REDBACK NETWORKS INC
S-3/A, 2000-07-21
BUSINESS SERVICES, NEC
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<S><C>
                                As filed with the Securities and Exchange Commission on July 21, 2000
                                                     Registration No. 333-39692
====================================================================================================================================

                                                 SECURITIES AND EXCHANGE COMMISSION

                                                       Washington, D.C. 20549

                                                           --------------

                                                         AMENDMENT NO. 1 TO

                                                              FORM S-3

                                                           --------------

                                                       REGISTRATION STATEMENT
                                                                UNDER
                                                     THE SECURITIES ACT OF 1933
                                                           --------------

                                                        REDBACK NETWORKS INC.
                                       (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                      DELAWARE                                                                    77-0438443
         (State or Other Jurisdiction                                             (I.R.S. Employer Identification Number)
       of Incorporation or Organization)
                                                        1195 BORREGAS AVENUE
                                                         SUNNYVALE, CA 94089
                                                           (408) 571-5000
        (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

                                                            VIVEK RAGAVAN
                                                 PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                                       REDBACK NETWORKS, INC.
                                                        1195 BORREGAS AVENUE
                                                         SUNNYVALE, CA 94089
                                                           (408) 571-5000
               (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
                                THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:

             GREGORY K. MILLER, ESQ.                                                       ELISSA WELLIKSON, ESQ.
               JARLON TSANG, ESQ.                                                          REDBACK NETWORKS, INC.
           AIMEE GALLEGO-COCHRAN, ESQ.                                                      1195 BORREGAS AVENUE
            GUNDERSON DETTMER STOUGH                                                         SUNNYVALE, CA 94089
      VILLENEUVE FRANKLIN & HACHIGIAN, LLP                                                     (408) 571-5000
            155 CONSTITUTION DRIVE
         MENLO PARK, CALIFORNIA 94025
                (650) 321-2400

                                                           --------------

       Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement
becomes effective.
       If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box. / /
       If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans,
check the following box. /x/
     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. / /
       If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
       If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /
       THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
====================================================================================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.


PROSPECTUS


                   SUBJECT TO COMPLETION, DATED JULY 21, 2000



                                  $500,000,000

                             [REDBACK NETWORKS LOGO]

               5% CONVERTIBLE SUBORDINATED NOTES DUE APRIL 1, 2007

       (AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES)
                                -----------------

     Holders of our 5% Convertible Subordinated Notes due April 1, 2007 may
offer for sale the notes and the shares of our common stock into which the notes
are convertible at any time at market prices prevailing at the time of sale or
at privately negotiated prices. The selling holders may sell the notes or the
common stock directly to purchasers or through underwriters, broker-dealers or
agents, who may receive compensation in the form of discounts, concessions or
commissions. We will not receive any of the proceeds from the sale of the notes
or shares by the selling holders.

     The holders of the notes may convert the notes into shares of common stock
at any time before the close of business on the maturity date of the notes,
unless previously redeemed or repurchased, at a conversion rate of 5.2430 shares
per $1,000 principal amount of notes (equivalent to an approximate conversion
price of $190.73 per share), subject to adjustment in certain events.

     Interest on the notes is payable on April 1 and October 1 of each year,
commencing on October 1, 2000. The notes are our unsecured obligations,
subordinated in right of payment to all of our existing and future senior debt.
The notes will not be subject to redemption prior to the third business day
after April 1, 2003 and we may, at our option, redeem the notes on or after such
date, in whole or in part, upon not less than 30 days nor more than 60 days
notice to each holder, at the redemption prices listed in this prospectus, plus
accrued interest, if any, to the redemption date; provided that we may only
redeem all or a portion of the notes on or after the third business day after
April 1, 2003 and before April 1, 2005 if the closing price of our common stock
exceeds 140% of the conversion price for a specified period of time before the
notice of redemption. The notes will mature on April 1, 2007.

     In the event of a change in control described in the prospectus, each
holder of notes may require us to repurchase its notes, in whole or in part, for
cash or, at our option, common stock (valued at 95% of the average of the
closing prices of our common stock for the five trading days immediately
preceding and including the third trading day prior to the repurchase date), at
a repurchase price of 100% of the principal amount of notes to be repurchased
plus accrued interest to the repurchase date.

     We issued and sold the notes in March 2000 in transactions exempt from
registration under the Securities Act of 1933. Prior to this offering there has
been no public market for the notes. We do not intend to apply for listing of
the notes on any securities exchange or for quotation of the notes through any
automated quotation system. Prior to this offering, the notes were designated
for trading on The PORTAL Market of the National Association of Securities
Dealers, Inc. We do not expect the notes to remain eligible for trading on The
PORTAL Market. We cannot assure you that any trading market will develop for the
notes.


     The common stock is quoted on the Nasdaq National Market under the symbol
"RBAK." The last reported bid price of the common stock on July 20, 2000, was
$145.06 per share.


     SEE "RISK FACTORS" BEGINNING ON PAGE 8 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE INVESTING IN THE NOTES OR SHARES OF THE COMMON STOCK OFFERED
HEREBY.

                                -----------------

     Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

                                -----------------


                         Prospectus dated July __, 2000

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                                     SUMMARY

     THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES,
INCLUDED IN THIS PROSPECTUS. YOU SHOULD CAREFULLY CONSIDER THE INFORMATION SET
FORTH UNDER "RISK FACTORS." UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERMS
"REDBACK," "WE," "US" AND "OUR" REFER TO REDBACK NETWORKS INC.


                             REDBACK NETWORKS INC.

     Redback Networks is a leading provider of advanced networking systems that
enable carriers, cable operators and service providers to rapidly deploy
high-speed access to the Internet and corporate networks. Our product lines,
which consist of the Subscriber Management System(TM) family combine, and the
SmartEdge(TM) family will combine, networking hardware with sophisticated
software. Together, these product families are designed to enable our customers
to create end-to-end regional networks that will support all major broadband
access technologies, as well as the new services that these high-speed
connections will enable. Our Subscriber Management System, or SMS, products
connect and manage large numbers of subscribers across all major high-speed
access technologies, including digital subscriber line, cable and wireless. Our
SmartEdge optical networking and multi-service products are being developed to
simplify the architecture of today's regional voice and data networks, as well
as improve their capacity and performance. We sell our products through our
direct sales force, resellers and distribution partners.

     Our SMS products bridge the gap between high-speed access concentrators and
the routers which connect to the Internet backbone, and they are currently being
used by many of the largest carriers and service providers worldwide. UUNET, a
subsidiary of MCI WorldCom; Bell Atlantic; SBC; Southwestern Bell Information
Services and Pacific Bell Internet, subsidiaries of SBC, and GTE have been,
since inception, our largest customers in terms of revenues. Other customers
include Bell Canada, BellSouth, ChungHwa Telecom, Concentric Network, EarthLink,
Flashcomm, Verio and @Work, a division of @Home.

     We announced our new family of SmartEdge products during the second
quarter of 2000 and anticipate our first customer shipments to begin in the
second half of 2000. We cannot be certain that the SmartEdge family of products,
or any future products designed around this technology, will be successfully
developed or will achieve widespread market acceptance.

     In recent years, there has been a significant increase in demand by
businesses and consumers for broadband, or high-speed, access to the Internet
and to corporate networks. While carriers, cable operators and service providers
are attempting to provide inexpensive and comprehensive broadband access, there
are several major challenges associated with scaling and configuring existing
network architectures to accommodate large numbers of new high-speed
subscribers. We believe widespread deployment of broadband services requires a
new model for subscriber management that efficiently terminates subscriber
connections, manages broadband subscribers, provides flexibility for
connections, and supports multiple broadband access technologies simultaneously.
We also believe that widespread deployment of broadband will require carriers
and service providers to re-architect their regional voice and data networks to
accommodate the massive increase in data traffic that will occur as a result of
the volume of new broadband connections. Carriers and service providers are also
seeking to simplify the operation of the existing technologies in their regional
networks and improve their ability to respond to customer requests for enhanced
services.

     Whether deployed at aggregation points by carriers, by cable operators or
by service providers, our SMS products accept a large concentration of
high-speed data traffic from such devices as digital subscriber line
concentrators, cable modem termination systems and wireless termination systems.
Our SMS products reduce the processing requirements placed on routers connecting
to the Internet backbone in broadband networks. Our SmartEdge products will add
significantly more capacity to regional data networks and make them simpler to
architect and operate. Our solution provides the following key benefits:

     o    ENHANCES BROADBAND OPERATIONS. Our SMS products bridge the operational
          gap between "last mile" access networks that serve businesses and
          homes and the routers connecting to the Internet backbone and
          corporate networks.


                                       1
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     o    SIMPLIFIES REGIONAL NETWORK ARCHITECTURE. Our SmartEdge products will
          simplify the design of regional voice and data networks, and enable
          our customers to increase their capacity and performance with less
          equipment.

     o    SUPPORTS ALL MAJOR ACCESS TECHNOLOGIES. Our SMS products support, and
          our SmartEdge products will support, all major access technologies,
          including digital subscriber line, cable, and wireless. Equally
          important, these products will enable customers to operate multiple
          broadband technologies simultaneously, reducing operational expenses
          and improving responsiveness to customers.

     o    FACILITATES RAPID AND SCALABLE DEPLOYMENT. Our SMS products allow, and
          our SmartEdge products will allow, service providers to quickly deploy
          high-speed access and achieve rapid time-to-market for significant
          revenue-generating services while using existing access, accounting
          and management control systems.

     o    PROVIDES PLATFORM FOR THE DELIVERY OF VALUE-ADDED SERVICES. Our SMS
          products enable, and our SmartEdge products will enable, carriers,
          cable operators and service providers to create and market new service
          offerings that extend broadband connectivity and capabilities.

     o    SIMPLIFIES END-USER ADMINISTRATION AND SUPPORT. Our SMS products
          allow, and our SmartEdge products will allow, easy configuration and
          administration of subscribers, reducing the cost of providing service
          and enabling faster response to customer requirements.

     We are focused on delivering subscriber management solutions through our
SMS family, and optical network and multi-service solutions through our
SmartEdge systems. We focus on carriers and service providers, and will seek to
use our position in the subscriber management market to penetrate the optical
transport market. We believe the combination of our operating system software
and our hardware technology differentiates our solution and provides a
competitive advantage by delivering advanced services and functionality. We will
continue to develop features and functionalities and expand our product families
to further enhance the ability of carriers, cable operators and service
providers to deliver profitable services.


                                 RECENT EVENTS

     On March 8, 2000, we announced a two-for-one stock split of our outstanding
shares of common stock. The stock split was effective on April 3, 2000. Unless
otherwise indicated, all share and per share information for all periods
presented in this prospectus has been retroactively restated to reflect this
two-for-one common stock split. Our historical net loss per share amounts
(restated to reflect the two-for-one stock split on April 3, 2000) were $1.02,
$.89, $.15, $.23, and $.96 for the years ended December 31, 1997, 1998, and 1999
and the three months ended March 31, 1999 and 2000, respectively.

     On March 8, 2000, Redback and Siara Systems, Inc. ("Siara") completed their
merger (the "Merger"). Siara was a development stage company that designed and
developed optical access networking products that enable network service
providers to offer data at multiple bandwidths to their customers in a
cost-effective way and to create new high speed data services. In connection
with the Merger, we issued 57,388,818 shares of our common stock and options and
warrants to purchase 5,295,038 shares of our common stock. We accounted for the
Merger under the purchase method of accounting. The consolidated financial
statements include the results of operations of Siara commencing on March 9,
2000.

