**Exhibit 10.48**
**EMPLOYMENT AGREEMENT**
     EMPLOYMENT AGREEMENT dated as of November 1, 2002 (this “Agreement”), byand between THOMAS D. DAVIS (the “Executive”), and XYBERNAUT CORPORATION, aDelaware Corporation (the “Company”).
     WHEREAS, the Executive has been employed as a Vice President and theController of the Company; and
     WHEREAS, the Company desires to employ the Executive as a Senior VicePresident and the Chief Financial Officer of the Company and the Executivedesires to continue his employment with the Company in the aforementionedcapacity, all upon the terms and provisions, and subject to the conditions setforth in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenantsand agreements contained herein, and other good and valuable consideration, thereceipt and legal sufficiency of which are hereby acknowledged, the partieshereby agree as follows:
     Section 1. Definitions. As used in this Agreement the following termsshall have the meanings set forth in this Section 1:
     (a)  “Affiliate” of any Person means any stockholder or person or entitycontrolling, controlled by, under common control with such Person, or anydirector, officer or key executive of such Person or any of their respectiverelatives. For purposes of this definition, “control,” when used with respectto any Person, means the power to direct the management and policies of suchPerson, directly or indirectly, whether through the ownership of votingsecurities, by contract or otherwise; and the terms “controlling” and“controlled” have meanings that correspond to the foregoing.
     (b)  “Cause” shall mean (i) the Company being subjected to any criminalliability under any applicable law as a result of any action or inaction on thepart of the Executive, which the Executive did not, at the time of the actionor inaction, reasonably believe to be in the best interests of the Company;(ii) the conviction or admission of the Executive of, or plea by the Executiveof nolo contendre to, a felony or crime involving moral turpitude which theBoard of Directors reasonably concludes is likely to have a material andadverse effect on the reputation of the Company; (iii) if the Executive ischronically addicted to any narcotic or other illegal or controlled substanceor repeatedly abuses any alcoholic product or any prescription stimulants ordepressant, as determined by a physician designated by the Company, which inthe reasonable opinion of the Board of Directors of the Company materiallyinterferes with Executive’s performance of his duties and obligationshereunder; (iv) the Executive committing fraud, or stealing or misappropriatingany asset or property of the Company, including, without limitation, any theftor embezzlement; or (v) a breach of a material term or provision of thisAgreement by the Executive which is not cured by the Executive within twenty(20) business days after written notice of such breach from the Company isreceived by the Executive; or (vi) the willful failure of the Executive tofollow the lawful directives of the Chief Executive Officer of the Company
 

 

or the Board of Directors of the Company which are consistent with theCompany’s policies and United States generally accepted accounting principles.
     (c)  “Change of Control” shall mean the occurrence of any of the following:(i) a Person or group of Persons, other than any current member of the Board ofDirectors, obtains beneficial ownership of more than thirty percent (30%) ofthe outstanding capital stock of the Company; (ii) a change in the membershipof more than fifty percent (50%) of the current Board of Directors in anytwelve (12) month period; (iii) a sale or complete dissolution of the Company;or (iv) in the event Edward G. Newman is no longer Chairman or Chief ExecutiveOfficer of the Company.
     (d)  “Common Stock” shall mean the common stock, par value $.01 per share,of the Company, and any other class of common stock of the Company createdafter the date of this Agreement in accordance with the Company’s Certificateof Incorporation and applicable law.
     (e)  “Competing Business” shall mean any business, enterprise or otherPerson that as one of its primary businesses or activities, is engaged in thebusiness of manufacturing, selling, marketing, licensing or distributingwearable computers or the solutions associated therewith that are provided bythe Company.
