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Code of Business Conduct and Ethics - Xybernaut Corp.

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                              XYBERNAUT CORPORATION

                       Code of Business Conduct and Ethics

Our Company's reputation for honesty and integrity is the sum of the personal
reputations of our directors, officers and employees. To protect this reputation
and to promote compliance with laws, regulations and Company policies, the Board
of Directors has adopted this Code of Business Conduct and Ethics. This Code is
only one aspect of our commitment. You must be familiar with and comply with all
Company policies.

This Code states the basic standards of ethics and conduct to which all of our
directors, officers and employees are held. These standards are designed to
deter wrongdoing and promote honest and ethical conduct, but will not cover all
situations. There may be times when the law or local practice restrict your
conduct to a greater extent than this Code. In these cases you must comply with
the law or local custom and practice, whichever is more restrictive.

Those who violate the standards stated in this Code will be subject to
disciplinary action.

      1.    Scope
            You are subject to this Code if you are a director, officer or
            employee of the Company or any of its subsidiaries (or controlled

      2.    Honest and Ethical Conduct
            We as a Company require honest and ethical conduct from everyone
            subject to this Code. Each of you has a responsibility to all other
            directors, officers, employees and to our Company itself, to act
            responsibly, in good faith and with competence and diligence. You
            are responsible to meet the Company's ethical and legal standards
            without misrepresenting material facts or allowing your independent
            judgment to be subordinated or compromised.

      3.    Compliance with Laws, Rules and Regulations
            You are required to comply with both the letter and spirit of all
            applicable governmental laws, rules and regulations. Although you
            are not expected to know the details of all applicable laws, rules
            and regulations, you are expected to seek advice from our Company's
            General Counsel if you have a question about any applicable laws,
            rules and regulations or if you are unsure whether certain conduct
            is illegal or unethical.

      4.    Conflict of Interest
            You must handle any actual or apparent conflict of interest in an
            ethical manner. Conflicts of interest are prohibited by Company
            policy and exist when a person's private interest interferes in any
            way with the interest of our Company. For example, taking actions or
            having interests that interfere with your ability to effectively and
            objectively perform your work for our Company is a conflict of
            interest. Conflicts of interest may also arise if you receive, or a
            member of your family receives, an improper personal benefit as a
            result of your position with the Company.



            Company policy prohibits conflicts of interest except under
            guidelines approved by the Board of Directors. The following
            standards apply to common situations where potential conflicts of
            interest may arise.

                  A.    Gifts and Entertainment
                        Personal gifts and entertainment offered by persons
                        doing business with our Company may be accepted, when
                        offered in the ordinary and normal course of the
                        business relationship. However, the frequency and cost
                        of any gifts or entertainment may not be so excessive
                        that your ability to exercise independent judgment on
                        behalf of our Company is or may appear to be
                        compromised. Cash in any form is inappropriate and
                        should not be accepted.

                  B.    Financial Interests In Other Organizations
                        The determination whether any outside investment,
                        financial arrangement or other interest in another
                        organization is improper depends on the facts and
                        circumstances of each case. Your ownership of an
                        interest in another organization may be inappropriate if
                        the other organization has a material business
                        relationship with, or is a direct competitor of, our
                        Company and your financial interest is of such a size
                        that your ability to exercise independent judgment on
                        behalf of our Company is or may appear to be
                        compromised. As a general rule, a passive investment
                        would not likely be considered improper if it: (1) is in
                        publicly traded shares; (2) represents less than 1% of
                        the outstanding equity of the organization in question;
                        and (3) represents less than 5% of your net worth. Other
                        interests also may not be improper, depending on the

                  C.    Outside Business Activities
                        The determination of whether any outside position an
                        employee may hold is improper will depend on the facts
                        and circumstances of each case. Your involvement in
                        trade associations, professional societies, and
                        charitable and similar organizations will not normally
                        be viewed as improper. However, if those activities are
                        likely to take substantial time from or otherwise
                        conflict with your responsibilities to our Company, you
                        should obtain prior approval from your supervisor and
                        the Human Resources Department. Other outside
                        associations or activities in which you may be involved
                        are likely to be viewed improper only if they would
                        interfere with your ability to devote proper time and
                        attention to your responsibilities to our Company or if
                        your involvement is with another Company with which our
                        Company does business or competes. For a director,
                        employment or affiliation with a Company with which our
                        Company does business or competes must be fully
                        disclosed to our Company's Board of Directors and must
                        satisfy any other standards established by applicable
                        law, rule (including rules of the Nasdaq stock exchange)
                        or regulation and any other corporate governance
                        guidelines that our Company may establish.



