Document:

<PAGE>

                                                                    Exhibit 10.3

                    TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT, dated as of __________, 2002 (this
Agreement), is made by and between CT Holdings, Inc., a Delaware corporation
(Parent), and Citadel Security Software Inc., a Delaware corporation (Spinco).

                                   WITNESSETH:

WHEREAS, Parent and Spinco are parties to an Agreement and Plan of Distribution,
dated as of __________, 2002 (the Distribution Agreement), pursuant to which
Parent will transfer certain assets to Spinco and have Spinco assume certain
liabilities of Parent;

WHEREAS, in connection with the transactions contemplated by the Distribution
Agreement, Parent and Spinco wish to enter into this Agreement for purposes of
continuity and transition; and

WHEREAS, Spinco desires to cause Parent to provide the Services set forth on
Schedule A to Spinco, and Parent is willing to provide such Services, and Parent
desires to cause Spinco to provide the Services set forth on Schedule B to
Parent, and Spinco is willing to provide such Services, all on the terms and
conditions set forth below;

NOW, THEREFORE, the parties hereto, in consideration of the premises and the
mutual covenants contained herein, agree as follows:

SECTION 1. SPECIFIC DEFINITIONS.

In addition to the terms defined elsewhere in this Agreement, as used in this
Agreement, the following terms have the respective meanings set forth below:

Applicable Rate shall mean the rate of interest per annum announced from time to
time by Bank One Texas, N.A. as its prime lending rate plus 4% per annum.

Bankruptcy Event with respect to a party shall mean the filing of an involuntary
petition in bankruptcy or similar proceeding against such party seeking its
reorganization, liquidation or the appointment of a receiver, trustee or
liquidator for it or for all or substantially all of its assets, whereupon such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or if such party shall (i) apply for or consent in writing to the appointment of
a receiver, trustee or liquidator of all or substantially all of its assets,
(ii) file a voluntary petition or admit in writing its inability to pay its
debts as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) file a petition or an answer seeking reorganization or an
arrangement with its creditors or take advantage of any insolvency law with
respect to itself as debtor, or (v) file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency proceedings or any similar proceedings.

Change in Control shall have the meaning given to that term in that certain
Indemnity Agreement entered into between Parent and certain of its key
management.

Loss shall mean all losses, liabilities, damages, claims, demands, judgments or
settlements of any nature or kind, known or unknown, fixed, accrued, absolute or
contingent, liquidated or unliquidated, including all reasonable costs and
expenses (legal, accounting or otherwise as such costs are incurred) relating
thereto.

Parent Services shall mean those transitional services to be provided by Parent
to Spinco set forth on Schedule A hereto to assist Spinco in operating Spinco's
business.

Person shall mean any natural person, corporation, business trust, limited
liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.

Services shall mean, collectively, the Parent Services and the Spinco Services.

<PAGE>

Spinco Services shall mean those transitional services to be provided by Spinco
to Parent set forth on Schedule B hereto to assist Parent in operating Parent's
business.

SECTION 2. SERVICES.

Section 2.1 Services. (a) Parent shall provide to Spinco each Parent Service for
the term set forth opposite the description of such Parent Service in Schedule
A. Additional services may be provided to Spinco by Parent if such arrangement
is agreed to in writing and executed by Parent and Spinco.

(b) Spinco shall provide to Parent each Spinco Service for the term set forth
opposite the description of such Spinco Service in Schedule B. Additional
services may be provided by Spinco to Parent if such arrangement is agreed in
writing and executed by Parent and Spinco.

Section 2.2 Standard of Service. In performing the Services, Parent and Spinco
shall provide substantially the same level of service and use substantially the
same degree of care as their respective personnel provided and used in providing
such Services prior to the date hereof, subject in each case to any provisions
set forth on Schedule A or Schedule B with respect to each such Service.

SECTION 3. LICENSES AND PERMITS.

Each party warrants and covenants that all duties and obligations (including
with respect to Parent, all Parent Services and with respect to Spinco, all
Spinco Services) to be performed hereunder shall be performed in compliance with
all material applicable federal, state, provincial and local laws, rules and
regulations. Each party shall obtain and maintain all material permits,
approvals and licenses necessary or appropriate to perform its duties and
obligations (including with respect to Parent, the Parent Services and with
respect to Spinco, the Spinco Services) hereunder and shall at all times comply
with the terms and conditions of such permits, approvals and licenses.

SECTION 4. PAYMENT.

Section 4.1 Service Fees. (a) In consideration for the provision of each of the
Parent Services, Spinco shall pay to Parent the fee set forth for such Parent
Service on Schedule A.

(b) In consideration for the provision of each of the Spinco Services, Parent
shall pay to Spinco the fee set forth for such Spinco Service on Schedule B.

