TAX DISAFFILIATION AGREEMENT
TAX DISAFFILIATION AGREEMENT dated as of ____________, 2002, by and between CT
HOLDINGS, INC., a Delaware corporation (Parent), and CITADEL SECURITY SOFTWARE INC.
(Spinco), a Delaware corporation.
A. Spinco, a Delaware corporation, is a first tier subsidiaries of Parent.
B. Parent is the common parent of an affiliated group of corporations within the meaning of Section 1504(a) of
the Internal Revenue Code of 1986, as amended (the Code), which currently files consolidated Federal income
C. As reflected in the Agreement and Plan of Distribution (the Distribution Agreement) dated _____, 2002 by
and between Parent and Spinco, Parent has formed Spinco as a first tier subsidiary.
D. In addition, after such formation, Parent contributed its security software business to Spinco along with certain
intercompany debt (the First Distribution).
E. After these contributions and pursuant to the Distribution Agreement, Parent shall distribute to its stockholders
all of the outstanding shares of stock of Spinco, on a pro rata basis (the Second Distribution, and together with
the First Distribution, the Distribution).
F. Parent and Spinco intend that the Distributions will qualify as distributions described in Section 355 of the
Code and will not result in the recognition of any taxable gain or income to Parent, Spinco or any of their
G. From the day after the Date of the Second Distribution forward, Spinco and its subsidiaries shall cease to be a
member of the Parent affiliated group for all applicable tax purposes.
H. Parent and Spinco desire on behalf of themselves, their subsidiaries and their successors to set forth their
rights and obligations with respect to taxes due for periods before and after the Second Distribution.
NOW, THEREFORE, in consideration of the transactions recited above and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties