Aladdin Knowledge Systems Exercises Warrant to Purchase Wave Systems Shares.

SAN JOSE, Calif. & Tel Aviv, Israel--(BUSINESS WIRE)--June 11, 1998--

- Investment Yields Proceeds to Wave of $2,550,000 -

Wave Systems Corp. (OTC BB: WAVX; http://www.wave.com/company) and Aladdin Knowledge Systems Ltd. (Nasdaq: ALDNF; http://www.aks.com) announced today that Aladdin has exercised a warrant to purchase 1,000,000 registered shares of Wave Systems Corp. Class A Common Stock, yielding gross proceeds of $2,550,000 to Wave.

Aladdin was issued warrants to purchase Wave Common Stock pursuant to a June 1997 stock and warrant purchase agreement. Under the agreement, Aladdin purchased 500,000 shares of Wave's Common Stock and certain warrants to purchase Wave common stock. In a separate transaction, Wave purchased a license for Aladdin's software execution control system -- the Aladdin Shell and its HASP(R) and Hardlock(R) key technologies -- in order to integrate it into Wave's WaveMeter(R) chip. The technology integration, which was completed in January 1998, provides the foundation for a new, distributed model of electronic commerce and the distribution of digital content in a secure and flexible environment.

"With the integration of Aladdin's software execution control system into the WaveMeter chip, Wave is able to secure digital content against unauthorized access and use. Wave's recent progress and developments, as demonstrated by its recent announcements, are impressive as they reflect the growing interest by the industry in the WaveMeter system," commented Yanki Margalit, President and CEO of Aladdin.

Wave's recent progress includes a December 1997 agreement with IBM Corporation to support each other in achieving industry-wide adoption of the WaveMeter technology by systems manufacturers; an April 1998 agreement with Fantastic Corporation enabling users and broadcasters to benefit from secure delivery of broadcasted content; a May 1998 agreement to include the WaveMeter on Windows '98 compatible WinTV(R) television tuner boards from Hauppauge Computer Works, Inc.; and a May 1998 technology license agreement with Standard Microsystems (SMSC) to incorporate the WaveMeter technology into a variety of SMSC's integrated circuit products.

Steven Sprague, President of Wave, stated, "Aladdin is a key strategic partner for Wave and has been tremendously supportive of our company and vision. In exercising this warrant, Aladdin has provided Wave with additional capital which will further enhance our efforts to commercialize the WaveMeter system.

"In addition, Wave has also received proceeds in excess of $700,000 over the past few weeks in conjunction with the exercise of warrants by a number of early Wave investors."

With the Aladdin technologies, Wave is able to enhance the security of its information content distribution and metering system designed to enable publishers to securely distribute, license, sell, rent and manage the usage of proprietary software and electronically distributed information.

Aladdin's Shell, HASP(R) and Hardlock(R) technologies offer industry-leading licensing and distribution solutions enabling persistent protection of software against unauthorized access, use and copying. Wave's WaveMeter technology enables flexible business models for purchasing digital content, including rental, pay-per- use and rent-to-own. The WaveMeter measures the usage of software and digital content at the user's site, and enables users to securely try, use, rent and purchase software and other digital content. Broad deployment of the WaveMeter technology is expected by Wave towards the end of 1998.

About Aladdin

Aladdin Knowledge Systems is a global leader in the secure licensing, management and distribution of digital content. Aladdin's product range includes HASP(R) and Hardlock(R), key-based software security systems which monitor software licensing and prevent unauthorized use of computer programs, PrivilegeTM, a suite of software licensing and metering tools for developers and corporate IT managers, and ASE(R) - The Aladdin Smartcard Environment - a set of smart card tools and solutions for integrating smart cards with PCs and Systems. Aladdin is an ISO 9002 accredited company with headquarters in Tel Aviv, Israel, 5 international offices and distributors in more than 40 countries, serving over 20,000 clients worldwide. For more information, visit the Aladdin home page at http://www.aks.com.

About Wave Systems

Wave Systems Corp., formed in 1988 by Peter Sprague, former Chairman of National Semiconductor, has developed a unique distributed information metering and transaction processing service, called the Wave System, for use in the sale and distribution of a wide range of electronic content for consumer entertainment and education applications. The Wave System gives content providers security and flexible transaction models and consumers the convenience and control of obtaining content via the Internet through Wave's Great Stuff Network (http://www.great- stuff.com), and planned CD-ROM and broadband delivery channels. For more information, please visit Wave's corporate web site at http://www.wave.com/company.

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 ability to fund operations, the loss of market share, changes in consumer buying habits and other factors over which Wave Systems Corp. has little or no control.

CONTACT: Wave Contact:

Kent Kappen

Wave Systems

408-261-9510

[e-mail]

or

Wave Investor Contact:

David Collins/Kathy Holmes

Jaffoni & Collins

212-835-8500

[e-mail]

or

Wave Media Contact:

Aaron Feigin

Fleishman & Hillard

415-356-1033

[e-mail]

or

Aladdin Contact:

Erez Rosen, CFO 

Aladdin Knowledge Systems

011-972-3636-2222

[e-mail]

or

Aladdin Investor Contact:

Donna N. Stein

Morgen-Walke Associates, Inc.

212-850-5600

or

Aladdin Media Contact:

Richard Dukas/Ann Travers

Morgen-Walke Associates, Inc.

212-850-5600