Document:

EX-10.4

Technology Option Capital

A TOC Capital Corporation correspondent office

January 24, 2006

Perry L. Nolen

President & CEO

Xybernaut Corporation

12701 Fair Lakes Circle, Suite 550

Fairfax, VA 22033

Re: Letter of Engagement

Dear Perry,

This letter will confirm the retention and engagement of Technology Option Capital, LLC and its
affiliates and partners (collectively, “TOC”) as the financial advisor to Xybernaut Corporation and
Xybernaut Solutions, Inc. (together, “Xybernaut” or the “Company”) to provide complex intellectual
asset management services (collectively, the “Project”) in connection with:

(i) recommending to management an intellectual asset monetization strategy that will
maximize the risk-adjusted near term return to the Company; and

(iii) executing the approved monetization strategy through processes may include but are not
limited to the sale, auction, of intellectual assets and the spin-off of new companies
centered about one or more of those assets.

Scope of Services and Deliverables

(i) Strategy recommendation: In coordination with counsel to the Company, TOC will
recommend in an executive presentation an intellectual asset monetization strategy that will
maximize the risk-adjusted near term return to the Company; and

(ii) Transactions: The transactions may include but are not limited to the sale or
auction of the Company’s intellectual assets or the amalgamation of some of the Company’s
assets with capital and assets from other sources to form new legal entities. Such
transactions, which will reasonably draw on substantial resources from the Company may
likely but not necessarily follow the general sequence of:

a. Creating marketing collaterals

b. Creating a due diligence logistics center and a target list of market
participants

c. Actively marketing the assets, supporting the due diligence process, and
investigation alternatives and options including supplementary asset bundling and
financing.

d. Actively negotiating term sheets/advancing the auction

e. Closing one or more transactions

Reporting Requirements

TOC shall provide the Company with weekly written reports, and to the extent necessary,
which may take the form of emails of TOC’s efforts in obtaining a Transaction(s)(as defined
below), including, without limitation, any and all contracts made by TOC of potential
purchasers or other parties to a Transaction (as defined below) and the results of such
contacts. Such reports shall be provided to the Company and its attorneys by the close of
business on Friday of each week during the engagement. TOC futher agrees, to the extent
necessary, to make itself reasonably available for teleconferences to discuss its efforts
and progress in obtaining a Transaction (as defined below)..

Obligations of the Company

	 	1.	 	In connection with TOC’s engagement, the Company will furnish TOC with any information
concerning the Company and Project which TOC reasonably deems appropriate and will provide
TOC with access to the Company’s and Project’s officers, directors, accountants, counsel
and other advisors. The Company represents and warrants to TOC that all such information
concerning the Company and Project will be true and accurate in all material respects and
will not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading in light of the circumstances under
which such statements are made. The Company acknowledges and agrees that except as noted
explicitly above in Scope of Services and Deliverables, TOC will be using and relying upon
such information supplied by the Company and its officers, directors, agents and other
representatives and any other publicly available information concerning the Company or
Project without any independent investigation or verification thereof by TOC of the Company
or Project or its business or assets.

	 	2.	 	As compensation for the services to be rendered by TOC hereunder and subject to the
approval of the Bankruptcy Court for the Eastern District of Virgnia (the “Bankruptcy
Court”), TOC shall be entitled to the following advisory fees and expenses:

	 	(a)	 	A fee of $50,000 for services already provided by TOC to the Company
with payment deferred until such time as funding is received by the Company for the
monetization of assets. . .

	 	(b)	 	A success fee (the “Success Fee”), equal to 4.00% of the cumulative
Aggregate Value, as defined in the attachment hereto, up to $10,000,000 and 8.00%
of the cumulative Aggregate Value in excess of $10,000,000 of each and every
Transaction (as defined below), upon Bankruptcy Court approval of any such
Transaction(s). To the extent the Company closes a Transaction with Innofone.com,
Inc. then the Success Fee due to TOC shall be equal to 75% of the amount calculated
as per the above formula. In no event shall the Success Fee be less than
$250,000.

	 	(c)	 	Subject to Bankruptcy Court approval, the Success Fee is payable at
each and every funding of a Transaction.

