According to the Company’s FORM 10-Q for the Quarterly Period Ended June 30, 2006, similar complaints have been filed against more than 300 other issuers, and the cases have been consolidated as In re Initial Public Offering Securities Litigation. Settlement discussions on behalf of the named defendants resulted in a final settlement memorandum of understanding with the plaintiffs in the case and the Company’s insurance carriers, which has been submitted to the court. The underwriters are not parties to the proposed settlement. As of July 31, 2003, over 250 issuers, constituting a majority of the issuer defendants, had tentatively approved the settlement, including the Company. On August 31, 2005, the court granted preliminary approval of the settlement. On April 24, 2006, the court conducted a fairness hearing in connection with the motion for final approval of the settlement. The court did not issue a ruling on the motion for final approval at the hearing. The settlement remains subject to a number of conditions, including final approval of the court.

The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the Underwriter Defendants (Morgan Stanley, Robertson Stephens, and Lehman Brothers) had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the Underwriter Defendants allocated to those investors material portions of the restricted number of Redback shares issued in connection with the Redback IPO; and (ii) the Underwriter Defendants had entered into agreements with customers whereby the Underwriter Defendants agreed to allocate Redback shares to those customers in the Redback IPO in exchange for which the customers agreed to purchase additional Redback shares in the aftermarket at pre-determined prices.