Section 4.2 Costs and Expenses. (a) In addition to the fees payable in
accordance with Section 4.1(a), Spinco shall reimburse Parent for all reasonable
and necessary out-of-pocket costs and expenses (including postage and other
delivery costs, telephone, telecopy and similar expenses) incurred by Parent
with respect to third parties in connection with the provision of Parent
Services to Spinco pursuant to the terms of this Agreement or paid by Parent on
behalf of Spinco.

(b) In addition to the fees payable in accordance with Section 4.1(b), Parent
shall reimburse Spinco for all reasonable and necessary out-of-pocket costs and
expenses (including postage and other delivery costs, telephone, telecopy and
similar expenses) incurred by Spinco with respect to third parties in connection
with the provision of Spinco Services to Parent pursuant to the terms of this
Agreement or paid by Spinco on behalf of Parent.

Section 4.3 Invoices. (a) Parent will invoice Spinco in U.S. dollars: (i) as of
the last day of each calendar month for any fees payable by Spinco in accordance
with Section 4.1(a) for Parent Services listed on Schedule A provided pursuant
to the terms of this Agreement during such month; (ii) as of the last day of
each calendar month for any amounts payable by Spinco in accordance with Section
4.2(a) for any out-of-pocket costs and expenses incurred during the immediately
preceding month to the extent Parent has received an invoice from such third
party; and (iii) as of the last day of each calendar month for any taxes
(excluding income taxes) payable with respect to the provision of Parent
Services to Spinco during such month. Parent shall deliver or cause to be
delivered to Spinco each such invoice within thirty (30) days following the last
day of the calendar month to which such invoice

                                       2

<PAGE>

relates. Spinco shall pay each such invoice received by electronic funds
transfer within thirty (30) days of the date on which such invoice was received.

(b) Spinco will invoice Parent in U.S. dollars: (i) as of the last day of each
calendar month for any fees payable by Parent in accordance with Section 4.1(b)
for Spinco Services listed on Schedule B provided pursuant to the terms of this
Agreement during such month; (ii) as of the last day of each calendar month for
any amounts payable by Parent in accordance with Section 4.2(b) for any
out-of-pocket costs and expenses incurred during the immediately preceding month
to the extent Spinco has received an invoice from such third party; and (iii) as
of the last day of each calendar month for any taxes (excluding income taxes)
payable with respect to the provision of Spinco Services to Parent during such
month. Spinco shall deliver or cause to be delivered to Parent each such invoice
within thirty (30) days following the last day of the calendar month to which
such invoice relates. Parent shall pay each such invoice received by electronic
funds transfer within thirty (30) days of the date on which such invoice was
received.

Section 4.4 Late Payment. Any amount not paid when due shall be subject to a
late payment fee computed daily at a rate equal to the Applicable Rate.
Notwithstanding the foregoing, in the event a party disputes the accuracy of any
invoice, a party shall pay the undisputed portion of such invoice a provided
herein, and the parties hereto will promptly meet and seek to resolve the
disputed amount of the invoice. Each party agrees to pay the other party's
reasonable attorneys' fees and other costs incurred in collection of any amounts
owed to such other party hereunder and not paid when due. Notwithstanding
anything to the contrary contained herein, in the event either party fails to
make a payment when due hereunder, and such failure continues for a period of
thirty (30) days following delivery of written notice to such non-paying party
of such failure, the other party shall have the right to cease provision of
Services to such non-paying party until such overdue payment (and any applicable
late payment fee accrued with respect thereto) is paid in full. Such right of
the party providing Services shall not in any manner limit or prejudice any of
such party's other rights or remedies in the event of the non-paying party's
failure to make payments when due hereunder, including any rights or remedies
pursuant to Section 7.

Section 4.5 Fees, Etc. Upon Termination of Services. In the event of a
termination of Services pursuant to Section 7.1, with respect to the calendar
month in which such Services cease to be provided, the recipient of such
Services shall be obligated to pay a pro rata share of the fee for such Service
set forth on Schedule A or Schedule B, as applicable, equal to the product of
(x) the fee set forth on Schedule A or Schedule B, as applicable, multiplied by
(y) a fraction, the numerator of which is the number of days in the calendar
month in which such Services cease to be provided preceding and including the
last date on which such Services are provided, and the denominator of which is
30.

SECTION 5. INDEMNIFICATION.

