EXHIBIT 11

ALADDIN
KNOWLEDGE SYSTEMS LTD.
CODE OF ETHICS

1.  Compliance With Applicable Laws

All employees, officers
and directors of Aladdin Knowledge Systems Ltd. (the Company) should comply
with all of the laws, rules and regulations of the U.S., Israel and other
countries, states, counties, cities and other jurisdictions, applicable to the
Company or its business.

This Code of Ethics does
not summarize all laws, rules and regulations applicable to the Company and its
employees, officers and directors. 
Please consult with the various guidelines which the Company has
prepared on specific laws, rules and regulations.

The Company has
designated its Head of Human Resources, and in her absence, the Companys
General Counsel, as Compliance Officer to administer this Code.  Employees, offices or directors may, at
their discretion, make any report or complaint provided for in this Code to the
Compliance Officer.   The Compliance Officer
will refer complaints submitted, as appropriate, to the Board of Directors or
an appropriate Committee of the Board.

2.  Conflicts Of Interest

All employees, officers
and directors of the Company should strive to avoid a conflict of interest with
regard to the Companys interests.

The Company acknowledges
and values its employees, officers and directors right and will to engage in
activities other than the Companys business and activities, so long as such
activities do not create a conflict of interest and do not interfere with the
employees responsibility to the Company or the employees efficiency in
performing his job.

A conflict of interest
may exist whenever an individuals private interests conflict in any way (or
even appear to conflict) with the interests of the Company.  A conflict situation can arise when an employee,
officer or director takes actions or has interests that may make it difficult
to perform his or her Company work objectively.  Conflicts of interest may also arise when an employee, officer or
director, or a member of his or her family, receives improper personal benefits
as a result of his or her position in the Company, whether received from the
Company or a third party.  Loans to, or
guarantees of obligations of, employees, officers and directors and their
respective family members may create conflicts of interest.

The following are
examples of situations which should be avoided:

| | 1. | An employee engaging himself in another job, which
  interferes with his efficiency or the performance of his tasks in the
  Company.                                                                                                                                                                                                                                                                                                                                                                                                        
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| | 2. | The possession of ownership interests in any of the
  Companys customers, competitors, suppliers or service providers by an
  employee, officer or director. 
  However, with respect to customers, competitors, suppliers or service
  providers that are public companies, it is acceptable to hold ownership
  interests in an amount equal to the lesser of (i) 1% of the outstanding share
  capital of such company, and (ii) 5% of the funds that such employee, officer
  or director has invested in public companies at such time.

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| | 3. | The provision of services of any kind to one or more
  of the Companys customers, competitors, suppliers or service providers by an
  employee, officer or director.                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4. | The receipt of money, loans, gifts, benefits, or
  services of any kind from any of the Companys customers, competitors,
  suppliers or service providers (other than banks).  However, it is acceptable to receive complimentary business
  related meals and other benefits with a cumulative annual value of up to $50.

Although it is not always
possible to avoid conflicts of interest, it is the Companys policy to minimize
such conflicts when possible.  Conflicts
of interest may not always be clear-cut, so if you have a ques­tion, you should
consult with the Compliance Officer.

Any employee, officer or
director who becomes aware of a conflict or potential conflict should bring it
to the attention of the Compliance Officer who, subject to applicable law and
in consultation with the CEO of the Company if he deems it appropriate, can
provide guidelines for future behavior.

3.  Corporate Opportunity

Except as may be approved
by the Board of Directors or a committee of independent directors and in
accordance with applicable law, employees, officers and directors are
prohibited from (a) taking for themselves personally opportunities that belong
to the Company or are discovered through the use of corporate property,
information or position; (b) using corporate property, information or position
for personal gain; and (c) competing with the Company.

4.  Confidentiality

All employees and
officers, under the Confidentiality Agreement signed when they joined the
Company and/or under the Companys other procedures, and all directors, must
maintain the confidentiality of Confidential Information entrusted to them by
the Company or its suppliers or customers, except when disclosure is authorized
by the Company or required by laws, regulations or legal proceedings.

Confidential
information includes, but is not limited to, non-public information that might
be of use to competitors of the Company, or harmful to the Company or its
customers if disclosed.  Whenever
feasible, employees, officers and directors should consult with the Companys
Compliance Officer or Legal Department if they believe they have a legal
obligation to disclose confidential information.

5.  Fair Dealing

Each employee, officer
and director is required to deal fairly with the Companys customers,
suppliers, competitors, officers and employees.  None should take unfair advantage of anyone through manipulation,
concealment, abuse of privileged information, misrepresentation of material
facts or any other unfair dealing practice. 
Stealing proprietary informa­tion, misusing trade secret information
that was obtained without the owners consent, or inducing such disclosures by
past or present employees of other companies is prohibited.

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6.
Protections And Proper Use Of Company Assets

All employees, officers
and directors should protect the Companys assets and ensure their efficient
use.  Theft, carelessness, and waste have
a direct impact on the Companys profitability.  All Company assets should be used for legitimate business
purposes.  For purposes of clarity, it
is acceptable to make reasonable personal use of the Companys assets while at
work.  Questions as to whether a
specific use of the Companys assets constitutes reasonable personal use
should be directed to the Compliance Officer before making personal use of the
Companys assets.

7.  Accounting Complaints

The Companys policy is
to comply with all applicable financial reporting and accounting regulations
applicable to the Company.   Employees,
officers or directors who have concerns or complaints regarding ques­tionable
accounting or auditing practices are encouraged to promptly submit those
concerns or complaints (anonymously, confidentially or otherwise) to the Audit
Committee of the Board of Directors which will, subject to its duties arising
under applicable law, regulations and legal proceedings, treat such submissions
confidentially.  Such submissions may be
directed to the attention of the Audit Committee, or any director who is a
member of the Audit Committee, at the principal executive offices of the
Company.

8.  Reporting Any Illegal Or Unethical Behavior

Employees are encouraged
to talk to supervisors, managers or other appropriate personnel about observed
illegal or unethical behavior and, when in doubt, about the best course of
action in a particular situation.  Any
employee, officer or director who believes that a violation of this Code or
other illegal or unethical conduct by any employee, officer or director has
occurred or may occur should promptly contact a supervi­sor, a corporate
officer, or the Compliance Officer. 
Such reports may be made confidentially or anonymously. Confidential­ity
will be protected, subject to applicable law, regulation or legal proceedings.

9.  No Retaliation

The Company will not
permit retaliation of any kind by or on behalf of the Company and its
employees, officers and directors against good faith reports or complaints of
violations of this Code or other illegal or unethical conduct.

10.  Public Company Reporting

As a public company, it
is of critical importance that the Companys filings with the U.S. Securities
and Exchange Commission be accurate and timely.  Depending on their respective positions with the Company,
employees, officers or direc­tors may be called upon to provide information
necessary to assure that the Companys public reports are complete, fair and
understandable.  The Company expects
employees, officers and directors to take this responsibility very seriously
and to provide prompt and accurate answers to inquiries related to the
Companys public disclosure require­ments. 
The Company has formed a Disclosure Committee led by its VP Operations,
Director of Finance and General Counsel, to oversee the preparation and review
of public disclosure documents.

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11.  Accountability

Any violations of this
Code may result in disciplinary action, up to and including immediate
termination.

12.  Amendment, Modification And Waiver

This Code may be amended, modified or waived by the Board of Directors,
subject to the disclosure and other provisions of the U.S. Securities Exchange
Act of 1934 and other applicable laws and the rules and regulations thereunder
and the applicable rules of the Nasdaq National Market.

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