Aladdin Establishes Brazilian Affiliate; Aladdin Brazil Will Offer Wide-Ranging Solutions for Software and Internet Security.

NEW YORK/RIO DE JANEIRO, Brazil--(BUSINESS WIRE)--Jan. 19, 1999-- Aladdin Knowledge Systems Ltd. (NASDAQ: ALDNF), a global leader in the field of Internet and software security, today announced the establishment of Aladdin Brasil Ltda., further expanding its presence in the fast-growing Latin-American market.

Aladdin has long recognized the considerable potential in Brazil for its products, and wishing to leverage on its global presence, has established a joint venture with HT-Mach Sistemas Electronicos Ltda., Aladdin's long-standing Brazilian distributor. Aladdin will be making a significant investment into developing its Brazilian market and has been granted an option to acquire control over Aladdin Brasil.

As well as being one of the world's largest and fastest growing IT markets, Brazil also has the 7th highest software piracy market in the world. According to the 1998 SPA/BSA Survey of Software Piracy, 62% of software in use in Brazil was pirated, at a cost of $400 million in lost revenue for the Brazilian software industry. This figure is comparable to mature IT markets such as the UK and France.

Growing awareness of the damage caused by software piracy has resulted in increased demand for Aladdin's products as well as government action. In November 1998, a large Brazilian media company was fined $65m for using 382 copies of pirated software.

Commenting, Aladdin CEO and President, Yanki Margalit said: "The success of our products in Brazil, make this a logical move for Aladdin. With the establishment of Aladdin Brasil we now have a secure base in one of the world's fastest growing IT markets."

Aladdin Brasil President, Mauro Moreira said: "With high piracy rates, a booming IT industry and a rapidly increasing Internet community, Brazil has already proved an excellent market for Aladdin's line of Internet and software security products. Aladdin Brasil is now in the forefront of the information security business both in Brazil and elsewhere in Latin- America. We will be able to offer solutions covering everything from software protection through to network and desktop security, with the full resources of Aladdin behind us."

Eyal Manger, Aladdin's VP Software Security Sales commented: "The creation of an Aladdin affiliate in Brazil is both a recognition of an excellent business relationship built up since 1991, and an indication of the importance that we place on the development of our distribution network in Latin America in the years to come".

About Aladdin:

Aladdin Knowledge Systems Ltd. (NASDAQ/NMS: ALDNF) is a global leader in the field of Internet and information security. Aladdin's products include HASP and Hardlock, token-based software security systems that ensure license compliance and provide innovative marketing and distribution solutions for developers and publishers; Privilege, a comprehensive Internet- ready software licensing tool for developers; and the award- winning eSafe line of anti-vandal, anti-virus and content filtering software for Internet-connected networks and PCs. Aladdin, an ISO 9002 accredited company, has offices throughout the United States and the world including Seattle, New York, Chicago, the United Kingdom, the Netherlands, Germany, Japan, and Israel as well as over 40 distributors serving more than 100 countries. For more information, visit the Aladdin home page at www.aks.com.

Safe Harbor for Forward-Looking Statements: Except for the statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the loss of market share, changes in consumer buying habits and other factors over which Aladdin Knowledge Systems Ltd. have little or no control.