Xybernaut and IBM Complete Business Development Agreement; Agreement Expands Existing Relationship in the Areas of Sales and Marketing and Joint Business Development

Business Wire, July 19, 2004

FAIRFAX, Va. -- Xybernaut(R) Corporation (NASDAQ:XYBR) today announced completion of an expanded Technical Services Agreement (TSA) with IBM Corporation (NYSE:IBM) whereby the two companies will continue to work closely on a variety of sales, marketing and business development opportunities in the mobile/wearable computing sector.

The joint business development opportunities expand on a relationship that has existed for more than 6 years. These opportunities include:

--Market development/sales-marketing and go-to-market strategies

--Technical assessments/solution configuration strategies

--Consultation for customer contract proposals

"IBM continues to be one of our strongest partners," stated Steven A. Newman, president and COO of Xybernaut. "This comprehensive technical services agreement will enhance this relationship even further as both organizations now have a solid understanding of each others' core offerings and strengths. Xybernaut sales, marketing, business development and product teams look forward to expanding our joint activities with IBM."

IBM and Xybernaut began their relationship in 1999 when IBM was selected to jointly develop and manufacture the fifth generation of the Xybernaut Mobile Assistant(R) (MA) product family. Under that initial agreement, the MA V(R) wearable computer was developed based on Xybernaut intellectual property with engineering and technology services provided by the Engineering and Technology Services (E&TS) division of IBM.

"Building on our initial involvement in the development and manufacturing of the MA V, the Xybernaut and IBM relationship naturally evolved into one that included joint market and business development efforts to further extend our relationship in the mobile computing marketplace," stated Samuel M. Prabhakar, Director, Systems Solutions, IBM E&TS.

About IBM

IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. IBM and its Business Partners offer a wide range of services, solutions and technologies that enable customers, large and small, to take full advantage of the new era of on demand engineering and computing services.

Information about IBM is available at http://www.ibm.com.

About Xybernaut Corporation

Xybernaut Corporation is the leading provider of wearable/mobile computing hardware, software and services, bringing communications and full-function computing power in a hands-free design to people when and where they need it. Headquartered in Fairfax, Virginia, Xybernaut has offices and subsidiaries in Europe (Germany) and Asia (Japan and China). Visit Xybernaut on the Internet at www.xybernaut.com.

Xybernaut, the Xybernaut logo, Mobile Assistant(R) MA V(R) and Atigo(R) are trademarks or registered trademarks of Xybernaut Corporation in the USA and other countries. All other brand and product names are or may be trademarks of, and are used to identify products or services of, their respective owners.

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "plan," "confident that," "believe," "scheduled," "expect," or "intend to," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward-looking statements. Such risks and uncertainties include, but are not limited to, market conditions, the availability of components and successful production of the Company's products, general acceptance of the Company's products and technologies, competitive factors, timing, and other risks described in the Company's SEC reports and filings.