     On June 8, 2000, we held a special meeting of our stockholders and obtained
approval of an increase in the number of authorized shares of our common stock
from 200,000,000 to 750,000,000.


                                       2
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                                                             THE OFFERING

Securities offered........................   $500,000,000 aggregate principal amount of 5% Convertible
                                             Subordinated Notes due April 1, 2007 and shares of our common stock
                                             issuable upon conversion of the notes.

Interest..................................   We will pay interest on the notes semi-annually on April 1 and
                                             October 1 of each year, commencing October 1, 2000.

Conversion................................   You may convert your notes into shares of our common stock at a
                                             conversion rate of 5.2430 shares per each $1,000 principal amount of
                                             notes which is equivalent to a conversion price of approximately
                                             $190.73 per share. The conversion rate is subject to adjustment. The
                                             notes will be convertible at any time before the close of business on
                                             the maturity date, unless we have previously redeemed or repurchased
                                             the notes. You may convert your notes called for redemption or
                                             submitted for repurchase up to and including the business day
                                             immediately preceding the date fixed for redemption or repurchase, as
                                             the case may be.

Subordination.............................   The notes are subordinated to our present and future "senior debt",
                                             as that term is defined in "Description of the Notes--Subordination."
                                             The notes are also effectively subordinated in right of payment to
                                             all indebtedness and other liabilities of our subsidiaries. As of
                                             March 31, 2000, we had approximately $16 million of senior debt
                                             outstanding, and the aggregate amount of indebtedness and other
                                             liabilities of our subsidiaries was approximately $281,000 (excluding
                                             intercompany liabilities). The indenture under which the notes were
                                             issued will not restrict the incurrence of senior debt or other
                                             indebtedness by us.

Global notes; book-entry system...........   We will issue the notes only in fully registered form without
                                             interest coupons and in minimum denominations of $1,000. The notes
                                             are evidenced by one or more global notes deposited with the trustee
                                             for the notes, as custodian for DTC. Beneficial interests in the
                                             global notes can be shown on, and transfers of those beneficial
                                             interests can only be made through, records maintained by DTC and its
                                             participants. See "Description of the Notes--Form, Denomination,
                                             Transfer, Exchange and Book-Entry Procedures."

Optional redemption.......................   On or after the third business day after April 1, 2003, we have the
                                             right at any time to redeem some or all of your notes at the
                                             redemption prices set forth in this prospectus plus accrued and
                                             unpaid interest, provided that the notes will not be redeemed on or
                                             after the third business day after April 1, 2003 and before April 1,
                                             2005 unless the closing price for our common stock exceeds 140% of
                                             the conversion price for at least 20 trading days within a period of
                                             30 consecutive trading days ending within five trading days of the
                                             notice of redemption.

Repurchase at the option of the holders
upon a change in control..................   If we experience a change in control, as that term is defined in
                                             "Description of Notes--Repurchase at Option of Holders Upon a Change
                                             in Control," you will have the right, subject to conditions and
                                             restrictions, to require us to repurchase some or all of your notes
                                             at a price equal to 100% of the principal amount, plus accrued and
                                             unpaid interest to the repurchase date. The repurchase price is
                                             payable in cash or, at our choice depending on the circumstances, in
                                             shares of our common stock, valued at 95% of the average closing
                                             sales prices of the common stock for the five trading days preceding
                                             and including the third trading day prior to the repurchase date.
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                                       3
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<S><C>

Use of proceeds...........................   We will not receive any of the proceeds from the sale of the notes
                                             and the common stock offered in this prospectus.

Events of default.........................   Events of default include:

                                             o  we fail to pay principal of or any premium on any note when due,
                                                whether or not the payment is prohibited by the subordination
                                                provisions of the indenture;

                                             o  we fail to pay any interest on any note when due and that default
                                                continues for 30 days, whether or not the payment is prohibited by
                                                the subordination provisions of the indenture;

                                             o  we fail to provide the notice that we are required to give in the
                                                event of a change in control, whether or not the notice is
                                                prohibited by the subordination provisions of the indenture;

                                             o  we fail to perform any other covenant in the indenture and that
                                                failure continues for 60 days after written notice to us by the
                                                trustee or the holders of at least 25% in aggregate principal
                                                amount of outstanding notes;

                                             o  we or any of our significant subsidiaries fail to pay when due at
                                                final maturity thereof, either at its maturity or upon
                                                acceleration, any indebtedness under any bonds, debentures, notes
                                                or other evidences of indebtedness for money borrowed, or any
                                                guarantee thereof, in excess of $25 million if the indebtedness is
                                                not discharged, or the acceleration is not annulled, within 30 days
                                                after written notice to us by the trustee or the holders of at
                                                least 25% in aggregate principal amount of the outstanding notes;
                                                and

                                             o  certain events of bankruptcy, insolvency or reorganization with
                                                respect to us or any of our significant subsidiaries specified in
                                                the indenture.
PORTAL trading of notes; Listing of
common stock..............................   We issued and sold the notes in March 2000 in transactions exempt
                                             from registration under the Securities Act of 1933. Prior to this
                                             offering, there has been no public market for the notes. We do not
                                             intend to apply for listing of the notes on any securities exchange
                                             or for quotation of the notes through any automated quotation system.
                                             Prior to this offering, the notes were designated for trading on The
                                             PORTAL Market of the National Association of Securities Dealers, Inc.
                                             We do not expect the notes to remain eligible for trading on The
                                             PORTAL Market. We cannot assure you that any trading market will
                                             develop for the notes. Our common stock is quoted on the Nasdaq
                                             National Market under the symbol "RBAK."

Governing law.............................   The indenture and the notes are governed by the laws of the State of
                                             New York, without regard to conflicts of laws principles.

Risk Factors..............................   You should read the "Risk Factors" section, beginning on page 8 of
                                             this prospectus, so that you understand the risks associated with an
                                             investment in the notes or shares of the common stock offered by this
                                             prospectus.
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                                   4
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                             SELECTED FINANCIAL DATA

     You should read the following selected financial data in conjunction with
our financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" incorporated by
reference in this prospectus. The statement of operations data for the years
ended December 31, 1997, 1998 and 1999 and the balance sheet data at December
31, 1998 and 1999 are derived from audited financial statements incorporated by
reference in this prospectus. The statement of operations data for the period
from August 30, 1996 (inception) through December 31, 1996 and the balance sheet
data at December 31, 1996 and 1997 are derived from audited financial statements
not included in this document. The statement of operations data for the three
months ended March 31, 1999 and 2000 and the balance sheet data as of March 31,
2000 are derived from unaudited financial statements incorporated by reference
in this prospectus. The financial statements include the results of operations
of Siara commencing on March 9, 2000.

     Unless otherwise indicated, all share and per share information for all
periods has been retroactively restated to reflect our two-for-one common stock
split which became effective on April 3, 2000.

<TABLE>
<CAPTION>
                                                PERIOD
                                                 FROM
                                               AUGUST 30,
                                                 1996                                                           THREE MONTHS
                                              (INCEPTION)                                                           ENDED
                                               THROUGH                 YEAR ENDED DECEMBER 31,                    MARCH 31,
                                              DECEMBER 31,  ------------------------------------------   ---------------------------
                                                 1996           1997           1998           1999           1999            2000
                                             ------------   ------------   ------------   ------------   ------------   ------------
                                                                      (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>
Net revenues..............................   $         --   $         48   $      9,206   $     64,274   $      6,517   $    34,163
Cost of revenues..........................             --             29          3,603         18,665          1,971         8,297
                                             ------------   ------------   ------------   ------------   ------------   ------------
Gross profit..............................             --             19          5,603         45,609          4,546        25,866
                                             ------------   ------------   ------------   ------------   ------------   ------------
Operating expenses:
   Research and development...............            124          3,249          5,727         21,125          3,105        12,139
   Selling, general and administrative....             19          1,317          8,875         30,208          4,138        13,255
   Amortization of intangible assets......             --             --             --             --             --        70,604
   In-process research and development....             --             --             --             --             --        15,300
   Amortization of deferred stock
     compensation.........................             --             --            880          4,033          1,078           535
                                             ------------   ------------   ------------   ------------   ------------   ------------
     Total operating expenses.............            143          4,566         15,482         55,366          8,321       111,833
                                             ------------   ------------   ------------   ------------   ------------   ------------
Loss from operations......................           (143)        (4,547)        (9,879)        (9,757)        (3,775)      (85,967)
Interest and other income, net............              1            136              3          1,838            (26)          730
                                             ------------   ------------   ------------   ------------   ------------   ------------
Net loss..................................   $       (142)  $     (4,411)        (9,876)  $     (7,919)  $     (3,801)  $   (85,237)
                                             ============   ============   ============   ============   ============   ============
Basic and diluted net loss per share......   $       (.05)  $      (1.02)  $       (.89)  $      (0.15)  $       (.23)  $     (0.96)
                                             ============   ============   ============   ============   ============   ============
Shares used in computing net loss per
   share..................................      2,632,000      4,304,000     11,076,000     53,388,000     16,728,000    89,137,000
                                             ============   ============   ============   ============   ============   ============
Unaudited pro forma net loss per
   share(1):
   Basic and diluted net loss per share...                                                $       (.11)
                                                                                          ============
   Shares used in computing net loss                                                        69,128,000
   per share..............................                                                ============

Other Data:
   Ratio of earnings to fixed charges(2)..             --             --             --             --             --            --

</TABLE>


<TABLE>
<CAPTION>

                                                                       DECEMBER 31,                   MARCH 31,
                                                       --------------------------------------------- -------------
                                                         1996       1997        1998        1999         2000
                                                       ---------  ----------  ----------  ---------- -------------
                                                                     (IN THOUSANDS)
<S>                                                    <C>        <C>         <C>         <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments....  $    119   $   6,223   $   8,189   $ 56,960   $    502,445
Working capital......................................        12       5,630       4,461     49,798        490,416
Total assets.........................................       216       7,849      14,682     94,830      4,992,487
Long-term obligations, less current portion..........        --         827       1,275      1,012        513,395
Accumulated deficit..................................      (142)     (4,553)    (14,429)   (22,348 )     (107,585)
Total stockholders' equity...........................        83       6,081       6,254     65,893      4,430,444
--------------
</TABLE>

  (1)  Pro forma basic and diluted net loss per share for 1999 has been
       computed using the weighted-average number of shares of common
       stock outstanding during the period, less shares subject to
       repurchase, and also

                                        5
<PAGE>

       gives effect to the conversion of our preferred stock which converted to
       common stock upon the closing of our initial public offering as if the
       conversion occurred as of the beginning of the period or the date of
       issuance, if later.

  (2)  The pre-tax loss from continuing operations for the years ended
       December 31, 1997, 1998 and 1999 and for the three month periods
       ended March 31, 1999 and 2000 were not sufficient to cover fixed
       charges by a total of approximately $4.4 million in 1997, $9.9
       million in 1998, $7.9 million in 1999, $3.8 million for the three
       months ended March 31, 1999 and $85.2 million for the three
       months ended March 31, 2000. As a result, the ratio of earnings
       to fixed charges has not been computed for any of these periods.
       We had no fixed charges in the period from inception (August 30,
       1996) through December 31, 1996.


                                   6
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              SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

       The following selected unaudited pro forma combined financial data
presents the effect of the merger transaction with Siara, which closed on March
8, 2000, as if the merger had been completed as of the beginning of the periods
indicated. The unaudited pro forma combined financial data was prepared using
the purchase method of accounting.

