REGISTRATION RIGHTS AGREEMENT


            This  Registration  Rights  Agreement is made and entered into as of
September 16, 2003 (this "Agreement"),  by and between Xybernaut Corporation,  a
Delaware  corporation  (the  "Company"),  and  Essex  Trading  Ltd.,  a  company
incorporated  under the laws of Navis,  having its  principal  place of business
located at Fitzroy Mews 5, Suite No. 7, London, England (the "Investor").

            Upon the terms and subject to the conditions of the Common Stock and
Warrant  Purchase  Agreement,  dated as of the date  hereof,  by and between the
Company and the Investor (the "Purchase  Agreement"),  the Company has agreed to
provide to the Investor certain  registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder,  with respect to the
1,600,000  shares (the "Shares") of the Company's  common stock,  par value $.01
per share ("Common Stock"), and the 800,000 shares of Common Stock (the "Warrant
Shares", and together with the Shares, the "Securities")  issuable upon exercise
of the  warrants  (the  "Warrants")  issued to the  Investor  on the date hereof
pursuant to the Purchase Agreement.

            The Company and the Investor hereby agree as follows:

         1. Definitions.

            Capitalized  terms used and not otherwise  defined herein shall have
the  meanings  given  such  terms  in the  Purchase  Agreement.  As used in this
Agreement, the following terms shall have the following meanings:

            "Advice" shall have the meaning set forth in Section 3(k).

            "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person.  For the  purposes of this  definition,  "control,"  when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the  direction  of the  management  and policies of such Person,
whether  through the ownership of voting  securities,  by contract or otherwise;
and the terms of  "affiliated,"  "controlling"  and  "controlled"  have meanings
correlative to the foregoing.

            "Blackout Period" shall have the meaning set forth in Section 3(l).

            "Board" shall have the meaning set forth in Section 3(l).

            "Business  Day"  means any day except  Saturday,  Sunday and any day
which shall be a legal  holiday or a day on which  banking  institutions  in the
State  of New  York  generally  are  authorized  or  required  by  law or  other
government actions to close.

            "Closing  Date"  means  the  date  of  closing  under  the  Purchase
Agreement.

            "Commission" means the Securities and Exchange Commission.






            "Common Stock" means the Company's  Common Stock, par value $.01 per
share.

            "Effectiveness   Date"  means  with  respect  to  the   Registration
Statement,  the earlier to occur of: (i) December  16,  2003,  and (ii) the date
which is  within  five (5)  Business  Days of the date on which  the  Commission
informs the Company  that the  Commission  (a) will not review the  Registration
Statement  or  (b)  that  the  Company  may  request  the  acceleration  of  the
effectiveness of the Registration Statement.

            "Effectiveness  Period"  shall have the meaning set forth in Section
2.

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
amended.

            "Filing  Date" means the date the  Registration  Statement  is filed
which date shall be on or before the date that is 30 days  following the Closing
Date.

            "Holder" or "Holders"  means the holder or holders,  as the case may
be, from time to time of Registrable Securities,  including the Investor and its
permitted assigns.

            "Indemnified  Party"  shall  have the  meaning  set forth in Section
5(c).

            "Indemnifying  Party"  shall have the  meaning  set forth in Section
5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "Nasdaq" shall mean the Nasdaq Small Cap Market.

            "Person" means an individual or a corporation,  partnership,  trust,
incorporated or  unincorporated  association,  joint venture,  limited liability
company, joint stock company,  government (or an agency or political subdivision
thereof) or other entity of any kind.

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

            "Prospectus"  means  the  prospectus  included  in the  Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by the Registration  Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material incorporated by reference in such Prospectus.

            "Registrable Securities" means the Shares and/or the Warrant Shares,
and any shares of Common Stock  issuable upon any stock split,  stock  dividend,
recapitalization or similar event with respect to such Shares or Warrant Shares.



                                      -2-


            "Registration    Statement"   means   the   registration   statement
contemplated by Section 2, including (in each case) the  Prospectus,  amendments
and supplements to such registration statement or Prospectus, including pre- and
post-effective  amendments,  all exhibits thereto, and all material incorporated
by reference in such registration statement.