Section 5.1 Indemnification by Principal. (a) Spinco agrees to indemnify, defend
and hold Parent harmless from and against any Loss to which Parent may become
subject arising out of, by reason of or otherwise in connection with the
provision hereunder by Parent of Parent Services, other than Losses resulting
from Parent's gross negligence, willful misconduct or material breach of its
obligations pursuant to this Agreement. Notwithstanding any provision in this
Agreement to the contrary, Spinco shall not be liable under this Section 5.1 for
any consequential, special or punitive damages (including lost profits), except
to the extent that such consequential, special or punitive damages relate to a
Loss resulting from a Third-Party Claim (as defined in the Distribution
Agreement).

(b) Parent agrees to indemnify, defend and hold Spinco harmless from and against
any Loss to which Spinco may become subject arising out of, by reason of or
otherwise in connection with the provision hereunder by Spinco of Spinco
Services, other than Losses resulting from Spinco's gross negligence, willful
misconduct or material breach of its obligations pursuant to this Agreement.
Notwithstanding any provision in this Agreement to the contrary, Parent shall
not be liable under this Section 5.1 for any consequential, special or punitive
damages (including lost profits), except to the extent that such consequential,
special or punitive damages relate to a Loss resulting from a Third-Party Claim
(as defined in the Distribution Agreement).

Section 5.2 Indemnification by Provider. (a) Parent agrees to indemnify, defend
and hold Spinco harmless from and against any Loss to which Spinco may become
subject arising out of, by reason of or otherwise in connection

                                       3

<PAGE>

with the provision hereunder by Parent of Parent Services to Spinco where such
Losses resulted from Parent's gross negligence, willful misconduct or material
breach of its obligations pursuant to this Agreement.

(b) Spinco agrees to indemnify, defend and hold Parent harmless from and against
any Loss to which Parent may become subject arising out of, by reason of or
otherwise in connection with the provision hereunder by Spinco of Spinco
Services to Parent where such Losses resulted from Spinco's gross negligence,
willful misconduct or material breach of its obligations pursuant to this
Agreement.

Section 5.3 Procedures for Indemnification. Any indemnification claims made
hereunder shall be made in accordance with Article III of the Distribution
Agreement.

SECTION 6. CONFIDENTIALITY.

Each party shall keep confidential the Schedules to this Agreement and all
information received from the other party regarding the Services, including any
information received with respect to Parent or Spinco, and to use such
information only for the purposes set forth in this Agreement unless otherwise
agreed to in writing by the party from which such information was received. In
the event a party is required by any court or legislative or administrative body
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigation demand or similar process) to disclose any
confidential information provided pursuant to this Agreement, the party shall
provide the other party with prompt notice of such requirement in order to
afford the other party an opportunity to seek an appropriate protective order or
other remedy. However, if the other party is unable to obtain or does not seek
such protective order and the party required to disclose the confidential
information is, in the opinion of its counsel, legally compelled to disclose
such confidential information, disclosure of such information may be made
without liability under this Agreement. The covenants in this Section 6 shall
survive any termination of this Agreement indefinitely with respect to
information qualifying as a trade secret under applicable law and for a period
of three (3) years from the date such termination becomes effective with respect
to all other information.

SECTION 7. TERM.

Section 7.1 Duration. (a) Subject to Sections 6, 7.2, 7.3 and 7.4, the term of
this Agreement shall commence on the date hereof and shall continue in full
force and effect with respect to each Service until the earlier of (i) the first
anniversary of the Distribution Date (as defined in the Distribution Agreement)
or (ii) the termination of such Service in accordance with Section 7.1(b).

(b) Each party acknowledges that the purpose of this Agreement is for Parent to
provide the Parent Services to Spinco on an interim basis until Spinco can
perform the Parent Services for itself, and for Spinco to provide the Spinco
Services to Parent on an interim basis until Parent can perform the Spinco
Services for itself. Accordingly, each of Parent and Spinco shall use its
commercially reasonable efforts to make or obtain such approvals, permits and
licenses and implement such systems, as shall be necessary for it to provide the
appropriate Services for itself as promptly as practicable. As Spinco becomes
self-sufficient or engages other sources to provide any Parent Service, Spinco
shall be entitled to release Parent from providing any or all of the Parent
Services hereunder by delivering a written notice thereof to Parent at least
thirty (30) days prior to the effective date of release of such Parent
Service(s). At the end of such thirty (30) day period (or such shorter period as
may be agreed by the parties), Parent shall discontinue the provision of the
Parent Services specified in such notice and any such Parent Services shall be
excluded from this Agreement, and Schedule A shall be deemed to be amended
accordingly. As Parent becomes self-sufficient or engages other sources to
provide any Spinco Service, Parent shall be entitled to release Spinco from
providing any or all of the Spinco Services hereunder by delivering a written
notice thereof to Spinco at least thirty (30) days. At the end of such thirty
(30) day period (or such shorter period as may be agreed by the parties), Spinco
shall discontinue the provision of the Spinco Services specified in such notice
and any such Spinco Services shall be excluded from this Agreement, and Schedule
B shall be deemed to be amended accordingly.