       The unaudited pro forma combined financial data is based on estimates and
assumptions which are preliminary and have been made solely for the purposes of
developing these unaudited pro forma combined financial data. The unaudited pro
forma combined financial data is not necessarily an indication of the results
that would have been achieved had the transaction been consummated as of the
dates indicated or results that may be achieved in the future.

       These selected unaudited pro forma combined financial data should be read
in conjunction with our unaudited pro forma combined financial data included
elsewhere in this prospectus, as well as our historical financial statements and
notes thereto, the historical financial statements and notes thereto of Siara,
and other financial information pertaining to Redback and Siara including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference in this prospectus and "Risk Factors"
included herein.
<TABLE>

                                                                                   YEAR ENDED     THREE MONTHS
                                                                                    DECEMBER       ENDED MARCH
                                                                                    31, 1999        31, 2000
                                                                                  -------------  ----------------
                                                                                   (IN THOUSANDS, EXCEPT SHARE
                                                                                               AND
                                                                                         PER SHARE DATA)

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS DATA:

<S>                                                                               <C>            <C>
Net revenues...................................................................   $     64,274   $        34,163
Cost of revenues...............................................................         22,115             8,942
                                                                                  -------------  ----------------
Gross profit...................................................................         42,159            25,221
                                                                                  -------------  ----------------
Operating expenses:
   Research and development....................................................         39,443            19,001
   Selling, general and administrative.........................................         37,097            17,602
   Amortization of intangibles.................................................      1,116,564           279,142
   Amortization of deferred stock compensation.................................          4,033               535
                                                                                  -------------  ----------------
     Total operating expenses..................................................      1,197,137           316,280
                                                                                  -------------  ----------------
Loss from operations...........................................................     (1,154,978)         (291,059)
Interest income (expense), net.................................................          1,175               157
                                                                                  -------------  ----------------
Net loss.......................................................................   $ (1,153,803)  $      (290,902)
                                                                                  =============  ================
Basic and diluted net loss per share...........................................   $     (13.39)  $         (2.51)
                                                                                  =============  ================
Shares used in computing net loss per share....................................     86,192,000       115,919,000
                                                                                  =============  ================
</TABLE>

                                       7
<PAGE>

                                  RISK FACTORS

     THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE MAKING AN INVESTMENT IN THE NOTES.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY

     We were founded in August 1996 and only began shipping products in material
quantities in the second quarter of 1998. You should consider the risks and
difficulties frequently encountered by companies like us in a new and rapidly
evolving market. Our ability to sell products and services, and the level of
success, if any, we achieve, depends, among other things, on the level of demand
for broadband access services, which is a new and rapidly evolving market. Our
business strategy may be unsuccessful and we may not successfully address the
risks we face.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR FUTURE LOSSES

     We incurred net losses of $4.4 million for the year ended December 31,
1997, $9.9 million for the year ended December 31, 1998, and $7.9 million for
the year ended December 31, 1999, and $85.2 million for the three months ended
March 31, 2000. As of March 31, 2000, we had an accumulated deficit of
approximately $107.6 million. Although we were profitable in the fourth quarter
of 1999, we have not had a history of profitability. Further, we incurred a
substantial net loss in the first quarter and expect to incur significant net
losses in the future as a result of the acquisition of Siara, including
operating losses from Siara's research and development and selling, general and
administrative expenses.

     To date, we have funded our operations from both private and public sales
of equity securities, the notes, from bank borrowings and by means of equipment
lease financing. We expect to continue to incur significant product development,
sales and marketing, and general and administrative expenses. As a result, we
must generate significant revenues to achieve profitability again. We may not
sustain recent growth rates in our revenues, and we may never achieve sufficient
revenue levels to achieve profitability again. If we do achieve profitability in
some future period, we cannot be certain that we would sustain profitability on
a quarterly or annual basis in the future.

IF REDBACK DOES NOT INTEGRATE SIARA'S TECHNOLOGIES AND OPERATIONS QUICKLY AND
EFFECTIVELY, OUR BUSINESS MAY SUFFER SIGNIFICANT DISRUPTIONS

     In order to achieve the benefits of our merger on March 8, 2000 with Siara,
we must successfully combine the two businesses. We may not be able to integrate
the technologies and operations quickly and smoothly. In the event that our
integration with Siara does not go smoothly, serious harm to our business,
financial condition and prospects may result. Integrating the two businesses
will entail significant diversion of our management's time and attention. The
integration of Siara's technology, products and services may require the partial
or wholesale conversion or redesign of some or all of our technologies, products
and services. In addition, we may be required to spend additional time or money
on integration that would otherwise have been spent on developing our business
and services or other matters.

WE FACE RISKS ASSOCIATED WITH ACQUISITIONS GENERALLY

     We expect to continue our acquisition and expansion strategy. Future
acquisitions could materially adversely affect our operating results as a result
of dilutive issuances of equity securities and the incurrence of additional
debt. In addition, the purchase price for many of these acquired businesses
likely will significantly exceed the current fair values of the net assets of
the acquired businesses. As a result, we would be required to record material
goodwill and other intangible assets that would result in significant
amortization charges in future periods. These charges, in addition to the
financial impact of such acquisitions, could have a material adverse effect on
our business, financial condition and results of operations. We cannot assure
you of the number, timing or size of future acquisitions, or the effect that any
such acquisitions might have on our operating or financial results.

                                       8
<PAGE>

OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY

     Factors likely to cause quarterly fluctuations in revenues and operating
results include:

     o    fluctuations in demand for broadband access services;

     o    the timing and size of sales of our products and services;

     o    announcements of new products and product enhancements by competitors;

     o    the entry of new competitors into our market, including by
          acquisition;

     o    unexpected delays in introducing new or enhanced products, including
          manufacturing delays;

     o    unexpected delays in product shipments due to component shortages;

     o    our ability to control expenses;

     o    our ability to ship products on a timely basis and at a reasonable
          cost; and

     o    the mix of our products sold and the mix of distribution channels
          through which our products are sold.

     A high percentage of our expenses, including those related to engineering,
sales and marketing, research and development, and general administrative
functions, are essentially fixed in the short term. As a result, if we
experience delays in generating or recognizing revenue, our quarterly operating
results are likely to be materially adversely affected. In addition, we plan to
increase our operating expenses to expand our engineering and sales and
marketing operations, broaden our customer support capabilities, develop new
distribution channels, fund increased levels of research and development and
build our operational infrastructure. If growth in our revenues does not outpace
the increase in these expenses, our business, results of operations and
financial condition could be materially adversely affected.

     We rely on a limited number of third-party manufacturers to build our
products. Any interruption in the operations of such manufacturers would
adversely affect our ability to meet our scheduled product deliveries to our
customers. This would cause significant variations in our quarterly operating
results and our business, results of operations and financial condition would be
materially adversely affected.

     Due to these and other factors, we believe that quarter-to-quarter
comparisons of our operating results may not be meaningful. You should not rely
on our results for one quarter as any indication of our future performance. It
is likely that in some future quarter our operating results may be below the
expectations of public market analysts or investors. If this occurs, the price
of our common stock would likely decrease.

OUR LENGTHY AND VARIABLE SALES CYCLE MAKES IT DIFFICULT FOR US TO PREDICT IF OR
WHEN A SALE WILL BE MADE

     The timing of our sales revenue is difficult to predict because of the
length and variability of the sales cycle for our products. Customers often view
the purchase of our products as a significant and strategic decision. This
evaluation process frequently results in a lengthy sales cycle, typically
ranging from three months to over one year. While our customers are evaluating
our products and before they place an order with us, we may incur substantial
sales and marketing expenses and expend significant management efforts. In
addition, product purchases are frequently subject to unplanned administrative,
processing and other delays. This is particularly true for larger customers for
whom our products represent a very small percentage of their overall purchase
activities. These customers are often engaged in multiple simultaneous
purchasing decisions, some of which may pertain to more immediate needs and
absorb the immediate attention of the customer. If sales forecasted from a
specific customer for a particular quarter are not realized in that quarter or
at all, our business, results of operations and financial condition could be
materially adversely affected.

IN ANY QUARTER, A SMALL NUMBER OF CUSTOMERS ARE LIKELY TO ACCOUNT FOR A
SUBSTANTIAL MAJORITY OF OUR REVENUE

     In each of the nine quarters in the period ended March 31, 2000, we have
had at least one customer that accounted for 15% or more of our total revenue in
the quarter. In the first quarter of 2000, Bell Atlantic accounted for 25% of
our total revenue and GTE accounted for 13% of our total revenue. For the twelve
months ended December 31, 1999, sales to Bell Atlantic and Southwestern Bell
Information Systems, a subsidiary of SBC, accounted for 24% and 11%,
respectively. We anticipate that a small number of customers with large orders
will

                                       9
<PAGE>

continue to account for a majority of our quarterly revenue. However, we do
not have any contracts or other agreements that guarantee continued sales to
these or any other customers. If our customers alter their purchasing habits or
reevaluate their need for our products, or if we fail to receive a large order
in any future period, our business, results of operations and financial
condition would be materially adversely affected.

WE ARE CURRENTLY ENTIRELY DEPENDENT ON THE SMS PRODUCT FAMILY FOR REVENUE

     The SMS family of products are the only products that we currently sell. We
have introduced, but have not begun shipping, the SmartEdge family of optical
networking products and intend to introduce new products and enhancements to
existing products in the future. We cannot be certain that the SMS or SmartEdge
products or any future products will achieve widespread market acceptance. Our
inability to timely and successfully introduce new products and enhancements, or
the failure of these new products or enhancements to achieve market acceptance,
could materially adversely affect our business, results of operations and
financial condition.

THERE IS A LIMITED NUMBER OF POTENTIAL CUSTOMERS FOR OUR SMS AND SMARTEDGE
PRODUCTS

     To date, substantially all of our revenues have been derived from sales and
service related to the SMS products. The SMS 500, SMS 1800 and SMS 10000 and any
other products that we have developed or may develop and introduce in the future
are marketed primarily to large customers. There are only a limited number of
large existing and potential customers and this number is not expected to
increase significantly in the future.

IF OUR PRODUCTS DO NOT ANTICIPATE AND MEET SPECIFIC CUSTOMER REQUIREMENTS AND
DEMANDS, OUR BUSINESS WOULD BE ADVERSELY AFFECTED

     Many of our customers require product features and capabilities that our
products may not have. The requirement that we add features to our products in
order to achieve a sale may result in a longer sales cycle, increased research
and development expenses and reduced margins on our products. To achieve market
acceptance for our products, we must effectively and timely anticipate and adapt
to customer requirements and offer products and services that meet customer
demands. Our failure to develop products or offer services that satisfy customer
requirements would materially adversely affect our business, results of
operations and financial condition.

     We intend to continue to invest in product and technology development. The
development of new or enhanced products is a complex and uncertain process that
requires the accurate anticipation of technological and market trends. We may
experience design, manufacturing, marketing and other difficulties that could
delay or prevent the development, introduction or marketing of new products and
enhancements. The introduction of new or enhanced products also requires that we
manage the transition from older products in order to minimize disruption in
customer ordering patterns and ensure that adequate supplies of new products can
be delivered to meet anticipated customer demand. Our inability to effectively
manage this transition would materially adversely affect our business, results
of operations and financial condition.