      5.    Corporate Opportunities
            You are prohibited from personally utilizing a corporate opportunity
            unless the Board of Directors has declined to pursue that
            opportunity. You may not use corporate property, information, or
            position for personal gain, or to compete with our Company. You owe
            a duty to our Company to advance its legitimate interests whenever
            the opportunity to do so arises.

      6.    Fair Dealing
            You should endeavor to deal fairly with our Company's suppliers,
            customers, competitors and employees and with other persons with
            whom our Company does business. You should not take unfair advantage
            of anyone through manipulation, concealment, abuse of privileged
            information, misrepresentation of material facts, or any other
            unfair-dealing practice.

      7.    Public Disclosures
            It is our Company's policy to provide full, fair, accurate, timely,
            and understandable disclosure in all reports and documents that we
            file with, or submit to, the Securities and Exchange Commission and
            in all other public communications made by our Company.

      8.    Confidentiality
            You should maintain the confidentiality of all confidential
            information entrusted to you by our Company or by persons with whom
            the Company does business, except when disclosure is authorized or
            legally mandated. Confidential information includes all non-public
            information that might be used by our competitors, or harmful to,
            our Company or persons with whom our Company does business, if

      9.    Insider Trading
            If you have access to material, non-public information concerning
            our Company, you are not permitted to use or share that information
            for stock trading purposes or any purpose other than to conduct our
            Company's business. The prohibition on insider trading applies not
            only to our Company's securities, but also to securities of other
            companies if you learn of material, non-public information about
            these companies in the course of your duties to the Company.
            Violations of this prohibition against "insider trading" may subject
            you to criminal or civil liability, in addition to disciplinary
            action by our Company.

      10.   Protection and Proper Use of Company Assets
            You are responsible to protect our Company's assets and promote
            their efficient use. Theft, carelessness and waste have a direct
            impact on the profitability of the Company. Employees are obligated
            to protect the Company's assets including proprietary information.
            Proprietary information includes intellectual property such as trade
            secrets, patents, trademarks and copyrights as well as business,
            marketing and service plans, engineering and marketing ideas,
            designs, databases, records, salary information and any unpublished
            financial data and reports. Unauthorized use or distribution of this



            information is a violation of Company policy and could also be
            illegal and result in civil or criminal penalties.

      11.   Interpretations and Waivers of the Code of Business Conduct and
            If you are unsure whether a particular activity or relationship is
            improper under this Code or requires a waiver of this Code, you
            should disclose it to our Company's General Counsel, Chief Executive
            Officer or President (or the Board of Directors or Audit Committee
            if you are a director), who will first make a determination whether
            a waiver of this Code is required and second, if required, whether a
            waiver will be granted. You may be required to agree to conditions
            before a waiver or a continuing waiver is granted. However, any
            waiver of this Code for an executive officer or director may only be
            made by the Company's Board of Directors (or the Nominating
            Committee of the Board of Directors) and will promptly be disclosed
            to the extent required by applicable law, rule (including any rule
            of the Nasdaq stock exchange) or regulation.

      12.   Reporting any Illegal or Unethical Behavior
            Any employee, including any supervisor, who receives a report of
            unethical or illegal behavior from a subordinate, should promptly
            report such violation of applicable laws, rules, regulations or this
            Code to a superior, our Company's General Counsel, Chief Executive
            Officer or President (or the Board of Directors or Audit Committee
            if you are a director). Any report or allegation of a violation of
            applicable laws, rules, regulations or this Code need not be signed
            and may be sent anonymously. All reports of violations of this Code,
            including those sent anonymously, will be promptly investigated and,
            if found to be credible and accurate, acted upon in a timely manner.
            If any report of wrongdoing relates to accounting or financial
            reporting matters, such report must be provided to a superior, our
            Company's General Counsel, Chief Executive Officer or President (or
            the Board of Directors or Audit Committee if you are a director). It
            is the Company's policy not to allow actual or threatened
            retaliation, harassment or discrimination due to reports of
            misconduct by others made in good faith by employees. Employees are
            required to cooperate in internal investigations of misconduct.