     (f)  “Confidential and Proprietary Information” shall mean any and all (i)confidential or proprietary information or material not in the public domainabout or relating to the business, operations, assets or financial condition ofthe Company or any Affiliate of the Company or any of the Company’s or any suchAffiliate’s trade secrets, including, without limitation, research anddevelopment plans or projects; data and reports; computer materials such asprograms, instructions and printouts; formulas; product testing information;business improvements, processes, marketing and selling strategies; strategicbusiness plans (whether pursued or not); budgets; unpublished financialstatements; licenses; pricing, pricing strategy and cost data; informationregarding the skills and compensation of executives; the identities of clientsand potential clients; intellectual property strategies and any work on anypatents, trademarks and tradenames, prior to any filing or the use thereof incommerce; pricing, timing, sales terms, service plans, methods, practices,strategies, forecasts, know-how and other marketing techniques; and (ii)information, documentation or material not in the public domain by virtue ofany action by or on the part of the Executive, the knowledge of which gives ormay give the Company or any Affiliate of the Company an advantage over anyPerson not possessing such information. For purposes hereof, the termConfidential and Proprietary Information shall not include any information ormaterial (i) that is known to the general public other than due to a breach ofthis Agreement by the Executive or (ii) was disclosed to the Executive by aPerson who the Executive did not reasonably believe was bound to aconfidentiality or similar agreement with the Company.
     (g)  “CPI” shall have the meaning given to that term in Section 5(a)hereof.
     (h)  “Employment Term” shall have the meaning given to that term in Section2 hereof.
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     (i)  “GAAP” shall mean generally accepted United States accountingprinciples, as from time to time in effect.
     (j)  “Good Reason” shall mean (i) a substantial change to or reduction inthe duties or responsibilities of the Executive such that the responsibilitiesof the Executive are no longer commensurate with the Executive’s office withthe Company as set forth herein; or (ii) the occurrence of Change of Control;provided that in order for a Change of Control pursuant to clause (i) or (ii)of that definition to constitute “Good Reason” it shall be necessary that thefactors set forth in clause (iv) of that definition also shall have occurred;or (iii) a change in the Executive’s office from that of Senior Vice Presidentand Chief Financial Officer of the Company which is not concurred in by theExecutive within twenty (20) days of its occurrence, or the breach of amaterial term or provision of this Agreement by the Company which is not curedby the Company within twenty (20) business days after written notice of suchbreach from the Executive is received by the Company. The failure to renew thisAgreement after the expiration of the Employment Term, shall not constituteGood Reason.
     (k)  “Incapacity” shall mean any mental or physical incapacity ordisability which prevents the Executive from performing his essential dutieshereunder for a continuous period of one hundred twenty (120) consecutive daysor for shorter periods aggregating one hundred eighty (180) days within anyconsecutive twelve (12) month period.
     (l)  “Inventions” shall mean inventions, discoveries, concepts and ideas,whether patentable or not, patents, patent applications, copyrights and otherintellectual property, including, without limitation, processes, methods,formulae and techniques, and improvements thereof or know-how related thereto,concerning any business activity of the Company or any Affiliate of theCompany, with which the Executive becomes, directly or indirectly, involved asa result in whole or in part, directly or indirectly, of the Executive’semployment by the Company, or any Affiliate of the Company, and whetherconceived of solely by the Executive or jointly with the efforts of others.
     (m)  “Person” shall mean, without limitation, any natural person,corporation, partnership, limited liability company, joint stock company, jointventure association, trust or other similar entity or firm.
     (n)  “Salary” shall have the meaning given to that term in Section 5(a)hereof.
     (o)  “Signing Bonus” shall have the meaning given to that term in Section5(b) hereof.
     (p)  “Without Cause” shall mean the termination of the Executive’semployment hereunder by the Company, other than termination by the Company dueto the Executive’s death or Incapacity or based upon Cause.
     Section 2. Employment and Term.
     (a)  The Company hereby employs the Executive as a Senior Vice Presidentand the Chief Financial Officer of the Company and the Executive hereby acceptssuch employment in that capacity, upon the terms and provisions, and subject tothe conditions, set forth in this
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Agreement, for a term of twenty-six (26) months, commencing on November 1,2002, and terminating on December 31, 2004, unless earlier terminated asprovided in this Agreement (the “Employment Term”).