WE NEED TO GAIN ACCEPTANCE IN OTHER BROADBAND ACCESS MARKETS

     To date, we have derived substantially all of our revenues from sales of
the SMS family products for use in the digital subscriber line market for
broadband access. We intend to expend a substantial amount of time and resources
to achieve market acceptance of our products in other markets, including the
cable, wireless and optical markets. We may be unable to simultaneously or
effectively address evolving demands in these markets, and customers in these
markets may choose to implement competing technologies or products. In addition,
if our competitors gain market acceptance in these markets first, it will be
difficult, if not impossible, for us to gain subsequent market acceptance in
these markets. If we are unable to achieve acceptance of our products in these
markets, our ability to generate revenues will be limited, and our business,
results of operations and financial condition would be materially adversely
affected.

WE EXPECT INCREASED COMPETITION

     We may be unable to compete successfully with current or future
competitors. If we do not compete successfully against current or future
competitors, our business, results of operations and financial condition will be
materially adversely affected. Currently, competition in our market is intense.
The broadband access markets we are targeting, including digital subscriber
line, cable, wireless and optical, are new and rapidly evolving and we expect

                                       10
<PAGE>

these markets to become highly competitive in the future. In addition, we expect
new competitors to emerge in the broadband access market as that market evolves
due to technological innovation and regulatory changes. We face actual and
potential competition from public and private companies providing routers
connecting to the Internet backbone, access concentrators and subscriber
aggregation systems. For instance, Cisco Systems, Inc., the leading provider of
routers connecting to the Internet backbone, offers products that compete
directly with our products, and also provides a comprehensive range of broadband
access systems and network access systems.

     We expect companies that offer access concentrators and routers to
incorporate some subscriber management functionality into their products. These
companies include Nortel Networks, which acquired Shasta Networks, a private
company providing subscriber management services, and Ascend, which was acquired
by Lucent Technologies. In addition, there are several other private companies
that provide subscriber management features in access concentrators or routing
platforms.

     Many of our principal competitors, including Alcatel, Cisco, Fujitsu,
Lucent Technologies, Nortel Networks, Siemens/Unisphere and some companies that
may compete with us in the future, are large public companies that have longer
operating histories and significantly greater financial, technical, marketing
and other resources than we have. As a result, these competitors are able to
devote greater resources to the development, promotion, sale and support of
their products. In addition, our competitors that have large market
capitalizations or cash reserves are much better positioned than we are to
acquire other companies, including our competitors, and thereby acquire new
technologies or products that may displace our product lines. Any of these
acquisitions could give our competitors a strategic advantage that would
materially adversely affect our business, results of operations and financial
condition.

       Many of our competitors have significantly more established customer
support and professional services organizations than we do. In addition, many of
our competitors have much greater name recognition and have a more extensive
customer base, broader customer relationships and broader product offerings than
we have. These companies can leverage their customer bases and broader product
offerings and adopt aggressive pricing policies to gain market share. We have
encountered, and expect to continue to encounter, potential customers that, due
to existing relationships with our competitors, are committed to the product
offerings of these competitors. As a result, these potential customers may not
consider purchasing our products. We expect to face competition in the following
areas:

     o    product pricing;

     o    breadth of product lines;

     o    sales and distribution capabilities;

     o    product features and enhancements, including product performance,
          reliability, size, compatibility and scalability;

     o    product ease of deployment;

     o    conformance to industry standards; and

     o    technical support and service.

     We expect that competitive pressures may result in price reductions,
reduced margins and loss of market share, which would materially adversely
affect our business, results of operations and financial condition.

THE ACCOUNTING TREATMENT OF THE SIARA MERGER WILL RESULT IN SIGNIFICANT CHARGES
TO OUR OPERATIONS

     We accounted for the merger with Siara as a purchase under generally
accepted accounting principles. The results of operations of Siara are included
in our consolidated financial statements for all periods after March 8, 2000.
The purchase price has been allocated to Siara's assets and liabilities based on
the fair values of the assets acquired and the liabilities assumed. The excess
of cost over the fair value of the net tangible assets of Siara acquired is
recorded as goodwill and other intangible assets, which will be amortized by
charges to operations. This amount of goodwill and other intangible assets is
approximately $4.5 billion. Our annual amortization of goodwill and other
intangible assets is estimated to be approximately $1.1 billion per year, which
will have a significant negative impact on our operating results and could cause
our stock price to decline.

                                       11
<PAGE>

WE ARE DEPENDENT ON A LIMITED NUMBER OF CONTRACT MANUFACTURERS

     We currently use a single third-party manufacturer, Electromax, to assemble
our SMS products. In addition, we are using Flash Electronics as our primary
contractor to assemble our SmartEdge products. We may not be able to effectively
manage our relationship with Electromax or Flash Electronics and such
manufacturers may not meet our future requirements for timely delivery. We have
no written agreement with Electromax. We have relationships with a limited
number of other third-party manufacturers, one of which currently builds our
prototypes. Although these other third-party manufacturers are capable of
building our products, any interruption in the operations of our contract
manufacturers would adversely affect our ability to meet our scheduled product
deliveries to our customers, which could cause the loss of existing or potential
customers and could materially adversely affect our business, results of
operations and financial condition.

     In addition, the products that Electromax or any other manufacturer builds
for us may be insufficient in quality or in quantity to meet our needs.
Electromax or any other manufacturer may not meet the technological or delivery
requirements of our current products or any future products that we may develop
and introduce. The inability of Electromax or any other of our contract
manufacturers in the future to provide us with adequate supplies of high-quality
products, or the loss of Electromax or any other of our contract manufacturers
in the future, would cause a delay in our ability to fulfill customer orders
while another of our third-party manufacturers begins production and would have
a material adverse effect on our business, results of operations and financial
condition.

SOME OF THE KEY COMPONENTS IN OUR PRODUCTS COME FROM SINGLE OR LIMITED SOURCES
OF SUPPLY

     We currently purchase several key components used in our products from
single or limited sources of supply. These manufacturers include Altera,
Brooktree, Connector Technologies, Foresight, Intel, Level One, Powerspec,
Siemens and Ziatech. In addition, we rely on Wyle Electronics and LSI Logic as
our foundry for a number of our application specific integrated circuits, or
ASICs, and IBM Microelectronics as a foundry for other ASICs. We have no
guaranteed supply arrangement with these suppliers, and we, or our
manufacturers, may fail to obtain these supplies in a timely manner in the
future. Financial or other difficulties faced by these suppliers or significant
changes in demand for these components could limit the availability to us of
these components. Any interruption or delay in the supply of any of these
components, or the inability to obtain these components from alternate sources
at acceptable prices and within a reasonable amount of time, would adversely
affect our ability to meet scheduled product deliveries to our customers and
would materially adversely affect our business, results of operations and
financial condition. In addition, qualifying additional suppliers is
time-consuming and expensive.

WE DEPEND ON THIRD-PARTY TECHNOLOGY FOR OUR SMARTEDGE PRODUCT

     Cerent Corporation has granted Siara a non-exclusive license to technology
related to two ASICs and parts of Cerent's system-level hardware technology that
are used in the SmartEdge product. In November 1999, Cerent was acquired by
Cisco Systems, a provider of networking products and a significant competitor of
ours. Although we believe we have sufficient rights to this Cerent technology to
conduct our business as currently conducted, we do not have a business
relationship with Cisco. Any loss of access to the technology that is the
subject of the agreement with Cerent would seriously harm our business.

WE MAY BE UNABLE TO MATCH PRODUCTION WITH PRODUCT DEMAND

     We currently use a rolling six-month forecast based on anticipated product
orders, product order history and backlog to determine our materials
requirements. Lead times for the materials and components that we order vary
significantly and depend on numerous factors, including the specific supplier,
contract terms and demand for a component at a given time. If actual orders do
not match our forecasts, we may have excess or inadequate inventory of materials
and components, which could materially adversely affect our business, results of
operations and financial condition.

WE MAY BE UNABLE TO RETAIN EMPLOYEES OR PROPERLY MANAGE GROWTH

     We have expanded our operations rapidly since our inception. The number of
our employees increased from 39 on February 28, 1998 to approximately 580 by the
end of the first quarter of 2000.

     Our success depends in part on the continued service of certain key
personnel. Despite our efforts to hire and retain quality employees, we might
lose some of these employees now that the merger is closed. Although similar,

                                       12
<PAGE>

Redback and Siara have different corporate cultures and Siara employees may be
unwilling to work for a larger company. Competitors may also recruit Siara
employees during integration, as is common in high technology mergers. In
addition, many employees have acquired significant amounts of our common stock
or vested stock options, which could provide them with substantial amounts of
cash. As a result, employees could leave with little or no prior notice. We
cannot assure you that we will be able to attract, retain and integrate
employees to develop and use the Siara technology following the merger.

     Similarly, our future performance depends on our continuing ability to
attract and retain highly qualified technical and managerial personnel. We
intend to continue to expand in order to pursue existing and potential market
opportunities and are in the process of hiring additional engineering and sales
personnel. Our ability to continue to attract and retain highly skilled
personnel is a critical factor in determining whether we will be successful in
the future. Competition for highly skilled personnel is intense, especially in
the San Francisco Bay Area. We may fail to attract, assimilate or retain
qualified personnel to fulfill our current or future needs. If we fail, our
business, results of operations and financial condition could be materially
adversely affected. Our planned rapid growth places a significant demand on
management and financial and operational resources.

IF WE BECOME SUBJECT TO UNFAIR HIRING CLAIMS, WE COULD INCUR SUBSTANTIAL COSTS
IN DEFENDING AGAINST THESE CLAIMS

     Companies in our industry whose employees accept positions with competitors
frequently claim that their competitors have engaged in unfair hiring practices.
We have received in the past, and may receive in the future, claims of this kind
as we seek to hire qualified personnel and those claims may result in material
litigation. We could incur substantial costs in defending ourselves or our
employees against such claims, regardless of their merits. In addition,
defending ourselves from such claims could divert the attention of our
management away from our operations.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY GOVERNMENT REGULATION OF THE
COMMUNICATIONS INDUSTRY

     The jurisdiction of the Federal Communications Commission, or FCC, extends
to the communications industry, to our customers and to the products and
services that our customers sell. Future FCC regulations, or regulations
established by other regulatory bodies, may slow or end the growth of the
broadband access services industry. Regulation of our customers may materially
harm our business and financial condition. For example, FCC regulatory policies
that affect the availability of data and Internet services may impede our
customers' penetration into broadband access markets. In addition, international
regulatory bodies are beginning to adopt standards for the communications
industry. The delays that these governmental processes entail may cause order
cancellations or postponements or product purchases by our customers, which
would materially harm our business, results of operations and financial
condition.

OUR PLANNED EXPANSION TO INTERNATIONAL MARKETS WILL INVOLVE NEW RISKS

     In 1998 and 1999, we derived approximately 15% and 7%, respectively, of our
revenues from sales to customers outside of the United States. Our ability to
achieve future success will depend in part on the expansion of our international
sales and operations. International operations are generally subject to a number
of risks, including:

     o    expenses associated with customizing products for foreign countries;

     o    protectionist laws and business practices that favor local
          competition;

     o    dependence on local vendors;

     o    multiple, conflicting and changing governmental laws and regulations;

     o    longer sales cycles;

     o    longer accounts receivable cycles;

     o    increased difficulties in collecting accounts receivable;

     o    difficulties in managing operations across disparate geographic areas;

     o    difficulties associated with enforcing agreements through foreign
          legal systems;

     o    reduced or limited protection of our intellectual property rights in
          some countries;

                                       13
<PAGE>

     o    foreign currency exchange rate fluctuations; and

     o    political and economic instability.

     In addition, if we grow internationally, we will need to expand our
worldwide operations and enhance our communications infrastructure. If we fail
to implement and improve these systems, our ability to accurately forecast sales
demand, manage our supply chain and record and report financial and management
information would be adversely affected. This could materially adversely affect
our business, results of operations and financial condition.