            "Rule 144" means Rule 144 promulgated by the Commission  pursuant to
the  Securities  Act,  as such Rule may be  amended  from  time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

            "Rule 158" means Rule 158 promulgated by the Commission  pursuant to
the  Securities  Act,  as such Rule may be  amended  from  time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

            "Rule 415" means Rule 415 promulgated by the Commission  pursuant to
the  Securities  Act,  as such Rule may be  amended  from  time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

            "Securities Act" means the Securities Act of 1933, as amended.

         2. Registration.  The Company shall use its best efforts to prepare and
file  with the  Commission,  on or  prior to the  Filing  Date,  a  Registration
Statement  covering all  Registrable  Securities for an offering to be made on a
continuous  basis pursuant to Rule 415. The  Registration  Statement shall be on
Form S-3 (except if the Company is not then  eligible to register for resale the
Registrable  Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall use its best
efforts to cause the Registration  Statement to be declared  effective under the
Securities  Act as promptly as  practicable  after the filing  thereof but on or
prior  to  the  Effectiveness  Date  and to  keep  such  Registration  Statement
continuously  effective  under  the  Securities  Act  until  such date as is the
earlier  of (x)  the  date  when  all  Registrable  Securities  covered  by such
Registration  Statement have been sold or (y) the date on which the  Registrable
Securities  may be sold  pursuant to Rule 144(k) as determined by the counsel to
the Company  pursuant to a written  opinion  letter,  addressed to the Company's
transfer agent to such effect (the "Effectiveness Period").

         3. Registration Procedures.

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Use its best efforts to prepare and file with the Commission, on
or prior to the Filing  Date,  a  Registration  Statement on Form S-3 (or if the
Company is not then eligible to register for resale the  Registrable  Securities
on Form S-3 such registration shall be on another appropriate form in accordance
herewith) in accordance  with the method or methods of  distribution  thereof as
specified by the Holders (except if otherwise directed by the Holders),  and use
its best efforts to cause the  Registration  Statement to become  effective  and
remain  effective  on or prior to the  Effectiveness  Date as  provided  herein;
provided, however, that prior to the filing of the Registration Statement or any
related  Prospectus  or any  amendment  or  supplement  thereto  (including  any
document that would be  incorporated  therein by  reference),  the Company



                                      -3-


shall furnish to the Holders copies of all such documents  proposed to be filed,
which documents (other than those  incorporated by reference) will be subject to
the review of such Holders.

            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
including  post-effective  amendments,  to the Registration  Statement as may be
necessary to keep the Registration  Statement  continuously  effective as to the
applicable  Registrable  Securities for the Effectiveness Period; (ii) cause the
related  Prospectus  to be amended or  supplemented  by any required  Prospectus
supplement,  and as so  supplemented or amended to be filed pursuant to Rule 424
(or any similar  provisions then in force) promulgated under the Securities Act;
(iii)  respond as promptly as  practicable  to any  comments  received  from the
Commission with respect to the Registration  Statement or any amendment  thereto
and as promptly as practicable  provide the Holders true and complete  copies of
all  correspondence  from and to the  Commission  relating  to the  Registration
Statement;  and (iv) comply in all material  respects with the provisions of the
Securities  Act and the  Exchange  Act with  respect to the  disposition  of all
Registrable   Securities  covered  by  the  Registration  Statement  during  the
applicable  period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

            (c)  Notify  the  Holders of  Registrable  Securities  to be sold as
promptly as practicable (i)(A) when a Prospectus or any Prospectus supplement or
post-effective  amendment to the Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration  Statement and whenever the Commission  comments in writing on
such Registration  Statement and (C) with respect to the Registration  Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state  governmental  authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional  information;  (iii) of the  issuance by the  Commission  of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable  Securities or the initiation of any Proceedings for that
purpose;  (iv) of the receipt by the Company of any notification with respect to
the suspension of the  qualification  or exemption from  qualification of any of
the Registrable  Securities for sale in any  jurisdiction,  or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the Registration  Statement or Prospectus
or any document  incorporated or deemed to be incorporated  therein by reference
untrue  in  any  material   respect  or  that  requires  any  revisions  to  the
Registration  Statement,  Prospectus or other  documents so that, in the case of
the  Registration  Statement or the Prospectus,  as the case may be, it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the circumstances under which they were made, not misleading.

