Red Hat to Acquire C2Net, the Number One Commercial Secure Web Server Developer

Research Triangle Park

United States, August 14, 2000

Broadens Capabilities to Deliver Secure Internet Infrastructure Solutions From Servers to Handhelds; Provides Common Open Source Platform to Communicate Across the Internet

Red Hat, Inc. (Nasdaq:RHAT), the leader in open source Internet infrastructure solutions, announced today that it has signed a definitive agreement to purchase privately held C2Net Software, Inc. C2Net Software is the developer of the popular Apache-based Stronghold secure web server. C2Net customers include Amazon.com, Ameritrade, IBM and Morgan Stanley Dean Witter Online.

"Enterprise customers want a single source for complete solutions to build out their Internet infrastructure. With the acquisition of C2Net, Red Hat adds security to our growing capabilities of OS development, tools and e-commerce that delivers unprecedented value to our customers," said Matthew Szulik, president and CEO of Red Hat, Inc. "Powerful, secure solutions like C2Net's Stronghold and the rapid technological advancement of the open source development model, which finds and fixes holes faster than proprietary development, delivers organizations a safe, advanced foundation for e-business initiatives."

Red Hat continues to broaden its product offerings to deliver a complete spectrum of Internet infrastructure solutions--which include powerful and secure Web servers, post-PC devices connected to each other through those servers, and the complete chain of development tools and services needed to rapidly create, deploy and manage Internet infrastructure. Red Hat's solutions leverage open source software to deliver all the necessary tools and services to deploy, manage and scale the Internet with a single open source platform.

Under the terms of the agreement, Red Hat will issue 1,992,883 shares of Red Hat common stock in exchange for all of the outstanding securities of Oakland, California-based C2Net. The transaction will be valued based on an average closing price of Red Hat's common shares for the seven-day period ended August 16, 2000. The acquisition will be accounted for as a purchase and is expected to be completed by August 31, 2000, subject to customary closing conditions.

According to the most recent InformationWeek "Global Security" survey, 74 percent of companies suffered downtime due to security breaches or espionage and 71 percent of executives and technology managers rank information security as a high priority for their business. C2Net's Stronghold, which is based on Apache and available for many operating system platforms, is the most popular commercial SSL Web server on the Internet with more than 30 percent of the secure web server market, according to Security Space. Red Hat Linux is the most popular open source operating system (OS) for Web servers and sites, with more than 72 percent of all Web sites running Linux choosing Red Hat according to the latest Netcraft survey (www.netcraft.com). The acquisition combines these market leaders to deliver the secure e-commerce infrastructure solutions that are in tremendous demand in today's organizations.

"Red Hat has a tremendous vision, expertise and market lead as the platform for a new generation of Internet and post-PC solutions. C2Net's Stronghold product is the most popular secure Web server for UNIX systems, and C2Net customers have always enjoyed the benefits of open source development," said William Rowzee, CEO of C2Net. "But there is tremendous synergy between Red Hat and C2Net that extends beyond our enthusiastic support of open source software and its worldwide community of developers. We are very excited to be able to leverage Red Hat's unique spectrum of packaged solutions and services in providing even more comprehensive solutions for our customers."

C2Net is the fifth major acquisition for Red Hat in 2000. In July, it completed the acquisition of WireSpeed, a leading developer of network and telecommunications software that helps connect a new generation of post-PC and embedded devices to the Internet and secure Web servers like Stronghold. In May, Red Hat acquired Bluecurve, whose performance management solutions allow organizations to simulate and measure user activity and demands placed on the Internet infrastructure and applications. And in January, Red Hat acquired both Hell's Kitchen Systems, Inc. (HKS), a provider of e-commerce payment processing software critical for any company trying to conduct business on the Web, and Cygnus Solutions, a top provider of a wide variety of software, tools, services and developer support for servers, real-time operating systems (RTOS) and embedded, post-PC platforms.

About C2Net
C2Net is the global provider of Stronghold secure web server software. Stronghold is available for more than 30 platforms, including several versions of Linux and most other common UNIX platforms.

As the first commercial server to support SSL and make its source code available to the development community, C2Net's Stronghold server has been leading the creation and adoption of security standards and protocols in Web-based computing for years. Stronghold was the first SSL Web server to support: 128-bit encryption, HTTP/1.1, SSL client certificates and hardware crypto acceleration. Stronghold 3, the latest version of C2Net's solution, includes administration tools for easy installation, powerful server-side scripting and unlimited virtual hosting on one license.

C2Net's customers include a blue-chip roster of leading Internet e-commerce businesses including Amazon.com, Ameritrade, Earthlink/Mindspring/Netcom, IBM, Lucent Technologies, Morgan Stanley Dean Witter Online, Network Solutions, USA.net, US Department of Energy, US Federal Courts, and Verio, Inc.

C2Net was founded in 1994 and has offices in Oakland, California and Newbury, England. The Company's revenues increased 46 percent in 1999 to $3.25 million. Additional information and free evaluation copies of Stronghold are available at http://www.c2.net.

C2Net Q & A

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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