     (b)  The Company anticipates negotiating the employment agreements of otherexecutive officers of the Company prior to December 31, 2002. To the extentthat the terms and conditions provided to the other members of seniormanagement are substantially more beneficial to such members than thoseprovided herein, taking into account the differences in position and tenurewith the Company, then the Company will negotiate in good faith to modify thisAgreement to be generally along similar lines to those more beneficial termsand conditions.
     Section 3. Executive’s Duties.
     (a)  The Executive shall be the senior financial executive officer of theCompany responsible for the Company’s financial operations including, but notlimited to, internal and external financial reporting, accounting, taxation,cash management and budgeting and forecasting. The Executive, together withthe Company’s Chief Executive Officer, shall be responsible for overseeing theCompany’s internal controls, disclosure procedures and ensuring that theCompany’s financial statements comply with applicable laws and regulations.The Executive shall report directly to the Chief Executive Officer of theCompany. The Executive shall perform such other duties as may reasonably beassigned to the Executive by the Company’s Chief Executive Officer or the Boardof Directors of the Company; provided, such assignments are lawful andconsistent with the Company’s policies and generally accepted accountingprinciples and tax principles (if applicable).
     (b)  The Executive shall devote all of his business time, effort, skill andattention exclusively to the business, operations and affairs of the Companyand to the furtherance of the interests, business and prospects of the Company.The Executive shall perform the Executive’s duties and obligations hereunderdiligently, competently, faithfully and to the best of his ability.
     (c)  The Executive agrees to execute policy statements and agreements thatthe Company may, from time to time, reasonably require all of its seniorexecutive officers to execute.
     Section 4. Company’s Duties Regarding Disclosure Controls, InternalControls, Internal Policies, Laws and Regulations. The Company represents tothe Executive that it will use best efforts to comply with and enforce allcurrent disclosure controls, internal controls and internal policies(including, but not limited to, the process of financial, legal and operationalreview and authorization of all contracts and transactions prior to execution),laws and regulations, as well as those controls, policies, laws and regulationsthat may be put into place from time to time.
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     Section 5. Compensation.
     (a)  In consideration of the performance of all of the duties andobligations to be performed by the Executive hereunder, the Company agrees topay, and the Executive agrees to accept, for the Employment Term a salary (the“Salary”) at an annual rate of $150,000, payable in accordance with theCompany’s regular payroll practices as from time to time in effect, less allwithholdings and other deductions in accordance with any applicable federal,state, local or foreign law, rule or regulation. After each twelve (12) monthperiod during the Employment Term, the annual Salary for each successive yearwill be increased by the lesser of (i) 10% and (ii) the percentage increase, ifany, in the CPI for each year just completed measured for the entire twelve(12) month period, plus three percent (3%). For purposes hereof, the term “CPI”means the Consumer Price Index for all Urban Consumers for the United Statesfor the Washington, D.C. metropolitan area prepared by the Bureau of LaborStatistics of the U.S. Department of Labor, or if such index is not then beingpublished, by the U.S. Department of Labor, the most nearly comparablesuccessor index that the parties may agree upon. Notwithstanding the above,the Executive agrees to take a temporary reduction, deferral or otheradjustment to Executive’s Salary on a pari passu basis with other seniorexecutives of the Company due to the current financial condition of theCompany; provided that the period(s) that the reduction, deferral or adjustment(are) in effect shall not exceed an aggregate of six (6) months during theEmployment Term, whether or not such months occur concurrently, without theprior written consent of the Executive.
     (b)  In consideration of the Executive’s execution and delivery of thisAgreement, the Company shall make a cash payment of $10,000 (the “SigningBonus”) to be payable as follows: $6,666 immediately and $3,334 when theCompany obtains aggregate financings subsequent to the date of this Agreementof at least $1,500,000.