            (d) Use its best  efforts to avoid the  issuance  of, or, if issued,
obtain the withdrawal  of, (i) any order  suspending  the  effectiveness  of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from  qualification)  of any of  the  Registrable  Securities  for  sale  in any
jurisdiction, at the earliest practicable moment.



                                      -4-


            (e)  Promptly  deliver to the  Holders,  without  charge,  up to ten
copies of the Registration Statement, Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto.

            (f) Prior to any public offering of Registrable Securities,  use its
best efforts to register or qualify or cooperate  with the Holders in connection
with the registration or qualification  (or exemption from such  registration or
qualification)  of such  Registrable  Securities  for offer  and sale  under the
securities  or Blue Sky laws of such  jurisdictions  within the United States as
the Holders request in writing,  to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all  other  acts or  things  necessary  to enable  the  disposition  in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided,  however,  that the Company shall not be required to qualify generally
to do business in any jurisdiction  where it is not then so qualified or to take
any  action  that would  subject  it to  general  service of process in any such
jurisdiction  where it is not then so  subject  or  subject  the  Company to any
material tax in any such jurisdiction where it is not then so subject.

            (g) Cooperate with the Holders to facilitate the timely  preparation
and delivery of  certificates  representing  Registrable  Securities  to be sold
pursuant to a Registration  Statement,  which  certificates shall be free of all
restrictive legends.

            (h)  Upon  the  occurrence  of any  event  contemplated  by  Section
3(c)(v),  as  promptly  as  practicable,  prepare  a  supplement  or  amendment,
including  a  post-effective  amendment,  to  the  Registration  Statement  or a
supplement to the related  Prospectus or any document  incorporated or deemed to
be incorporated  therein by reference,  and file any other required  document so
that,  as  thereafter  delivered,  neither the  Registration  Statement nor such
Prospectus will contain an untrue  statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading.

            (i) Use  its  best  efforts  to  cause  all  Registrable  Securities
relating to such Registration Statement to be listed on the Nasdaq and any other
securities  exchange,  quotation  system,  market or  over-the-counter  bulletin
board,  if any,  on which  similar  securities  issued by the  Company  are then
listed.

            (j) Comply in all material  respects with all  applicable  rules and
regulations  of the  Commission  and make  generally  available  to its security
holders  earning  statements  satisfying  the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any 12-month period (or ninety (90) days after the end of any 12-month period if
such period is a fiscal  year)  commencing  on the first day of the first fiscal
quarter of the Company after the effective date of the  Registration  Statement,
which statement shall conform to the requirements of Rule 158.

            (k)  Require  the  Holders  to furnish  to the  Company  information
regarding such Holder and the distribution of such Registrable  Securities as is
required by law to be disclosed in the Registration  Statement,  and the Company
may exclude from such registration the Registrable Securities of any such Holder
who fails to furnish  such  information  within a  reasonable  time



                                      -5-


prior to the  filing of each  Registration  Statement,  supplemented  Prospectus
and/or  amended  Registration   Statement.  If  any  Registration  Statement  or
Prospectus  refers  to any  Holder  by name or  otherwise  as the  Holder of any
securities of the Company, then such Holder shall promptly notify the Company of
any fact of which the Holder  becomes aware and the happening of any event which
relates to the Holder or distribution  of such  securities  owned by such Holder
which results in the Registration  Statement or the Prospectus  included in such
Registration  Statement  containing  an untrue  statement  of  material  fact or
omitting to state a material fact required to be stated  therein or necessary to
make the statements therein not misleading and shall provide to the Company such
information  as shall be necessary to enable the Company to prepare a supplement
or post-effective  Amendment to such Registration Statement or Prospectus or any
document  incorporated  therein by reference or file any other document required
so that the  Registration  Statement  or  Prospectus  will not contain an untrue
statement  of  material  fact or omit to state a material  fact  required  to be
stated therein.

