COMMON STOCK AND WARRANT PURCHASE AGREEMENT

                          DATED AS OF NOVEMBER __, 2000

                                 BY AND BETWEEN

                              XYBERNAUT CORPORATION

                                       AND

                          THE PURCHASERS LISTED THEREIN


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                                TABLE OF CONTENTS

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ARTICLE I PURCHASE AND SALE OF THE SHARES AND THE WARRANTS........................................................1

         Section 1.1 Purchase and Sale of the Shares..............................................................1
         Section 1.2 The Securities...............................................................................1
         Section 1.3 Purchase Price and Closing...................................................................2
         Section 1.4 Escrow.......................................................................................2
         Section 1.5 Warrant......................................................................................2

ARTICLE II REPRESENTATIONS AND WARRANTIES.........................................................................3

         Section 2.1 Representation and Warranties of the Company.................................................3
         (a)    Organization, Good Standing and Power.............................................................3
         (b)    Authorization; Enforcement........................................................................3
         (c)    Capitalization....................................................................................4
         (d)    Issuance of Securities............................................................................4
         (e)    No Conflicts......................................................................................5
         (f)    Commission Documents, Financial Statements........................................................5
         (g)    Subsidiaries......................................................................................6
         (h)    No Material Adverse Change........................................................................6
         (i)    No Undisclosed Liabilities........................................................................6
         (j)    No Undisclosed Events or Circumstances............................................................6
         (k)    Indebtedness......................................................................................7
         (l)    Title to Assets...................................................................................7
         (m)    Actions Pending...................................................................................7
         (n)    Compliance with Law...............................................................................7
         (o)    Taxes.............................................................................................8
         (p)    Certain Fees......................................................................................8
         (q)    Operation of Business.............................................................................8
         (r)    Environmental Compliance..........................................................................8
         (s)    Books and Record Internal Accounting Controls.....................................................9
         (t)    Material Agreements...............................................................................9
         (u)    Securities Act of 1933...........................................................................10
         (v)    Governmental Approvals...........................................................................10
         (w)    Employees........................................................................................10
         (y)    Employees........................................................................................10
         (x)    Use of Proceeds..................................................................................11
         (y)    Public Utility Holding Company Act and Investment Company Act Status.............................11
         (z)    ERISA............................................................................................11
         (aa)   Dilutive Effect..................................................................................11
         (bb)   No Integrated Offering...........................................................................11
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         (cc)   Eligibility......................................................................................12
         Section 2.2 Representations and Warranties of the Purchasers............................................12
         (a)    Organization and Standing of the Purchasers......................................................12
         (b)    Authorization and Power..........................................................................12
         (c)    No Conflicts.....................................................................................12
         (d)    Acquisition for Investment.......................................................................13
         (e)    Accredited Purchaser.............................................................................13
         (f)    Rule 144.........................................................................................13
         (g)    Intentionally Omitted............................................................................13
         (h)    Information......................................................................................13
         (i)    No Solicitation..................................................................................14
         (j)    No Endorsement...................................................................................14
         (k)    General..........................................................................................14
         (l)    No Commissions or Similar Fees...................................................................14

ARTICLE III COVENANTS............................................................................................15

         Section 3.1 Securities Compliance.......................................................................15
         Section 3.2 Registration and Listing....................................................................15
         Section 3.3 Inspection Rights...........................................................................15
         Section 3.4 Compliance with Laws........................................................................16
         Section 3.5 Keeping of Records and Books of Account.....................................................16
         Section 3.6 Reporting Requirements......................................................................16
         Section 3.7 Amendments..................................................................................16
         Section 3.8 Other Agreements............................................................................17
         Section 3.9 Reservation of Shares.......................................................................17
         Section 3.10 Transfer Agent Instructions................................................................17

ARTICLE IV CONDITIONS TO CLOSING.................................................................................18

         Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the Securities................18
         (a)    Accuracy of Each Purchaser's Representations and Warranties......................................18
         (b)    Performance by the Purchasers....................................................................18
         (c)    No Injunction....................................................................................18
         (d)    Minimum Purchase.................................................................................18
         Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase the
                        Shares at the Closing....................................................................18
         (a)    Accuracy of the Company's Representations and Warranties.........................................19
         (b)    Performance by the Company.......................................................................19
         (c)    Minimum Purchase.................................................................................19
         (d)    No Suspension, Etc...............................................................................19
         (e)    No Injunction....................................................................................19
         (f)    No Proceedings or Litigation.....................................................................19
         (g)    Opinion of Counsel, Etc..........................................................................19
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         (h)    Registration Rights Agreement....................................................................20
         (i)    Stock and Warrant Certificates...................................................................20
         (j)    Resolutions......................................................................................20
         (k)    Reservation of Shares............................................................................20
         (l)    Transfer Agent Instructions......................................................................20
         (m)    Secretary's Certificate..........................................................................20
         (n)    Escrow Agreement.................................................................................20
         (o)    Officer's Certificate............................................................................20

ARTICLE V STOCK CERTIFICATE LEGEND...............................................................................21

         Section 5.1 Legend......................................................................................21

ARTICLE VI TERMINATION...........................................................................................22

         Section 6.1 Termination by Mutual Consent...............................................................22
         Section 6.2 Other Termination...........................................................................22
         Section 6.3 Termination of Closing......................................................................23
         Section 6.4 Effect of Termination.......................................................................23

ARTICLE VII INDEMNIFICATION......................................................................................23

         Section 7.1 General Indemnity...........................................................................23
         Section 7.2 Indemnification Procedure...................................................................23

ARTICLE VIII MISCELLANEOUS.......................................................................................24

         Section 8.1 Fees, Costs and Expenses....................................................................24
         Section 8.2 Consent to Jurisdiction.....................................................................25
         Section 8.3 Entire Agreement; Amendment.................................................................25
         Section 8.4 Notices.....................................................................................25
         Section 8.5 Waivers.....................................................................................26
         Section 8.6 Headings....................................................................................26
         Section 8.7 Successors and Assigns......................................................................26
         Section 8.8 No Third Party Beneficiaries................................................................27
         Section 8.9 Governing Law...............................................................................27
         Section 8.10 Survival...................................................................................27
         Section 8.11 Counterparts...............................................................................27
         Section 8.12 Severability...............................................................................27
         Section 8.13 Further Assurances.........................................................................27
         Section 8.14 Publicity..................................................................................28
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                            SCHEDULES OF THE COMPANY
                            ------------------------

Schedule 2.1(c)   Capitalization
Schedule 2.1(e)   No Conflicts
Schedule 2.1(g)   Subsidiaries
Schedule 2.1(h)   No Material Adverse Effect
Schedule 2.1(i)   No Undisclosed Liabilities
Schedule 2.1(k)   Indebtedness
Schedule 2.1(l)   Title to Assets
Schedule 2.1(m)   Actions Pending
Schedule 2.1(n)   Compliance with Law
Schedule 2.1(o)   Taxes
Schedule 2.1(p)   Certain Fees
Schedule 2.1(q)   Operation of Business
Schedule 2.1(r)   Environmental Compliance
Schedule 2.1(t)   Material Agreements
Schedule 2.1(v)   Governmental Approvals
Schedule 2.1(w)   Employees
Schedule 3.2      Registration and Listing



                           SCHEDULES OF THE PURCHASERS
                           ---------------------------

Schedule 2.2(l)   No Commissions or Similar Fees

                                    EXHIBITS
                                    --------

Exhibit A         List of Purchasers
Exhibit B         Form of Warrant
Exhibit C         Form of Escrow Agreement
Exhibit D         Form of Registration Rights Agreement
Exhibit E         Form of Irrevocable Transfer Agent Instructions
Exhibit F         Form of Opinion of Counsel

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                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

         This COMMON STOCK AND WARRANT  PURCHASE  AGREEMENT dated as of November
___, 2000 (this  "Agreement"),  by and between  XYBERNAUT  CORPORATION,  INC., a
Delaware corporation (the "Company"), and each of the purchasers whose names are
set forth on Exhibit A hereto (individually, a "Purchaser" and collectively, the
"Purchasers").

                                    RECITALS

         WHEREAS, upon the terms and subject to the conditions contained herein,
the  Company  desires to issue and sell to the  Purchasers,  and the  Purchasers
desire to purchase  from the Company in the  aggregate  _________  shares of the
Company's  common  stock,  par value $.01 per share (the  "Common  Stock"),  and
warrants to purchase up to in the aggregate 40% of the total number of shares of
Common Stock purchased by the Purchasers, in the form attached hereto as Exhibit
B (the "Warrants").

         WHEREAS,  such investments will be made in reliance upon the provisions
of Section 4(2) of the  Securities  Act of 1933,  as amended,  and the rules and
regulations  promulgated thereunder (the "Securities Act"), including Regulation
D  ("Regulation  D"),  and/or upon such other  exemption  from the  registration
requirements  of the  Securities  Act as may be available with respect to any or
all of the investments to be made hereunder.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                PURCHASE AND SALE OF THE SHARES AND THE WARRANTS

         Section 1.1 Purchase and Sale of the Shares.  Upon the following  terms
and subject to the conditions contained herein, the Company shall issue and sell
to each of the  Purchasers  and each of the  Purchasers  shall purchase from the
Company  the  number of shares of Common  Stock set forth  with  respect to such
Purchaser on Exhibit A hereto (collectively,  the "Shares").  Upon the following
terms and subject to the conditions  contained  herein,  the Purchasers shall be
issued Warrants. The purchase price per share of Common Stock shall be $____.

         Section 1.2 The Securities. The Company has authorized and has reserved
and  covenants  to  continue  to reserve,  free of  preemptive  rights and other
similar  contractual  rights  of  stockholders,   a  sufficient  number  of  its
authorized but unissued shares of its Common Stock to effect the issuance of the
Shares and exercise of the  Warrants.  Any shares of Common Stock  issuable upon
exercise of the Warrants (and such shares when issued) are herein referred to as
(the  "Warrant  Shares").  The Shares,  the Warrants and the Warrant  Shares are
sometimes collectively referred to herein as the "Securities".