	 	(d)	 	A retainer of $25,000 to be paid within 10 days of Bankruptcy Court
approval of this contract which shall be used for out-of-pocket fees and expenses
incurred during the term of its engagement hereunder, including the reasonable fees
and expenses of legal counsel retained by TOC to enforce this agreement, until
retainer is exhausted, after which an additional retainer shall be agreed to by the
parties to this agreement.

	 	3.	 	Since TOC will be acting on behalf of the Company and Project in connection with this
engagement, the Company agrees to indemnify TOC and certain other persons in accordance
with the indemnity agreement attached hereto (the “Indemnity Agreement”).

Additional Terms and Conditions

	 	4.	 	The term of TOC’s engagement hereunder shall extend from the date hereof through 180
days. However, subject to the provisions of paragraphs 2 through 9 and the Indemnity
Agreement, each of which shall survive any termination or expiration of this agreement,
either TOC or the Company may terminate the engagement hereunder at any time with or
without cause by giving the other at least 10 days’ prior written notice.

	 	5.	 	TOC may not be publicly referred to without its prior consent, except to the extent
such disclosure is required under applicable law or by legal proceedings. Any information
provided by Company under this agreement shall not be publicly disclosed or made available
to third parties without Company’s prior consent, other than to the TOC’s attorneys,
accountants, directors and other professional advisors, nor may Company be otherwise
publicly referred to without its prior consent, except to the extent such disclosure is
required under applicable law or by legal proceedings.

	 	6.	 	This Agreement may not be assigned by Company or TOC without the prior written consent
of the other.

	 	7.	 	This agreement may not be amended or modified except in writing and shall be governed
by and construed in accordance with the laws of the State of Delaware, without regard to
principles of conflicts of laws.

	 	8.	 	TOC shall have the right to place advertisements in form and substance reasonably
acceptable to the Company, as approved in writing, in financial and other newspapers and
journals at its own expense describing its services to the Company. The Company agrees to
respond promptly to any request for acceptance.

	 	9.	 	In view of the fact that the Company has filed for Chapter 11 protection, the Company
agrees to take reasonable steps to ensure that the compensation terms outlined in paragraph
2 of this Agreement are honored by the Bankruptcy Court.

TOC is delighted to accept this engagement and looks forward to working with management of the
Company on this assignment. Please confirm that the foregoing correctly sets forth our agreement
by signing the enclosed duplicate of this letter in the space provided and returning it, whereupon
this letter shall constitute a binding agreement as of the date first above written.

TECHNOLOGY OPTION CAPITAL, LLC

	 	 	 
	By:

	 	/s/ Nir Kossovsky     
	
 
	 	 
	Name:

Title:

	 	Nir Kossovsky

CEO

AGREED AND ACCEPTED:

XYBERNAUT CORPORATION

	 	 	 
	By:

	 	/s/ Perry L. Nolen     
	
 
	 	 
	Name:

Title:

	 	Perry L. Nolen

President and Chief Executive Officer

XYBERNAUT SOLUTIONS, INC.

	 	 	 
	By:

	 	/s/ Edward Maddox
	
 
	 	 
	Name:

Title:

	 	Edward Maddox

President
	 
	 	 

1

DEFINITION OF AGGREGATE VALUE

The “Aggregate Value” means the aggregate value of all cash, securities and other property
paid to the Company and/or its stockholders for the Company or its equity in connection with
a Transaction, including all indebtedness of the Company repaid or assumed, directly or
indirectly, (by operation of law or otherwise) in connection with such Transaction. In the
event that the consideration received in a Transaction is paid in whole or in part in the
form of securities or other property, then, for purposes of calculating the Success Fee
hereunder, the value of such securities or other property shall be the fair market value
thereof (as determined by generally accepted valuation methods used in the ordinary course
of Technology Option Capital’s business) on the day immediately preceding the consummation
of such Transaction; provided, however, that if such securities consist of securities with
an existing public trading market, the value thereof shall be determined by the average of
the last sales prices of such securities on the 20 trading days immediately preceding the
consummation of such Transaction. Any amounts payable to the Company, any stockholder of
the Company or any affiliate of the Company in connection with a non-competition,
employment, consulting, licensing, supply or other agreement shall be deemed consideration,
except in the case of employment or consulting agreements to the extent such amounts
represent the fair value of services to be rendered. Any contingent or conditional
consideration will be valued using generally accepted valuation methods as used in the
ordinary course of Technology Option Capital’s business. If the consideration to be paid is
computed in a foreign currency, the value of such foreign currency, for purposes of
calculating the Success Fee, shall be converted into U.S. Dollars at the prevailing exchange
rate on the date on which the Transaction is consummated.