Section 7.2 Early Termination by Parent. Parent may terminate this Agreement by
giving written notice to Spinco under the following circumstances:

                                       4

<PAGE>

(a) if Spinco shall default in the performance of any of its material
obligations under, or breach any of its warranties set forth in, this Agreement,
and such default or breach shall continue and not be remedied for a period of
thirty (30) days after Parent has given written notice to Spinco specifying such
default or breach and requiring it to be remedied;

(b) if a Bankruptcy Event has occurred with respect to Spinco; or

(c) upon the occurrence of a Change in Control of Spinco.

Section 7.3 Early Termination by Spinco. Spinco may terminate this Agreement by
giving written notice to Parent under the following circumstances:

(a) if Parent shall default in the performance of any of its material
obligations under, or breach any of its warranties set forth in, this Agreement
and such default or breach shall continue and not be remedied for a period of
thirty (30) days after Spinco has given written notice to Parent specifying such
default or breach and requiring it to be remedied;

(b) if a Bankruptcy Event has occurred with respect to Parent; or

(c) upon the occurrence of a Change in Control of Parent.

Section 7.4 Force Majeure. In the event the performance by Spinco or Parent of
their respective duties or obligations hereunder is interrupted or interfered
with by reason of any cause beyond its reasonable control, including fire,
storm, flood, earthquake, explosion, war, strike or labor disruption, rebellion,
insurrection, quarantine, act of God, boycott, embargo, shortage or
unavailability of supplies, riot, or governmental law, regulation or edict
(collectively, the Force Majeure Events), the party affected by such Force
Majeure Event shall not be deemed to be in default of this Agreement by reason
of its nonperformance due to such Force Majeure Event, but shall give prompt
written notice to the other party of the Force Majeure Event. The party affected
by the Force Majeure Event shall cooperate with the other party in obtaining, at
the other party's sole expense, an alternative source for the affected Services,
and the other party shall be released from any payment obligation to the party
affected by the Force Majeure Event with respect to such Services during the
period of such Force Majeure Event. Additionally, upon and during the occurrence
of a Force Majeure Event, at the sole option of the party receiving the Services
affected by the Force Majeure Event, the term of this Agreement shall be tolled
with respect to any Services that are not being provided by a third party.

Section 7.5 Consequences on Termination. In the event this Agreement expires or
is terminated in accordance with this Section 7, then (a) all Services to be
provided will promptly cease, (b) each of Parent and Spinco shall promptly
return all confidential information received from the other party in connection
with this Agreement (including the return of all information received with
respect to the Services of Parent or Spinco, as the case may be), without
retaining a copy thereof, and (c) each of Parent and Spinco shall honor all
credits and make any accrued and unpaid payment to the other party as required
pursuant to the terms of this Agreement, and no rights already accrued hereunder
shall be affected.

SECTION 8. RECORDS.

Each of the parties shall create and, for a period of six (6) years after the
termination or expiration of this Agreement, maintain full and accurate books in
connection with the provision of the Services, and all other records relevant to
this Agreement, and upon reasonable notice from the other party shall make
available for inspection and copy by such other party's agents such records
during reasonable business hours.

SECTION 9. DISPUTE RESOLUTION.

SECTION 9.1 Dispute Resolution under Distribution Agreement. Any dispute arising
out of or relating to the performance, breach or interpretation of this
Agreement shall be handled in accordance with Article V of the Distribution
Agreement.

                                       5

<PAGE>

SECTION 9.2 Continuity of Service and Performance. Unless otherwise agreed
herein or in writing, the parties will continue to provide Services and honor
all other commitments under this Agreement and each Ancillary Agreement (as
defined in the Distribution Agreement) during the course of dispute resolution
pursuant to the provisions of this Section 9 with respect to all matters not
subject to such dispute, controversy or claim.

SECTION 10. NOTICES.

All notices and other communications hereunder shall be in writing, shall
reference this Agreement and shall be hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and will be deemed given on the date on which
such notice is received:

To Parent:

CT Holdings, Inc.
3811 Turtle Creek Blvd., Suite 770
Dallas, Texas 75219
Attention: Steven B. Solomon
Telephone: (214) 520-9292
Facsimile: (214) 520-0034

To SpinCo:

Citadel Security Software Inc.
3811 Turtle Creek Blvd., Suite 770
Dallas, Texsas  75219
Attention: Steven B. Solomon
Telephone: (214) 520-9292
Facsimile: (214) 520-0034

SECTION 11. MISCELLANEOUS.

SECTION 11.1 Waivers, Modifications, Amendments. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Spinco, on the one hand, and Parent,
on the other hand, or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and in addition to other or further
remedies provided by law or equity.