<PAGE>

         Section 1.3 Purchase  Price and  Closing.  In  consideration  of and in
express  reliance upon the  representations,  warranties,  covenants,  terms and
conditions  of this  Agreement,  the  Company  agrees  to issue  and sell to the
Purchasers and the Purchasers, severally but not jointly, agree to purchase that
number of Shares set forth  opposite  their  respective  names on Exhibit A. The
aggregate  purchase  price of the Shares being acquired by each Purchaser is set
forth opposite such  Purchaser's  name on Exhibit A (each, a "Purchase  Price").
The  closing  under this  Agreement  shall  take place at the  offices of Parker
Chapin LLP (the "Escrow Agent"),  The Chrysler  Building,  405 Lexington Avenue,
New York, New York 10174 (the "Closing") at 10:00 a.m. E.S.T. on (i) the date on
which the last to be fulfilled or waived of the  conditions set forth in Article
IV  hereof  and  applicable  to the  Closing  shall be  fulfilled  or  waived in
accordance  herewith  or (ii) such  other  time and place or on such date as the
Purchaser and the Company may agree upon (the "Closing Date").

         Section 1.4  Escrow.  On or before the  Closing  Date,  (a) the Company
shall execute and deliver to the escrow agent (the "Escrow Agent") identified in
the Escrow Agreement  attached hereto as Exhibit C (the "Escrow  Agreement") all
applicable agreements,  documents, instruments and writings required pursuant to
Section 4.2 herein (collectively,  the "Closing Documents"),  to be delivered by
the Company including,  without  limitation,  the certificates for the number of
Shares and amount of Warrant set forth opposite each  Purchaser's name under the
heading "Number of Shares and Warrants to be Purchased" on Exhibit A, registered
in such  Purchaser's  name, and (b) the Purchasers shall pay by wire transfer of
immediately  available funds into escrow in accordance with the Escrow Agreement
the  Purchase  Price,  and  execute  and  deliver  all  applicable   agreements,
documents,  instruments  and  writings  required  pursuant to Section 4.1, to be
delivered by the  Purchaser.  In regard to the  Closing,  the Escrow Agent shall
give notice (by  telephone  or other  means) (an "Escrow  Agent  Notice") to the
parties  hereto when the Escrow Agent has received all of the Closing  Documents
and wire  transfer the funds  constituting  the  Purchase  Price and deliver the
other  Closing  Documents  to the  Company  pursuant  to the terms of the Escrow
Agreement.  As soon thereafter as is practicable on the Closing Date, the Escrow
Agent shall deliver the Company's Closing Documents to the Purchasers, including
applicable certificates for the Shares and the Warrants.

         Section 1.5 Warrant.  Concurrently with the issuance of the Shares, the
Company shall issue to the  Purchasers  Warrants to purchase in the aggregate up
to 40% of the  total  number  of  shares  of  Common  Stock  purchased  by  such
Purchasers.  The  Warrants  shall have an exercise  price equal to the  Exercise
Price  (as  defined  in the  Warrant)  and  shall  expire  on the  fourth  (4th)
anniversary of the issuance date of such Warrants.

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                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

         Section 2.1 Representation  and Warranties of the Company.  The Company
hereby makes the following  representations  and  warranties to the  Purchasers,
except as set forth in the Company's  disclosure  schedules  delivered with this
Agreement:

         (a) Organization, Good Standing and Power. The Company is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
State of  Delaware  and has the  requisite  corporate  power to own,  lease  and
operate its properties and assets and to conduct its business as it is now being
conducted  and to enter  into this  Agreement  and to  perform  its  obligations
hereunder.  The Company does not have any  subsidiaries or own securities of any
kind in any other entity, except as set forth in the Company's (i) Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 (the "Form 10-K);  (ii)
Quarterly  Report on Form 10-Q for the fiscal  quarters  ended June 30, 2000 and
March 31, 2000  (collectively,  the "Form 10-Q"); and (iii) all of the Company's
filings with the  Securities  and Exchange  Commission  (the "SEC") prior to the
date hereof  (collectively,  the  "Commission  Documents") or in Schedule 2.1(g)
hereto.  The  Company  and  each  subsidiary  is  duly  qualified  as a  foreign
corporation  to do business  and is in good  standing in every  jurisdiction  in
which the nature of the business  conducted  or property  owned by it makes such
qualification  necessary  except  for  any  jurisdiction(s)  (alone  or  in  the
aggregate)  in which the  failure  to be so  qualified  will not have a Material
Adverse Effect (as defined  hereinafter) on the Company's  financial  condition.
For the purposes of this Agreement,  "Material Adverse Effect" means any adverse
effect on the business, operations,  properties,  prospects, assets or financial
condition  of the  Company or its  subsidiaries  and which is  material  to such
entity or other  entities  controlling  or controlled by such entity or which is
likely to materially  hinder the  performance  by the Company of its  obligation
hereunder  and under the other  Transaction  Documents  (as  defined  in Section
2.1(b) hereof).

         (b) Authorization; Enforcement. The Company has the requisite corporate
power and  authority  to enter  into and  perform  its  obligations  under  this
Agreement,  the Escrow Agreement,  the Registration Rights Agreement attached as
Exhibit D hereto (the  "Registration  Rights  Agreement"),  the  Transfer  Agent
Instructions (as defined in Section 3.14 hereof) and the Warrants (collectively,
the "Transaction Documents") and to issue and sell the Shares in accordance with
the term hereof and the Warrants.  The  execution,  delivery and  performance of
each of the  Transaction  Documents by the Company and the  consummation  by the
Company of the transactions  contemplated  hereby and thereby have been duly and
validly authorized by all necessary  corporate action, and no further consent or
authorization  of the  Company  or  the  Company's  board  of  directors  or its
stockholders is required. This Agreement has been duly executed and delivered by
the Company.  The Registration Rights Agreement will have been duly executed and
delivered by the Company on or before the Closing Date.  Each of the Transaction
Documents constitutes,  or shall constitute when executed and delivered, a valid
and  binding  obligation  of the  Company  enforceable  against  the  Company in
accordance  with its  terms,  except

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<PAGE>

as such  enforceability  may be limited by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation,  conservatorship,   receivership  or
similar laws relating to, or affecting  generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.

         (c) Capitalization. The authorized capital stock of the Company and the
shares  thereof  issued and  outstanding  as of the date hereof are set forth on
Schedule 2.1(c) hereto.  All of the outstanding  shares of the Company's  Common
Stock  have  been  duly and  validly  authorized.  Except  as set  forth in this
Agreement  and  the  Registration  Rights  Agreement  and  as set  forth  in the
Commission  Documents or on Schedule 2.1(c) hereto, no shares of Common Stock or
any other securities  issued by the Company are entitled to preemptive rights or
registration  rights  and there are no  outstanding  options,  warrants,  scrip,
rights to subscribe to, call or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the
Company. Furthermore, except as set forth in this Agreement and the Registration
Rights  Agreement  and as set forth in the  Commission  Documents or on Schedule
2.1(c)  hereto,  there  are  no  contracts,   commitments,   understandings,  or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of the  capital  stock of the Company or  options,  securities  or rights
convertible  into shares of capital  stock of the Company.  Except for customary
transfer  restrictions  contained in  agreements  entered into by the Company in
order to sell restricted  securities or as provided on the Commission  Documents
or  Schedule  2.1 (c)  hereto,  the  Company  is not a party  to or bound by any
agreement or understanding  granting registration or anti-dilution rights to any
person with respect to any of its equity or debt securities.  The Company is not
a  party  to,  and  it has no  knowledge  of,  any  agreement  or  understanding
restricting  the voting or transfer  of any shares of the  capital  stock of the
Company.  Except as set forth on the  Commission  Documents  or Schedule  2.1(c)
hereto, the offer and sale of all capital stock, convertible securities, rights,
warrants,  or options of the Company  issued prior to the Closing  complied with
all  applicable  federal  and  state  securities  laws,  and no  holder  of such
securities  has a right of rescission or claim for damages with respect  thereto
which could have a Material  Adverse  Effect.  The Company has furnished or made
available to the Purchasers true and correct copies of the Company's Articles of
Incorporation  as in  effect  on the  date  hereof  (the  "Articles"),  and  the
Company's Bylaws as in effect on the date hereof (the "Bylaws").

         (d) Issuance of Securities. The Shares to be issued at the Closing have
been duly  authorized  by all necessary  corporate  action and, when paid for or
issued in accordance  with the terms hereof,  the Shares shall be validly issued
and outstanding, fully paid and nonassessable,  and free from preemptive rights,
taxes  upon  issuance,  liens and  similar  charges  caused by the  Company  and
entitled to all  applicable  rights and  preferences  set forth in the Articles.
When the  Warrant  Shares  are  issued  in  accordance  with  the  terms of this
Agreement and as set forth in the Warrants,  such shares will be duly authorized
by all necessary corporate action and validly issued and outstanding, fully paid
and non-assessable,  and free from preemptive rights, taxes upon issuance, liens
and other  similar  charges  caused by the  Company,  and the  holders  shall be
entitled to all rights accorded to a holder of Common Stock.

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<PAGE>

         (e) No Conflicts.  Except as set forth in the  Commission  Documents or
Schedule 2.1(e) attached hereto, the execution,  delivery and performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions contemplated herein and therein do not and will not (i) violate any
provision of the Company's Articles or Bylaws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration  or  cancellation  of,  any  agreement,  mortgage,  deed of  trust,
indenture,  note, bond,  license,  lease agreement,  instrument or obligation to
which the  Company is a party or by which any of its  respective  properties  or
assets are bound,  (iii) create or impose a lien,  mortgage,  security interest,
charge or  encumbrance  of any nature  whatsoever on any property of the Company
under any  agreement  or any  commitment  to which the  Company is a party or by
which the  Company  is bound or by which  any of its  respective  properties  or
assets are bound, or (iv) result in a violation of any federal,  state, local or
foreign statute, rule, regulation,  order, judgment or decree (including federal
and state securities laws and  regulations)  applicable to the Company or any of
its  subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected,  except,  in all cases other than violations
pursuant  to clause  (i)  above,  for such  conflicts,  defaults,  terminations,
amendments,   acceleration,   cancellations   and   violations   as  would  not,
individually or in the aggregate,  have a Material Adverse Effect.  The business
of the Company and its  subsidiaries  is not being conducted in violation of any
laws,  ordinances or regulations of any governmental entity, except for possible
violations  which  singularly  or in the  aggregate  do not and  will not have a
Material  Adverse  Effect.  The Company is not required under federal,  state or
local law, rule or regulation to obtain any consent,  authorization or order of,
or make any filing or  registration  with, any court or  governmental  agency in
order for it to  execute,  deliver or perform any of its  obligations  under the
Transaction  Documents,  or issue and sell the Shares and the Warrant  Shares in
accordance with the terms hereof or thereof (other than any filings which may be
required  to be made by the  Company  with the  Commission  or state  securities
administrators subsequent to a Closing, and any registration statement which may
be filed pursuant  hereto);  provided  that, for purposes of the  representation
made in this sentence,  the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Purchasers herein.

         (f)  Commission  Documents,   Financial  Statements.  The  Company  has
provided to the Purchasers  prior to the date hereof copies of its annual report
on Form 10-KSB for the fiscal  year ended  December  31, 1999 and its  quarterly
reports for the fiscal  quarters  ended March 31,  2000 and June 30,  2000.  The
Company has not provided to the Purchasers any material  non-public  information
or other  information  which,  according to applicable  law, rule or regulation,
should  have been  disclosed  publicly  by the Company but which has not been so
disclosed,  other than with  respect to the  transactions  contemplated  by this
Agreement.  The financial  statements of the Company furnished to the Purchasers
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements  and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted  accounting

                                       5
<PAGE>

principles  ("GAAP")  applied on a consistent  basis during the periods involved
(except (i) as may be otherwise  indicated in such  financial  statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary  statements),  and
fairly  present in all material  respects the financial  position of the Company
and its  subsidiaries  as of the dates thereof and the results of operations and
cash  flows  for the  periods  then  ended  (subject,  in the case of  unaudited
statements, to normal year-end audit adjustments).

         (g)  Subsidiaries.  The Commission  Documents or Schedule 2.1(g) hereto
sets forth each  subsidiary  of the  Company  showing  the  jurisdiction  of its
incorporation  or  organization  and showing  the  percentage  of the  Company's
ownership of the outstanding  stock or other interests of such  subsidiary.  For
the purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity  of  which at  least a  majority  of the  securities  or other  ownership
interest  having  ordinary  voting power  (absolutely or  contingently)  for the
election of directors or other persons  performing  similar functions are at the
time  owned  directly  or  indirectly  by the  Company  and/or  any of its other
subsidiaries.  All of the outstanding shares of capital stock of each subsidiary
have  been  duly  authorized  and  validly  issued,   and  are  fully  paid  and
non-assessable.  Except as disclosed on Schedule 2.1(g) there are no outstanding
preemptive,  conversion or other rights, options, warrants or agreements granted
or issued by or binding upon any  subsidiary  for the purchase or acquisition of
any  shares  of  capital  stock  of  any  subsidiary  or  any  other  securities
convertible into, exchangeable for or evidencing the rights to subscribe for any
shares of such capital stock.  Neither the Company nor any subsidiary is subject
to any obligation  (contingent or otherwise) to repurchase or otherwise  acquire
or retire any shares of the capital stock of any  subsidiary or any  convertible
securities,  rights,  warrants or options of the type described in the preceding
sentence.  Neither  the  Company  nor any  subsidiary  is party to,  nor has any
knowledge of, any agreement  restricting the voting or transfer of any shares of
the capital stock of any subsidiary.

         (h) No Material  Adverse Change.  Since June 30, 2000, the date through
which the most recent report of the Company has been prepared and filed with the
Commission (a copy of which is included in the Commission Documents) the Company
has not experienced or suffered any Material Adverse Effect, except as disclosed
on Schedule 2.1(h) hereto.

         (i) No Undisclosed  Liabilities.  Except as disclosed in the Commission
Documents  or on  Schedule  2.1(i)  hereto,  neither  the Company nor any of its
subsidiaries  has  any  liabilities,  obligations,  claims  or  losses  (whether
liquidated or unliquidated,  secured or unsecured, absolute, accrued, contingent
or otherwise)  other than those incurred in the ordinary course of the Company's
or its  subsidiaries  respective  businesses  since  June 30,  2000,  and which,
individually  or in the aggregate,  do not or would not have a Material  Adverse
Effect.

         (j) No Undisclosed  Events or  Circumstances.  No event or circumstance
has occurred or exists with respect to the Company or its  subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which,  under applicable law, rule or

                                       6
<PAGE>

regulation,  requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.

         (k)  Indebtedness.  The Commission  Documents or Schedule 2.1(k) hereto
sets  forth  as of  the  date  hereof  all  outstanding  secured  and  unsecured
Indebtedness of the Company or any  subsidiary,  or for which the Company or any
subsidiary has commitments.  For the purposes of this Agreement,  "Indebtedness"
shall mean (a) any  liabilities  for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts  payable  incurred in the ordinary course of
business), (b) all guaranties,  endorsements and other contingent obligations in
respect  of  Indebtedness  of  others,  whether or not the same are or should be
reflected  in the  Company's  balance  sheet  (or  the  notes  thereto),  except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar  transactions  in the ordinary  course of business;  and (c) the present
value of any lease  payments in excess of $100,000 due under leases  required to
be capitalized in accordance with GAAP.  Except as disclosed on Schedule 2.1(k),
neither  the  Company  nor any  subsidiary  is in  default  with  respect to any
Indebtedness.

         (l) Title to Assets.  Each of the Company and its subsidiaries has good
and  marketable  title  to all of its real and  personal  property,  free of any
mortgages,  pledges,  charges,  liens, security interests or other encumbrances,
except for those  indicated in the  Commission  Documents or on Schedule  2.1(l)
hereto or such that,  individually or in the aggregate,  do not cause a Material
Adverse Effect on the Company's financial condition or operating results. Except
as described in the Commission  Documents or on Schedule 2.1(l) hereto, all said
leases of the Company and each of its  subsidiaries are valid and subsisting and
in full force and effect.

         (m) Actions Pending. There is no action, suit, claim,  investigation or
proceeding  pending or, to the knowledge of the Company,  threatened against the
Company or any subsidiary  which questions the validity of this Agreement or the
transactions  contemplated  hereby or any action  taken or to be taken  pursuant
hereto or thereto.  To the knowledge of the Company,  there is no action,  suit,
claim,  investigation or proceeding pending or threatened,  against or involving
the Company,  any  subsidiary or any of their  respective  properties or assets,
except as set forth in the Commission Documents or Schedule 2.1(m) hereto. There
are no  outstanding  orders,  judgments,  injunctions,  awards or decrees of any
court,  arbitrator or governmental or regulatory body against the Company or any
subsidiary  or any officers or directors of the Company or  subsidiary  in their
capacities as such.

         (n)  Compliance   with  Law.  The  business  of  the  Company  and  the
subsidiaries  has been and is presently  being  conducted in accordance with all
applicable  federal,  state and local governmental laws, rules,  regulations and
ordinances,  except as set forth in the Commission  Documents or Schedule 2.1(n)
hereto  or  such  that,  individually  or in the  aggregate,  the  noncompliance
therewith would not have a Material Adverse Effect.  The Company and each of its
subsidiaries  have  all  franchises,   permits,  licenses,  consents  and  other
governmental  or  regulatory  authorizations  and  approvals  necessary  for the
conduct of its  business  as now being  conducted  by it unless  the  failure to
possess such franchises,  permits, licenses,  consents and

                                       7
<PAGE>

other governmental or regulatory  authorizations and approvals,  individually or
in the aggregate,  could not  reasonably be expected to have a Material  Adverse
Effect.

         (o) Taxes. Except as set forth in the Commission  Documents or Schedule
2.1(o) hereto, the Company and each of the subsidiaries has accurately  prepared
and filed all federal,  state and other tax returns  required by law to be filed
by it, has paid or made  provisions for the payment of all taxes shown to be due
and all  additional  assessments,  and  adequate  provisions  have  been and are
reflected in the financial  statements of the Company and the  subsidiaries  for
all current  taxes and other  charges to which the Company or any  subsidiary is
subject and which are not  currently  due and  payable.  Except as  disclosed on
Schedule 2.1(o) hereto, none of the federal income tax returns of the Company or
any subsidiary have been audited by the Internal  Revenue  Service.  The Company
has no knowledge of any  additional  assessments,  adjustments or contingent tax
liability (whether federal or state) of any nature  whatsoever,  whether pending
or threatened  against the Company or any subsidiary for any period,  nor of any
basis for any such assessment, adjustment or contingency.

         (p) Certain Fees.  The Company has not employed any broker or finder or
incurred  any  liability   for  any   brokerage  or  investment   banking  fees,
commissions,  finders' or  structuring  fees,  financial  advisory fees or other
similar fees in connection with the Transaction  Documents,  except as set forth
on Schedule  2.1(p)  hereto which fees shall be paid by the  Company.  All those
entities listed on Schedule 2.1(p) hereto are  broker/dealers (i) registered and
in good standing with the National  Association of Securities Dealers,  Inc. and
(ii) registered  pursuant to Section 15 of the Securities  Exchange Act of 1934,
as amended (the "Exchange Act").

         (q)  Operation  of Business.  The Company and each of the  subsidiaries
owns  or  possesses  all  patents,  trademarks,  domain  names  (whether  or not
registered) and any patentable  improvements or  copyrightable  derivative works
thereof,  websites and intellectual  property rights relating  thereto,  service
marks, trade names, copyrights,  licenses and authorizations and all rights with
respect to the foregoing, which are necessary for the conduct of its business as
now conducted without any conflict with the rights of others except as disclosed
in the Commission Documents or on Schedule 2.1(q).