“Transaction” shall include any sale or other form of transaction that occurs during the
term of TOC’s engagement by the Company whereby, directly or indirectly, control of, or a
material interest in, the Company or any portion of its businesses or assets is transferred
for consideration to a third party or parties, including, without limitation, a sale or
exchange of capital stock or assets, a merger or consolidation, a tender or exchange offer,
or any similar transaction which results in the transfer, sale or license of a business,
product, technology, intellectual property, or other asset of the Company.

2

Technology Option Capital

A TOC Capital Corporation correspondent office

INDEMNIFICATION PROVISIONS

Xybernaut Corporation (“Company”), agrees to indemnify and hold harmless Technology Option
Capital, LLC, and its partner UCC Capital Corporation (collectively, “TOC”), to the full extent
lawful, against any and all losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements (and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs, expenses and disbursements
in giving testimony or furnishing documents in response to a subpoena or otherwise) (each a
“Liability”), including, without limitation, the costs, expenses and disbursements, as and when
incurred, of investigating, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which TOC is a party), directly or
indirectly, relating to, based upon, arising out of, or in connection with, its acting for the
Company under the Agreement, dated 24 January 2006, between the Company and TOC to which these
indemnification provisions are attached and form a part (the “Agreement”), except to the extent
that any such Liability is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted primarily and directly from TOC’s gross negligence or
willful misconduct, and provided that Liabilities resulting from actions brought by the Company
against TOC shall be covered by the final sentence of this paragraph. So long as TOC is not in
breach of this Letter of Engagement, the Company also agrees that TOC shall not have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of TOC, except to the extent that any such liability is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from TOC’s gross negligence or willful misconduct.

The indemnification provisions shall be in addition to any liability which the Company may
otherwise have to TOC or the persons identified below in this sentence and shall extend to the
following: TOC, its affiliated entities, partners, employees, legal counsel, and controlling
persons (within the meaning of the federal securities laws), and the officers, directors,
employees, legal counsel, and controlling persons of any of them. All references to TOC in these
indemnification provisions shall be understood to include any and all of the foregoing.

If any action, suit, proceeding or investigation is commenced, as to which TOC proposes to
demand indemnification, it shall notify the Company with reasonable promptness (but any failure by
TOC to notify the Company shall not relieve the Company from its obligations hereunder unless such
failure shall materially and adversely affect the Company); and the Company shall promptly assume
the defense of such action, suit, proceeding or investigation, including the employment of counsel
(reasonably satisfactory to TOC) and payment of fees and expenses. TOC shall have the right to
retain its own counsel of its own choice to represent it and such counsel shall, to the extent
consistent with its professional responsibilities, cooperate with the Company and any counsel
designated by the Company, but the fees and expenses of such counsel employed by TOC shall be at
the expense of TOC unless (i) the employment of such counsel shall have been authorized in writing
by the Company in connection with the defense of such action, (ii) the Company shall not have
promptly employed counsel reasonably satisfactory to TOC, or (iii) TOC’s outside legal counsel
shall have reasonably concluded and so advised TOC in writing that there may be one or more legal
defenses available to it which have substantial merit and which are different from or additional to
those available to the Company, in any of which events such fees and expenses shall be borne by the
Company to the extent incurred in connection with such defenses and the Company shall not have the
right to direct the defense of such action on behalf of TOC. The Company shall be liable for any
settlement of any claim against TOC made with the Company’s written consent, which consent shall
not be unreasonably withheld. The Company shall not, without the prior written consent of TOC,
which consent shall not be unreasonably withheld, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof, unless such settlement,
compromise or consent includes, as unconditional term thereof, the giving by the claimant to TOC of
an unconditional release from all liability in respect of such claim.