     (c)  By this Agreement, the Company confirms its prior grants to theExecutive of options to purchase 86,563 shares of Common Stock, of which atotal of 82,709 options remain outstanding, as set forth on Schedule A attachedhereto. Additionally, in consideration of the services to be performed by theExecutive hereunder, the Company hereby grants to the Executive options topurchase 150,000 shares of Common Stock at an exercise price equal to theaverage of the closing market price of the shares of the Company’s Common Stockon the date of this Agreement, which options will vest one-third upon executionof this Agreement, one-third on the one-year anniversary of this Agreement andthe final one-third upon the two-year anniversary of this Agreement.
     (d)  The Company anticipates establishing a new bonus program(s) on orabout December 31, 2002. The Executive will be eligible for participation insuch program(s) or any other programs that may be established from time to timeduring the Employment Term. There is no guaranty that the Company willestablish any such program(s).
     (e)  At the sole discretion of the Board of Directors of the Company, theExecutive may be paid, in cash, Common Stock, options to purchase Common Stockor any combination thereof, a bonus for fiscal 2002, 2003 or 2004, or any partsof such fiscal years, in such an amount, if any, and based upon such criteriaas the Compensation Committee of the Company’s
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Board of Directors may from time to time consider appropriate based uponthe Executive’s performance during each such period.
     (f)  All stock options pursuant to this Section 5 may be exercised in anyamount at any time after being vested until three (3) years from date oftermination of the Executive’s employment hereunder (other than For Cause) andshall be irrevocable during that period. Should there not be sufficientoptions available or useable under the Company’s then existing stock optionplans to satisfy any grant hereunder then, unless otherwise agreed to by theExecutive, the Company will use its best efforts to cause a new stock optionplan to be adopted which covers such options and to register the shares ofCommon Stock underlying the options within 180 days of the issuance of suchoptions.
     (g)  Should there be a Change of Control of the Company or any othertransaction in which the Company is not the surviving entity during theEmployment Term: (i) then as part of that transaction, the Company will requirethe surviving entity to adopt this Agreement whole or to enter into such otheragreement with the Executive that provides the Executive the same orsubstantially similar compensation and benefits that he is entitled to earnpursuant to this Agreement and (ii) all stock options granted to the Executiveprior to the date hereof or granted pursuant to Section 5 of this Agreementshall become immediately exercisable in full.
     Section 6. Benefits, Vacation.
     (a)  During the Employment Term, the Executive shall be entitled to suchinsurance and health and medical benefits as are generally made available tothe senior executives of the Company, as a group, pursuant to such plans as arefrom time to time maintained by the Company; provided, however, that theExecutive shall be required to comply with the conditions of coverage attendantto such plans.
     (b)  The Executive shall be entitled to four (4) weeks of vacation for eachyear during the Employment Term. For each year during the Employment Term anyunused vacation shall accrue in accordance with the Company’s regular vacationpolicies. The Executive shall take vacation at such time or times as theExecutive desires, subject to the concurrence of the Company based upon thethen current business needs and activities of the Company. Vacation shallaccrue if unused during the term of employment. At the end of each fiscal year,any unused vacation time will be paid out to Executive based on Executive’sannual salary in effect at that time divided by 2,080 hours, such payment to bemade through the Company’s normal payroll and tax withholding processes.
     (c)  During the Employment Term, the Executive shall be eligible toparticipate in the profit sharing and other benefit plans that the Company fromtime to time makes available to the senior executives of the Company as agroup, subject to the terms, provisions and conditions of such plans,including, without limitation, any vesting periods and eligibility criteria.
     (d)  The Company agrees to maintain in full force and effect a lifeinsurance policy in the face amount aggregating five hundred thousand dollars($500,000), which is made payable to such beneficiary or beneficiaries who aredesignated by the Executive. The Company shall pay all premiums due on suchpolicy during the Employment Term. After the termination or
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expiration of the Employment Term, at the request of the Executive, theCompany shall assign to pay such insurance policy to the Executive, whereuponthe Executive shall assume the obligation for all future premiums.