         (r)  Environmental  Compliance.  Except as disclosed in the  Commission
Documents or on Schedule 2.1(r) hereto, the Company and each of its subsidiaries
have obtained all material  approvals,  authorization,  certificates,  consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws.  The  Commission  Documents  or on Schedule  2.1(r)  hereto sets forth all
material   permits,   licenses  and  other   authorizations   issued  under  any
Environmental  Laws to the  Company or its  subsidiaries.  "Environmental  Laws"
shall mean all  applicable  laws relating to the  protection of the  environment
including,   without  limitation,  all  requirements  pertaining  to  reporting,
licensing,  permitting,  controlling,  investigating  or remediating  emissions,
discharges,  releases or threatened releases of hazardous  substances,  chemical
substances,

                                       8
<PAGE>

pollutants,  contaminants  or toxic  substances,  materials  or wastes,  whether
solid, liquid or gaseous in nature, into the air, surface water,  groundwater or
land, or relating to the manufacture,  processing, distribution, use, treatment,
storage,  disposal,  transport  or handling of  hazardous  substances,  chemical
substances,  pollutants,  contaminants or toxic substances,  material or wastes,
whether  solid,  liquid or gaseous in  nature.  Except as set forth on  Schedule
2.1(r) hereto,  the Company has all necessary  governmental  approvals  required
under all Environmental  Laws and used in its business or in the business of any
of its  subsidiaries.  The  Company  and  each of its  subsidiaries  are also in
compliance  with all other  limitations,  restrictions,  conditions,  standards,
requirements,   schedules   and   timetables   required  or  imposed  under  all
Environmental  Laws.  Except for such instances as would not  individually or in
the  aggregate  have a  Material  Adverse  Effect,  there are no past or present
events, conditions,  circumstances,  incidents, actions or omissions relating to
or in any way  affecting  the Company or its  subsidiaries  that  violate or may
violate any Environmental Law after any of the Closings or that may give rise to
any environmental  liability,  or otherwise form the basis of any claim, action,
demand,  suit,  proceeding,  hearing,  study  or  investigation  (i)  under  any
Environmental  Law, or (ii) based on or related to the manufacture,  processing,
distribution,  use, treatment, storage (including without limitation underground
storage tanks),  disposal,  transport or handling,  or the emission,  discharge,
release  or  threatened  release  of  any  hazardous  substance.  "Environmental
Liabilities"  means all  liabilities of a person  (whether such  liabilities are
owed by such person to  governmental  authorities,  third  parties or otherwise)
whether  currently in existence or arising hereafter which arise under or relate
to any Environmental Law.

         (s) Books and Record  Internal  Accounting  Controls.  The  records and
documents of the Company and its subsidiaries accurately reflect in all material
respects  the  information  relating  to the  business  of the  Company  and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions  giving  rise to the  obligations  or  accounts  receivable  of the
Company or any subsidiary.  The Company and each of its subsidiaries  maintain a
system of  internal  accounting  controls  sufficient,  in the  judgment  of the
Company's  board  of  directors,   to  provide  reasonable  assurance  that  (i)
transactions  are executed in accordance with  management's  general or specific
authorizations,   (ii)   transactions   are  recorded  as  necessary  to  permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles  and to maintain  asset  accountability,  (iii) access to
assets is permitted  only in accordance  with  management's  general or specific
authorization and (iv) the recorded  accountability  for assets is compared with
the existing  assets at reasonable  intervals and  appropriate  actions is taken
with respect to any differences.

         (t)  Material  Agreements.  Except  as  set  forth  in  the  Commission
Documents or on Schedule  2.1(t) hereto,  neither the Company nor any subsidiary
is a party to any written or oral contract, instrument,  agreement,  commitment,
obligation,  plan or arrangement,  a copy of which would be required to be filed
with the  Commission  as an exhibit to a  registration  statement on Form S-3 or
applicable  form  (collectively,  "Material  Agreements")  if the Company or any
subsidiary were  registering  securities under the Securities Act. Except as set
forth in the Commission  Documents or on Schedule 2.1(t) hereto, the Company and
each  of its  subsidiaries

                                       9
<PAGE>

has in all  material  respects  performed  all the  obligations  required  to be
performed  by them to date under the  foregoing  agreements,  have  received  no
notice of default and, to the best of the Company's knowledge are not in default
under any Material  Agreement  now in effect,  the result of which could cause a
Material  Adverse Effect.  No written or oral contract,  instrument,  agreement,
commitment,  obligation, plan or arrangement of the Company or of any subsidiary
limits or shall limit the payment of dividends on the Company's Common Stock.

         (u)  Securities  Act of 1933.  The Company has complied and will comply
with all applicable  federal and state  securities  laws in connection  with the
offer,  issuance and sale of the Shares and the Warrants hereunder.  Neither the
Company nor anyone  acting on its behalf,  directly or  indirectly,  has or will
sell,  offer to sell or  solicit  offers to buy any of the  Shares,  or  similar
securities  to, or solicit  offers with respect  thereto from, or enter into any
preliminary  conversations or negotiations relating thereto with, any person, or
has taken or will take any action so as to bring the issuance and sale of any of
the Shares under the registration provisions of the Securities Act and any other
applicable federal and state securities laws.  Assuming the  representations set
forth in Section  2.2  hereof are true,  the  Securities  may be issued  without
registration  under the Securities  Act of 1933.  Neither the Company nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities Act) in connection with any of the Shares.

         (v)  Governmental  Approvals.  Except  as set  forth in the  Commission
Documents or on Schedule 2.1(v) hereto,  and except for the filing of any notice
prior or subsequent to the Closing that may be required under  applicable  state
or  federal  securities  laws  (which  if  required,  shall be filed on a timely
basis), including, but not limited to, the filing of a registration statement or
statements  pursuant to the Registration  Rights  Agreement,  no  authorization,
consent,  approval,  license exemption of, filing or registration with any court
or   governmental   department,    commission,    board,   bureau,   agency   or
instrumentality,  domestic  or  foreign,  is or will  be  necessary  for,  or in
connection with, the execution or delivery of the Shares, or for the performance
by the Company of its obligations under the Transaction Documents.

         (w)  Employees.   Neither  the  Company  nor  any  subsidiary  has  any
collective bargaining  arrangements or agreements covering any of its employees,
except as set forth in the  Commission  Documents or on Schedule  2.1(w) hereto.
Except as set forth in the  Commission  Documents or on Schedule  2.1(w) hereto,
neither the Company nor any subsidiary has any  employment  contract,  agreement
regarding proprietary information,  non-competition agreement,  non-solicitation
agreement,   confidentiality   agreement,  or  any  other  similar  contract  or
restrictive  covenant,  relating  to the  right  of  any  officer,  employee  or
consultant  to be employed or engaged by the Company or such  subsidiary.  Since
September 30, 1999, no officer, consultant or key employee of the Company or any
subsidiary whose  termination,  either  individually or in the aggregate,  could
have a Material  Adverse  Effect,  has  terminated  or, to the  knowledge of the
Company,  has any present  intention of  terminating  his or her  employment  or
engagement with the Company or any subsidiary.

                                       10
<PAGE>

         (x) Use of Proceeds.  The proceeds  from the sale of the Shares and the
Warrants will be used by the Company for working  capital and general  corporate
purposes.

         (y) Public  Utility  Holding  Company  Act and  Investment  Company Act
Status.  The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public  Utility  Holding  Company Act of 1935,  as
amended. The Company is not, and as a result of and immediately upon any Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.

         (z) ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be materially adverse to the Company and its subsidiaries. The
execution,  delivery and performance of this Agreement and the other Transaction
Documents and the issue and sale of the Shares and the Warrants will not involve
any transaction  which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed  pursuant to Section 4975 of the
Internal  Revenue  Code  of  1986,  as  amended,  provided  that,  if any of the
Purchasers,  or any person or entity that owns a  beneficial  interest in any of
the  Purchasers,  is an "employee  pension  benefit plan" (within the meaning of
Section  3(2) of  ERISA)  with  respect  to which  the  Company  is a "party  in
interest"  (within the meaning of Section 3(14) of ERISA),  the  requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable,  are met. As used in this
Section 2.1(az),  the term "Plan" shall mean an "employee  pension benefit plan"
(as  defined  in  Section  3 of  ERISA)  which  is or has  been  established  or
maintained,  or to which  contributions are or have been made, by the Company or
any subsidiary or by any trade or business, whether or not incorporated,  which,
together  with the  Company  or any  subsidiary,  is under  common  control,  as
described in Section 414(b) or (c) of the Code.

         (aa) Dilutive Effect. The Company understands and acknowledges that the
number of the  Warrant  Shares  issuable  upon  exercise  of the  Warrants  will
increase in certain  circumstances.  The Company further  acknowledges  that its
obligations  to issue the Warrant  Shares upon the  exercise of the  Warrants in
accordance with this Agreement and the Warrants,  is, in each case, absolute and
unconditional  regardless of the dilutive  effect that such issuance may have on
the ownership interest of other stockholders of the Company.

         (bb) No Integrated  Offering.  To the best of the Company's  knowledge,
neither the Company, nor any of its affiliates,  nor any person acting on its or
their  behalf  has,  directly  or  indirectly,  made any  offers or sales of any
security or solicited any offers to buy any security,  under  circumstances that
would require  registration of any of the Securities under the 1933 Act or cause
this offering of the  Securities to be  integrated  with prior  offerings by the
Company for  purposes  of the 1933 Act or any  applicable  stockholder  approval
provisions,  including,  without limitation,  under the rules and regulations of
any exchange or automated quotation system on which any of the Securities of the
Company  are  listed  or  designated,  nor  will  the  Company  or

                                       11
<PAGE>

any  of  its  subsidiaries   take  any  actions  or  steps  that  would  require
registration  of any of the Securities  under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.

         (cc)  Eligibility.  The Company is  currently  eligible to register the
resale of the Securities on a registration  statement on Form S-3 under the 1933
Act.

