Cygnus Solutions Merger Snapshot

Raliegh

United States, November 15, 1999

The News:
A definitive merger agreement signed between Red Hat, Inc. (Nasdaq: RHAT) and privately-held Cygnus Solutions on Monday, November 15, 1999.
What the Merger Will Create:
The merger will make Red Hat the largest company in the world dedicated to providing open source technology, information and services, offering an end-to-end spectrum of open source software and support for enterprise servers, the Internet and embedded and post-PC-centric computing.
Terms of the Merger:
The $674 million transaction (based on Red Hat's closing price on Friday, November 12) will be completed in a stock for stock merger in which Red Hat will issue up to 6,624,344 shares for all of the outstanding securities of Cygnus. The acquistion will be accounted for under the pooling of interests method, is expected to close in January 2000 and is subject to approval from Cygnus' shareholders.
Management:
Matthew Szulik, currently the president of Red Hat, Inc., will lead the combined companies as president and CEO. Bob Young, currently chairman and CEO, will be chairman of the combined entity. There are no additions to Red Hat's board of directors.
Employees:
Red Hat, Inc. currently has 235 employees worldwide. Cygnus Solutions currently has 181 employees worldwide. There are no plans for a reduction in the company workforce as a result of the merger.
Locations:
Cygnus is based in Silicon Valley (Sunnyvale, Calif.). Red Hat's corporate headquarters in Research Triangle Park, NC will be the worldwide headquarters for the combined companies. In addition, Red Hat and Cygnus have offices in Europe, Japan, Asia and Canada.
About Red Hat, Inc.
Red Hat (Nasdaq: RHAT) is based in Research Triangle Park, NC and is the market leader in Linux and open source software solutions and services. The company, which completed its IPO in August, offers both its award-winning open source Red Hat Linux OS and a full line of services, including telephone support, on-site consulting, developer training, certification programs and priority access updates. Red Hat partners include major computing industry leaders worldwide. Additional facts on Red Hat are available at www.redhat.com.
About Cygnus Solutions
Based in Sunnyvale, Calif., Cygnus Solutions is a leader in innovative open source technology, including comprehensive development software and support solutions for today's Linux applications and tomorrow's post-PC-centric devices. Additional facts on Cygnus are available at www.CYGNUS.com/about/index.html
Facts on Linux, Open Source and Post-PC Markets
Linux was the fastest-growing server operating environment in 1998, growing more than 190 percent in that year alone and capturing more than 15.8 percent of the 4.4 million revenue shipment server operating systems market segment. Red Hat Linux is by far the most popular distribution, preferred by 68.7 percent of U.S. Linux users. By 2002, it is estimated there will be more than 55 million handheld and notebook-style information appliance devices and that by 2005 shipments of these appliances will exceed shipments of PCs. Source: IDC Research.
Press and Industry Analyst Contact:
Any member of the Schwartz Communications team at (781) 684-0770 or redhat@schwartz-pr.com can arrange interviews with media and industry analysts.
Investor and Wall Street Analyst Contact:
For investor inquiries, contact Lippert/Heilshorn at (212) 838-3777.

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