EXHIBIT 4.5

Indemnification Agreement

|Whereas | It is in the
  best interest of Aladdin Knowledge Systems Ltd. (the Company) to retain and attract the most
  capable and talented persons to serve as directors and officers of the
  Company (hereinafter both directors and officers shall be referred to as Officers);and,                                                                       
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|        |                                                                                                                                                                                                                                                                                                                                                          
|Whereas | The Company
  believes that in order to engage with such persons it must provide them with
  adequate protection through insurance, exemption and indemnification in
  connection with their service; and,                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                                                          
|Whereas | You are or
  have been appointed an Officer of the Company, and in order to ensure your
  continuing service with the Company in the most effective manner, the Company
  desires to provide for your exemption and indemnification, to the fullest
  extent permitted by the Israeli Companies Law - 1999 (the Law), subject to the terms hereof; and,
|        |                                                                                                                                                                                                                                                                                                                                                          
|Whereas | The
  shareholders of the Company have amended the Companys Articles of
  Association to provide for the indemnification of Officers to the fullest
  extent provided for under the Law.                                                                                                                                                                

NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:

| | 1. | Exemption      
| | -- | ---------------
| |    |                
| |    | 1.1            
| |    |                
| |    | 1.2            
| |    |                
| |    |                
| |    |                
| |    |                
| |    |                
| | 2. | Indemnification
| |    |                
| |    | 2.1            

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| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 2.1.1                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 2.1.2                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| |    | The above
  shall also apply to any obligation or expense specified in Sections 2.1.1 and
  2.1.2 above imposed on you in consequence of your service as Officer of a
  subsidiary of the Company (as defined in the Securities Law - 1968) (Subsidiary) or in consequence of your
  service as Officer in an affiliated company (Chevra Mesunefet) (as defined
  in the Securities Law - 1968) (Affiliate).  Regarding Section
  2.1.2 above the Company will make available to you any security or guarantee
  that you may be required to post in accordance with an interim decision given
  by a court or an arbitrator, including for the purpose of substituting liens
  imposed on your assets.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | 2.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | The Company
  will not indemnify you for any Indemnifiable Liabilities with respect to
  which you are entitled to payment under an insurance policy or another
  indemnification agreement, other than amounts which are in excess of the
  amounts you are entitled to receive as aforesaid.                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| |    | 2.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | If legal
  proceedings that may give rise to Indemnifiable Liabilities are initiated
  against you (Legal Proceedings),
  the Company will make available to you, from time to time, the funds required
  to cover all expenses and other payments in connection with the Legal
  Proceedings, so that you will not be required to pay them.                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| |    | 2.4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | If the
  Company pays to you or on your behalf any amount in accordance herewith, and
  it is thereafter established that you were not entitled to indemnification
  from the Company with respect to such amount, you will pay such amount to the
  Company upon the Companys first request, and in accordance with the payment
  terms the Company determines.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                  
| | 3. | The Company
  will not indemnify you for any amount you may be obligated to pay in respect
  of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | 3.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | A breach of
  your duty of loyalty, except, to the extent permitted by law, for a breach of
  a duty of loyalty to the Company, a Subsidiary or an Affiliate while acting
  in good faith and having reasonable cause to assume that such act would not
  prejudice the interests of the Company;                                                                

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| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 3.2                               | A willful
  breach of the duty of care or reckless disregard for the circumstances or to
  the consequences of a breach of the duty of care;                                                                                                                                                                                                                      
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 3.3                               | An action
  taken or not taken with the intent of unlawfully realizing personal gain;                                                                                                                                                                                                                                                                             
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 3.4                               | A fine or
  penalty imposed upon you for an offense; and                                                                                                                                                                                                                                                                                                          
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 3.5                               | A
  counterclaim made by the Company or in its name in connection with a claim
  against the Company filed by you.                                                                                                                                                                                                                                                
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| | 4. | Notices and Defense Against Suits
| |    |                                  
| |    | 4.1                               | You shall
  notify the Company of any Legal Proceedings and of all possible or threatened
  Legal Proceedings as soon as you become aware thereof, and deliver to the
  Company, or to such person as it shall direct you, without delay, all
  documents you receive in connection with such proceedings.                                                        
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.2                               | The Company
  shall be entitled to assume your defense in respect of all Legal Proceedings
  and to use any attorney which the Company may choose for that purpose (except
  an attorney who is reasonably unacceptable to you).                                                                                                                                  
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.3                               | You will
  fully cooperate with the Company and/or its attorney in every reasonable way
  as may be required, including, but not limited to, the execution of power(s)
  of attorney and other documents, provided that the Company shall cover all
  costs incidental thereto so that you will not be required to pay the same or
  to finance the same yourself.
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.4                               | If the
  Company has notified you that it shall assume your defense with respect to a
  Legal Proceeding, it shall not indemnify you for expenses you incur in
  connection with such proceeding.                                                                                                                                                                 
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.5                               | The Company
  shall have the right to settle or to turn to arbitration with respect to
  Legal Proceedings.                                                                                                                                                                                                                                                       
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.6                               | Notwithstanding
  the aforesaid, the Company shall not have the right to settle without your
  consent, not to be unreasonably withheld, unless the settlement in question
  is without admission of any responsibility or liability on your part and provides
  for a complete waiver of all respective claims against you.                                      
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.7                               | The Company
  will have no liability or obligation to indemnify you in the case of a
  settlement or initiation of arbitration proceedings by yourself, without the
  Companys prior written consent, which consent shall not be unreasonably
  withheld.                                                                                                        
| |    |                                   |                                                                                                                                                                                                                                                                                                                                                                   
| |    | 4.8                               | For the
  removal of doubt, the Companys obligations hereunder shall not derogate from
  the Companys ability to indemnify you retroactively for any payment or
  expense as provided in Sections 2.1.1 and 2.1.2 above, without limitation to
  the types of events and the amount specified in Appendix A.                                                  

