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24 April 2009

Lock-up Agreement relating to shares in which Director is interested

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 a lock-up agreement relating to a total of 22,344,191 shares in the Common Stock of xG (held by Stormur Holding AB, in which Palmi Sigmarsson has an indirect 58.7% controlling interest, and representing approximately 16.9% of the Company's share capital, the "Locked-up Shares") has been entered into by Palmi Sigmarsson and companies under his control.

In order to avoid the creation or continuance in the market of an impression that there may be an overhang of shares owned or held by Palmi Sigmarsson or companies under his control, they have entered into a lock-up agreement with Wennberg Industries AB ("Wennberg"), representing the Company's senior independent Director, Mats Wennberg.

Pursuant to the Agreement, the Locked-up Shares are to be transferred into a blocked account and will be held subject to the condition that none of the shares can be transferred out of the account, disposed of or otherwise dealt with, without the prior written approval of Wennberg (which may or may not be given solely at the absolute discretion of Wennberg). In addition, Wennberg has been irrevocably appointed as proxy entitled to exercise or abstain from exercising the voting rights attached to the Locked-up Shares solely at its absolute discretion.

The Lock-up Agreement is for a term of six months.

Palmi Sigmarsson, Director of xG, commented: "As a long term supporter of xG, I am pleased to confirm my continued commitment to the Company by agreeing to a lock-up of shares in which I am interested. Against a general background of turbulent market conditions it is important to help maintain orderly markets."

Mats Wennberg, Senior Independent Director of xG, commented:
"Palmi has been a substantial backer of xG from its earliest capital raisings and I am delighted he is committed to continuing his support."

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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.