C2Net Questions and Answers


Q: Why is Red Hat acquiring C2Net?
Red Hat and C2Net are the leaders in their respective markets. C2Net's Stronghold is the leading commercial secure web server on the Internet (July 2000 SecuritySpace.com survey) and, like Red Hat Linux and other open source technologies, Stronghold is a key component of the Internet infrastructure.

With this acquisition, Red Hat adds another fast growing market---security---to its complete line of Internet infrastructure solutions spanning powerful servers to post-PC devices, and becomes the market leader for secure Internet servers. Also, since more Web servers run Red Hat Linux than any other operating system, Red Hat will be able to sell C2Net's secure server technology into a vast installed base.

Q: How does the combination benefit customers?
Web server security and uptime are priority concerns for e-commerce sites and organizations that now do the majority of their business over the Internet. By combining the most popular Linux OS with the number-one secure server for Web e-commerce while leveraging the rapid technological advancement of the open source development model, Red Hat will be able to deliver an extremely safe, stable, and advanced foundation for e-business initiatives.

Q: Is SSL important in a web server?
Absolutely. Just scan any number of recent headlines to read how hackers have accessed private and corporate information---or completely disabled Web or e-commerce sites such as Yahoo! In fact, 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.

SSL provides the encryption and authentication features needed to protect exchanges of confidential information between web servers and browsers. C2Net's Stronghold is the only commercial web server based on OpenSSL, the open source standard for SSL.

Q: What is the value and what are the financial terms of the acquisition?
Under the terms of the agreement, Red Hat will issue1,992,883 shares of Red Hat common stock in exchange for all of the outstanding securities of C2Net. The transaction will be valued based on the average closing price of Red Hat's common shares for a 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.

Q: In the event the current stock price changes, will the value of the acquisition change?
No. The transaction will be valued based on the average closing price of Red Hat's common shares for the seven-day period ending August 16, 2000.

Q: Do you expect key personnel from either company to leave as a result of the acquisition?
No. The personnel at C2Net have expressed their support and enthusiasm for this transaction and look forward to the opportunity to grow Red Hat's services capabilities.

Q: Is there any significant change in the management structure of Red Hat?
No. Matthew Szulik remains president and CEO of the combined companies and there are no changes in Red Hat's board of directors.

Q: What happens to C2Net's Oakland offices? Their European offices?
We expect to maintain both the Oakland and Newbury, England, offices as we focus on maintaining Stronghold's international presence and the existing world-class levels of engineering and support.

Q: Will C2Net still support customers on platforms other than Red Hat Linux?
Definitely. Stronghold is currently available for over 30 different platforms.

Will there be any changes to the price or conditions of Stronghold?
No immediate changes. Stronghold customers receive great value for the current price, and Red Hat plans to continue to offer Stronghold customers a unique value proposition for secure web serving.

Is Stronghold open source?
Stronghold is based on Apache, which has an open source license. C2Net has also been working with the mod_ssl and OpenSSL projects to release the source code for previously proprietary Stronghold functions.

What happens to the Apache Week publication (www.apacheweek.com)?
We will continue to distribute Apache Week. The importance of Apache Week to over 30,000 readers each week is of great concern to Red Hat.

Will this affect C2Net's involvement with Apache?
No, C2Net engineers have considerable history of contributing and working with open-source projects such as Apache, OpenSSL and mod_ssl and will continue to do so. With this transaction Red Hat becomes the leading secure Apache commercial distributor.

Is this the first acquisition for Red Hat?
As a public company, this is the fifth major acquisition for Red Hat this year. The others are:

  • Wirespeed (July), 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 C2Net.
  • Bluecurve (May), - a performance management solutions company that allows organizations to simulate and measure user activity and demands placed on the Internet infrastructure and applications.
  • Hell's Kitchen Systems, Inc. (HKS, Jan.), a provider of e-commerce payment processing software critical for any company trying to conduct business on the Web
  • Cygnus Solutions (Jan.), 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.

Can Red Hat digest all of these?
Integration will be a top priority in working towards a seamless transition. From our experience with prior acquisitions, Red Hat has learned the value in expediting company transitions.

How will the acquisition impact revenues?
The acquisition will pool resources and expertise from both companies to allow for expanded offerings in the secure server market.

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