     Section 7. Business Expenses. The Executive shall be entitled toreimbursement for ordinary and reasonable business expenses actually incurredby the Executive during the Employment Term in the performance of theExecutive’s duties hereunder, if supported by such documentation as may bereasonably required by the Company in accordance with the Company’s policies.
     Section 8. Termination of Employment Term.
     (a)  In the event of the death of the Executive during the Employment Term,the Executive’s employment hereunder shall automatically terminate as of thedate of death; provided, however, that the Executive’s estate or legalrepresentative, as the case may be, shall be entitled to receive, and theCompany shall (i) pay the Salary then in effect for a one (1) year periodfollowing the month of Executive’s death (which shall be paid on a monthlybasis); (ii) pay any amounts which have not been paid pursuant to Section 5(b)hereof and Section 5(d), if applicable; (iii) pay for any accrued and unpaidvacation as provided in Section 6(b) hereof; and (iv) reimburse the Executivefor any unpaid business expenses which are properly payable pursuant to Section7 hereof.
     (b)  In the event of the Executive’s Incapacity, the Company may, in itssole discretion, terminate the Executive’s employment hereunder upon writtennotice to the Executive; provided, however, that the Executive or theExecutive’s legal representative, as the case may be, shall be entitled toreceive, and the Company shall (i) pay the Salary then in effect for a one (1)year period from the date of termination (which shall be paid on a monthlybasis), less any amounts received by the Executive under any disabilityinsurance policy maintained by the Company; (ii) pay any amounts which have notbeen paid pursuant to Section 5(b) hereof and Section 5(d), if applicable;(iii) pay for any accrued and unpaid vacation as provided in Section 6(b)hereof; and (iv) reimburse the Executive for any unpaid business expenses whichare properly payable pursuant to Section 7 hereof.
     (c)  The Company shall have the right to terminate the Executive’semployment under this Agreement at any time for Cause upon written notice tothe Executive. In the event the Executive’s employment hereunder is terminatedby the Company for Cause, the Company shall only be obligated to pay accruedand unpaid Salary and vacation pay through the date of termination and theCompany shall pay any accrued and unreimbursed business expenses which areproperly owing to the Executive pursuant to Section 7 hereof through the dateof termination.
     (d)  The Company shall have the right to terminate the Executive’semployment hereunder Without Cause at any time upon twenty (20) days’ priorwritten notice to the Executive. If the Company terminates the Executive’semployment hereunder Without Cause, the Company shall (i) continue to paySalary to the Executive provided for hereunder for a period equal to theremaining period of the Employment Term, but in no event for a period of lessthan one (1) year (which in either case shall be paid on a monthly basis, inequal installments); (ii) pay any amounts which have not been paid pursuant toSection 5(b) hereof and
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Section 5(d), if applicable; (iii) pay for any accrued and unpaid vacationas provided in Section 6(b) hereof; and (iv) reimburse the Executive for anyunpaid business expenses which are properly payable pursuant to Section 7hereof.. The Executive shall not be under any obligation to mitigate theCompany’s obligation pursuant to this Section 8(d) by securing other employmentor otherwise.
     (e)  The Executive shall have the right to terminate his employment withthe Company hereunder for Good Reason, upon not less than twenty (20) businessdays prior written notice to the Company. Should the Executive terminate hisemployment hereunder for Good Reason, the Company shall be obligated to makethe payments to the Executive provided for in Section 8(d) hereof upon thetermination of the Executive’s employment by the Company Without Cause.
     (f)  The failure of the Company to continue the employment of the Executiveupon expiration of the entire twenty-six (26) month Employment Term shall notbe considered a termination of employment for purposes of this Agreement.
