Aladdin Leads Equity Investment in
Athena Smartcard Solutions

TEL AVIV, ISRAEL, January 24, 2008, - Aladdin Knowledge Systems, Ltd. (NASDAQ: ALDN), an information security leader specializing in authentication, software DRM and content security, today announced an equity investment in Tokyo-based Athena Smartcard Solutions. Aladdin was the most significant investor in the recent equity investment round with existing Athena shareholders making additional contributions. Athena Smartcard Solutions was formed in 1998 based on technology licensed from Aladdin.

Following its formation, Athena has developed advanced cryptographic smart card operating systems, smart card middleware, and reading devices, securing its position as an innovator in smart card technology. Athena's product offerings, which include FIPS and Common Criteria certified smart card operating systems, is designed for use in the expanding market for secure government and enterprise employee smart identification cards. Aladdin previously licensed elements of Athena's smart card technology for use with its own products. This most recent investment in Athena serves to further strengthen the strategic alliance between the two companies.

"We are pleased to continue our partnership with Athena Smartcard Solutions," said Yanki Margalit, Chairman and CEO of Aladdin Knowledge Systems. "Moving forward into 2008, this investment will allow us to streamline our strong authentication offerings and provide Aladdin eToken customers increased flexibility and enhanced functionality. "This remains an important investment for Aladdin as Athena maintains significant expertise in smart card technology and production, enabling continued innovation for Aladdin eToken."

"Having Aladdin as an active technology and financial partner in Athena is a testament to Athena's ability to constantly innovate and develop leading-edge technologies that are being successfully utilized by the most demanding industry partners and customers," said Masaru Kosaka, Chairman and co-founder of Athena. "This investment from Aladdin and other shareholders provides Athena with additional resources that will enable us to accelerate our growth and market penetration, while continuing the development of our next generation products."

About Athena Smartcard Solutions

Athena Smartcard Solutions, one of the industry's fastest growing companies, is a leading provider of Java Card™ and file-based smart card operating systems, secure identification cards, smart card readers, cryptographic middleware, and smart card management systems. Athena serves government and corporate customers worldwide through its worldwide distribution network and technology partners.

Athena's products include contact and dual interface cryptographic smart cards that are designed for secure authentication to corporate networks and Web sites, with specific products designed for U.S. Government FIPS-201/PIV, digital signature, and various national ID projects. For more information, visit the Athena Web site at www.athena-scs.com.

About Aladdin

Aladdin Knowledge Systems' Software Rights Management products are the #1 choice of software developers and publishers to protect intellectual property, increase revenues, and reduce losses from software piracy. Aladdin eToken is the world's #1 USB-based authentication solution. The Aladdin eSafe secure Web gateway provides the most advanced protection against the latest Web-based threats and attacks. Aladdin has offices in 12 countries, a worldwide network of channel partners, and has won numerous awards for innovation. For more information, visit the Aladdin Web site at www.Aladdin.com.

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