In order to provide for just and equitable contribution, if a claim for indemnification
pursuant to these indemnification provisions is made but it is found in a final judgment by a court
of competent jurisdiction (not subject to further appeal) that such indemnification may not be
enforced in such case, even though the express provisions hereof provide for indemnification in
such case, then the Company, on the one hand, and TOC, on the other hand, shall contribute to the
losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses,
and disbursements to which the indemnified persons may be subject in accordance with the relative
benefits received by the Company, on the one hand, and TOC, on the other hand, and also the
relative fault of the Company, on the one hand, and TOC, on the other hand, in connection with the
statements, acts or omissions which resulted in such losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses or disbursements and the relevant
equitable considerations shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not also found liable
for such fraudulent misrepresentation. Notwithstanding the foregoing, TOC shall not be obligated to
contribute any amount hereunder that exceeds the amount of fees previously received by TOC pursuant
to the Agreement.

Neither termination nor completion of the engagement of TOC referred to above shall affect
these indemnification provisions which shall then remain operative and in full force and effect.

AGREED AND ACCEPTED:

XYBERNAUT CORPORATION

	 	 	 
	By:

	 	/s/ Perry L. Nolen     
	
 
	 	 
	Name:

Title:

	 	Perry L. Nolen

President and Chief Executive Officer

XYBERNAUT SOLUTIONS, INC.

	 	 	 	 	 
	By:

	 	/s/ Edward Maddox     
	 	March 10, 2006
	
 
	 	 
	 	 
	Name:

Title:

	 	Edward Maddox

President
	 	

	 
	 	 	 	 

3EX-10.5

February 8, 2006

Mr. Perry L. Nolen

President and chief Executive Officer

Xybernaut Corporation

5175 Parkstone Drive, Suite 130

Chantilly, VA 20151

Dear Mr. Nolen:

This agreement will serve as the contract between Xybernaut Corporation and Xybernaut Solutions,
Inc. (together, “Xybernaut” or the “Company”) and SSG Capital Advisors, L.P. (“SSG”) regarding the
retention of SSG as investment banker to Xybernaut (“Engagement Agreement”), in conjunction with
the engagement of Technology Option Capital, LLC. SSG’s responsibilities hereunder involve
providing investment banking services to the Company focusing on the sale (the “Sale”) of the
Xybernaut operating business and assets, including, but not limited to, any and all intellectual
property. SSG and the Company understand and agree that such sale may include a sale of multiple
classes of intellectual property to multiple buyers.

A. SSG’s Role

1. Sale

Our role in connection with any Sale will include the following:

	 	•	 	Work with the Company and its advisors to prepare an Offering Memorandum
describing the Company, its operating assets, its intellectual property, its
historical performance and prospects, including existing contracts, marketing
and sales, labor force and management and anticipated financial results;

	 	•	 	Assist Xybernaut in developing a list of suitable potential buyers who will
be contacted on a discreet and confidential basis by SSG after approval by the
Company;

	 	•	 	Coordinate the execution of confidentiality agreements for potential buyers
wishing to review the Offering Memorandum;

	 	•	 	Assist Xybernaut in coordinating site visits for interested buyers and work
with the management team to develop appropriate presentations for such visits;

	 	•	 	Solicit and analyze competitive offers from potential buyers as authorized
by the Company in each instance;

	 	•	 	Advise and assist the Company in structuring the transactions and
negotiating the transaction agreements; and

	 	•	 	Otherwise assist the Company, its attorneys and accountants, as necessary,
through closing of all transactions on a best efforts basis.

Both SSG and the Company acknowledge that the sale will be effectuated pursuant to
Section 363 of the United States Bankruptcy Code or through a plan of reorganization
in Xybernauts’s pending Chapter 11 bankruptcy proceeding in the U. S. Bankruptcy
Court for the Eastern District of Virginia, Alexandria Division (the “Bankruptcy
Court”), Case No. 05-12801 RGM.

In performing the service described above, Xybernaut agrees to furnish or cause to
be furnished to SSG such information as SSG reasonably believes appropriate to the
execution of its engagement hereunder (all such information so furnished being the
“Information”). The Company will use its best efforts to ensure that all historic
Information relating to the Company it furnishes to SSG shall be accurate, to the
best of its knowledge, and that until the expiration of SSG’s engagement hereunder,
it will advise SSG of the occurrence of any event or any other change known by it
that results in the Information ceasing to be accurate in all material respects.
The Company recognizes and confirms that SSG (a) will use and rely primarily on the
Information and on information available from generally recognized public sources in
performing the services contemplated hereby without having independently verified
any of the same, (b) does not assume responsibility for accurateness or completeness
of the Information and such other information and will not make any representation
or warranty on behalf of the Company regarding the accurateness or completeness of
the Information and (c) will not make an appraisal of any of the assets or
liabilities of the Company.