         Section 2.2 Representations  and Warranties of the Purchasers.  Each of
the Purchasers hereby makes the following  representations and warranties to the
Company:

         (a) Organization and Standing of the Purchasers. If the Purchaser is an
entity, the Purchaser is a corporation, limited liability company or partnership
duly incorporated or organized,  validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, and the Purchaser
was not formed for the specific purpose of acquiring the Securities.

         (b)  Authorization and Power. The Purchaser has the requisite power and
authority to enter into and perform this Agreement and the  Registration  Rights
Agreement  and the Escrow  Agreement and to purchase the Shares and the Warrants
being sold to it hereunder.  The  execution,  delivery and  performance  of this
Agreement,  the  Registration  Rights Agreement and the Escrow Agreement and the
documents contemplated hereby by the Purchaser and the consummation by it of the
transactions  contemplated  hereby and thereby have been duly  authorized by all
necessary  corporate  action and no  further  consent  or  authorization  of the
Purchaser  or  its  board  of  directors,  stockholders,  members,  managers  or
partners,  as the  case  may  be,  is  required.  Each of  this  Agreement,  the
Registration  Rights  Agreement  and the  Escrow  Agreement  will have been duly
executed  and  delivered  by the  Purchaser  on the closing  Date.  Each of this
Agreement,   the   Registration   rights  Agreement  and  the  Escrow  Agreement
constitutes,  or shall  constitute  when  executed  and  delivered,  a valid and
binding  obligation  of the  Purchaser  enforceable  against  the  Purchaser  in
accordance  with its  terms,  except as such  enforceability  may be  limited by
applicable  bankruptcy,  insolvency,  reorganization,  moratorium,  liquidation,
conservatorship,  receivership,  or  similar  laws  relating  to,  or  affecting
generally  the  enforcement  of,  creditor's  rights  and  remedies  or by other
equitable principles of general application.

         (c) No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement,  the  Registration  Rights Agreement and the Escrow Agreement and the
documents  contemplated hereby and thereby and the consummation by the Purchaser
of the transactions contemplated hereby or thereby or relating hereto or thereto
do not and  will  not (i)  result  in a  violation  of the  Purchaser's  charter
documents,   by-laws,  partnership  agreement,   operating  agreement  or  other
organizational  documents,  or (ii) conflict  with,  constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of any agreement, indenture or instrument to which the Purchaser is
a party, or result in a violation of any law, rule, or

                                       12
<PAGE>

regulation, or any order, judgment or decree of any court or governmental agency
applicable  to the  Purchaser  or its  properties,  except  for such  conflicts,
defaults and violations as would not, individually or in the aggregate, prohibit
or  otherwise  interfere  with the  ability of the  Purchaser  to enter into and
perform its  obligations  under this  Agreement  in any  material  respect.  The
Purchaser is not required to obtain any consent,  authorization  or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any of its  obligations  under  this
Agreement,  the  Registration  Rights  Agreement,  the Escrow  Agreement  or the
documents  contemplated  hereby  and  thereby or to  purchase  the Shares or the
Warrants in accordance with the terms hereof;  provided that for purposes of the
representation made in this sentence, the Purchaser is assuming and relying upon
the  accuracy of the  relevant  representations  and  agreements  of the Company
herein.

         (d) Acquisition for Investment.  The Purchaser is purchasing the Shares
and the  Warrants and will be acquiring  the Warrant  Shares  solely for its own
account,  for  investment  only and not with a view  towards  the public sale or
distribution  thereof.  The  Purchaser  agrees not to sell,  assign or otherwise
transfer  any of its  Securities  except in  accordance  with  federal and state
securities laws applicable to such disposition.  The Purchaser acknowledges that
it is able to bear the  financial  risks  associated  with an  investment in the
Securities and that it has been given full access to such records of the Company
and its  subsidiaries and to the officers of the Company and its subsidiaries as
it  has  deemed   necessary  or   appropriate   to  conduct  its  due  diligence
investigation. The Purchaser is capable of evaluating the risks and merits of an
investment in the  Securities by virtue of its experience as an investor and its
knowledge,  experience and  sophistication in financial and business matters and
the  Purchaser  is capable of bearing the entire loss of its  investment  in the
Securities.

         (e) Accredited Purchaser.  The Purchaser is an "accredited investor" as
defined in Regulation D promulgated  under the  Securities Act and is a resident
of the state indicated on Exhibit A hereto.

         (f) Rule 144. The Purchaser  understands  that the  Securities  must be
held indefinitely unless such Securities are registered under the Securities Act
or an exemption from registration is available.  The Purchaser acknowledges that
the Purchaser is familiar with Rule 144 of the rules and regulations promulgated
pursuant to the  Securities  Act ("Rule  144"),  and that the Purchaser has been
advised that Rule 144 permits  resales  only under  certain  circumstances.  The
Purchaser understands that to the extent that Rule 144 is not available, it will
be  unable  to  sell  any  Securities  without  either  registration  under  the
Securities  Act or the  existence of another  exemption  from such  registration
requirement.

         (g) Intentionally Omitted.

         (h)  Information.  The Purchaser  and its  advisors,  if any, have been
furnished with all materials  relating to the business,  finances and operations
of the Company and  materials  relating to the offer and sale of the  Securities
which have been requested by the Purchaser.  The

                                       13
<PAGE>

Purchaser and its advisors,  if any, have been afforded the  opportunity  to ask
questions of and receive answers from, or obtain  additional  information  from,
the  executive  officers of the Company the  financial  and other affairs of the
Company.  The Purchaser has sought such  accounting,  legal and tax advice as it
has considered necessary to make an informed investment decision with respect to
its acquisition of the Securities.  The Purchaser  understands  that it (and not
the Company) shall be responsible for its own tax liabilities  that may arise as
a result of this investment or the transactions  contemplated by this Agreement.
Without limiting the generality of the foregoing, the Purchaser has also had the
opportunity to obtain and to review the Commission Documents.

         (i) No Solicitation. The Purchaser acknowledges that the Shares and the
Warrants  were not offered to the  Purchaser  by means of any form of general or
public   solicitation   or  general   advertising,   or  publicly   disseminated
advertisements or sales literature,  including (i) any advertisement,  articles,
notice or other communication  published in any newspaper,  magazine, or similar
media,  or broadcast over television or radio, or (ii) any seminar or meeting to
which the purchaser was invited by any of the foregoing means of communications.

         (j) No  Endorsement.  The Purchaser  understands  that no United States
federal  or  state  agency  or  any  other  government  or  governmental  agency
(including,   without   limitation,   the  SEC)  has   passed  on  or  made  any
recommendation or endorsement of the Securities.

         (k) General. The Purchaser understands that the Shares and the Warrants
are being offered and sold,  and the Warrant  Shares are being  offered,  to the
Purchaser in reliance on specific  exemptions from the registration  requirement
of federal and state  securities  laws and that the Company is relying  upon the
truth and accuracy of, and the compliance with, the representations, warranties,
agreements,  acknowledgments and understanding of the Purchaser set forth herein
in order to determine the  applicability  of such exemptions and the eligibility
of the  Purchaser to acquire the Shares and the Warrants and to receive an offer
of the Warrant Shares.

         (l) No Commissions or Similar Fees. In connection  with the purchase of
the Shares and Warrants by the  Purchaser,  the  Purchaser  has not and will not
pay, and has no knowledge of the payment of, any  commission  or other direct or
indirect  remuneration  to any  person or entity  for  soliciting  or  otherwise
coordinating  the purchase of such  securities,  except as set forth on Schedule
2.2(l) hereto. All such persons or entities listed on Schedule 2.2(l) hereto are
duly licensed  and/or  registered  to engage in securities  offering and selling
activities (or are exempt from such licensing and/or registration  requirements)
under  applicable  federal  laws and the  laws of the  state(s)  in  which  such
activities have taken place in connection  with the transaction  contemplated by
this agreement.

                                       14
<PAGE>

                                  ARTICLE III

                                    COVENANTS

         The Company  covenants with each of the Purchasers,  for so long as the
Shares and/or the Warrants remain  outstanding,  as follows (which covenants are
for the benefit of the Purchasers and its permitted assignees):

         Section 3.1 Securities Compliance.

         (a) The Company shall notify the  Commission  in accordance  with their
rules and regulations of the transactions contemplated by any of the Transaction
Documents,  as may be required,  and shall take all other  necessary  action and
proceedings  as may be  required  and  permitted  by  applicable  law,  rule and
regulation,  for the legal and valid  issuance  of the  Shares  and the  Warrant
Shares to the Purchasers or subsequent  holders and will take no action to cause
integration under the 1933 Securities Act or the rules of Nasdaq.

         (b)  The  Company  is  relying  upon  the  truth  and  accuracy  of the
representations,  warranties, agreements,  acknowledgments and understandings of
the  Purchasers  set forth herein in order to  determine  the  applicability  of
federal  and  state  securities  laws  exemptions  and  the  suitability  of the
Purchasers to acquire the Shares and the Warrants.

         Section  3.2  Registration  and  Listing.  The Company (a) will cause a
registration statement registering the Shares and the Warrant Shares to be filed
no later than thirty (30) days after the Closing Date and cause the registration
statement to be declared  effective within (i) sixty (60) days after the Closing
Date or (ii) five (5) business days of the date on which the Commission  informs
the Company that it may request the  acceleration  of the  effectiveness  of the
registration  statement,  whichever  date  is the  earlier  (the  "Effectiveness
Date"),  (b)  will  comply  in  all  respects  with  its  reporting  and  filing
obligations  under the  Exchange Act for three (3) years  following  the Closing
Date,  (c)  will  comply  with  all  requirements  related  to any  registration
statement filed pursuant to this Agreement or the Registration Rights Agreement,
and (d) will not take any action or file any document  (whether or not permitted
by the  Securities  Act or the rules  promulgated  thereunder)  to  terminate or
suspend such  registration  or to terminate or suspend its  reporting and filing
obligations  under the  Exchange  Act or  Securities  Act,  except as  permitted
herein.  The Company  will take all action  necessary to continue the listing or
trading of its Common  Stock on the Nasdaq  National  Market.  During the period
beginning  on the Closing  Date and ending on the date which is ninety (90) days
after  the  Effectiveness  Date,  the  Company  shall  not  file a  registration
statement,  other than as described above in this Section 3.2 or as set forth on
Schedule 3.2 hereto,  covering the sale or resale of shares of Common Stock with
the SEC.