SECTION 11.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF DELAWARE.

SECTION 11.3 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person,
corporation, partnership or other entity or any circumstance, is invalid and
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, corporations, partnerships or other entities or circumstances shall not
be affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any jurisdiction.

                                       6

<PAGE>

SECTION 11.4 Reference; Interpretation. References in this Agreement to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa. The words include, includes and
including when used in this Agreement shall be deemed to be followed by the
phrase without limitation. Unless the context otherwise requires, references in
this Agreement to Sections and Schedules shall be deemed references to Sections
of, and Schedules to, this Agreement. Unless the context otherwise requires, the
words hereof, hereby and herein and words of similar meaning when used in this
Agreement refer to this Agreement in its entirety and not to any particular
Section or provision of this Agreement. This Agreement shall not be construed
against either party as the principal drafter hereof.

SECTION 11.5 Entire Agreement. This Agreement (including all Schedules hereto)
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.

SECTION 11.6 Assignment. Neither Parent nor Spinco may, directly or indirectly,
assign or subcontract, or attempt to assign or subcontract, any of its rights or
obligations hereunder, in whole or in part, by operation of law or otherwise,
except with the prior written consent of the other party; it being understood
that such consent shall not be unreasonably withheld if Parent or Spinco assigns
or subcontracts the Agreement to one of its Affiliates (as defined in the
Distribution Agreement) with the financial and other resources and expertise to
perform all of the obligations of such party hereunder. Any attempted assignment
or delegation not in compliance with the forgoing shall be null and void and of
no effect. Nothing contained herein shall prevent a party from providing
Services through or with the assistance of third parties whom such party
regularly used to provide such Services prior to the date hereof.

SECTION 11.7 Binding Effect. This Agreement shall be binding upon the parties
hereto and their respective successors and permitted assigns, if any, and except
as provided herein, shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, if any.

SECTION 11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.

SECTION 11.9 No Agency or Partnership. Nothing in this Agreement will create, or
will be deemed to create, a partnership or the relationship of principal and
agent or of employer and employee between the parties.

SECTION 11.10 Provisions Unaffected. Nothing contained in this Agreement shall
affect the rights and obligations of Parent and Spinco pursuant to the
Distribution Agreement.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
behalf of the parties as of the date first herein above written.

CT HOLDINGS, INC.

By       _____________________________
Name:    _____________________________
Title:   _____________________________

CITADEL SECURITY SOFTWARE INC.

By       _____________________________
Name:    _____________________________
Title:   _____________________________

                                       7<PAGE>

                                                                    Exhibit 10.4

                               INDEMNITY AGREEMENT

     This INDEMNITY AGREEMENT, is dated effective as of ______, 2002 (the
"Effective Date") between Citadel Security Software Inc., a Delaware corporation
(the "Company"), and _______ (the "Indemnitee").

     WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available;

     WHEREAS, Indemnitee is a director and/or officer of the Company;

     WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies in today's environment;

     WHEREAS, the Amended and Restated By-laws (the "By-laws") and Amended and
Restated Certificate of Incorporation (the "Certificate") of the Company require
the Company to indemnify and advance expenses to its directors and officers to
the fullest extent permitted by law, and the Indemnitee has agreed to serve or
to continue to serve as a director and/or an officer of the Company in part in
reliance on such provisions in the By-laws and Certificate;

     WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner and Indemnitee's reliance on the foregoing
provisions in the By-laws and Certificate, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by such
provisions in the By-laws and Certificate will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of such
provisions in the By-laws or Certificate or any change in the composition of the
Company's Board of Directors (the "Board") or acquisition transaction relating
to the Company), the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under Company
directors' and officers' liability insurance policies;

     NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:

1.  Certain Definitions.
    -------------------

    (a)  Change in Control:  shall be deemed to have occurred upon any of the
         -----------------
following events:

         (i)   The acquisition in one or more transactions by any "Person" (as
               the term person is used for purposes of Section 13(d) or 14(d) of
               the Securities Exchange Act of 1934, as amended (the "1934 Act"),
               of "Beneficial Ownership" (within the meaning of Rule 13d-3
               promulgated under the 1934 Act) of twenty-five percent (25%) or
               more of the combined voting power of the Company's then
               outstanding voting securities (the "Voting Securities"),
               provided, however, that for purposes of this Section 1(a)(i), the
               --------  -------
               Voting Securities acquired directly from the Company by any
               Person shall be excluded from the determination of such Person's
               Beneficial Ownership of Voting Securities (but such Voting
               Securities shall be included in the calculation of the total
               number of Voting Securities then outstanding); or