            If the  Registration  Statement  refers  to the  Holder  by  name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the  Securities  Act or any similar  federal  statute then in
force)  the  deletion  of the  reference  to such  Holder  in any  amendment  or
supplement to the  Registration  Statement  filed or prepared  subsequent to the
time that such reference ceases to be required.

            The  Holder  covenants  and  agrees  that  (i) it will  not sell any
Registrable  Securities under the  Registration  Statement until it has received
copies of the  Prospectus as then amended or  supplemented  as  contemplated  in
Section 3(e) and notice from the Company that such  Registration  Statement  and
any  post-effective  amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to them in connection with sales of Registrable  Securities  pursuant
to the Registration Statement.

            The Holder agrees by its acquisition of such Registrable  Securities
that,  upon receipt of a notice from the Company of the  occurrence of any event
of the kind described in Section 3(c)(ii),  3(c)(iii), 3(c)(iv) or 3(c)(v), such
Holder will forthwith  discontinue  disposition of such  Registrable  Securities
under the  Registration  Statement until such Holder's  receipt of the copies of
the supplemented  Prospectus and/or amended Registration  Statement contemplated
by Section 3(h), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable  Prospectus may be resumed,  and, in either case,
has  received  copies  of  any  additional  or  supplemental  filings  that  are
incorporated  or deemed to be  incorporated  by reference in such  Prospectus or
Registration Statement.

            (l) If (i) there is material  non-public  information  regarding the
Company  which  the  Company's  Board  of  Directors  (the  "Board")  reasonably
determines  not to be in the  Company's  best interest to disclose and which the
Company is not  otherwise  required to disclose,  or (ii) there is a significant
business  opportunity  (including,  but  not  limited  to,  the  acquisition  or
disposition  of assets  (other than in the  ordinary  course of business) or any
merger,  consolidation,  tender offer or other similar transaction) available to
the Company  which the Board  reasonably  determines  not to be in the Company's
best  interest to disclose  and which the Company  would be required to disclose
under the Registration Statement,  then the Company may suspend



                                      -6-


effectiveness  of a  registration  statement and suspend the sale of Registrable
Securities under a Registration Statement for a period not to exceed ninety (90)
consecutive  days or one hundred and eighty (180) days in the  aggregate  during
any twelve (12) month period (a "Blackout Period").

            (m)  Notwithstanding  anything  to the  contrary  contained  in this
Agreement,  the  Registration  Statement  shall  register  for  resale  only the
Registrable Securities

         4. Registration Expenses.

            All  fees  and  expenses   incident  to  the   registration  of  the
Registrable  Securities  shall be  borne by the  Company,  other  than  fees and
expenses  of  any  counsel  retained  by  the  Holder  in  connection  with  the
transactions  contemplated by this Agreement and those set forth in the Purchase
Agreement,  which fees and expenses  shall be borne  exclusively  by the Holder,
whether or not the  Registration  Statement  is filed or becomes  effective  and
whether or not any Registrable  Securities are sold pursuant to the Registration
Statement.  The fees and  expenses  to be borne by the  Company  shall  include,
without  limitation,  the  following:  (i)  all  registration  and  filing  fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required to be made with the Nasdaq and each other securities exchange or market
on which  Registrable  Securities are required  hereunder to be listed,  and (B)
with respect to filings  required to be made with the Commission;  (ii) printing
expenses (including,  without limitation,  expenses of printing certificates for
Registrable   Securities  and  of  printing  prospectuses  if  the  printing  of
prospectuses  is  requested  by the  holders  of a majority  of the  Registrable
Securities included in the Registration Statement),  (iii) messenger,  telephone
and delivery  expenses,  (iv) fees and  disbursements of counsel for the Company
and (v) fees and  expenses  of all other  Persons  retained  by the  Company  in
connection  with  the  consummation  of the  transactions  contemplated  by this
Agreement,  including,  without  limitation,  the Company's  independent  public
accountants  (including the expenses of any comfort letters or costs  associated
with the  delivery by  independent  public  accountants  of a comfort  letter or
comfort letters).  In addition,  the Company shall be responsible for all of its
internal   expenses   incurred  in  connection  with  the  consummation  of  the
transactions contemplated by this Agreement (including,  without limitation, all
salaries  and  expenses  of its  officers  and  employees  performing  legal  or
accounting  duties),  the  expense of any annual  audit,  the fees and  expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities exchange as required hereunder.