UNDETECTED SOFTWARE OR HARDWARE ERRORS COULD HAVE A MATERIAL ADVERSE EFFECT ON
US

     Networking products frequently contain undetected software or hardware
errors when first introduced or as new versions are released. We have
experienced minor errors in the past in connection with new products. We expect
that errors will be found from time to time in new or enhanced products after we
begin commercial shipments. These problems may cause us to incur significant
warranty and repair costs, divert the attention of our engineering personnel
from our product development efforts and cause significant customer relations
problems. The occurrence of these problems could result in the delay or loss of
market acceptance of our products and would likely have a material adverse
effect on our business, results of operations and financial condition.

     Our customers use our products to provide broadband access to their
customers. Defects, integration issues or other performance problems in our
products could result in financial or other damages to our customers or could
damage market acceptance for our products. Our customers could seek damages for
losses from us, which, if they were successful, could have a material adverse
effect on our business, results of operations and financial condition. A product
liability claim brought against us, even if unsuccessful, would likely be
time-consuming and costly.

WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY

     We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
We have filed one U.S. patent application. There can be no assurance that this
application will be approved, that any issued patents will protect our
intellectual property or that any issued patents will not be challenged by third
parties. Furthermore, other parties may independently develop similar or
competing technology or design around any patents that may be issued to us.
Although we attempt to protect our intellectual property rights, we may be
unable to prevent the misappropriation of our intellectual property,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States.

     Others may allege that our products infringe upon their proprietary rights.
Any parties asserting that our products infringe upon their proprietary rights
would force us to defend ourselves or our customers, manufacturers or suppliers
against alleged infringement of intellectual property rights. We could incur
substantial costs to prosecute or defend this litigation. In addition,
intellectual property litigation could force us to do one or more of the
following:

     o    cease selling, incorporating or using products or services that
          incorporate the challenged intellectual property;

     o    obtain from the holder of the infringed intellectual property right a
          license to sell or use the relevant technology, which license may not
          be available on acceptable terms, if at all; or

     o    redesign those products or services that incorporate the disputed
          technology.

     In the event of a successful claim of infringement against us and our
failure or inability to develop non-infringing technology or license the
infringed technology on acceptable terms and on a timely basis, our business,
results of operations and financial condition would be materially adversely
affected. We may be subject to these claims in the future.

     We may in the future initiate claims or litigation against third parties
for infringement of our proprietary rights in order to determine the scope and
validity of our proprietary rights or the proprietary rights of competitors.
These claims could result in costly litigation and the diversion of our
technical and management personnel. As a result, our business, results of
operations and financial condition could be materially adversely affected.

                                       14
<PAGE>

WE MAY NEED ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE

     The development and marketing of new products, which are not yet complete,
will require a significant commitment of resources. Likewise, the expansion of
our operations and reseller channels as a result of the merger will require
significant resources.

     Furthermore, if the market for broadband access develops at a slower pace
than anticipated or if we fail to establish significant market share and achieve
a meaningful level of revenue, we may continue to incur significant operating
losses and utilize significant amounts of capital. While we believe that our
existing capital resources are adequate to meet our current needs, we may
require additional capital in the future. Additional capital may not be
available to us at all, or, if available, may be available only on unfavorable
terms. Any inability to raise additional capital when we require it would
materially adversely affect our business, results of operations and financial
condition.

WE ARE DEPENDENT ON THE WIDESPREAD ADOPTION OF BROADBAND ACCESS SERVICES

     Sales of our products depend on the increased use and widespread adoption
of broadband access services, and the ability of our customers to market and
sell broadband access services. Our business, results of operations and
financial condition would be materially adversely affected if the use of
broadband access services does not increase as anticipated or if our customers'
broadband access services are not received well by the marketplace. Critical
issues concerning use of broadband access services are unresolved and will
likely affect use of broadband access services. These issues include:

     o    security;

     o    reliability;

     o    bandwidth;

     o    congestion;

     o    cost;

     o    ease of access; and

     o    quality of service.

     Even if these issues are resolved, if the market for products that provide
broadband access to the Internet and to corporate networks fails to develop, or
develops at a slower pace than anticipated, our business, results of operations
and financial condition would be materially adversely affected.

WE MAY HAVE INSUFFICIENT CASH FLOW TO MEET OUR DEBT SERVICE OBLIGATIONS

     We are required to generate cash sufficient to pay all amounts due on the
notes and to conduct our business operations. Currently, our earnings are
insufficient to cover our anticipated debt service obligations, and this may
materially hinder our ability to make payments on the notes. Our ability to meet
our future debt service obligations will be dependent upon our future
performance, which will be subject to financial, business and other factors
affecting our operations, many of which are beyond our control.

SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
FLOW

     We have substantial amounts of outstanding indebtedness, primarily the
notes. We also may obtain additional long-term debt and working capital lines of
credit. As a result of this indebtedness, our principal and interest payment
obligations will increase substantially. There is the possibility that we may be
unable to generate cash sufficient to pay the principal of, interest on and
other amounts due in respect of our indebtedness when due.

     Our substantial leverage could have significant negative consequences,
including:

     o    increasing our vulnerability to general adverse economic and industry
          conditions;

     o    limiting our ability to obtain additional financing;

                                       15
<PAGE>

     o    requiring the dedication of a substantial portion of our cash from
          operations to service our indebtedness, thereby reducing the amount of
          our cash available for other purposes, including capital expenditures;

     o    limiting our flexibility in planning for, or reacting to, changes in
          our business and the industry which we compete; and

     o    placing us at a possible competitive disadvantage vis-a-vis less
          leveraged competitors and competitors that have better access to
          capital resources.

THE NOTES ARE SUBORDINATED TO ALL OTHER SENIOR DEBT

     The notes are unsecured and subordinated in right of payment to all of our
existing and future senior debt. Generally, all of our present and future debt
will be senior debt unless the instrument creating such debt expressly provides
that such debt is not senior to the notes. Because the notes are subordinate to
our senior debt, if we experience:

     o    a bankruptcy, liquidation or reorganization;

     o    an acceleration of the notes due to an event of default under the
          indenture; or

     o    certain other events,

we will be permitted to make payments on the notes only after we have satisfied
all of our senior debt obligations. Therefore, we may not have sufficient assets
remaining to pay amounts due on any or all of the notes. In addition, the notes
effectively will be subordinate to all liabilities, including trade payables, of
our subsidiaries and any subsidiaries that we may in the future acquire or
establish. Consequently, our right to receive assets of any subsidiaries upon
their liquidation or reorganization, and the rights of the holders of the notes
to share in those assets, would be subordinate to the claims of the
subsidiaries' creditors.

     The notes are our obligations exclusively. The indenture for the notes does
not limit our ability or that of any of our presently existing or future
subsidiaries, to incur senior debt, other indebtedness and other liabilities. We
may have difficulty paying what we owe under the notes if we, or any of our
subsidiaries, incur additional indebtedness or other liabilities. As of March
31, 2000, we had approximately $16 million of senior debt outstanding. From time
to time we may incur additional indebtedness, including senior debt, which could
adversely affect our ability to pay our obligations under the notes.

WE MAY BE UNABLE TO REPURCHASE THE NOTES

     At maturity, the entire outstanding principal amount of the notes will
become due and payable. In addition, if a change in control occurs, each holder
of the notes may require us to repurchase all or a portion of that holder's
notes. At maturity or if a change in control occurs, we may not have sufficient
funds or may be unable to arrange for additional financing to pay the principal
amount or repurchase price due. Under the terms of the indenture for the notes,
we may elect, if we meet certain conditions, to pay the repurchase price with
shares of common stock. Our borrowing arrangements or agreements relating to
senior debt to which we become a party may contain restrictions on, or
prohibitions against, our repurchases of the notes. If the maturity date or
change in control occurs at a time when our other arrangements prohibit us from
repurchasing the notes, we could try to obtain the consent of the lenders under
those arrangements to purchase the notes, or we could attempt to refinance these
borrowings that contain the restrictions. If we do not obtain the necessary
consents or refinance these borrowings, we will be unable to repurchase the
notes. In that case, our failure to repurchase any tendered notes or notes due
upon maturity would constitute an event of default under the indenture. Any such
default, in turn, may cause a default under the terms of our senior debt. As a
result, in those circumstances, the subordination provisions of the indenture
would, absent a waiver, prohibit any repurchase of the notes until we pay the
senior debt in full.

THERE WILL BE NO PUBLIC MARKET FOR THE NOTES BEING OFFERED

     There has been no public market for any of the notes offered by this
prospectus, and there can be no assurance as to:

     o    the liquidity of any such market that may develop;

     o    the ability of the holders to sell their notes; or

                                       16
<PAGE>

     o    the price at which the holders would be able to sell their notes.

     If such a market were to exist, the notes could trade at prices that may be
higher or lower than the principal amount or purchase price, depending on many
factors, including prevailing interest rates, the market for similar notes, and
our financial performance. We do not presently intend to apply for the listing
of the notes on any securities exchange or for inclusion of the notes in the
automated quotation system of the National Association of Securities Dealers,
Inc.

     The initial purchasers have advised us that they presently intend to make a
market in the notes. The initial purchasers are not obligated, however, to make
a market in the notes, and any such market-making may be discontinued at any
time at the sole discretion of the initial purchasers. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act. Accordingly, no assurance can be given as to the
development or liquidity of any market for the notes.

VOLATILITY OF OUR STOCK PRICE MAY IMPAIR THE MARKET VALUE OF THE NOTES

     The notes are convertible into our common stock and the market price of our
common stock has been volatile in the past and is likely to continue to be
volatile. In addition, the securities markets in general, and technology stocks
in particular, have experienced significant price volatility and this could
affect the notes.

PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN OUR CONTROL

     Provisions of our amended and restated certificate of incorporation, bylaws
and Delaware law could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders.

                                       17
<PAGE>

                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We intend that the forward-looking
statements be covered by the safe harbor provisions for forward-looking
statements in these sections. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "could," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential," "intend" or
"continue," the negative of such terms or other comparable terminology. These
statements are only predictions, reflecting our expectations for future events
or our future financial performance. Actual events or results may differ
materially. In evaluating these statements you should specifically consider
various factors, including the risks outlined under "Risk Factors." These
factors may cause our actual results to differ materially from any
forward-looking statement. These factors include, but are not limited to:

     o    our limited operating history

     o    our history of losses

     o    our limited ability to forecast quarterly operating results

     o    our development and introduction of new products

     o    obtaining and expanding market acceptance of the products we offer

     o    increasing competition

     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of the forward-looking
statements. Nor do we undertake any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.


                                       18
<PAGE>

                       RATIO OF EARNINGS TO FIXED CHARGES

       The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings. Earnings is defined as pretax income from continuing
operations adjusted by adding fixed charges and excluding interest capitalized
during the period. Fixed charges means the total of interest expense and
amortization of financing costs, the estimated interest component of rental
expense on operating leases and preferred stock dividends.

       The following table sets forth our deficiency of earnings to fixed
charges for each of the periods indicated.
<TABLE>
<CAPTION>

                                          PERIOD FROM
                                           AUGUST 30,
                                              1996
                                          (INCEPTION)                                       THREE MONTHS ENDED
                                            THROUGH         YEAR ENDED DECEMBER 31,              MARCH 31,
                                          DECEMBER 31,  ---------------------------------  ----------------------
                                              1996        1997        1998        1999       1999        2000
                                          ------------- ---------  -----------  ---------  ---------- -----------
                                                                 (IN THOUSANDS)
<S>                                       <C>           <C>        <C>          <C>        <C>        <C>
Ratio of earnings to fixed charges.......           --        --           --         --          --          --
Amount of deficiency.....................           (1) $ (4,411)  $   (9,876)  $ (7,919)  $  (3,801) $  (85,237)
--------------
</TABLE>

  (1) We had no fixed charges in the period from inception (August 30, 1996)
through December 31, 1996.

