Amendment to Non-Qualified Stock Option Agreement



 Exhibit 10.1 
  
 RED HAT, INC. 
  
 Amendment to 
 Non-Qualified Stock
Option Agreement 
  
 WHEREAS, Red Hat, Inc. (the “Company”), a
Delaware corporation, and Matthew Szulik (the “Optionee”) entered into a Non-Qualified Stock Option Agreement (the “Agreement), as of December 17, 2003, in connection with the grant by the Company to the Optionee of an option to
purchase 500,000 shares of the Company’s common stock, $.0001 par value per share at a per share exercise price of $6.70; and 
  
 WHEREAS, the Company and the Optionee desire to amend the Agreement in certain respects; and 
  
 NOW, THEREFORE, the Agreement is amended as set forth below, effective as of
December 30, 2005, only with respect to the option shares that were not vested shares as of December 31, 2004. The Agreement shall be applied without regard to this Amendment with respect to the option shares that were vested shares as of
December 31, 2004. 
  
 1. Section 5 is amended in its entirety to read
as follows: 
  
 5. Death; Disability; Change of
Control. 
  
 (a) Death. If
the Optionee dies while maintaining a Business Relationship with the Company, this option shall expire on the earlier of 180 days after the date of death or the scheduled expiration date, except as provided in the Employment Agreement between the
Company and the Employee entered into effective July 24, 2002 (the “Employment Agreement”). 
  
 (b) Disability. If the Optionee’s Business Relationship with the Company is terminated by reason of his
disability, this option shall expire on the earlier of 180 days after such cessation of the Business Relationship or the scheduled expiration date, except as provided in the Employment Agreement. For purposes hereof, “disability” shall
mean “permanent and total disability” as defined in Section 22(c)(3) of the Code. 
  
 (c) Change of Control. For purposes of this Agreement, “Change of Control” shall have the meaning set forth on
Appendix 1. 
  
 2. Section 6 is amended in its entirety to read as follows:

  
 6. Exercise. This option shall be exercised in
accordance with the Optionee’s election of Stock Option Exercise Dates executed in December, 2005 (the “Election”). 







 3. Section 9 is amended in its entirety to read as follows: 
  
 9. Exercise Price; Certificates. On each exercise date
specified in the Election, the Optionee shall make payment to the Company of the full purchase price of such shares in accordance with Section 7, and the Company shall deliver a certificate or certificates representing such shares as soon as
practicable after each such exercise date. Such certificate or certificates shall be registered: 
  
 (a) If the exercise date is prior to the Optionee’s death, in the name of the Optionee (or, if the Optionee shall so request in
writing prior to the exercise of this option, in the name of the Optionee and another person jointly, with right of survivorship); or 
  
 (b) If the exercise date is on or after the Optionee’s death in the name of the Optionee’s estate, personal representative or
beneficiary to whom this option has been transferred pursuant to Section 10. 
  
 4. A new Appendix 1 is added to read as follows: 
  

APPENDIX 1 
  
 “Change of Control” means and shall be deemed to have occurred as of the date of the first to occur of the following events: 
  
 (a) Any Person or Group acquires stock of the Company that,
together with stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. However, if any Person or Group is considered to own more than 50% of the total fair market
value or total voting power of the stock of the Company, the acquisition of additional stock by the same Person or Group is not considered to cause a Change of Control. An increase in the percentage of stock owned by any Person or Group as a result
of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this subsection. This paragraph (a) applies only when there is a transfer of stock of the Company (or
issuance of stock of the Company) and stock in the Company remains outstanding after the transaction; 
  
 (b) Any Person or Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such
Person or Group) ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company. However, if any Person or Group is considered to own 35% of the total voting power of the stock of the Company, the
acquisition of additional stock by the same Person or Group is not considered to cause a Change of Control; 
  

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 (c) A majority of members of the Company’s Board is replaced during any 12-month
period by Directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board prior to the date of the appointment or election; or 
  
 (d) Any Person or Group acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such Person or Group) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. However, no Change of
Control shall be deemed to occur under this paragraph (d) as a result of a transfer to: 
  
 (i) A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; 
  
 (ii) An entity, 50% or more of the total value or voting
power of which is owned, directly or indirectly, by the Company; 
  
 (iii) A Person or Group that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or 
  
 (iv) An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly,
by a person described in clause (iii) above. 
  
 For these
purposes, the term “Person” shall mean an individual, Company, association, joint stock company, business trust or other similar organization, partnership, limited liability company, joint venture, trust, unincorporated organization or
government or agency, instrumentality or political subdivision thereof. The term “Group” shall have the meaning set forth in Rule13d-5 of the Securities Exchange Commission, modified to the extent necessary 
  

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 to comply with Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B), or any successor thereto in effect at the
time a determination of whether a Change of Control has occurred is being made. 
  
 IN WITNESS WHEREOF, the Company and the Optionee have caused this Amendment to be executed effective as of the date set forth above. 
  

					
	 	 	RED HAT, INC.
			
	December 31, 2005	 	By:	 	 /s/ Mark E. Cook


	 	 	 	 	VP and Treasurer
		
	 	 	OPTIONEE
		
	December 20, 2005	 	 /s/ Matthew Szulik


	 	 	Matthew Szulik

  

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