         Section 3.3 Inspection Rights. The Company shall permit,  during normal
business hours and upon reasonable request and reasonable notice, each Purchaser
or any employees,  agents or

                                       15
<PAGE>

representatives  thereof, so long as such Purchaser shall be obligated hereunder
to  purchase  the  Shares or shall own Common  Stock  which,  in the  aggregate,
represent  more  than  2% of the  total  combined  voting  power  of all  voting
securities  then  outstanding,  to  examine  and make  reasonable  copies of and
extracts  from the  records  and books of account  of, and visit and inspect the
properties,  assets,  operations and business of the Company and any subsidiary,
and to discuss  the  affairs,  finances  and  accounts  of the  Company  and any
subsidiary with any of its officers, consultants, directors, and key employees.

         Section 3.4 Compliance  with Laws. The Company shall comply,  and cause
each  subsidiary to comply,  with all applicable  laws,  rules,  regulations and
orders, noncompliance with which could have a Material Adverse Effect.

         Section 3.5 Keeping of Records and Books of Account.  The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which entries will be made in accordance with United States  generally  accepted
accounting principles  consistently  applied,  reflecting all material financial
transactions of the Company and its subsidiaries,  and in which, for each fiscal
year,   all  proper   reserves  for   depreciation,   depletion,   obsolescence,
amortization,  taxes,  bad debts  and  other  purposes  in  connection  with its
business shall be made.

         Section  3.6  Reporting  Requirements  The  Company  shall  furnish the
following,  if and when  applicable,  to each of the  Purchasers so long as such
Purchaser  shall be  obligated  hereunder  to  purchase  the Shares or shall own
Shares which,  in the  aggregate,  represent  more than 2% of the total combined
voting power of all voting securities then outstanding,  provided, however, that
the Company  shall not be obligated to furnish the  following,  if the following
reports  have been filed by the  Company  with the  Commission  pursuant  to the
Commission's "electronic data gathering and retrieval" (EDGAR) service:

         (a)  Reports  filed  with  the  Commission  on  Form  10-Q,  as soon as
available,  and in any event  within  fifteen (15) days after filing such report
with the Commission;

         (b) Annual  Reports filed with the  Commission on Form 10-K, as soon as
available, and in any event within ninety (90) days after the end of each fiscal
year of the Company; and

         (c) Copies of all notices and information, including without limitation
notices and proxy statements in connection with any meetings,  that are provided
to holders of shares of Common  Stock,  contemporaneously  with the  delivery of
such notices or information to such holders of Common Stock.

         Section  3.7  Amendments.  The  Company  shall  not  amend or waive any
provision of the Articles or Bylaws of the Company,  or the Registration  Rights
Agreement in any way that would adversely affect the dividends rights,  exercise
rights,  voting  rights or redemption  rights of the holders of the Shares,  the
Warrants or the Warrant Shares.

                                       16
<PAGE>

         Section  3.8 Other  Agreements  The  Company  shall not enter  into any
agreement  in which the terms of such  agreement  would  restrict  or impair the
right  or  ability  to  perform  of the  Company  or any  subsidiary  under  any
Transaction Document.

         Section  3.9  Reservation  of  Shares.  So long as any of the  Warrants
remain outstanding,  the Company shall take all action necessary to at all times
have authorized,  and reserved for the purpose of issuance, no less than 100% of
the  aggregate  number  of  shares of Common  Stock  needed to  provide  for the
issuance of the Warrant Shares.

         Section  3.10  Transfer  Agent  Instructions.  The Company  shall issue
irrevocable  instructions  to its transfer  agent,  and any subsequent  transfer
agent,  to issue  certificates,  registered in the name of each Purchaser or its
respective nominee(s),  for the Shares and the Warrant Shares in such amounts as
specified  from time to time by each  Purchaser to the Company upon  issuance of
the Shares or exercise of the Warrants in the form of Exhibit E attached  hereto
(the "Irrevocable  Transfer Agent  Instructions").  Prior to registration of the
Shares and the Warrant  Shares under the Securities  Act, all such  certificates
shall bear the  restrictive  legend  specified in Section 5.1 of this Agreement.
The Company  warrants that no instruction  other than the  Irrevocable  Transfer
Agent Instructions referred to in this Section 3.10 will be given by the Company
to its transfer agent and that the Shares and the Warrant Shares shall otherwise
be freely  transferable  on the books and  records of the  Company as and to the
extent provided in this Agreement and the Registration Rights Agreement. Nothing
in this Section 3.10 shall affect in any way each  Purchaser's  obligations  and
agreements  set forth in Section  5.1 to comply with all  applicable  prospectus
delivery requirements,  if any, upon resale of the Shares or the Warrant Shares.
If a Purchaser  provides the Company with an opinion of counsel,  in a generally
acceptable form, to the effect that a public sale, assignment or transfer of the
Shares or Warrant Shares may be made without  registration  under the Securities
Act or such Purchaser  provides the Company with reasonable  assurances that the
Shares or the  Warrant  Shares  can be sold  pursuant  to Rule 144  without  any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Company shall permit the transfer, and, in the
case of the Shares and the Warrant Shares,  promptly instruct its transfer agent
to issue one (1) or more certificates in such name and in such  denominations as
specified by such  Purchaser  and without any  restrictive  legend.  The Company
acknowledges that a breach by it of its obligations under this Section 3.10 will
cause  irreparable harm to the Purchasers by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly,  the Company acknowledges that
the remedy at law for a breach of its  obligations  under this Section 3.10 will
be inadequate and agrees,  in the event of a breach or threatened  breach by the
Company of the  provisions of this Section 3.10,  that the  Purchasers  shall be
entitled,  in  addition  to all other  available  remedies,  to an order  and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the  necessity  of showing  economic  loss and without any bond or other
security being required.

                                       17
<PAGE>

                                   ARTICLE IV

                              CONDITIONS TO CLOSING

         Section 4.1  Conditions  Precedent to the  Obligation of the Company to
Sell the Securities.  The obligation  hereunder of the Company to issue and sell
the Shares and the Warrants to the Purchasers is subject to the  satisfaction or
waiver,  at or before the Closing,  of each of the  conditions  set forth below.
These  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion.

         (a) Accuracy of Each Purchaser's  Representations  and Warranties.  The
representations  and warranties of each  Purchaser  shall be true and correct in
all  material  respects as of the date when made and as of the Closing as though
made at that time, except for  representations and warranties that are expressly
made as of a particular date, which shall be correct in all material respects as
of such date.

         (b) Performance by the Purchasers. Each Purchaser shall have performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing, including having paid by wire
transfer of funds into escrow in accordance  with this  Agreement and the Escrow
Agreement  the  Purchase  Price  and such  Purchaser  shall  have  executed  and
delivered  this  Agreement,  the  Registration  Rights  Agreement and the Escrow
Agreement to the Escrow  Agent on behalf of the Company.  The Escrow Agent shall
have  performed,  satisfied  and  complied  in all  material  respects  with all
covenants,  agreements and conditions  required by this Agreement and the Escrow
Agreement to be performed,  satisfied or complied with by the Escrow Agent at or
prior to the  Closing,  including  delivery  of all of the  Purchaser's  Closing
Documents to the Company.

         (c) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (d) Minimum  Purchase.  The Escrow  Agent shall have  received at least
$15,000,000  or more of  immediately  available  funds  pursuant  to the  Escrow
Agreement  and the  Purchasers  shall make the  minimum  purchase  described  in
Section 4.2(c) hereof.

         Section 4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Shares at the Closing.  The obligation  hereunder of each Purchaser
to acquire and pay for the Shares and Warrants is subject to the satisfaction or
waiver,  at or before the Closing,  of each of the  conditions  set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.

                                       18
<PAGE>

         (a) Accuracy of the Company's  Representations and Warranties.  Each of
the  representations  and warranties of the Company shall be true and correct in
all  material  respects as of the date when made and as of the Closing as though
made at that time (except for  representations and warranties that speak as of a
particular date), which shall be true and correct in all material respects as of
such date.

         (b)  Performance  by the  Company.  The Company  shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.

         (c) Minimum Purchase. Under the terms and conditions of this Agreement,
the  Company  shall  make  sales of a minimum  of  $15,000,000  of Shares to the
Purchasers.

         (d) No  Suspension,  Etc.  From the date  hereof to the  Closing  Date,
trading in the  Company's  Common  Stock  shall not have been  suspended  by the
Commission,  and, at any time prior to the Closing  Date,  trading in securities
generally as reported by Bloomberg  Financial  Markets  ("Bloomberg")  shall not
have  been  suspended  or  limited,  or  minimum  prices  shall  not  have  been
established on securities whose trades are reported by Bloomberg,  or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States, or New York State authorities,  nor shall there have occurred
any  material  outbreak  or  escalation  of  hostilities  or other  national  or
international  calamity  or crisis of such  magnitude  in its  effect on, or any
material  adverse  change in any financial  market  which,  in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to acquire the
Shares and Warrant.

         (e) No  Injunction.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (f) No Proceedings or Litigation.  No action, suit or proceeding before
any arbitrator or any governmental  authority shall have been commenced,  and no
investigation by any governmental authority shall have been threatened,  against
the Company,  or any of the  officers,  directors or  affiliates  of the Company
seeking to restrain,  prevent or change the  transactions  contemplated  by this
Agreement, or seeking damages in connection with such transactions.

         (g) Opinion of Counsel,  Etc. At the Closing, the Purchasers shall have
received an opinion of counsel to the Company,  dated the date of such  Closing,
in the form of Exhibit F hereto,  and the such other  certificates and documents
as the  Purchasers  or its  counsel  shall  reasonably  require  incident to the
Closing.

