Red Hat Completes Cygnus and HKS Acquisitions To Create Global Open Source Powerhouse

Research Triangle Park

United States, January 10, 2000

Combines Internet, Server, and Post-PC Technology Leaders for a Complete Solution Spanning Powerful Servers, Internet Software and Handheld Devices

Red Hat®, Inc. (Nasdaq: RHAT), the market leader in open source solutions, announced the completion of the acquisitions of privately-held Cygnus Solutions and Hell's Kitchen Systems, Inc. (HKS). The Cygnus transaction, to be accounted for as a pooling of interest, was completed in a stock-for-stock merger in which Red Hat issued up to 6,624,344 shares for all outstanding securities of Cygnus. Red Hat will issue up to 398,335 shares for all the outstanding shares of HKS in a transaction to be accounted for under the purchase method of accounting. Matthew Szulik, the president and CEO of Red Hat, leads the combined companies.

"The addition of Cygnus and HKS to the Red Hat family creates a next-generation software company for the 21st century, spanning powerful servers, Internet infrastructure and pervasive, post-PC-centric computing platforms," said Matthew Szulik, president and CEO of Red Hat, Inc. "Red Hat is now positioned as a complete worldwide source for companies rapidly creating and deploying Linux and open source applications for servers and small devices."

The acquisitions make Red Hat, Inc. the largest company in the world dedicated to providing open source technology, information and services, offering the full spectrum of open source software and support âeuro” from enterprise server and e-commerce deployments to embedded and handheld platforms. End users worldwide benefit from the companies' combined, unmatched technical expertise and a wide-array of industry partnerships with major computing vendors like Compaq, Dell, IBM, Intel and Hewlett-Packard to support their rapidly-growing adoption of open source solutions. The combined entity remains committed to serving the customers of each company.

For more information on Cygnus and HKS, visit www.redhat.com.

About Red Hat, Inc.

Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com

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