                                 USE OF PROCEEDS

       We will not receive any of the proceeds from the sale of the Notes or
common stock by the selling holders.


                                   19
<PAGE>

                                    BUSINESS

OVERVIEW

       Redback Networks is a leading provider of advanced networking systems
that enable carriers, cable operators and service providers to rapidly deploy
high-speed access to the Internet and corporate networks. Our product lines,
which consist of the Subscriber Management System family combine, and the
SmartEdge family will combine, networking hardware with sophisticated software.
Together, these product families are designed to enable our customers to create
end-to-end regional networks that will support all major broadband access
technologies, as well as the new services that these high-speed connections will
enable. Our Subscriber Management System, or SMS, products connect and manage
large numbers of subscribers across all major high-speed access technologies,
including digital subscriber line, cable and wireless. Our SmartEdge optical
networking and multi-service products are being developed to simplify the
architecture of today's regional voice and data networks, as well as improve
their capacity and performance. We sell our products through our direct sales
force, resellers and distribution partners.

       Our SMS products bridge the gap between high-speed access concentrators
and the routers which connect to the Internet backbone, and they are currently
being used by many of the largest carriers and service providers worldwide.
UUNET, a subsidiary of MCI WorldCom; Bell Atlantic; SBC; Southwestern Bell
Information Services and Pacific Bell Internet, subsidiaries of SBC and GTE have
been, since inception, our largest customers in terms of revenues. Other
representative customers include Bell Canada, BellSouth, ChungHwa Telecom,
Concentric Network, EarthLink, Flashcomm, Verio and @Work, a division of @Home.

       We announced our new family of SmartEdge products during the second
quarter of 2000 and anticipate our first customer shipments to begin in the
second half of 2000. We cannot be certain that the SmartEdge family of products,
or any future products designed around this technology, will be successfully
developed or will achieve widespread market acceptance.

INDUSTRY BACKGROUND

INCREASING DEMAND FOR BROADBAND ACCESS SERVICES

       In recent years, there has been a significant increase in demand by
businesses and consumers for broadband, or high-speed, access to the Internet
and to corporate networks. Increasing numbers of users are relying on networks
based on Internet Protocol, the dominant software standard for the Internet, to
access corporate intranets and the Web and to participate in network-dependent
activities such as email, electronic commerce, telecommuting and on-line
entertainment. Consumers are seeking low-cost, high-speed access to
bandwidth-intensive Internet content and services such as highly graphical Web
sites, high quality audio and video feeds, and high-speed data. Businesses have
even greater requirements for high-speed access in order to implement electronic
commerce strategies or Web-based business models, and to provide employees and
others with robust telecommuting capabilities. These applications often require
the transmission of large, multimedia-intensive files, which is practical only
with high-speed data access services.

EMERGING BROADBAND INTERNET ACCESS OPTIONS

       Carriers, cable operators and service providers are responding to this
demand for high-speed access by providing inexpensive and comprehensive
broadband services. These services deliver "always on" availability that
eliminates the tedious dial-up process associated with analog modem
technologies. Changes in telecommunications regulations have facilitated the
development of broadband strategies by local access providers, using the
following technologies:

       DIGITAL SUBSCRIBER LINE. The market for digital subscriber line services
is expanding rapidly. Digital subscriber line operates over standard copper
telephone wires, utilizing an extensive network infrastructure that can be
upgraded for broadband services. Various implementations of digital subscriber
line are being developed and deployed, including full-rate consumer oriented
asymmetrical digital subscriber line and G.lite and business oriented
symmetrical digital subscriber line. Digital subscriber line can also serve as
an affordable replacement for dedicated lines used to deliver high-speed data
services. In North America, incumbent local exchange carriers and their various
subsidiaries, including Bell Atlantic, Bell Canada, BellSouth, GTE, Pacific
Bell, SBC and US West, have

                                       20
<PAGE>

deployed digital subscriber line services. Internationally, many national
carriers have begun digital subscriber line trials or deployments.
Telecommunications regulatory reform has enabled new competitive local exchange
carriers and leading Internet exchange carriers, including Covad Communications,
MCI WorldCom, NorthPoint Communications, Rhythms NetConnections, and Sprint, to
provide digital subscriber line service over the same telephone infrastructure
used by the local exchange carriers and national carriers.

       INTERACTIVE CABLE. High-speed interactive communication across the cable
infrastructure is made possible by the combination of two-way cable, cable
modems installed in the home and cable modem termination systems installed at
major cable concentration points. Several companies are currently deploying
broadband access services across two-way cable, including @Home and Time Warner,
through its Roadrunner service, in North America. With upgrades to two-way
cable, cable operators are well positioned to deploy broadband access services.

       WIRELESS. As an alternative to wireline access, carriers and service
providers are using wireless technologies to provide cost-effective broadband
access. Many of these providers are in the early stages of using their licenses
to deploy broadband wireless access services.

       FIBER-TO-THE-CURB. Fiber optic cable supports an alternative broadband
access technology based on light and photonics that offers nearly unlimited
bandwidth capacity. Where deployment costs are justified by service opportunity,
fiber optic cable is being deployed in the "last mile" from the telephone
central office to the subscriber. Recent fiber-to-the-curb initiatives have been
pursued by several local exchange carriers.

OBSTACLES TO DEPLOYING BROADBAND ACCESS

       Regardless of the type of broadband access delivered, deployment of
broadband services poses several major challenges associated with scaling and
configuring existing architectures to accommodate large numbers of new
high-speed subscribers. The traditional dial network model, relying on analog
modems and standard telephone lines, is structured so that service providers can
aggregate subscribers using remote access servers, located at the service
providers' data centers. Although constrained by speed, this network model
allows service providers not only to aggregate subscriber connections and pass
the traffic to routers, but also to manage subscriber provisioning,
authentication and accounting in the remote access server.

       With broadband access technologies, however, subscriber connections are
first concentrated by the carriers and cable operators using technology-specific
access concentrators such as digital subscriber line access multiplexers and
cable modem termination systems. From there, high-speed data circuits are
aggregated at a central facility by carriers, cable operators or other service
providers who terminate subscriber connections and provide backbone connectivity
to the Internet. These service providers therefore need to manage thousands of
subscribers' connections and to route subscribers' data to and from the
Internet. While service providers have been using traditional routers to provide
both the circuit termination and Internet connectivity functions, routers were
only designed to address the Internet connection task and are limited to
managing several hundred subscribers, significantly less than the thousands of
potential subscribers associated with a widely deployed service. In addition,
unlike existing remote access servers used in the traditional analog modem dial
network model, routers were not designed to provide broadband subscriber
management functions such as provisioning, authentication and accounting.

                                       21
<PAGE>

       Broadband technologies pose additional challenges for service providers
interested in offering more than one type of broadband service. Each broadband
access technology uses different equipment at the service provider's facility.
As a result, service providers offering multiple broadband services
significantly increase their costs, as they must purchase different routers and
deploy different operational models for each broadband service they choose to
offer to their subscribers. The traditional broadband network model is depicted
below:

                  SEPARATE NETWORKS FOR EACH ACCESS TECHNOLOGY

             [SEPERATE NETWORKS FOR EASY ACCESS TECHNOLOGY GRAPHIC]

       Another obstacle to deploying broadband services is the point-to-point,
or dedicated, nature of broadband access technologies. Whether the access method
is digital subscriber line, cable or wireless, each of these technologies
provides a dedicated link from one starting point, such as a home or small
office, to a single destination network, such as a service provider or a
corporation. Thus, a telecommuter who purchases a digital subscriber line
service for connecting to a corporate network is unable to use the same line to
access directly a consumer service provider for personal Web surfing.

       There is a growing demand from carriers, cable operators and service
providers to address these issues so that they are able to provide their
customers with reliable, scalable, easy-to-use high-speed access on a
cost-effective basis. Carriers, cable operators and service providers require
highly scalable networks and the ability to manage and groom individual
subscriber data streams into simplified Internet Protocol flows for routers
connecting to the Internet backbone. Service providers must be able to rapidly
and cost-effectively aggregate data streams from diverse broadband access
technologies from different carriers and cable operators.

CAPACITY AND FLEXIBILITY ISSUES IN THE REGIONAL NETWORK

       In addition to the obstacles noted above for delivering broadband access,
carriers, cable operators and service providers face additional issues in their
regional data networks, or intra- and inter-city networks, with regard to
capacity and flexibility. Previously, these telecommunications providers carried
only voice or low-speed data traffic over their regional data networks. However,
with the popularity of broadband Internet access and high-speed data connections
for businesses, providers are now facing challenges in accommodating a greatly
increased volume of traffic. The widespread availability of broadband access
will create significantly more data traffic volume than most existing regional
networks are able to carry today.

       Another issue carriers and other providers must address in their regional
networks is the complexity that exists in them today. Currently, most
telecommunication providers' regional networks are comprised of two separate
networks--one that carries traditional voice and data traffic using older
optical technology, and one that provides high-speed connections for businesses
using newer but still complex data equipment. To offer a comprehensive set of
telecommunications services to a business, a provider must make changes to
multiple pieces of equipment and multiple software systems. The result is that
today telecommunications services often take a long time to be delivered once
requested, and are not able to be quickly modified to meet customer requests.

                                       22
<PAGE>

                 COMPLEXITY IN PROVIDERS' REGIONAL DATA NETWORKS

            [COMPLEXITY IN PROVIDERS' REGIONAL DATA NETWORKS GRAPHIC]

THE REDBACK SOLUTION

       Redback provides solutions that make it possible for carriers, cable
operators and service providers to connect and manage large numbers of
subscribers using high-speed access technologies such as digital subscriber
line, cable and wireless. Together our product families will enable our
customers to create end-to-end regional networks that will support all major
broadband access technologies as well as the new services that these high-speed
connections will enable. Additionally, Redback provides solutions that ease the
capacity and flexibility issues associated with carriers' and service providers'
regional networks.

       Our SMS product family lets carriers, cable operators and service
providers connect thousands of subscribers quickly and cost-effectively, as well
as manage subscriber accounts and service profiles. Carriers, cable operators
and service providers are able to deliver different kinds of high-speed access
and a variety of service offerings with a single operational structure. Our SMS
network model is described below:

                   WE SUPPORT ALL MAJOR BROADBAND TECHNOLOGIES

              [WE SUPPORT ALL MAJOR BROADBAND TECHNOLOGIES GRAPHIC]


                                       23
<PAGE>

       Our SmartEdge family will enable carriers, cable operators and service
providers to create high capacity, very flexible regional fiber optic networks.
Telecommunications providers will be able to use the SmartEdge platform to
upgrade their regional voice and data networks to support the extra traffic
generated by the growing availability of broadband Internet access.
Additionally, regional networks based on our SmartEdge products will be less
complex and more flexible in design, and thus telecommunications providers will
be able to deliver high-speed data services more rapidly. Our SmartEdge network
model is described below:

 OUR SMARTEDGE FAMILY OF PRODUCTS IS BEING DESIGNED TO SIMPLIFY REGIONAL
                           NETWORKS AND ADD CAPACITY

    [OUR SMARTEDGE FAMILY OF PRODUCTS IS BEING DESIGNED TO SIMPLIFY REGIONAL
                       NETWORKS AND ADD CAPACITY GRAPHIC]

       Our solution provides the following key benefits:

       ENHANCES BROADBAND OPERATIONS. Our SMS products bridge the operational
gap between "last mile" access networks that serve businesses and homes and the
routers connecting to the Internet backbone used by service providers. Our
products accept a large concentration of high-speed data traffic from multiple
access concentrators and translate it to an Internet Protocol data stream,
relieving routers connecting to the Internet backbone of traffic translation and
management responsibilities. In this process, our products manage individual
subscriber connections and reduce the number of routers required for widespread
deployment of broadband services.