                                       19
<PAGE>

         (h) Registration  Rights Agreement.  Prior to the Closing,  the Company
shall have  executed and  delivered  the  Registration  Rights  Agreement to the
Escrow Agent on behalf of the Purchasers.

         (i) Stock and Warrant Certificates. The Company shall have executed and
delivered to the Escrow Agent on behalf of the Purchasers,  the certificates (in
such  denominations  as the  Purchaser  shall  request)  for the  Shares and the
Warrants being purchased by such Purchaser at the Closing.

         (j)  Resolutions.  Prior to the Closing,  the Board of Directors of the
Company shall have adopted resolutions consistent with Section 2.1(b) above in a
form reasonably acceptable to the Purchasers (the "Resolutions").

         (k)  Reservation  of Shares.  As of the Closing Date, the Company shall
have reserved out of its  authorized and unissued  Common Stock,  solely for the
purpose  of  effecting  the  issuance  of the  Shares  and the  exercise  of the
Warrants,  a number  of shares of  Common  Stock  equal to at least  100% of the
shares of Common Stock which would be issuable  upon  issuance of the Shares and
upon exercise of the Warrants  following the Closing (after giving effect to the
Shares and  Warrants  to be issued on the  Closing  Date and  assuming  all such
Shares and Warrants were fully issuable and exercisable,  as applicable, on such
date  regardless of any  limitation on the timing or amount of such issuances or
exercises).

         (l)  Transfer  Agent   Instructions.   As  of  the  Closing  Date,  the
Irrevocable  Transfer  Agent  Instructions,  in the form of  Exhibit E  attached
hereto, shall have been delivered to the Company's transfer agent.

         (m)  Secretary's  Certificate.  At the Closing,  the Company shall have
delivered  to the  Escrow  Agent  on  behalf  of the  Purchasers  a  secretary's
certificate,  dated as of the Closing Date, as to (i) the Resolutions,  (ii) the
Articles and (iii) the Bylaws,  each as in effect at the  Closing,  and (iv) the
authority  and  incumbency  of  the  officers  of  the  Company   executing  the
Transaction  Documents  and any  other  documents  required  to be  executed  or
delivered in connection therewith.

         (n) Escrow  Agreement.  Prior to the  Closing,  the Company  shall have
executed and delivered the Escrow Agreement to the Escrow Agent on behalf of the
Purchasers.

         (o)  Officer's  Certificate.  At the  Closing,  the Company  shall have
delivered  to the  Purchasers  a  certificate  of an  executive  officer  of the
Company,  dated as of the Closing Date, confirming the accuracy of the Company's
representations,  warranties and covenants as of the Closing Date and confirming
the  compliance by the Company with the  conditions  precedent set forth in this
Section 4.2 as of the Closing Date.

                                       20
<PAGE>

                                   ARTICLE V

                            STOCK CERTIFICATE LEGEND

Section 5.1 Legend. Each certificate  representing the Shares, the Warrants, and
the securities  issued upon exercise  thereof,  as applicable  and  appropriate,
shall be stamped  or  otherwise  imprinted  with a legend in  substantially  the
following  form (in  addition  to any legend  required  by  applicable  federal,
provincial or state securities or "blue sky" laws):

         THE SECURITIES  REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
         NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES  ACT")  OR  STATE  SECURITIES  LAWS  AND MAY  NOT BE  SOLD,
         TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF
         UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
         SECURITIES LAWS OR XYBERNAUT  CORPORATION  (THE  "COMPANY")  SHALL HAVE
         RECEIVED AN OPINION IN FORM, SCOPE AND SUBSTANCE REASONABLY  ACCEPTABLE
         TO THE COMPANY, OF COUNSEL, WHO IS REASONABLY ACCEPTABLE TO THE COMPANY
         THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
         THE PROVISIONS OF APPLICABLE  FEDERAL AND STATE  SECURITIES LAWS IS NOT
         REQUIRED.

                                       21
<PAGE>

         The Company  agrees to reissue  certificates  representing  the Shares,
Warrants or Warrant Shares,  without the legend set forth above if at such time,
prior to making any  transfer  of any Shares,  Warrants  or Warrant  Shares such
holder  thereof shall give written  notice to the Company  describing the manner
and terms of such transfer and removal as the Company may reasonably request and
such holder otherwise complies with the terms of the Transaction Documents.  The
legend  set  forth  above  shall  be  removed  and  the  Company  shall  issue a
certificate without such legend to the holder of any Shares, Warrants or Warrant
Shares  upon which it is stamped  if,  unless  otherwise  required by federal or
state securities  laws, (a) the sale of such Shares,  Warrants or Warrant Shares
is registered under the Securities Act (including  registration pursuant to Rule
416 thereunder) as contemplated by the  Registration  Rights  Agreement (b) such
holder provides the Company with an opinion of counsel,  in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the
effect that a sale or transfer of such Shares, Warrants or Warrant Shares may be
made without  registration under the Securities Act; or (c) such holder provides
the Company with  reasonable  assurances  that such Shares,  Warrants or Warrant
Shares can be sold under Rule 144(k). Each of the Purchasers agrees that it will
only sell Shares,  Warrants or Warrant Shares,  including those represented by a
certificate(s) from which the legend has been removed,  pursuant to an effective
registration statement, under an exemption from the registration requirements of
the  Securities  Act or in accordance  with Rule 144(k).  In the event the above
legend  is  removed  from  any  Shares,   Warrant  or  Warrant  Shares  and  the
effectiveness  of a  registration  statement  covering such Shares,  Warrants or
Warrant  Shares is suspended  or the Company  determines  that a  supplement  or
amendment  thereto  is  required  by  applicable   securities  laws,  then  upon
reasonable  advance  notice to the  Purchasers  the Company may require that the
above  legend be placed on any such  Shares,  Warrants  or Warrant  Shares  that
cannot then be sold pursuant to an effective  registration  statement,  under an
exemption from the registration requirements of the Securities Act or under Rule
144(k) and the  Purchasers  shall  cooperate in the  replacement of such legend.
Such legend shall  thereafter  be removed when such Shares,  Warrants or Warrant
Shares may again be sold pursuant to an effective registration statement,  under
an exemption from the  registration  requirements of the Securities Act or under
Rule 144(k).  The restrictions on transfer  contained in Section 5.1 shall be in
addition to, and not by way of limitation of, any other restrictions on transfer
contained in any other section of this Agreement.

                                   ARTICLE VI

                                   TERMINATION

         Section  6.1  Termination  by Mutual  Consent.  This  Agreement  may be
terminated at any time prior to any Closing by the mutual written consent of the
Company and the Purchasers.

         Section 6.2 Other Termination.  This Agreement may be terminated by the
action of the board of directors of the Company or by the Purchasers at any time
if the Closing shall not have been  consummated  by the Closing Date, as long as
the failure to so consummate is not the fault of the terminating party.

                                       22
<PAGE>

         Section 6.3 Termination of Closing.  If the Closing has not occurred on
or prior to the Closing  Date,  those  sections and  provisions  relating to the
Closing  in this  Agreement  may be  terminated  by the  action  of the board of
directors  of the  Company  or by the  Purchasers  as  long  as the  failure  to
consummate the Closing is not the fault of the terminating party.

         Section 6.4 Effect of  Termination.  In the event of termination by the
Company or the Purchasers of this  Agreement or any part hereof,  written notice
thereof  shall  forthwith  be  given to the  other  party  and the  transactions
contemplated by this Agreement and the  Registration  Rights  Agreement shall be
terminated  without  further  action  by  either  party.  If this  Agreement  is
terminated as provided in Section 6.1 or 6.2 herein, this Agreement shall become
void and of no further  force and effect,  except for  Sections 8.1 and 8.2, and
Article VII herein.  Nothing in this  Section 6.4 shall be deemed to release the
Company or any Purchaser  from any liability for any breach under this Agreement
or the Registration Rights Agreement, or to impair the rights of the Company and
the  Purchasers  to  compel  specific  performance  by the  other  party  of its
obligations under this Agreement and the Registration Rights Agreement.

                                  ARTICLE VII

                                 INDEMNIFICATION

         Section 7.1 General Indemnity. The Company agrees to indemnify and hold
harmless  the  Purchasers  (and its  directors,  officers,  affiliates,  agents,
successors and assigns) from and against any and all actual losses, liabilities,
deficiencies,   costs,  damages  and  reasonable  expenses  (including,  without
limitation,  reasonable attorney's fees, charges and disbursements)  incurred by
the Purchasers as a result of any breach of the covenants,  representations  and
warranties made by the Company herein. Each of the Purchasers agrees,  severally
and not jointly,  to indemnify and hold harmless the Company and its  directors,
officers,  affiliates,  agents,  successors and assigns from and against any and
all actual  losses,  liabilities,  deficiencies,  costs,  damages and reasonable
expenses (including, without limitation, reasonable attorneys' fees, charges and
disbursements)  incurred by the Company as a result of any false  representation
or  warranty  or any  breach of the  covenants  made by such  Purchaser  herein,
provided, however, such Purchaser's indemnification obligations shall not exceed
such Purchaser's Purchase Price.

