Red Hat to Acquire E-Commerce Software Provider Hell's Kitchen Systems, Inc.

Research Triangle Park

United States, January 5, 2000

Red Hat®, Inc. (NASDAQ:RHAT), the market leader in open source solutions, announced today that it has signed a definitive agreement to purchase privately-held Hell's Kitchen Systems, Inc. (HKS). Under the terms of the agreement, Red Hat will acquire HKS by issuing up to 398,335 shares of Red Hat common stock to acquire all the outstanding shares of HKS.

The acquisition will bring HKS's e-commerce payment processing softwareâeuro” a critical piece of infrastructure for any company trying to conduct business on the Webâeuro” into the Red Hat solutions family. Enterprises worldwide and HKS' more than 150 Internet Service Provider (ISP), online merchants and financial institution customers will benefit from Red Hat's complete open source software and services portfolio, providing all the software, information and services needed for Internet and enterprise e-business initiatives.

Under the terms of the agreement, Red Hat will issue up to 398,335 shares of Red Hat common stock to acquire all the outstanding shares of HKS. The transaction will be a purchase transaction and is subject to approval by HKS shareholders and other customary closing conditions.

"Red Hat's global reach and brand recognition delivers HKS' e-commerce software to the open source servers running the world's Internet infrastructure," said Matthew Szulik, president and CEO of Red Hat, Inc. "The acquisition of HKS is another key addition to Red Hat's strategy to create a next-generation software company spanning powerful servers, Internet infrastructure and pervasive, post-PC-centric computing platforms."

The acquisition continues the expansion of Red Hat's open source software and services for enterprises migrating their business to the Internet and the next-generation of embedded, post-PC devices. In November, Red Hat announced a definitive agreement to acquire Cygnus Solutions, an open source software technology leader with software development tools and engineering services for a variety of desktops, client/server systems, real-time operating systems (RTOS) and embedded, post-PC centric platforms.

"Enterprises and Internet Service Providers are increasingly turning to Linux for reliable, scalable and flexible Internet solutions," said Larry Weidman, president and CEO of Pittsburgh, PA-based HKS. "Red Hat's wide-reaching partnerships, complete line of open source solutions, technical expertise and vision makes it an ideal match for HKS and other forward-looking companies embracing the next-generation of Internet computing."

In 1999, Red Hat also added worldwide support for top open source Internet software, including the Apache Web Server, Sendmail and Postfix. Red Hat will bundle HKS' credit card verification system software with the Professional Edition of its Red Hat Linux operating system, providing users worldwide with an e-commerce server and services solution for fast-growing e-business initiatives.

Red Hat, Inc. is the market leader in open source solutions, offering a wide-array of consulting, training and support solutions for both its award-winning Red Hat Linux operating systems (OS) software and popular open source applications used by enterprises worldwide. Hell's Kitchen Solutions, Inc. (www.hks.net), based in Pittsburgh, Pa., provides e-commerce software and services to more than 150 Internet Service Providers (ISPs), online merchants and financial institutions nationwide. The combined entity will remain committed to serving the customers of each company.

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. The most trusted name in open source, CIOs and other senior-level IT executives have ranked Red Hat as the industry's most valued vendor for two consecutive years in the CIO Insight Magazine Vendor Value study. 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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