Memorandum of Agreement

EXHIBIT A

Execution Copy

Memorandum of Agreement

Made and executed as of November 18, 2005 by and between CYMI Private Equity II LLC. (“CYMI”) on the one part, and the group of shareholders listed below (the “Xxxxx Group”), represented by Xx. Xxxxxx Xxxxx (“SK”), on the other part.

Whereas CYMI and the Xxxxx Group, are shareholders of Xxxx Communications & Software Ltd. (“Xxxx”), and each of the Xxxxx Group represents that he holds such number of Xxxx shares as are listed opposite its name below; and

Whereas Xxxx intends to enter into going private transaction through a plan of arrangement to be ordered by the Tel-Aviv District Court (the “Arrangement”), and the parties have agreed to cooperate in effecting such Privatization;

Now therefore the parties agree as follows:

1. The Xxxxx Group shall cooperate with CYMI in effecting the Arrangement and receipt of all required legal approvals.

2. Immediately following the date on which Xxxx announces the completion of the Arrangement, SK shall resign from Xxxx’x Board. Notwithstanding and as long as Xxxx remains a private company, once a calendar quarter, SK only, on behalf of the Xxxxx Group shall be entitled to (i) receive Xxxx’x quarterly financial statements (ii) talk with Xxxx’x CEO. The Board shall consult SK prior to making strategic decisions but shall not be obliged in any way to follow SK’s advice.

3. If following the investment and conversion of the funds required for the Privatization, CYMI/CLM shall make further investments in Xxxx, then such investments in an amount of up to US $ 7.5 million shall not be made in Xxxx’x equity (securities, convertibles, etc.). In the event of any further investments, CYMI shall offer the Xxxxx Group the opportunity to invest its pro-rata portion of any proposed investment simultaneously with CYMI (or its successors¹ or affiliates). Such offer shall be made in writing to SK on behalf of the Xxxxx Group and SK shall have 10 business days to respond to such offer.

4. Each member of the Xxxxx Group shall have a put option right to sell to CYMI (or its successors) its Xxxx shares for the same price per share² paid for the Xxxx shares purchased from the public shareholders in the Privatization, for a period of 30 months following completion of the Arrangement. Payment for the sold shares shall be made no later than 60 days from the date of exercise of the option.

5. Following the completion of the Arrangement Xxxx shall no longer be a considered a public company under all applicable laws.

6. No member of the Xxxxx Group shall be entitled to any additional rights with the exception of those provided to shareholders by law, other than those set forth in this Agreement.

7. This Agreement shall be construed in accordance with the laws of the State of Israel.

¹ In the event of a sale by CYMI or its successors of their shares to a non-affiliated party SK Group shall have tag along rights.

² Currently, $1.50 per share.

Execution Copy

In Witness Whereof:
By:		/s/    XXX XXXXXXX
		CYMI Private Equity II LLC.
		Xx. Xxx Xxxxxxx

The Xxxxx Group:

Name		No. of Shares		Signature
Hagit & Xxxxxx Xxxxx		300,000		/s/    XXXXX XXXXX
				/s/    XXXXXX XXXXX
Xxx Xxxxx		60,000		/s/    XXX XXXXX
Xxxx Xxxxx		50,000		/s/    XXXX XXXXX
Xxx Xxxxx		00,000		/x/    XXX XXXXX
Xxxx Xxxxx		60,000		/s/    XXXX XXXXX
Xxxxxx Bin-Nun		235,329		/s/    XXXXXX BIN-NUN

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