     Section 9. Inventions. Any Inventions originated or conceived by theExecutive related to the Company’s business during his employment by theCompany or any Affiliate of the Company or with the use or assistance of thefacilities, materials or personnel of the Company or any Affiliate of theCompany, either solely or jointly with others, during the Employment Term shallbe the sole and exclusive property of the Company. The Executive herebyirrevocably assigns and transfers to the Company and agrees to transfer andassign to the Company all of his right, title and interest in and to allInventions, and to applications for patents and patents granted upon suchInventions and to all copyrightable material related thereto developed by theExecutive or under his supervision. The Executive agrees for himself and hisheirs and personal representatives, upon the request of the Company and at theCompany’s expense, to do such acts, to execute such documents and instrumentsand to participate in such legal proceedings as from time to time may benecessary or required to apply for, secure, maintain, reissue, extend or defendthe worldwide rights of the Company in the Inventions. The Executive herebygrants to the Company a power of attorney, which is irrevocable and coupledwith an interest, to execute any such documents and instruments if theExecutive is unable or fails to do so, after the request by the Company asprovided in the immediately preceding sentence. The Executive shall have noright to receive any royalties or other payments from the Company with respectto any inventions.
     Section 10. Restrictions Respecting Competing Businesses, ConfidentialInformation, etc. The Executive acknowledges and agrees that by virtue of theExecutive’s position and involvement with the business and affairs of theCompany, the Executive will develop substantial expertise and knowledge withrespect to all aspects of the Company’s business, affairs and operations andwill have access to all significant aspects of the business and operations ofthe Company and to Confidential and Proprietary Information. The Executiveacknowledges and agrees that the Company will be damaged if the Executive wereto breach any of the provisions of this Section 10 or if the Executive were todisclose or make unauthorized use of any Confidential and ProprietaryInformation. Accordingly, the Executive expressly acknowledges and agrees thatthe Executive is voluntarily entering into this Agreement and that the terms,
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provisions and conditions of this Section 10 are fair and reasonable andnecessary to adequately protect the Company.
     (a)  The Executive hereby covenants and agrees that, during the EmploymentTerm and thereafter, unless otherwise authorized by the Company in writing, theExecutive shall not, directly or indirectly, under any circumstance: (i)disclose to any other Person (other than in the regular course of business ofthe Company) any Confidential and Proprietary Information, other than pursuantto applicable law, regulation or subpoena or with the prior written consent ofthe Company; (ii) act or fail to act so as to impair the confidential orproprietary nature of any Confidential and Proprietary Information; (iii) useany Confidential and Proprietary Information related to the Company’s businessother than for the sole and exclusive benefit of the Company; or (iv) offer oragree to, or cause or assist in the inception or continuation of, any suchdisclosure, impairment or use of any Confidential and Proprietary Information.Following the Employment Term, the Executive shall return all documents,records and other items containing any Confidential and Proprietary Informationto the Company (regardless of the medium in which maintained or stored),without retaining any copies, notes or excerpts thereof, or at the request ofthe Company, shall destroy such documents, records and items (any suchdestruction to be certified by the Executive to the Company in writing).
     (b)  The Executive covenants and agrees that, while the Executive isemployed by the Company and for one (1) year after the Executive ceases to beemployed by the Company, if the Executive (i) voluntarily terminates hisemployment with the Company other than for Good Reason or (ii) is terminated bythe Company for Cause, the Executive shall not, directly or indirectly, manage,operate or control, or participate in the ownership, management, operation orcontrol of, or otherwise become interested in (whether as an owner,stockholder, partner, lender, consultant, executive, agent, supplier,distributor or otherwise) any Competing Business or, directly or indirectly,induce or influence any customer or other Person that has a businessrelationship with the Company, or any Affiliate of the Company, to discontinueor reduce the extent of such relationship. For purposes of this Agreement, theExecutive shall be deemed to be directly or indirectly interested in a businessif he is engaged or interested in that business as a stockholder, director,officer, executive, agent, partner, individual proprietor, consultant, advisoror otherwise, but not if the Executive’s interest is limited solely to theownership of not more than 5% of the securities of any class of equitysecurities of a corporation or other Person whose shares are listed or admittedto trade on a national securities exchange or are quoted on NASDAQ or a similarmeans if NASDAQ is no longer providing such information.