         Section  7.2   Indemnification   Procedure.   Any  party   entitled  to
indemnification  under  this  Article  VII (an  "indemnified  party")  will give
written notice to the  indemnifying  party of any matters giving rise to a claim
for  indemnification;  provided,  that the  failure  of any  party  entitled  to
indemnification  hereunder  to give notice as provided  herein shall not relieve
the indemnifying  party of its obligations under this Article VII, except to the
extent that the  indemnifying  party is actually  materially  prejudiced by such
failure  to give  notice.  In case any  action,  proceeding  or claim is brought
against  an  indemnified  party in respect  of which  indemnification  is sought
hereunder, the indemnifying party shall be entitled to participate in, unless in
the reasonable  judgment of the indemnified party a conflict of interest between
it and the indemnifying  party may

                                       23
<PAGE>

exist with respect of such action, an action, a proceeding or a claim, to assume
the defense  thereof with counsel  reasonably  satisfactory  to the  indemnified
party.  In the event that the  indemnifying  party advises an indemnified  party
that it will  contest  such a claim  for  indemnification  hereunder,  or fails,
within thirty (30) days of receipt of any  indemnification  notice to notify, in
writing,  such person of its election to defend,  settle or  compromise,  at its
sole cost and expense,  any action,  proceeding  or claim (or  discontinues  its
defense at any time after it commences such defense), then the indemnified party
may, at its option, defend, settle or otherwise compromise or pay such action or
claim. In any event,  unless and until the indemnifying  party elects in writing
to assume  and does so assume  the  defense  of any such  claim,  proceeding  or
action,  the indemnified  party's costs and expenses arising out of the defense,
settlement or compromise of any such action, claim or proceeding shall be losses
subject to  indemnification  hereunder.  The  indemnified  party shall cooperate
fully with the indemnifying  party in connection with any negotiation or defense
of any such action or claim by the  indemnifying  party and shall furnish to the
indemnifying party all information reasonably available to the indemnified party
which  relates to such action or claim.  The  indemnifying  party shall keep the
indemnified party fully apprised at all times as to the status of the defense or
any settlement  negotiations  with respect thereto.  If the  indemnifying  party
elects to defend any such action or claim,  then the indemnified  party shall be
entitled to  participate  in such defense with counsel of its choice at its sole
cost and expense,  unless in the reasonable  judgment of the indemnified party a
conflict  of  interest  between  it and the  indemnifying  party may exist  with
respect to such action or claim. The indemnifying  party shall not be liable for
any  settlement of any action,  claim or proceeding  effected  without its prior
written consent.  Notwithstanding  anything in this Article VII to the contrary,
the indemnifying party shall not, without the indemnified  party's prior written
consent (which consent shall not be unreasonable withheld), settle or compromise
any claim or consent to entry of any judgment in respect  thereof  which imposes
any future obligation on the indemnified party or which does not include,  as an
unconditional  term thereof,  the giving by the claimant or the plaintiff to the
indemnified  party of a release from all liability in respect of such claim. The
indemnification  required by this Article VII shall be made by periodic payments
of the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the  indemnified  party  irrevocably  agrees  to  refund  such  moneys  if it is
ultimately  determined by a court of competent  jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar  rights of the  indemnified
party  against  the  indemnifying  party or others and (b) any  liabilities  the
indemnifying party may be subject to pursuant to the law.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section 8.1 Fees,  Costs and  Expenses.  All fees,  costs and  expenses
incurred in connection  with this  Agreement and the  transactions  contemplated
hereby  will be paid by the party  incurring  such  fees,  costs  and  expenses,
provided,  however,  that the Company shall pay, at

                                       24
<PAGE>

the  Closing,  all  reasonable  attorneys'  fees and  expenses  incurred  by the
Purchasers  up to  $10,000  in  connection  with the  preparation,  negotiation,
execution and delivery of this Agreement,  the Registration Rights Agreement and
the transactions contemplated thereby.

         Section  8.2  Consent  to  Jurisdiction.  Each of the  Company  and the
Purchasers  (i) hereby  irrevocably  submits to the  jurisdiction  of the United
States  District  Court  sitting in the  Southern  District  of New York and the
courts of the State of New York  located in New York county for the  purposes of
any suit,  action or proceeding  arising out of or relating to this Agreement or
any  of  the  other  Transaction  Documents  or  the  transactions  contemplated
hereunder or thereunder and (ii) hereby waives,  and agrees not to assert in any
such suit, action or proceeding,  any claim that it is not personally subject to
the jurisdiction of such court,  that the suit,  action or proceeding is brought
in an inconvenient  forum or that the venue of the suit, action or proceeding is
improper.  Each of the Company  and the  Purchasers  consents  to process  being
served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall  constitute  good and sufficient  service of process and
notice  thereof.  Nothing in this Section 8.2 shall affect or limit any right to
serve process in any other manner permitted by law.

         Section  8.3  Entire  Agreement;  Amendment.  This  Agreement  and  the
exhibits  attached hereto contain the entire  understanding  of the parties with
respect to the matters  covered  hereby,  supersedes all prior  agreements  with
respect to subject matter hereof and, except as  specifically  set forth herein,
in the Shares or in the Warrants,  neither the Company nor any of the Purchasers
makes any  representations,  warranty,  covenant or undertaking  with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.

         Section 8.4  Notices.  Any  notice,  demand,  request,  waiver or other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand  delivery,  by telex (with  correct  answer
back  received),  telecopy,  facsimile  or  e-mail  at  the  address  or  number
designated  below (if delivered on a business day during normal  business  hours
where such notice is to be received),  or the first  business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address,  or upon actual receipt of such mailing,  whichever  shall first occur.
The addresses for such communications shall be:

If to the Company:                Xybernaut Corporation
                                  12701 Fair Lakes Circle
                                  Suite 550
                                  Fairfax, Virginia 22033
                                  Fax No.: 703-631-3903
                                  Attention:  John F. Moynahan

                                       25
<PAGE>

                                  with copies to:

                                  Xybernaut Corporation
                                  12701 Fair Lakes Circle
                                  Suite 550
                                  Fairfax, Virginia 22033
                                  Fax No.: 703-631-3903
                                  Attention:  Dr. Steven A. Newman

                                  and

                                  Parker Chapin LLP
                                  The Chrysler Building
                                  405 Lexington Avenue
                                  New York, New York 10174
                                  Fax:  (212) 704-6288
                                  Attention:  Martin Eric Weisberg, Esq.

If to the Purchasers:             At the address of such Purchaser as set
                                  forth on the signature page to this Agreement,
                                  with copies to Purchaser's counsel as set
                                  forth on Schedule A or as specified in writing
                                  by such Purchaser

         Any party  hereto may from time to time  change its address for notices
by giving at least ten (10) days written  notice of such changed  address to the
other party hereto.

         Section 8.5  Waivers.  No waiver by either  party of any  default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed  to be a  continuing  waiver  in the  future  or a  waiver  of any  other
provisions,  condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right  hereunder in any manner  impair the exercise of
any such right accruing to it thereafter.

         Section 8.6 Headings.  The article,  section and subsection headings in
this Agreement are for convenience  only and shall not constitute a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

         Section 8.7 Successors  and Assigns.  None of the Purchasers may assign
this  Agreement to any person  (other than to an  affiliate  (as defined in Rule
144) of the Purchaser)  without the prior consent of the Company,  which consent
will not be  unreasonably  withheld.  This  Agreement  shall be binding upon and
inure to the  benefit of the  parties  and their  successors  and  assigns.  The
parties  hereto  may not amend  this  Agreement  or any  rights  or  obligations
hereunder  without the prior written consent of the Company and the Purchaser to
be affected by the  amendment.  After the Closing,  the assignment by a party to
this Agreement of any rights  hereunder shall not affect the obligations of such
party under this Agreement.

                                       26
<PAGE>

         Section 8.8 No Third Party  Beneficiaries.  This  Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns  and is not for the  benefit  of, nor may any  provision  hereof be
enforced by, any other person.

         Section 8.9  Governing  Law.  This  Agreement  shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.

         Section  8.10  Survival.  The  representations  and  warranties  of the
Company  and the  Purchasers  contained  in: (i)  Sections  2.1(o) and (s) shall
survive  indefinitely and (ii) those contained in Article II, with the exception
of Sections  2.1(o) and (s), shall survive the execution and delivery hereof and
the applicable Closing until the date three (3) years from the Closing Date; and
(iii) the  agreements  and covenants set forth in Articles I, III, V, VI and VII
of this  Agreement  shall  survive the  execution  and  delivery  hereof and any
Closing  hereunder,  as  applicable,  until  the  Purchasers  in  the  aggregate
beneficially  own  (determined in accordance  with Rule 13d-3 under the Exchange
Act) less than 5% of the total  combined  voting power of all voting  securities
then  outstanding,  provided,  that  Sections 3.1, 3.2, 3.4, 3.5, 3.7, 3.8, 3.9,
3.10 and 3.12 shall not expire  until the  Registration  Statement  required  by
Section 2 of the  Registration  Rights  Agreement  is no longer  required  to be
effective under the terms and conditions of Registration Rights Agreement.

         Section 8.11 Counterparts. This Agreement may be executed in any number
of  counterparts,  all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties  need not sign the same  counterpart.  In the  event  any  signature  is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall cause four additional executed signature pages to be physically  delivered
to the other parties within five days of the execution and delivery hereof.

         Section  8.12  Severability.  The  provisions  of  this  Agreement  are
severable  and,  in the event  that any court of  competent  jurisdiction  shall
determine  that  any  one or more of the  provisions  or part of the  provisions
contained  in this  Agreement  shall,  for any  reason,  be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability  shall not affect any other provision or part of a provision of
this  Agreement,  and this Agreement  shall be reformed and construed as if such
invalid or illegal or unenforceable  provision,  or part of such provision,  had
never been contained herein,  so that such provisions would be valid,  legal and
enforceable to the maximum extent possible.

         Section  8.13  Further  Assurances.  From  and  after  the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the  Purchasers  shall  execute and deliver such  instrument,  documents and
other writings as may be reasonably  necessary or

                                       27
<PAGE>

desirable  to  confirm  and carry out and to  effectuate  fully the  intent  and
purposes of this Agreement, the Registration Rights Agreement and the Warrants.

         Section 8.14  Publicity.  The Company shall not issue any press release
or  otherwise  make any public  statement or  announcement  with respect to this
Agreement or the transactions  contemplated hereby of which the Purchasers shall
not previously have been advised.

                                       28
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective  authorize  officer as of the date first above
written.

                                     XYBERNAUT CORPORATION

                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:




                                     [PURCHASER]

                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                        ----------------------------------------
                                        Address

                                        ----------------------------------------

                                        ----------------------------------------
                                        Tel. no.:
                                        ----------------------------------------
                                        Fax no.:
                                        ----------------------------------------

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