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| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| |    | 4.9      | For the
  removal of doubt, in the case of criminal proceedings the Company and/or the
  attorneys as aforesaid will not have the right to plead guilty in your name
  or to agree to a plea-bargain in your name without your consent.  Furthermore, in a civil proceeding
  (whether before a court or as a part of a compromise arrangement), the Company
  and/or its attorneys will not have the right to admit to any occurrences that
  are not indemnifiable pursuant to this agreement and/or pursuant to law,
  without your consent.  However, the
  aforesaid will not prevent the Company and/or its attorneys as aforesaid,
  with the approval of the Company, to come to a financial arrangement with a
  plaintiff in a civil proceeding without your consent so long as such
  arrangement will not be an admittance of an occurrence not indemnifiable
  pursuant to this agreement and/or pursuant to law.
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 5. | Validity
| |    |         
| |    | 5.1      | The
  Companys obligations hereunder will continue after termination of your
  office/employment, provided that the cause of action of the Legal
  Proceedings, which led to Indemnifiable Liabilities, is based on your being
  or having been an Officer of the Company and your action and/or omission to
  act during your office/employment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.2      | The
  Companys obligations hereunder shall also apply to Indemnifiable Liabilities
  related to Legal Proceedings the cause of action of which is based on your
  action or omission to act prior to execution hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.3      | This
  agreement shall be governed by and construed and enforced in accordance with
  the laws of the State of Israel, without application of the conflict of laws
  principles thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.4      | Gender Use
  of the masculine pronoun shall be deemed to include usage of the feminine
  pronoun where appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.5      | This
  agreement cancels any preceding letter of indemnification that may have been
  issued to you.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.6      | The headings
  of the paragraphs of this agreement are inserted for convenience only and
  shall not be deemed to constitute part of this agreement or to affect the
  construction thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    | 5.7      | If all or
  any part of this agreement is held invalid or unenforceable by local law
  and/or a court of competent jurisdiction, such invalidity or unenforceability
  will not affect any of the other provisions of this agreement that are valid
  and enforceable all of which shall remain in full force and effect, as
  applicable.  Furthermore, if such invalid
  or unenforceable provision may be modified or amended so as to be valid and
  enforceable as a matter of local law, such provisions will be deemed to have
  been automatically modified or amended accordingly.                                                                                                                                                                                                                                                                                                                                   

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IN WITNESS WHEREOF the parties have signed this Indemnification
Agreement on ___________, 2003.

| | Aladdin
  Knowledge Systems Ltd. | 
| | -------------------------------- | 
| |                                  | 
| | By:                              | 
| |                                  | 
| | Title:                           | 
| |                                  | 
| |                                  | 

Accepted and agreed on__________:

|      | 
|----- | 
|Name: | 

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APPENDIX A

| | 1. | The
  Companys obligation to indemnify you is limited to the following:
| | -- | ------------------------------------------------------------------------
| |    |                                                                         
| |    | a.                                                                      
| |    |                                                                         
| |    | b.                                                                      
| |    |                                                                         
| |    | c.                                                                      
| |    |                                                                         
| |    | d.                                                                      
| |    |                                                                         
| |    | e.                                                                      
| |    |                                                                         
| |    | f.                                                                      
| |    |                                                                         
| |    | g.                                                                      
| |    |                                                                         
| |    | h.                                                                      
| |    |                                                                         
| |    | i.                                                                      
| |    |                                                                         
| |    | j.                                                                      

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| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | k. | Actions
  taken in connection with the public relation and/or investor relation efforts
  of the Company, or of its Subsidiaries or Affiliates.                                                                                                                                                                                                                                                                             
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | l. | Actions in
  connection with the testing of products developed by the Company,
  Subsidiaries and/or Affiliates actions in connection with product liability
  as they relate to products developed by the Company, Subsidiaries and/or
  Affiliates actions in connection with the distribution, sale, license or use
  of such products;                                                                                  
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | m. | Actions
  taken in connection with the intellectual property of the Company, Subsidiaries and/or
  Affiliates, and its protection, including the registration or assertion of
  rights to intellectual property and the defense of claims related to
  intellectual property including but not limited to any infringement by the
  Company, Subsidiaries and/or Affiliates on the intellectual property of a third
  party;
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | n. | Actions
  taken in connection with the granting of incentive stock options of the
  Company to any employee, officer, director or consultant of the Company, a
  Subsidiary or of an Affiliate.                                                                                                                                                                                                                             

The total amount of indemnification for each
case (including all matters connected therewith), shall not exceed an amount in
US dollars or US dollar equivalents equal to $7,000,000 (in addition to any
amounts paid under an insurance coverage).

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