     (c)  While the Executive is employed by the Company and for one (1) yearafter the Executive ceases to be employed by the Company, the Executive shallnot, directly or indirectly, solicit to employ for himself or others anyemployee of the Company or any Affiliate of the Company who was an employee ofthe Company or any Affiliate of the Company as of the date of the terminationof the Executive’s employment with the Company, or to solicit any such employeeto leave such employee’s employment or join the employ of another, then or at alater time; provided that the foregoing shall not apply to any family member ofthe Executive who is employed by the Company or any such Affiliate or theExecutive’s administrative assistant.
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     (d)  The parties agree that nothing in this Agreement shall be construed tolimit or negate the common law of torts, confidentiality, trade secrets,fiduciary duty and obligations where such laws provide the Company with anybroader, further or other remedy or protection than those provided herein.
     (e)  Because the breach of any of the provisions of this Section 10 mayresult in immediate and irreparable injury to the Company for which the Companymay not have an adequate remedy at law, the Company shall be entitled, inaddition to all other rights and remedies, to a decree of specific performanceof the restrictive covenants contained in this Section 10 and to a temporaryand permanent injunction enjoining such breach, without posting a bond orfurnishing similar security, upon proof of such breach.
     Section 11. Severability. Each term and provision of this Agreement isseverable; the invalidity, illegality or unenforceability or modification ofany term or provision of this Agreement shall not affect the validity, legalityand enforceability of the other terms and provisions of this Agreement, whichshall remain in full force and effect. Since it is the desire and intent of theparties that the provisions of this Agreement be enforced to the fullest extentpermissible under the laws and public policies applied in each jurisdiction inwhich enforcement is sought, should any particular provision of this Agreementbe deemed invalid, illegal or unenforceable, the same shall be deemed reformedand amended to delete that portion that is adjudicated to be invalid, illegalor unenforceable and the deletion shall apply only with respect to theoperation of such provision and to the extent of such provision and, to theextent that a provision of this Agreement would be deemed unenforceable byvirtue of its scope, but may be made enforceable by limitation thereon, eachparty agrees that this Agreement shall be reformed and amended so that the sameshall be enforceable to the fullest extent permissible under the laws andpublic policies applied in the jurisdiction in which enforcement is sought.
     Section 12. Assignment. This Agreement and the rights and obligations ofthe parties hereto shall bind and inure to the benefit of each of the partieshereto, the heirs, executors, administrators and legal representatives of theExecutive and the successors and permitted assigns of the Company. Neither thisAgreement nor any rights or benefits hereunder may be assigned by the Executiveor the Company without the prior written consent of the other party hereto,except that the Company may assign any of its rights or obligations hereunderto any other Person which purchases all or substantially all of the commonstock or assets of the Company or is the successor to the Company by merger,consolidation or other similar transaction.
     Section 13. Amendment; Entire Agreement. This Agreement may not bemodified, amended, altered or supplemented except by a written agreementexecuted by the parties hereto. This Agreement contains the entire agreementand understanding of the parties hereto with respect to the subject matter ofthis Agreement and supersedes all prior and/or contemporaneous agreements andunderstandings of any kind and nature (whether written or oral) between theparties with respect to such subject matter, all of which are merged herein.
     Section 14. Waivers. Waiver by either party of either breach of orfailure to comply with any provision of this Agreement by the other party shallnot be construed as, or constitute, a
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continuing waiver of such provision, or a waiver of any other breach of,or failure to comply with, any other provision of this Agreement, any suchwaiver must be in writing to be limited to the specific matter and instance forwhich it is given. No waiver of any such breach or failure or of any term orcondition of this Agreement shall be effective unless in a written instrumentand signed by the waiving party and delivered, in the manner required fornotices generally, to the affected party.