	B.	 	SSG’s Compensation 

As compensation for providing the foregoing services, the Company shall pay to SSG the
following subject to Bankruptcy Court approval:

	 	1.	 	Initial Fee. An initial fee (the “Initial Fee”) equal to $25,000, due
upon Bankruptcy Court approval of this Engagement Agreement by way of a Retention
Order. One hundred (100%) percent of the Initial Fee received by SSG will be credited
against the Sale Fee (as defined below in Section (2) owed to SSG).

	 	2.	 	Sale Fee. If the Company closes on the Sale of all or a significant
portion of its assets or securities, or any other extraordinary corporate transaction,
whether by way of recapitalization, merger, reverse merger, consolidation, negotiated
purchase or otherwise, or any combination of the aforementioned during the Engagement
Term to any party, (the “Sale Transaction”), SSG shall be entitled to receive a sale
fee (the “Sale Fee”) payable in cash, in federal funds via wire transfer or certified
check, subject to Bankruptcy Court approval upon appropriate application, equal to 5.0%
of the Total Consideration up to $10,000,000 and 10% of the Total Consideration in
excess of $10,000,000. (By way of example, if the Company sells its assets in two
separate transactions, each for $8,000,000, SSG would be entitled to receive $400,000
upon closing of the first Sale Transaction and an additional $700,000 upon closing of
the second Sale Transaction.) To the extent the Company closes a sale transaction with
Innofone.com, Inc. then the Sale Fee due to SSG shall be equal to 75% of the amount
calculated as per the above formula. In no event shall the Sale Fee be less than
$250,000.

	 	3.	 	In addition to the foregoing fees, the Company shall reimburse SSG for all
reasonable out-of-pocket expenses incurred by SSG in connection with its duties under
this Engagement Agreement for the duration of this representation, subject to
Bankruptcy Court approval.

C. Definitions

For the purpose of this Engagement Agreement:

Total Consideration shall mean the purchase price paid for the stock, assets or securities
plus the assumption or payoff of indebtedness related to the business or assets sold, which
includes secured, administrative, priority and/or unsecured claims (trade or other) and the
assumption of any other obligations on balance sheet.

In the event that the consideration is paid in whole or in part in the form of securities of
the acquiring entity, the value of such securities, for the purpose of calculating SSG’s
fee, shall be the market value thereof as of the date of the purchase agreement. If such
aggregate consideration may be increased by contingent payments such as an “earnout” or
other monetary agreement in the transaction, the portion of SSG’s fee relating thereto shall
be calculated and paid when and as such contingent payments or other monetary amounts are
received.

D. Term of Engagement

This Engagement Agreement shall remain in force (the “Engagement Term”) for a period of six
(6) months from the date of Bankruptcy Court approval of this Engagement Agreement and may
thereafter be terminated by either party upon thirty (30) days prior written notice to the
other; provided, however, that the Company or SSG may terminate this Engagement Agreement by
written notice immediately upon the closing of a Sale Transaction of all the assets. Upon
the termination of this Engagement Agreement, neither party shall have any further
obligations to the other except that (i) termination of the Engagement Agreement shall not
affect SSG’s right to indemnification under the Indemnification paragraph below, (ii)
Xybernaut shall remain obligated to pay the Initial Fee or Sale Fee, subject to Bankruptcy
Court approval, that became payable prior to the termination of the Engagement Agreement,
and (iii) Xybernaut shall remain obligated to reimburse SSG for any expenses incurred
through the date of the termination of the Engagement Agreement, subject to Bankruptcy Court
approval.

E. Reporting Requirements

SSG shall provide the Company with weekly written reports of SSG’s efforts in obtaining a
Sale, including, without limitation, any and all contacts made by SSG of potential
purchasers and the results of such contacts. Such reports shall be provided to the Company
and counsel to the Company, counsel to the Official Committee of Unsecured Creditors,
counsel to the Official Committee of Equity Security Holders, and counsel to LC Capital
Master Fund, Ltd. by the close of business on Friday of each week during the engagement.
SSG further agrees, to the extent necessary, to make itself reasonably available for
teleconferences to discuss its efforts and progress in obtaining a Sale.

