Red Hat Completes C2Net Aquisition for Approximately $42.7 Million

Research Triangle Park

United States, September 13, 2000

Strengthens Offering of Internet Infrastructure Solutions with Added Security

Red Hat, Inc. (NASDAQ: RHAT), the leader in open source Internet infrastructure solutions, completed the acquisition of privately-held C2Net Software, Inc., the developer of the popular Apache-based Stronghold® secure web server. C2Net's Stronghold, which is 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.

The transaction was valued at approximately $42.7 million based on an average closing price of Red Hat's common shares for a seven-day period ended August 16, 2000. Under the terms of the transaction, Red Hat issued 1,992,877 shares of Red Hat common stock in exchange for all of the outstanding securities of Oakland, California-based C2Net. The acquisition has been accounted for as a purchase.

Red Hat continues to broaden its product offerings to provide a single source of complete Internet infrastructure solutions for its enterprise customers. C2Net is the fifth major acquisition for Red Hat in 2000 following the acquisition of: (1) 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; (2) Bluecurve, whose performance management solutions allow organizations to simulate and measure user activity and demands placed on the Internet infrastructure and applications; (3) 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, (4) 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/.

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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Forward-Looking Statements

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