<PAGE>

                  (ii)     The individuals who, as of the Effective Date, are
                           members of the Board (the "Incumbent Board"), cease
                           for any reason to constitute at least two-thirds of
                           the Board; provided, however, that if the election,
                           or nomination for election by the Company's
                           stockholders, of any new director was approved by a
                           vote of at least two-thirds of the Incumbent Board,
                           such new director shall, for purposes of this
                           Agreement, be considered as a member of the Incumbent
                           Board; or

                  (iii)    Approval by stockholders of the Company of (A) a
                           merger or consolidation involving the Company if the
                           stockholders of the Company immediately before such
                           merger or consolidation do not own, directly or
                           indirectly immediately following such merger or
                           consolidation, more than seventy-five percent (75%)
                           of the combined voting power of the outstanding
                           voting securities of the corporation resulting from
                           such merger or consolidation in substantially the
                           same proportion as their ownership of the Voting
                           Securities immediately before such merger or
                           consolidation or (B) a complete liquidation or
                           dissolution of the Company or an agreement for the
                           sale or other disposition of all or substantially all
                           of the assets of the Company.

                  (iv)     Notwithstanding the foregoing, a Change in Control
                           shall not be deemed to occur solely because
                           twenty-five percent (25%) or more of the then
                           outstanding Voting Securities is acquired by (i) a
                           trustee or other fiduciary holding securities under
                           one or more employee benefit plans maintained by the
                           Company or any of its subsidiaries or (ii) any
                           corporation that, immediately prior to such
                           acquisition, is owned directly or indirectly by the
                           stockholders of the Company in the same proportion as
                           their ownership of stock in the Company immediately
                           prior to such acquisition;

                  (v)      Moreover, notwithstanding the foregoing, a Change in
                           Control shall not be deemed to occur solely because
                           any Person (the "Subject Person") acquired Beneficial
                           Ownership of more than the permitted amount of the
                           outstanding Voting Securities as a result of the
                           acquisition of Voting Securities by the Company
                           which, by reducing the number of Voting Securities
                           outstanding, increases the proportional number of
                           shares Beneficially Owned by the Subject Person,
                           provided that if a Change in Control would occur (but
                           for the operation of this sentence) as a result of
                           the acquisition of Voting Securities by the Company,
                           and after such share acquisition by the Company, the
                           Subject Person becomes the Beneficial Owner of any
                           additional Voting Securities which increases the
                           percentage of the then outstanding Voting Securities
                           Beneficially Owned by the Subject Person, then a
                           Change in Control shall occur.

         (b)      Claim: any threatened, pending or completed action, suit or
                  -----
                  proceedings, whether civil, criminal, administrative or
                  investigative or other, including, without limitation, an
                  action by or in the right of any other corporation of any type
                  or kind, domestic or foreign, or any partnership, joint
                  venture, trust, employee benefit plan or other enterprise,
                  whether predicated on foreign, federal, state or local law and
                  whether formal or informal.

         (c)      Expenses: include attorneys' fees and all other costs, charges
                  --------
                  and expenses paid or incurred in connection with
                  investigating, defending, being a witness in or participating
                  in (including on appeal), or preparing to defend, be a witness
                  in or participate in any Claim relating to any Indemnifiable
                  Event.

                                       2

<PAGE>

         (d)      Indemnifiable Event: any event or occurrence related to the
                  -------------------
                  fact that Indemnitee is or was or has agreed to become a
                  director, officer, employee, agent or fiduciary of the
                  Company, or is or was serving or has agreed to serve in any
                  capacity, at the request of the Company, in any other
                  corporation, partnership, joint venture, trust, employee
                  benefit plan or other enterprise, or by reason of anything
                  done or not done by Indemnitee in any such capacity.

         (e)      Voting Securities:  any securities of the Company that vote
                  -----------------
                  generally in the election of directors.

2.       Basic Indemnification Arrangement.
         ---------------------------------

         (a)      In the event Indemnitee was, is or becomes a party to or
                  witness or other participant in, or is threatened to be made a
                  party to or witness or other participant in, a Claim by reason
                  of (or arising in part out of) an Indemnifiable Event, the
                  Company shall indemnify Indemnitee (without regard to the
                  negligence or other fault of the Indemnitee) to the fullest
                  extent permitted by applicable law, as soon as practicable but
                  in no event later than thirty days after written demand is
                  presented to the Company, against any and all Expenses,
                  judgments, fines, penalties, excise taxes and amounts paid or
                  to be paid in settlement (including all interest, assessments
                  and other charges paid or payable in connection with or in
                  respect of such Expenses, judgments, fines, penalties, excise
                  taxes or amounts paid or to be paid in settlement) of such
                  Claim. If Indemnitee makes a request to be indemnified under
                  this Agreement, the Board (acting by a quorum consisting of
                  directors who are not parties to the Claim with respect to an
                  Indemnifiable Event or, if such a quorum is not obtainable,
                  acting upon an opinion in writing or independent legal counsel
                  ("Board Action")) shall, as soon as practicable but in no
                  event later than thirty days after such request, authorize
                  such indemnification. Notwithstanding anything in the
                  Certificate, the By-laws or this Agreement to the contrary,
                  following a Change in Control, Indemnitee shall be entitled to
                  indemnification pursuant to this Agreement in connection with
                  any claim initiated by Indemnitee.