     Section 15. Notices. All notices, consents, directions, approvals,instructions, requests and other communications required or permitted by theterms of this Agreement to be given to any person shall be in writing, andshall be delivered personally or sent by certified mail, return receiptrequested (postage prepaid) or by telecopy, to the parties at the followingaddresses or telecopy numbers, as applicable:
     If to the Executive:
   Mr. Thomas D. DavisXybernaut Corporation12701 Fair Lakes Circle, Suite 550Fairfax, VA 22033Telecopier: (703) 631-3903
     If to the Company:
   Xybernaut Corporation12701 Fair Lakes Circle, Suite 550Fairfax, VA 22033Attention: SecretaryTelecopier: (703) 631-7070
     With a copy to:
   Jenkens & Gilchrist Parker Chapin LLPThe Chrysler Building405 Lexington AvenueNew York, NY 10174Attention: Martin Eric Weisberg, Esq.Telecopier: (212) 704-6288
or to such other address as a party may have furnished to the other parties inwriting in accordance herewith. Any notice, consent, direction, approval,instruction, request or other communication given in accordance with thisSection 15 shall be effective after it is received by the intended recipient.
     Section 16. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNEDBY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIAAPPLICABLE TO AGREEMENTS MADE AND TO BE
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PERFORMED THEREIN, WITHOUT REGARD OR REFERENCE TO ITS PRINCIPLES OFCONFLICTS OF LAWS. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED WITHOUTREGARD TO ANY PRESUMPTION AGAINST THE PARTY CAUSING THIS AGREEMENT TO BEDRAFTED.
     Section 17. Arbitration. The parties agree that with respect to anydispute or claim hereunder, either party shall be entitled to submit the claimor dispute to binding arbitration to be held in Fairfax County, Virginia, inaccordance with the rules and procedures of the American ArbitrationAssociation (the “AAA”), before a single arbitrator chosen from an AAA panel ofarbitrators experienced in complex contractual matters who is mutuallyagreeable to the parties. If the parties cannot agree on a single arbitrator,the parties shall request an odd numbered panel of proposed arbitrators fromthe AAA in complex contractual matters, the parties must alternatively strikeone name each from the list of panel members. Unless the parties agreeotherwise, the party selecting first will be determined by the flip of a coin.The last remaining name will be designated as the sole arbitrator. Thedetermination of the single arbitrator shall be final, conclusive and bindingon the parties and not subject to any appeal or judicial review. Anarbitration conducted pursuant to this Section 17 shall be the sole andexclusive remedy for the resolution of any such dispute or claim arising out ofor relating to this Agreement. The arbitrator shall, in addition to making anaward, be entitled to determine that the costs and expenses incurred by theprevailing party in the arbitration (including, without limitation, reasonableattorneys’ fees and expenses and the costs of the AAA) be paid by the otherparty to the arbitration. Judgment on the decision of the arbitrator may beentered in any court of competent jurisdiction. Each of Executive and Companyhereby (i) irrevocably consents to the exclusive personal jurisdiction of thecourts of the Commonwealth of Virginia located in Fairfax County, Virginia forthis purpose; (ii) waives any right to contest the venue of such courts; or(iii) to assert that such courts constitute an inconvenient forum.
     Section 18. Headings; Counterparts. The headings contained in thisAgreement are inserted for reference purposes only and shall not in any wayaffect the meaning, construction or interpretation of this Agreement. ThisAgreement may be executed in two (2) counterparts, each of which when executedshall be deemed to be an original, but both of which, when taken together,shall constitute one and the same document.
     IN WITNESS WHEREOF, the Executive and the Company have executed thisAgreement as of the date first above written.