         5. Indemnification.

            (a)   Indemnification   by   the   Company.   The   Company   shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Holder, and the officers,  directors, agents and employees, if any, of such
Holder and each  Person who  controls  any such  Holder  (within  the meaning of
Section 15 of the  Securities  Act or Section  20 of the  Exchange  Act) and the
officers,  directors,  agents and employees of each such controlling Person, and
the respective successors,  assigns, estate and personal representatives of each
of the foregoing,  to the fullest extent  permitted by applicable  law, from and
against any and all claims, losses, damages, liabilities,  penalties, judgments,
costs  (including,  without  limitation,  costs of  investigation)  and expenses
(including,  without  limitation,  attorneys' fees and expenses)  (collectively,
"Losses"),  as  incurred,  arising  out of or  relating to any untrue or alleged
untrue statement of a material fact



                                      -7-


contained  in  the  Registration  Statement,  any  Prospectus  or  any  form  of
prospectus  or in any  amendment  or  supplement  thereto or in any  preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein  (in the case of any  Prospectus  or form of  prospectus  or
supplement  thereto,  in the light of the  circumstances  under  which they were
made) not misleading,  except to the extent,  but only to the extent,  that such
untrue statements or omissions are based upon information  regarding such Holder
furnished  in writing to the Company by such Holder  expressly  for use therein,
which information was reasonably  relied on by the Company for use therein.  The
Company  shall  notify  the  Holders  promptly  of the  institution,  threat  or
assertion of any Proceeding of which the Company is aware in connection with the
transactions  contemplated by this  Agreement.  Such indemnity shall survive the
transfer of the Registrable Securities by the Holders.

            (b) Indemnification by Holders. The Holder shall,  severally and not
jointly,  indemnify  and hold  harmless the Company,  the  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons, and the
respective successors,  assigns, estate and personal  representatives of each of
the  foregoing,  to the fullest  extent  permitted by  applicable  law, from and
against all Losses, as incurred,  arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration Statement, any
Prospectus,  or any form of prospectus, or arising solely out of or based solely
upon any omission of a material fact required to be stated  therein or necessary
to make  the  statements  therein  (in the  case  of any  Prospectus  or form of
prospectus or supplement  thereto, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that such
untrue  statement or omission is contained in or omitted from any information so
furnished in writing by such Holder to the Company specifically for inclusion in
the  Registration  Statement or such  Prospectus and that such  information  was
reasonably  relied upon by the Company  for use in the  Registration  Statement,
such  Prospectus  or such form of  prospectus.  Notwithstanding  anything to the
contrary  contained  herein,  the Holder shall be liable under this Section 5(b)
for only that  amount as does not exceed the net  proceeds  to such  Holder as a
result  of the sale of  Registrable  Securities  pursuant  to such  Registration
Statement.

            (c) Conduct of Indemnification  Proceedings. If any Proceeding shall
be brought or asserted  against any Person  entitled to indemnity  hereunder (an
"Indemnified  Party"),  such Indemnified  Party promptly shall notify the Person
from whom  indemnity  is sought (the  "Indemnifying  Party) in writing,  and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably  satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided that the
failure of any  Indemnified  Party to give such  notice  shall not  relieve  the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally  determined  by a court
of  competent  jurisdiction  (which  determination  is not  subject to appeal or
further  review)  that  such  failure  shall  have  proximately  and  materially
adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense  thereof,  but the fees
and expenses of such counsel



                                      -8-


shall be at the expense of such  Indemnified  Party or Parties  unless:  (1) the
Indemnifying  Party has agreed in writing to pay such fees and expenses;  or (2)
the Indemnifying  Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel  reasonably  satisfactory  to such  Indemnified
Party in any such  Proceeding;  or (3) the named parties to any such  Proceeding
(including any impleaded  parties) include both such  Indemnified  Party and the
Indemnifying  Party,  and such  Indemnified  Party  shall  have been  advised by
counsel  that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified  Party and the Indemnifying  Party (in which case,
if such  Indemnified  Party notifies the  Indemnifying  Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying  Party, the
Indemnifying  Party shall not have the right to assume the  defense  thereof and
such  counsel  shall  be  at  the  expense  of  the  Indemnifying   Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected  without its written  consent,  which consent shall not be unreasonably
withheld.  No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any  Indemnified  Party is a party,  unless  such  settlement  includes an
unconditional  release of such  Indemnified  Party from all  liability on claims
that are the subject matter of such Proceeding.