       SIMPLIFICATION OF REGIONAL NETWORK ARCHITECTURE. Our SmartEdge products
are being designed to simplify the design of regional voice and data networks,
and enable our customers to increase their capacity and performance with less
equipment.

       SUPPORTS ALL MAJOR ACCESS TECHNOLOGIES. Our SMS products provide, and our
SmartEdge products will provide, a consistent operational model across major
access technologies including digital subscriber line, cable, and wireless and
can, and will, be deployed by all types of access providers, including incumbent
and competitive local exchange carriers, cable operators and service providers.
For example, a service provider, using our SMS product, can offer digital
subscriber line services today and later add or resell a cable or wireless
service offering through the same SMS product family. Additionally, a carrier
using the SmartEdge platform for traditional voice and data traffic will be able
to deliver Internet Protocol-based services in the future. With our products,
providers will be able to utilize one set of products and one familiar
operational model to deliver multiple broadband access technologies to serve
thousands of subscribers.

       FACILITATES RAPID AND SCALABLE DEPLOYMENT. Our products support service
providers' existing accounting and management software systems. This enables
service providers to quickly deploy new high-speed access services and thus gain
a critical advantage in the highly competitive Internet access market. For
example, our products have built-in support for the industry standard for
accounting and security databases, as well as support for the major digital
subscriber line protocols and implementations. To further facilitate rapid
deployment, we designed our products to be interoperable with equipment from
multiple vendors, for easy integration into existing networks. Our products are
compatible with existing routers and support high performance levels, thereby
eliminating the need to purchase new routers. The SMS product family
architecture, for example, is inherently more scalable than a router-based
architecture. The SMS 10000 currently supports 100,000 simultaneous subscriber
sessions, many times the number of subscribers supported by conventional
routers.

                                       24
<PAGE>

       PROVIDES PLATFORM FOR THE DELIVERY OF VALUE-ADDED SERVICES. Our SMS
products enable, and our SmartEdge product will facilitate, providers to create
and market new service offerings that leverage basic broadband connectivity and
capabilities. The multiple context functionality of our SMS products lets
service providers configure subscribers to access multiple services across a
single physical link. For example, a telecommuter can access a corporate network
from home while his or her family simultaneously accesses consumer Internet
services through the same connection. Thus, a service provider previously
generating a flat monthly access fee can offer value-added services and generate
multiple revenue streams through "re-profiling". In addition, a wholesale
provider of network services can partition high-speed transport services among
multiple service providers or corporate customers through a single SMS family
product with "re-selling". A large provider can use this capability to provide
wholesale access to up to hundreds of smaller providers per SMS 1800 or SMS
10000 chassis--a significant improvement for wholesale transactions.

       SIMPLIFIES END-USER ADMINISTRATION AND SUPPORT. Our approach allows easy
configuration and administration of end-user broadband modems, reducing service
providers' costs and enhancing their ability to rapidly deploy services to
thousands of subscribers. For example, we utilize a standard networking protocol
to provide individualized services for multiple users sharing a single
connection, such as multiple PCs in a home or office. Our products also support
a variety of means to manage users, resulting in reduced training and lower
operational expenses.

STRATEGY

       Our objective is to be the leading provider of advanced networking
systems that enable carriers, cable operators and service providers to rapidly
deploy high-speed access to the Internet and corporate networks. Key elements of
our strategy include the following:

       EXTEND LEADERSHIP IN THE CARRIER AND SERVICE PROVIDER MARKET. We are
focused on delivering subscriber management solutions to carriers and service
providers, and have established early market leadership in the digital
subscriber line market through capturing accounts in several major networks. We
currently have orders or installations at many of the RBOCs, including SBC, Bell
Atlantic and BellSouth, as well as installations at other national and
international carriers, including Bell Canada, ChungHwa Telecom, France Telecom,
GTE and Guandong Telecom. Additionally, we have several leading service
providers as customers, including UUNET, a subsidiary of MCI WorldCom,
EarthLink, Concentric Network, Southwestern Bell Information Services and
Pacific Bell Internet, subsidiaries of SBC, and @Work, a division of @Home. We
plan to extend our market leadership position by continuing to invest in sales
and marketing efforts that will allow us to further penetrate existing accounts,
to develop early customer relationships and to win new service provider accounts
for all types of broadband access.

       PENETRATE REGIONAL NETWORK MARKET. We intend to leverage our customer
relationships and our knowledge of their deployments to sell our SmartEdge
Systems. We plan to offer integrated end-to-end solutions that provide our
customers with greater benefit and cost savings.

       PENETRATE CABLE AND WIRELESS BROADBAND MARKETS. We intend to use our
leadership position in digital subscriber line subscriber management to
penetrate other critical broadband access markets, such as cable, wireless and
fiber-to-the-curb. We plan to continue to enhance our solutions that support
multiple broadband access technologies and to expand our sales and marketing
efforts.

       Our solution has gained acceptance across multiple broadband access
markets by offering service providers the ability to support multiple broadband
access markets. Example installations include EarthLink and MosCom, the leading
service provider in the Philippines, both of which use SMS products for both
cable and digital subscriber line access.

       EXPAND GLOBAL DISTRIBUTION AND STRENGTHEN RELATIONSHIPS WITH DISTRIBUTION
PARTNERS. We currently pursue a direct and indirect sales strategy to penetrate
carrier, cable operator and service provider organizations in North America,
focusing primarily on large Internet service providers and incumbent and
competitive local exchange carriers. We also target smaller service providers
through resellers that participate in our authorized PowerPartners program.
Resellers who participate in our PowerPartners program sell our products to
their customers. We do not have formal partnership agreements with resellers who
participate in our PowerPartners program. However, we offer participating
resellers discounts, technical training materials, access to an exclusive
web-site and exclusive marketing and sales materials.

                                       25
<PAGE>

       Since inception, a substantial majority of our revenues have been
generated through direct sales. We have expanded our presence globally by
increasing the scope and size of our sales force by adding dedicated sales
resources in both Europe and Asia. To further support our global sales
objectives, we have established relationships with companies such as Nokia,
which are leading communications and networking companies with significant
customer relationships in place. Although we do not have formal partnership
agreements with these companies, which we refer to as distribution partners,
they have enabled us to rapidly expand our global sales presence and to leverage
their established relationships with major carriers and service providers.
Unlike resellers who participate in our PowerPartners program that sell our
product directly to their customers, our distribution partners integrate our
products into their products and sell the integrated product to their customers.

       LEVERAGE LEADING SOFTWARE CAPABILITIES. We believe our products'
operating system software differentiates our solution and gives us a competitive
advantage in the marketplace. We intend to continue to enhance our wholesale,
security, bandwidth management, subscriber accounting and billing, and network
management capabilities with our highly experienced team of software engineers.
We expect our current and future products will share a common software
foundation and offer a consistent operational model.

       LEVERAGE PROPRIETARY COMPUTER CIRCUIT DESIGNS. We believe our SmartEdge
products' hardware design, including proprietary computer circuits, commonly
known as application specific integrated circuits or ASICs, will give us a
competitive advantage in the marketplace. These ASICs are very complex and
incorporate the functions previously performed by multiple pieces of equipment.
We intend to continue to enhance our ASIC designs and use them throughout our
SmartEdge product line, as well as migrate them to our SMS product line.

       ENABLE NEW CONSUMER AND BUSINESS SERVICES. We believe our solution
provides a highly flexible platform for the creation and delivery of new
value-added services. We will continue to work directly with our customers to
develop features and functionality that further enhance the ability of service
providers to deliver profitable new broadband-based services. We believe this
approach will increase the value we offer in both new and existing
installations, as well as contribute to the continued business success of our
customers. Examples of these new services include tiered "gold" or "platinum"
high-availability services, virtual private networks and bundled teleworker
services.

       DELIVER BROAD PRODUCT FAMILY. Our SMS 1800 and SMS 10000 are targeted at
carriers, cable operators and large service providers. We have expanded our
product offering with the SMS 500, which is targeted at service provider
facilities with fewer subscribers than those using the SMS 1800. Our strategy is
to continue to leverage our products' operating system software across multiple
access technologies and products. In so doing we intend to address a range of
functionality, density and application requirements of carriers, cable operators
and small and large service providers.

                                       26
<PAGE>

CUSTOMERS

       The following is a list of selected companies that have purchased our
products and services:

<TABLE>
<CAPTION>
SERVICE PROVIDERS                            CARRIERS                             RESELLERS
----------------                             ---------                            ---------
<S>                                          <C>                                  <C>
Advanced Telcom Group                        AT&T Wireless                        ComTrend
Concentric Network                           Bell Atlantic                        ECI Telecom
EarthLink                                    Bell Canada                          Fujitsu
FirstWorld Communications                    BellSouth                            GTI
Flashcomm                                    ChungHwa Telecom                     Lucent Technologies
InterQuest Communications                    France Telecom                       NCA
JumpPoint Communications                     GTE                                  Nokia
Pacific Bell Internet, a                     Korea Telecom                        Network Systems
   subsidiary of SBC                         Qwest Communications                    Integrators
Primary Network Communications               SBC                                  Plexus Technology
PSINet                                       Southern N.E. Telephone              Solunet
Southwestern Bell Information                Sprint                               Starcom
   Systems, a subsidiary of SBC              Williams Communications              Structured
UUNET, a subsidiary of MCI                                                           Communications
   WorldCom                                                                       Sumitomo Electronics
Verio
@Work, a division of @Home
</TABLE>

       The following three examples illustrate how organizations are using our
products to deploy broadband service offerings.

NETWORK SERVICE PROVIDER

       Since 1999, one of the world's largest network service providers has been
delivering its digital subscriber line service across North America. Their
service offering, which was one of the largest digital subscriber line
deployments offered by any service provider to date, included two different
categories of digital subscriber line services:

       o   Symmetrical digital subscriber line services designed to support
           business applications such as Web hosting, e-commerce and bulk file
           transfer; and

       o   Asymmetrical digital subscriber line services targeted at consumer
           applications such as Internet surfing, home shopping and interactive
           games. In order to offer a broad deployment on a rapid time schedule,
           the service provider required a solution that would enable it to
           quickly and easily scale to large proportions.

       The network service provider chose our SMS product as the platform for
delivering its digital subscriber line service offering. The provider uses our
SMS product to perform all of the aggregation, management and conversion
functions necessary to deliver router-ready Internet Protocol data streams to
the backbone. The provider is using the high subscriber capacity of our SMS
product to aggregate as many as 8,000 subscribers per system over high-speed
connections delivered from various central office facilities. Using our SMS
products' powerful multiple context functionality, the network service provider
is able to offer wholesale digital subscriber line services to its many Internet
service provider customers that are using the network service provider's
backbone.

