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22 April 2009

Issue of Equity: xG enters into agreement with Spartan Mullen & Cie S.A.

xG Technology, Inc. (LSE-AIM: XGT, "xG" or the "Company"), which has developed an innovative, low-cost, mobile VoIP and data communications system, is pleased to announce that Spartan Mullen & Cie S.A. has agreed to make a significant investment in the Company, purchasing two million newly issued shares at $3.00 per share, representing a 100% premium over the latest closing mid-price.

Spartan Mullen & Cie S.A. has also been granted the following options to purchase additional new shares in the Company: 1 million shares at an exercise price of $4.00, exercisable by July 31, 2009, 1 million shares at an exercise price of $5.00, exercisable by September 30, 2009, and 1 million shares at an exercise price of $6.00, exercisable by December 31, 2009. Any option not exercised by the end of its exercise period may, at the Company's entire discretion, be exercised during a subsequent exercise period at the option price then applicable. If exercised in full, the Company will raise at least an additional $15 million at an average of $5.00 per share.

The new capital will be used by the Company to accelerate development of new products, such as the MX20 USB Dongle, BSN230 compact base station and xMax Communications Hub.

Guy de Chimay, Director of Spartan Mullen & Cie S.A., commented: "xG presents an outstanding investment opportunity. We have been buying shares in the open market for some time with only limited success owing to the lack of market liquidity. Therefore, we are extremely pleased to be able now to purchase a large block of stock from the Company. We believe that the prospects for the Company are exceptionally attractive and, consequently, we have no hesitation in investing at a substantial premium to the Company's recent share price. We are also delighted to have the right to purchase more shares in the Company going forward under the options granted to Spartan Mullen & Cie S.A."

Rick Mooers, Chairman and CEO of xG technology commented:
"While the Company already had a strong balance sheet, when capital market conditions are making it difficult for other companies to raise any capital, let alone at a premium, and we are afforded the opportunity to fund accelerated product development, we believe this investment will be great for the Company. Given Guy de Chimay's long standing and consistent track record of strong returns as well as his history of long-term investments, this transaction is a great vote of confidence for the Company and its current and future prospects. "

Contacts

ABOUT XG TECHNOLOGY

Based in Florida, United States, xG Technology, Inc. has developed innovative, patented wireless communications technologies which offer the potential to significantly reduce the required capital investment and operating costs of wireless voice and data communications services. Its mobile VoIP (Voice over Internet Protocol) base station and handset product line - branded as xMax - is intended for use by regional carrier partners which seek to deliver mobile Internet Protocol voice and data services directly to consumers without using the incumbent circuit switched or coaxial cable networks. The xMax system provides an extended range of operation and is expected to provide superior handset battery performance and double the call capacity of mobile WiMAX networks. Planned future releases of the xMax product line include integrated video and data applications.

ABOUT SPARTAN MULLEN & CIE S.A.

Spartan Mullen et Cie S.A., an investment holding company, represents the interests of the Chimay family. Through various affiliates, lead by Chimay Capital Management (Intl) LLC, it manages and invests in several hedge fund strategies, including the Spartan Mullen Chimay family of equity funds and the Colbeck distressed debt funds.