         (b)      Notwithstanding anything in the Certificate, the By-laws or
                  this Agreement to the contrary, if so requested by Indemnitee,
                  the Company shall advance (within two business days of such
                  request) any and all Expenses relating to a Claim to
                  Indemnitee (an "Expense Advance"), upon the receipt of a
                  written undertaking by or on behalf of Indemnitee to repay
                  such Expense Advance if a judgment or other final adjudication
                  or determination adverse to Indemnitee establishes that
                  Indemnitee, with respect to such Claim, is not eligible for
                  indemnification.

         (c)      If there has been no Board Action or Arbitration (as defined
                  in Section 3), or if Board Action determines that Indemnitee
                  would not be permitted to be indemnified, in any respect, in
                  whole or in part, in accordance with Section 2(a) of this
                  Agreement, Indemnitee shall have the right to commence
                  litigation in the court that is hearing the action or
                  proceeding relating to the Claim for which indemnification is
                  sought or in any court in the States of Delaware or Texas
                  having subject matter jurisdiction thereof and in which venue
                  is proper seeking an initial determination by the court or
                  challenging any Board Action or any aspect thereof, and the
                  Company hereby consents to service of process and to appear in
                  any such proceeding. Notwithstanding anything in the
                  Certificate, the By-laws or this Agreement to the contrary, if
                  Indemnitee has commenced legal proceedings in a court of
                  competent jurisdiction or Arbitration to secure a
                  determination that Indemnitee should be indemnified under this
                  Agreement, the By-laws of the Company or applicable law, any
                  Board Action under which Indemnitee would not

                                       3

<PAGE>

            be permitted to be indemnified in accordance with Section 2(a) of
            this Agreement shall not be binding. Any Board Action not followed
            by such litigation or Arbitration shall be conclusive and binding on
            the Company and Indemnitee.

         3. Change in Control. The Company agrees that if there is a Change in
            -----------------
Control, Indemnitee, by giving written notice to the Company and the American
Arbitration Association (the "Notice"), may require that any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration (the "Arbitration") in Dallas, Texas in accordance
with the Rules of the American Arbitration Association (the "Rules"). The
Arbitration shall be conducted by a panel of three arbitrators selected in
accordance with the Rules within thirty days of delivery of the Notice. The
decision of the panel shall be made as soon as practicable after the panel has
been selected, and the parties agree to use their reasonable efforts to cause
the panel to deliver its decision within ninety days of its selection. The
Company shall pay all fees and expenses of the Arbitration. The Arbitration
shall be conclusive and binding on the Company and Indemnitee, and the Company
or Indemnitee may cause judgment upon the award rendered by the arbitrators to
be entered in any court having jurisdiction thereof.

         4. Indemnification For Additional Expenses. The Company shall indemnify
            ---------------------------------------
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted by or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under law, this
Agreement, or any other agreement or By-law of the Company now or hereafter in
effect relating to Claims for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery,
as the case may be.

         5. Partial Indemnity, Etc. If Indemnitee is entitled under any
            ----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties, excise taxes and amounts
paid or to be paid in settlement of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to an Indemnifiable Event or in defense of any issue or
matter therein, including, without limitation, dismissal without prejudice,
Indemnitee shall be indemnified against any and all Expenses, judgments, fines,
penalties, excise taxes and amounts paid or to be paid in settlement of such
Claim. In connection with any determination by Board Action, Arbitration or a
court of competent jurisdiction that Indemnitee is not entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.

         6. No Presumption. For purposes of this Agreement, the termination of
            --------------
any claim, action, suit or proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo contendere
or its equivalent, shall not create a presumption that Indemnitee did not meet
any particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law or this
Agreement.

         7. Contribution. In the event that the indemnification provided for in
            ------------
this Agreement is unavailable to Indemnitee for any reason whatsoever, the
Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection with
any Claim deemed fair and reasonable in light of all of the circumstances of
such action by Board Action or Arbitration or by the court before which such
action was brought in order to reflect (i) the relative benefits received by the

                                       4

<PAGE>

Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such action; and/or (ii) the relative fault of the Company (and its
other directors, officers, employees and agents) and Indemnitee in connection
with such event(s) and/or transaction(s). Indemnitee's right to contribution
under this Paragraph 7 shall be determined in accordance with, pursuant to and
in the same manner as, the provisions in Paragraphs 2 and 3 hereof relating to
Indemnitee's right to indemnification under this Agreement.