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified  Party,  as incurred,  within ten (10)
Business Days of written notice thereof to the Indemnifying Party, regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided that the Indemnifying Party may require such
Indemnified  Party to undertake  to reimburse  all such fees and expenses to the
extent it is finally  judicially  determined that such Indemnified  Party is not
entitled to indemnification hereunder.

            (d) Contribution.  If a claim for indemnification under Section 5(a)
or 5(b) is unavailable  to an Indemnified  Party because of a failure or refusal
of a governmental  authority to enforce such  indemnification in accordance with
its terms (by  reason of public  policy or  otherwise),  then each  Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall,  severally and not
jointly, contribute to the amount paid or payable by such Indemnified Party as a
result of such  Losses,  in such  proportion  as is  appropriate  to reflect the
relative fault of the  Indemnifying  Party and  Indemnified  Party in connection
with the actions,  statements or omissions that resulted in such Losses, as well
as any other  relevant  equitable  considerations.  The  relative  fault of such
Indemnifying  Party and  Indemnified  Party shall be determined by reference to,
among other  things,  whether any action in  question,  including  any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying, Party or Indemnified Party, and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include,  subject to the  limitations set forth
in Section 5(c), any reasonable  attorneys' or other reasonable fees or expenses
incurred  by such party in  connection  with any  Proceeding  to the extent such
party   would  have  been   indemnified   for  such  fees  or  expenses  if  the
indemnification  provided  for in this  Section was  available  to such party in
accordance with its terms.  Notwithstanding  anything to the contrary  contained
herein,  the Holder shall be liable or required to contribute under this Section
5(d) for only that amount as



                                      -9-


does not  exceed  the net  proceeds  to such  Holder  as a result of the sale of
Registrable Securities pursuant to such Registration Statement.

            The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent  misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any Person
who was not guilty of such fraudulent misrepresentation.

            The indemnity and contribution  agreements contained in this Section
are in addition to any liability that the  Indemnifying  Parties may have to the
Indemnified Parties.

         6. Rule 144.

            As  long  as a  Holder  owns  Registrable  Securities,  the  Company
covenants  to use its best  efforts  to timely  file (or  obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the Company  after the date hereof  pursuant to Section
13(a) or 15(d) of the  Exchange  Act.  As long as any  Holder  owns  Registrable
Securities,  if the Company is not required to file reports  pursuant to Section
13(a) or 15(d) of the  Exchange  Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144(c) promulgated under the
Securities  Act annual  and  quarterly  financial  statements,  together  with a
discussion  and  analysis of such  financial  statements  in form and  substance
substantially  similar to those that would  otherwise be required to be included
in reports  required by Section  13(a) or 15(d) of the Exchange  Act, as well as
any other  information  required  thereby,  in the time period that such filings
would have been  required to have been made under the Exchange  Act. The Company
further  covenants  that it will take such  further  action  as any  Holder  may
reasonably request, including the issuance of a legal opinion of counsel, all to
the extent required from time to time to enable such Person to sell  Registrable
Securities  without  registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 promulgated under the Securities Act.

         7. Miscellaneous.

            (a)  Remedies.  In the  event of a  breach  by the  Company  or by a
Holder,  of any of their  obligations  under this Agreement,  each Holder or the
Company,  as the case may be, in  addition to being  entitled  to  exercise  all
rights granted by law and under this Agreement,  including  recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary  damages would not provide  adequate
compensation  for any losses  incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific  performance  in respect of such breach,  it shall waive the
defense that a remedy at law would be adequate.

            (b) Specific Enforcement, Consent to Jurisdiction.