F. Indemnification

The following provisions regarding indemnification, contribution and related matters have
been agreed to by the Company and SSG.

	 	1.	 	Except as provided in the last sentence of this paragraph and subject to
Bankruptcy Court approval, the Company shall indemnify and hold harmless SSG, and its
partners, officers, employees and affiliates (collectively, “Indemnitees”) from and
against all losses, claims, judgments, liabilities, costs, damages and expenses,
including reasonable attorneys’ fees (collectively “Claims”), that SSG may incur and
which are based upon, or arise out of, any services that SSG provides to the Company as
its agent and advisor in connection with the services that SSG provides, pursuant to
this Engagement Agreement, except for any liability for losses, claims, damages or
liabilities that is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted from the gross negligence or willful
misconduct of SSG.

	 	2.	 	Subject to Bankruptcy Court approval, the Company shall defend any Claim
asserted against SSG through counsel reasonably satisfactory to SSG, which with SSG’s
approval may be the Company’s counsel. Subject to Bankruptcy Court approval, the
Company shall pay SSG’s fees and expenses, including counsel fees, as they are incurred
in defending any such Claim, and SSG shall repay the Company for any costs and expenses
advanced by the Company pursuant to the preceding sentence, in a case where it has been
determined in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that the Claim resulted from the gross negligence or willful misconduct
of SSG.

	 	3.	 	So long as SSG is not in breach of the Engagement Agreement, SSG shall not have
any liability to the Company or any other person in connection with the services
performed by SSG pursuant to this Engagement Agreement (whether direct or indirect, in
contract or tort or otherwise) except for any liability for losses, claims, damages or
liabilities that is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted from the gross negligence or willful
misconduct of SSG.

	 	4.	 	Without the consent of SSG, which shall not be unreasonably withheld, the
Company shall not settle or compromise, or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought from the Company by SSG or any other of the Indemnitees
(whether SSG is any actual or potential party to the claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release of SSG
and all other Indemnitees from all liability arising out of the claim, action, suit or
proceeding.

	 	5.	 	The provisions hereof shall survive any termination or completion of the
engagement set forth in this Engagement Agreement.

G. Confidentiality

SSG agrees to maintain the confidentiality of all information provided to it by the Company
regarding the Company or a Sale Transaction, and shall not disclose any such information to
any person other than employees of SSG without the prior consent of the Company. The
obligations regarding confidential information received hereunder shall not apply to any
such information which (a) is or becomes part of the public domain or is or becomes publicly
available without breach hereof by SSG, (b) is lawfully acquired by SSG from a source not
under any obligation to the Company regarding disclosure of such information and its release
is expressly authorized by such source, (c) is disclosed to any third party by or with the
permission of the Company without confidentiality restrictions or (d) is developed by or on
behalf of SSG by individuals who have not received confidential information hereunder.

H. Miscellaneous

The Company agrees that SSG has the right, following the Transaction Closing, to place
advertisements in financial and other newspapers and journals at its own expense describing
its services to the Company hereunder.

This Agreement shall be governed by the laws of the State of Virginia and the Bankruptcy
Court for the Eastern District of Virginia, Alexandria Division, shall have exclusive
jurisdiction over any dispute hereunder.

Any amendment, modification or other changes to this Engagement Agreement must be in writing and
signed by both parties to be enforceable.

Please indicate your acceptance of the foregoing by executing and returning the enclosed copy of
this letter.

	 	 	 
	SSG CAPITAL ADVISORS, L.P.
	By:

	 	Chesen, DeMatteo, Karlson, Victor Securities Corporation,

General Partner
	 
	 	 
	By:

	 	/s/ J. Scott Victor
	
 
	 	 

J. Scott Victor

Managing Director

ACCEPTED:

XYBERNAUT CORPORATION

	 	 	 	 	 
	By:

	 	/s/ Perry L. Nolen
	 	March 10, 2006     
	
 
	 	 
	 	 
	
 
	 	Perry L. Nolen

President and Chief Executive Officer
	 	Date

	 
	 	 	 	 
	XYBERNAUT SOLUTIONS, INC.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Edward Maddox     
	 	March 10, 2006     
	
 
	 	 
	 	 
	
 
	 	Edward Maddox
	 	Date

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