The amendments to the employee stock options were approved by Aladdin'sCompensation Committee and the Board of Directors. Effective as of July 31,2008, the Company amended approximately 430,000 outstanding incentiveemployee stock options by reducing the exercise price to $8.82 per share.The average exercise price of the options that were amended was $19.85. Thetotal expense related to this action is estimated to be approximately$600,000, of which the Company expects to incur approximately $390,000during the current fiscal year 2008.

The Company believes that these amendments provide an important mechanismto continuing to motivate and incentivize Aladdin's dedicated employees whoare critical to the company's growth strategy and to the objective ofcreating long-term shareholder value.

"Aladdin has a truly exceptional team of employees worldwide dedicated tothe development and delivery of market leading authentication, software DRMand content security solutions to our customers globally," said YankiMargalit, Chairman and CEO of Aladdin Knowledge Systems. "Just as we arereinvesting in our core business, it is equally as important that wecontinue to reinvest in our people -- our greatest asset."

About Aladdin

Aladdin Knowledge Systems (NASDAQ: ALDN) is an information security leaderwith offices in 12 countries, a worldwide network of channel partners, andnumerous awards for innovation. Aladdin eToken is the world's #1 USB-basedauthentication solution, offering identity and access management tools thatprotect sensitive data. Aladdin HASP SRM boosts growth for softwaredevelopers and publishers through strong anti-piracy protection, IPprotection, and secure licensing and product activation. Aladdin eSafedelivers real-time intelligent Web gateway security that helps protect dataand networks, improve productivity, and enable compliance. Visitwww.Aladdin.com.

This press release may contain forward-looking statements which are madepursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995. Investors are cautioned that these forward-lookingstatements involve risks and uncertainties that could cause actual resultsto differ materially from current expectations. These risks anduncertainties include, without limitation, the expected timing and benefitsof the proposed transaction and the risks and uncertainties described fromtime to time in the companies' periodic reports filed with the Securitiesand Exchange Commission. The companies specifically disclaim anyresponsibility for updating these forward-looking statements.

©2008 Aladdin Knowledge Systems, Ltd. All rights reserved. HASP, eToken,eSafe, Aladdin Knowledge Systems and the Aladdin logo are trademarks orregistered trademarks of Aladdin Knowledge Systems, Ltd.