Hammerhead Systems Secures $30 Million in Series C to Fund Ramp in Sales, Customer Support, and Operations

Silver Creek Ventures Leads, along with Apex Venture Partners, Joining Foundation Capital, Mayfield, Enterprise Partners and Pequot Ventures

Mountain View, CA – January 31, 2006 – Hammerhead Systems, Inc., the market leader in Layer 2.5 Aggregation solutions, today announced the closing of a $30 million Series C round of funding, led by new investor Silver Creek Ventures and joined by new investor Apex Venture Partners.  All existing investors participated in the round which now brings the total equity raised by Hammerhead Systems to $80 million. The funds will be used for working capital including expanding sales, marketing and customer support in North America and internationally, as well as the acceleration of product development in response to customer demand and establishing volume manufacturing.

“We are delighted to have Apex and Silver Creek Ventures join our board and are pleased that our recent market successes and stringent financial controls have been recognized by our investors” said Peter P. Savage, Hammerhead Systems CEO. “We will continue our focus on delivering the only Layer 2.5 aggregation and switching solutions available today as we expand our operations to meet customer demand.”

“George Middlemas, Managing General Partner of Apex Venture Partners, invested in two previous companies led by Pete Savage, including Commterm, acquired by Alliance Telecommunications, and Applied Digital Access (NASDAQ: ADAX),” said Babu Ranganathan, General Partner at Apex Venture Partners and new Hammerhead Systems Director.  “We are very pleased to again invest in a company led by Pete Savage, which is executing to the highest levels within tier 1 carrier networks.”

“The carrier market has shown significant demand for Hammerhead’s  HSX 6000 and its ability to win tier 1 networks with its innovative network processor architecture, including Bandwidth Pooling (patent pending),  1:N Redundancy, and technology leadership in MPLS Pseudowires and QoS,” said Mark Masur, General Partner of Silver Creek Ventures and new Hammerhead Systems Director. “Hammerhead’s time-to-market lead offers carriers real, flexible, and cost-effective solutions to support their network expansions today.”

About Apex Venture Partners
Apex Venture Partners, established in 1987, has five funds and more than $500 million under management. The firm has invested in over 130 technology companies.  Apex focuses on early stage investments in enterprise applications & services, IT infrastructure, and telecommunications. www.apexvc.com.

About Silver Creek Ventures
Silver Creek is an early stage investment firm focused exclusively on early stage information technologies. For over 20 years, they have helped entrepreneurs build market-leading companies in the data networking, semiconductor, and communications fields. www.silvercreekventures.com.

About Hammerhead Systems
Hammerhead Systems, Inc. is the market leader in Aggregation, Interworking, and Migration to accelerate the profitable delivery of new Ethernet and existing legacy services at a fraction of the cost and complexity of other solutions. The HSX 6000, the first purpose-built Layer 2.5 Aggregation Switch using MPLS Pseudowire technology, and the Pegador SOA Element Management System are both available today. Hammerhead has a strategic partnership with Fujitsu Network Communications in North America for distribution, joint marketing, product planning, and customer support and services. Hammerhead, located in Mountain View, California, is privately held and has raised $80 million from Foundation Capital, Mayfield, Enterprise Partners, Pequot Ventures, Apex Venture Partners, and Silver Creek Ventures. For more information about Hammerhead, visit www.hammerheadsystems.com.

Copyright © 2006 Hammerhead Systems, Inc. All Rights Reserved. Hammerhead Systems, HSX 6000 and Pegador are trademarks of Hammerhead Systems, Inc.