      13.   Compliance Standards and Procedures
            Our Company wants to promote ethical behavior. This Code is intended
            as a statement of basic principles and standards and does not
            include specific rules that apply to every situation. Its contents
            have to be viewed within the framework of our Company's other
            policies, practices, instructions and requirements of the law. This
            Code is in addition to other policies, practices or instructions of
            our Company that must be observed. Moreover, the absence of a
            specific corporate policy, practice or instruction covering a
            particular situation does not relieve you of the responsibility for
            exercising the highest ethical standards applicable to the

            In some situations, it is difficult to know right from wrong.
            Because this Code does not anticipate every situation that will
            arise, it is important that each of you approach a new question or
            problem in a deliberate fashion:

                  (a)   Determine if you know all the facts.



                  (b)   Identify exactly what it is that concerns you.

                  (c)   Discuss the problem with a supervisor if you are a
                        corporate employee or the Company's General Counsel if
                        you are an officer or director. The Human Resources
                        Department is always available to discuss any ethical
                        issues that you may have.

                  (d)   Seek guidance before taking any action that you believe
                        may be unethical or dishonest.

            You may also submit any questions that you may have relating to the
            propriety of a situation in writing to our Company's General
            Counsel, who will review the situation and provide you with advice
            as to the course of action that you should take. If your concern
            relates to the Company's General Counsel, you may submit your
            concern in writing to the Chief Executive Officer or President of
            the Company. The mailing address for each of these individuals is
            included at the end of this Code.

            You will be governed by the following compliance standards:

                  |X|   You are personally responsible for your own conduct and
                        for complying with all provisions of the Code and for
                        properly reporting known or suspected violations;

                  |X|   If you are a supervisor, director or officer, you must
                        use your best efforts to ensure that employees
                        understand and comply with this Code;

                  |X|   No one has the authority or right to order, request or
                        even influence you to violate this Code or the law. A
                        request or order from another person will not be an
                        excuse for your violation of this Code;

                  |X|   Any attempt by you to induce another director, officer
                        or employee of our Company to violate this Code, whether
                        successful or not, is itself a violation of this Code
                        and may be a violation of law;

                  |X|   Any retaliation or threat of retaliation against any
                        director, officer or employee of our Company for
                        refusing to violate this Code, or for reporting in good
                        faith the violation or suspected violation of this Code,
                        is itself a violation of this Code and may be a
                        violation of law; and

                  |X|   Our Company expects that every reported violation of
                        this Code will be investigated.

Violation of any of the standards contained in this Code, or in any other
policy, practice or instruction of our Company, can result in disciplinary
actions, including dismissal and civil or criminal action against the violator.
This Code should not be construed as a contract of employment and does not
change any person's status as an at-will employee.



This Code is for the benefit of our Company, and no other person is entitled to
enforce this Code. This Code does not, and should not be construed to, create
any private cause of action or remedy in any other person for a violation of the

The names, addresses, telephone numbers, facsimile numbers and e-mail addresses
of the Chief Executive Officer, President and General Counsel of our Company are
set forth below:

General Counsel (outside):                        Chief Executive Officer:           President:
Martin Eric Weisberg, Esq.                        Mr. Edward G. Newman               Dr. Steven A. Newman
Jenkens & Gilchrist Parker Chapin LLP             12701 Fair Lakes Circle            12701 Fair Lakes Circle
The Chrysler Building                             Fairfax, Virginia 22033            Fairfax, Virginia 22033
405 Lexington Avenue                              (703) 631-6925                     (703) 631-6925
New York, New York 10174                          (703) 631-7070                     (703) 222-7660
(212) 704-6050                              
(212) 704-6157




You are being furnished two copies of this Code of Business Conduct and Ethics.
To confirm that you have read and understand it, please sign one copy below and
return it to Human Resources.

I have read and I understand and I will observe the requirements of this Code of
Business Conduct and Ethics of Xybernaut Corporation

                                          Name: ________________________________
                                                               Print Above

                                          Signature: ___________________________

                                          Date: ________________________________