  successor  rule  and  filed  by the Company pursuant to paragraph 2(b)
     hereof.

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

          (a)  First Registration  Statement.  On  or  before  the  First Filing
               -----------------------------
Deadline,  the  Company  shall  prepare  and  file with the Commission the First
Registration  Statement  on  Form  S-3 as a "shelf" registration statement under
Rule  415  covering  the  resale of a number of shares of Registrable Securities
equal  to  one  hundred  percent  (100%) of the number of shares of Common Stock
issuable  on  the Initial Closing Date pursuant to the conversion of the Initial
Preferred  Stock  and  the  exercise  of the Initial 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  Initial  Preferred  Stock  or exercise such
Holder's  Initial  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 Initial Preferred Stock and
exercise  of  the  Initial  Warrants in order to prevent dilution resulting from
stock  splits,  stock  dividends  or  similar  events.

          (b)  Second Registration Statement.  If the Put Option Closing occurs,
               -----------------------------
on or before the Second 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  covering  the  resale  of  a  number  of  shares of
Registrable  Securities  equal to one hundred fifty percent (150%) of the number
of  shares  of  Common Stock issuable on the Put Option Closing Date pursuant to
the  conversion of all then outstanding Preferred Shares and the exercise of all
then  outstanding  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  Shares  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  Shares  and  exercise  of  the  Warrants in order to prevent dilution
resulting  from  stock  splits,  stock  dividends  or  similar  events.

          (c)  Conversion  to  Form  S-3.  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 (as a "shelf" registration statement under
Rule  415);  provided  that  the  Company  shall  use  its

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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 fifty
percent  (150%)  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).

          (d)  Effectiveness.  The  Company  shall use its best efforts to cause
               -------------
each Registration Statement to become effective as soon as practicable following
the  filing  thereof,  but  in  no  event later than the applicable Registration
Deadline. The Company shall respond promptly to any and all comments made by the
staff  of  the  Commission  on a Registration Statement, and shall submit to the
Commission,  within one (1) Business Day after the Company learns that no review
of  such  Registration  Statement will be made by the staff of the Commission or
that  the  staff  of the Commission has no further comments on such Registration
Statement,  as  the case may be, a request for acceleration of the effectiveness
of  such  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 the end of the applicable 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 such Registration Statement or a supplement to the
Prospectus  to  be  used  in  connection  with such Registration Statement.  The
Company will maintain the effectiveness of each 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 such 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 Initial Closing Date and ending on the earlier to occur
of  (i)  or  (ii)  above being referred to herein as the "Registration Period").
                                                          -------------------

          (e)  Registration  Default.  If  (A)  a  Registration Statement is not
               ---------------------
filed  on  or before the applicable Filing Deadline or declared effective by the
Commission  on  or  before  the  applicable  Registration  Deadline, (B) after a
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  such
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 a 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

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<PAGE>
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.

          (f)  Allowed  Delay.  The Company may delay the disclosure of material
               --------------
non-public  information,  and  suspend  the  availability  of  a  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, unless the Company is eligible to file a registration statement on
Form  S-3,  each  time  the  Company  files  a  post-effective  amendment  to  a
Registration  Statement  for the purpose of updating such 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 such 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  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 each available 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.

          (g)  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.

          (h)  Registration of Other Securities.  During the period beginning on
               --------------------------------
the date hereof and ending on the later to occur of (i) the First Effective Date
and  (ii)  if  the  Put  Option

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<PAGE>
Closing occurs, the Second Effective Date, the Company shall refrain from filing
any new registration statement (other than (x) the Registration Statement or (y)
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  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).

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<PAGE>
     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 each Registration Statement and the prospectus used in connection
with  such  Registration  Statement  as  may  be  necessary  to  comply with the
provisions  of  the  Securities  Act  or  to  maintain the effectiveness of such
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 a Registration Statement, furnish to
each  Holder  such  number  of  copies  of  the  prospectus  included  in  such
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  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
a  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

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<PAGE>
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  each
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  any 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  each 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) 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 after the Approval Date (as such
term  is  defined in the Securities Purchase Agreement), the aggregate number of
shares of Common Stock available under the Registration Statements then covering
such  shares  is insufficient to cover one hundred twenty five percent (125%) of
the  Registrable  Securities issuable under all then outstanding 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 such
Registration  Statements  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

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<PAGE>
Registration  Statements  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 all then outstanding 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  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

                                        9
<PAGE>
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 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,

                                       10
<PAGE>
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 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

                                       11
<PAGE>
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.

     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

                                       12
<PAGE>
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.  The  failure  of any party to
exercise  any right or remedy under this Agreement or otherwise, or the delay by
any  party  in  exercising  such  right or remedy, shall not operate as a waiver
thereof.

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

          with  a  copy  to:

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

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

                                       13
<PAGE>
          (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.

                           [Signature Pages to Follow]

                                       14
<PAGE>
     IN  WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date  first-above  written.

CITADEL  SECURITY  SOFTWARE  INC.

By:  __________________________
     Name:
     Title:

SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

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

By:  _________________________
     Name:
     Title:

SATELLITE STRATEGIC FINANCE PARTNERS, LTD.

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

By:  __________________________
     Name:
     Title:

___________________________________________
          Investor  Name

By:  __________________________,  its  Manager

By:  __________________________
     Name:
     Title:EXHIBIT 4.3

                               EXCHANGE AGREEMENT

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

                                    RECITALS

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

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

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

                                    AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          If  to  the  Company:

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

          with  a  copy  to:

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

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

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

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

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

                           [Signature Pages to Follow]

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

CITADEL  SECURITY  SOFTWARE  INC.

By:  __________________________
     Name:
     Title:

SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

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

     By:  __________________________
          Name:
          Title:

ADDRESS:

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

     With  a  copy  to:

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

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

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