         8.       Notice to the Company by Indemnitee. Indemnitee agrees to
                  -----------------------------------
notify the Company promptly in writing upon being served with or having actual
knowledge of any citation, summons, complaint, indictment or any other similar
document relating to any action which may result in a claim of indemnification
or contribution hereunder, but the failure of Indemnitee to give such notice
shall not relieve the Company of any liability hereunder except to the extent
the Company has been materially prejudiced thereby.

         9.       Non-exclusive, Etc. The rights of the Indemnitee hereunder
                  ------------------
shall be in addition to any other rights Indemnitee may have under the Company's
Certificate or By-laws or the Delaware General Corporation Law or otherwise, and
nothing herein shall be deemed to diminish or otherwise restrict Indemnitee's
right to indemnification under any such other provision. To the extent
applicable law or the Certificate or the By-laws of the Company, as in effect on
the date hereof or at any time in the future, permit greater indemnification
than as provided for in this Agreement, the parties hereto agree that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by such law or
provision of the Certificate or By-laws and this Agreement shall be deemed
amended without any further action by the Company or Indemnitee to grant such
greater benefits. Indemnitee may elect to have Indemnitee's rights hereunder
interpreted on the basis of applicable law in effect at the time of execution of
this Agreement, at the time of the occurrence of the Indemnifiable Event giving
rise to a Claim or at the time indemnification is sought.

         10.      Liability Insurance.
                  -------------------

         (a)      To the extent the Company maintains at any time an insurance
                  policy or policies providing directors' and officers'
                  liability insurance, Indemnitee shall be covered by such
                  policy or policies, in accordance with its or their terms, to
                  the maximum extent of the coverage available for any other
                  Company director or officer under such insurance policy. The
                  purchase and maintenance of such insurance shall not in any
                  way limit or affect the rights and obligations of the parties
                  hereto, and the execution and delivery of this Agreement shall
                  not in any way be construed to limit or affect the rights and
                  obligations of the Company and/or of the other parties under
                  any such insurance policy.

         (b)      For seven years after the Indemnitee no longer serves as a
                  director or officer of the Company, the Company shall continue
                  to provide directors' and officers' liability coverage for
                  liabilities of the Indemnitee occurring during his service
                  with the Company on terms no less favorable in terms of
                  coverage and amount than such insurance maintained by the
                  Company at the date of the Indemnitee's separation from the
                  Company. In the event such coverage is not available, the
                  maximum available coverage shall be maintained pursuant to
                  this covenant.

         11.      Period of Limitations. No legal action shall be brought and no
                  ---------------------
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action

                                       5

<PAGE>

within such two-year period; provided, however, that if any shorter period of
                             --------  -------
limitations is otherwise applicable to any such cause of action such shorter
period shall govern.

         12. Amendments, Etc. No supplement, modification or amendment of this
             ----------------
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

         13. Subrogation. In the event of payment under this Agreement, the
             -----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery with respect to such payment of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.

         14. No Duplication of Payments. The Company shall not be liable under
             --------------------------
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.

         15. Binding Effect, Etc. This Agreement shall be binding upon and inure
             --------------------
to the benefit of and be enforceable against and by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company), spouses, heirs and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation, or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as a director and/or officer of the
Company or of any other enterprise at the Company's request.

         16. Severability. The provisions of this Agreement shall be severable
             ------------
in the event that any of the provisions thereof (including any provision within
a single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.

         17. Notices. All notices, requests, demands and other communications
             -------
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by certified registered
mail, return receipt requested, with postage prepaid.

             A.   If to Indemnitee, to:   ___________________________
                                          3811 Turtle Creek Blvd., Suite 770
                                          Dallas, Texas  75219

or to such other person or address which Indemnitee shall furnish to the Company
in writing pursuant to the above.

             B.   If to the Company, to:  Citadel Security Software Inc.
                                          3811 Turtle Creek Boulevard, Suite 770
                                          Dallas, Texas  75219
                                          Attention:  Chief Executive Officer

                                       6

<PAGE>

or to such person or address as the Company shall furnish to Indemnitee in
writing pursuant to the above.

         18.  Governing Law. This Agreement shall be governed by and construed
              -------------
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the Effective Date.

CITADEL SECURITY SOFTWARE INC.

_________________________________________________
Steven B. Solomon, Chief Executive Officer

INDEMNITEE:

_________________________________________________

Name:  __________________________________________

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]