                (i) The  Company  and the Holder  acknowledges  and agrees  that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement  were



                                      -10-


not  performed  in  accordance  with  their  specific  terms  or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or  injunctions to prevent or cure breaches of the provisions of this
Agreement  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

                (ii) Each of the Company and the Holders (i) hereby  irrevocably
submits to the jurisdiction of the United States District Court for 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 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 Holders 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 shall affect or limit any right to
serve process in any other manner permitted by law.

            (c)  Amendments  and  Waivers.  The  provisions  of this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and  Holders  of not less 51% of the  Registrable  Securities  then owned by all
Holders.  Notwithstanding the foregoing,  a waiver or consent to depart from the
provisions  hereof with  respect to a matter  that  relates  exclusively  to the
rights of Holders and that does not directly or indirectly  affect the rights of
other Holders may be given by Holders of at least a majority of the  Registrable
Securities to which such waiver or consent relates; provided,  however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

            (d)  Notices.  Any  and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given  and  effective  on the  earlier  of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified for notice prior to 5:00 p.m.,  New York
City  time,  on a  Business  Day,  (ii)  the  Business  Day  after  the  date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number specified for notice later than 5:00 p.m., New York
City time, on any date and earlier than 11:59 p.m.,  New York City time, on such
date,  (iii)  the  Business  Day  following  the  date  of  mailing,  if sent by
nationally  recognized  overnight  courier service or (iv) actual receipt by the
party to whom  such  notice is  required  to be given.  The  addresses  for such
communications  shall be with  respect  to each of the Holder  the  Company,  as
follows:



                                      -11-


                (i)  if to the Company, to:

                     Xybernaut Corporation
                     12701 Fair Lakes Circle
                     Suite 550
                     Fairfax, Virginia  22033
                     Attention:  Mr. Thomas D. Davis
                     Facsimile No.:  (703) 631-3903

                     with copies to:

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

                     and

                     Jenkens & Gilchrist Parker Chapin LLP
                     The Chrysler Building
                     405 Lexington Avenue
                     New York, New York 10174
                     Attention:  Martin Eric Weisberg, Esq.
                     Facsimile No.: (212) 704-6288


                (ii) if to the Holder, to:

                     Essex Trading Ltd.
                     Fitzroy Mews 5, Suite No. 7
                     London, England
                     Facsimile No.: ______________

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such notice.  Copies of notices to any Holder shall be sent to the  addresses
set forth on the signature pages to the Purchase Agreement. Copies of notices to
the Company shall also be sent to:

            (e) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
Permitted  assigns of the  Company  shall  include  any  person or entity  which
acquires all or substantially  all of the capital stock or assets of the Company
or is the  successor to the Company by merger,  consolidation  or other  similar
transaction.  No Holder  shall  assign its rights  hereunder  without  the prior
written consent of the Company.



                                      -12-


            (f)  Counterparts.  This  Agreement may be executed in any number of
counterparts,  each of which when so executed  shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any  signature  is  delivered  by  facsimile  transmission,  such
signature shall create a valid binding  obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

            (g) Governing Law. This Agreement shall be governed by and construed
in  accordance  with  the laws of the  State  of New  York,  without  regard  to
principles of conflicts of law thereof.  This Agreement shall not be interpreted
or construed with any presumption against the party causing this Agreement to be
drafted.

            (h) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

            (i) Severability. If any term, provision, covenant or restriction of
this  Agreement is held to be invalid,  illegal,  void or  unenforceable  in any
respect, the remainder of the terms, provisions,  covenants and restrictions set
forth  herein  shall  remain  in full  force and  effect  and shall in no way be
affected,  impaired  or  invalidated,  and the  parties  hereto  shall use their
reasonable  efforts to find and employ an alternative  means to achieve the same
or substantially the same result as that  contemplated by such term,  provision,
covenant  or  restriction.  It is  hereby  stipulated  and  declared  to be  the
intention of the parties  that they would have  executed  the  remaining  terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

            (j) Headings.  The headings herein are for convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.



                  [Remainder of Page Intentionally Left Blank]










                                      -13-




            IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective  authorized  persons as
of the date first indicated above.

                                       XYBERNAUT CORPORATION



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



                                       ESSEX TRADING LTD.


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




                                      -14-