INTERNET SERVICE PROVIDER

       A large consumer-oriented service provider decided to roll-out its
broadband access strategy. Already a leader in traditional dial-up access with
over a million subscribers, it was looking to anchor its service with a platform
that would enable them to simultaneously support cable and digital subscriber
line access. The service provider would receive digital subscriber line capacity
from several large wholesale partners, and cable capacity via cable operator
that it partnered with. The service provider faced the challenge of how to
cost-effectively aggregate subscriber traffic from these different access
technologies while maintaining a large investment in its existing, and highly
successful, operational model.

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<PAGE>

       By using our SMS in its large subscriber aggregation points, the service
provider was able to concentrate its different digital subscriber line and cable
feeds using a single platform. Additionally, because the SMS was fully
integrated with the service provider's existing billing and authentication
systems, the service provider was able to leverage and retain its many years of
operating expertise and continue using its existing operational model with new
broadband service offerings. Over time, the service provider also has added very
high-capacity fiber-to-the-curb access, which it received through another
partnership, and used our SMS family of products to integrate that technology as
well.

INCUMBENT LOCAL EXCHANGE CARRIER AFFILIATE

       An unregulated affiliate of an incumbent local exchange carrier had been
operating trials of its digital subscriber line Internet access service in a
limited number of communities and households for over a year and planned to
announce a much broader service deployment and breakthrough pricing levels. The
affiliate needed a highly scalable and production-proven solution to handle the
massive demand it expected to receive for its services.

       The affiliate selected our SMS products as the subscriber management
platform to aggregate subscriber traffic in its service. Today, this provider is
one of the largest digital subscriber line providers in the world, with very
high volumes of traffic passing through its SMS platforms every day. Our SMS
products are deployed in the affiliate's digital subscriber line-enabled
subscriber aggregation points to manage live traffic from many thousands of
subscribers, and the size of the deployment continues to grow every month.

SALES AND MARKETING

       We sell our products through a direct sales force, resellers, and
distribution partners. Our direct sales force is located in North America and is
focused on the largest service provider, cable operator and carrier
opportunities. As of May 31, 2000, our direct sales force consisted of
approximately 130 persons located in various cities throughout North America,
Europe and Asia.

       We have a variety of marketing programs and initiatives to support the
sale and distribution of our products. The audience for these activities
includes our sales organization, distribution partners and authorized resellers,
existing and prospective customers, and the trade press, analysts and others who
are influential in the industry. Marketing activities include participation in
technical conferences, preparation of sales tools, business cases, competitive
analyses and other marketing collateral, sales training, publication of customer
deployments, new product information and educational articles in industry
journals, maintenance of our World Wide Web site and direct marketing to
prospective customers. We also participate in leading industry tradeshows, such
as Networld + InterOp in Las Vegas and SuperComm in Atlanta. We were recently
awarded Telecommunications Magazine's "Hot Start-up" award for 1999. We continue
to receive extensive media coverage in both telecommunications and financial
publications.

PRODUCTS AND TECHNOLOGY

       Our SMS products enable broadband service providers to deliver high-speed
Internet access and services by bridging the operational gap between high-speed
access equipment in the telco central office or cable/wireless concentration
point and network service provider routers connecting to the Internet backbone.
Whether deployed at subscriber aggregation points by telecommunications
carriers, by cable operators or by service providers, the SMS product family
accepts a large concentration of high-speed data traffic from such devices as
digital subscriber line concentrators, cable modem termination systems, and
wireless termination systems. The SMS product family applies scalable user
configuration and management to the data streams, and then performs all of the
translations necessary to convert the traffic to Internet Protocol, relieving
the service provider backbone routers of frame translations that can cause
congestion on high-volume networks.

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<PAGE>

                                    [GRAPHIC]

          SMS 500                    SMS 1800                         SMS 10000

       Our SmartEdge products will enable carriers, cable operators and service
providers to build regional voice and data networks. Using SmartEdge products,
these providers will be able to build regional networks that require fewer
pieces of equipment, provide more capacity, and are easier to operate to deliver
services. We announced our family of SmartEdge products during the second
calendar quarter of 2000 and anticipate our first customer shipments to begin in
the second half of 2000.

DESCRIPTION OF THE SMS PRODUCT FAMILY

       We currently offer the SMS 500, the SMS 1000, the SMS 1800 and the SMS
10000.

       SMS 500. Targeted initially for service provider facilities with fewer
subscribers than those using the SMS 1000, we released the SMS 500 for general
availability in March 1999. The SMS 500 is a smaller chassis with two modular
interface slots and supports up to 2,000 simultaneous subscribers. The SMS 500
supports ATM, Frame Relay and 10/100 megabit Ethernet, as well as T-1
connections.

       SMS 1000 AND SMS 1800. We began shipping the SMS 1000 in December 1997.
Our follow-on product, the SMS 1800, began shipping in October 1999. Each SMS
1800 today can support up to 8,000 simultaneous subscribers and is targeted at
major internet service providers, incumbent and competitive local exchange
carriers and cable operators. The chassis consists of six modular interface
slots, which can be populated with modules supporting DS-3 and OC-3 ATM, DS-3
Frame Relay, 10/100 megabit Ethernet and other transmission protocols. The
product also has E1 and E3 modules for Europe and Asia.

       SMS 10000. We began shipping the SMS 10000 in May 2000. Our largest
system, each SMS 10000 today can support up to 100,000 subscribers. The SMS
10000 features very high levels of reliability and all major system components
can be configured with standby components for fail-safe operation. The SMS 10000
also features a very high capacity in the number of ports than can be configured
and in the speed of those ports. The chassis itself consists of 24 modular
interface slots. Besides supporting the ports and speeds mentioned above, the
SMS 10000 also supports OC-12 ATM and Packet over SONET, as well as Gigabit
Ethernet.

SMS OPERATING SYSTEM SOFTWARE

       Our operating system software is an advanced operating system developed
to optimize the subscriber management and routing functions in our products. Our
operating system software operates on the SMS product family, and was developed
specifically to support the aggregation of large numbers of subscriber circuits.
It supports a large variety of network protocols in use in the industry today,
and provides sophisticated traffic management features.

       In addition, our operating system software supports the routing and
bridging of Internet Protocol packets and is capable of running dynamic routing
protocols. Our operating system software supports the unique capability to
dynamically bind subscriber sessions to services. This capability enables
dynamic service selection to be deployed by carriers and service providers
alike. Our operating system software also supports the Layer 2 Tunneling
Protocol, or L2TP, which is critical to the deployment of virtual private
networks by service providers. We are a co-author of the PPP-over-Ethernet
specification, a protocol that greatly simplifies broadband access and service
provider selection, and the functionality in our operating system software is a
leading implementation of this protocol.

                                       29
<PAGE>

Another distinguishing feature of our operating system software is its support
for multiple contexts, which allows a service provider to partition a single SMS
unit into as many as twenty multiple virtual logical devices.

       Some of the key functions that our operating system software supports
include:

       TRAFFIC MANAGEMENT FEATURES. Traffic management features, including
policing and rate limiting, support the creation of different service classes
and provide service providers with predictable traffic behavior for better
management of their networks.

       ROUTING PROTOCOL SUPPORT. Our operating system software includes support
for various popular routing protocols. In addition, we will continue to leverage
and expand the routing protocol support that our product line offers.

       LAYER 2 TUNNELING PROTOCOL (L2TP). We support Layer 2 Tunneling Protocol,
or L2TP, the standard method of building a virtual private network that allows
fixed and mobile users, including telecommuters, to simulate a private network
using a shared infrastructure, such as the Internet. Virtual private networks
also allow mobile users to make secure connections to their corporate intranets
or extranets over the public Internet.

       WEB-BASED MANAGEMENT. The Web-based management capabilities in our
operating system software allow service providers to streamline operations and
simplify troubleshooting through a common, easy-to-use browser interface.

       BULK STATISTICS. The bulk statistics capabilities in our operating system
software allow service providers access to information that enables them to
provide efficient storage and transfer of high volume accounting data.

DESCRIPTION OF THE SMARTEDGE PRODUCT FAMILY

       Our SmartEdge products will be hardware and software solutions that will
be used to create regional voice and data networks. Our SmartEdge products will
incorporate technological advances in ASICs and fiber optics to deliver both
traditional data and Internet Protocol-based services with very high
reliability, security, and expandability. A key benefit of the design of our
SmartEdge products will be the ability to incorporate multiple network functions
into a single system. We plan to achieve this integration through our extensive
use of proprietary ASICs.

   OUR SMARTEDGE FAMILY OF PRODUCTS WILL INTEGRATE MULTIPLE NETWORK FUNCTIONS

                                    [GRAPHIC]

                                       30
<PAGE>

       In developing the SmartEdge solution, we have invested in creating a high
degree of competency in ASIC and computer processor design, fiber optics, and
Internet Protocol software development. We have developed ASICs for our
SmartEdge solutions that will integrate multiple communications functions into a
single computer circuit. These functions would previously have been accomplished
with several different pieces of equipment.

RESEARCH AND DEVELOPMENT

       We have assembled a team of highly experienced networking engineers. Our
engineering expertise includes Internet Protocol and routing software
development, ASIC and custom circuit design, optical networking hardware and
software, subscriber management software, ATM/Frame Relay switching, wide area
network interfaces and network management software. Following the merger with
Siara Systems, we have, as of May 31, 2000, 320 engineers, with plans to
continue expanding all functional areas of the engineering organization. This
compares to 33 engineers at the beginning of 1999. During 1998 and 1999, we
spent $5.7 million and $21.1 million, respectively, on research and development.
During the three months ended March 31, 1999 and 2000, we spent $3.1 million and
$12.1 million, respectively, on research and development. As a result of
introducing the SmartEdge product this year, as well as its follow-on
development, we expect to invest additional capital in research and development
programs.

       Our research and development process is driven by market demand. Product
development begins with a comprehensive functional product specification based
on input from the product management and sales organizations. In addition, we
value feedback from customers and have incorporated a significant amount of
customer-requested functionality to date. We are also active in industry bodies
and standards committees and utilize information from these organizations in the
product development process.

       We are focusing development efforts on, among other things, completing
and extending the functions of our ASIC designs, enhancing our support of the
Internet Protocol and other related routing protocols, and creating and
delivering optical interfaces for our products. We are also completing the
development of a larger, higher capacity subscriber management product. In
addition, we are committed to extending the functionality of our subscriber
management system software to enable additional competitive advantages for our
customers.

CUSTOMER SERVICE AND SUPPORT

       Our customer service and support organization installs and maintains
products sold worldwide by our direct sales force, as well as products sold by
our authorized resellers and partners. Generally, our distribution partners and
authorized resellers provide installation and first-level, or preliminary,
support to their customers, while we provide backup support. Our technical
assistance center employs systems engineers who work closely with our direct
sales personnel, partners and resellers to assist end users with post-sales
support issues. We have retained field systems engineers to provide pre-sales
support and installation services for direct sales customers.

MANUFACTURING

       Our manufacturing operations consist primarily of prototype development,
materials planning and procurement, final assembly, testing and quality control.
We use several independent suppliers to provide printed circuit boards, chassis
and subassemblies. For our SMS products, we use a combination of standard parts
and components obtained through Wyle Electronics, located in Santa Clara,
California. Several key components are purchased from sole or limited sources of
supply.

       We currently use a single third-party manufacturer, Electromax, located
in San Jose, California, to manufacture our SMS products. We have developed our
own products and specify to Electromax the exact parts necessary to build these
products. We or an outside contractor then order and assemble these parts into
subassemblies and components and provide these subassemblies and components to
Electromax. Electromax then provides the labor to assemble, test and ship our
products, pursuant to the exact specifications provided to them by us. While
Electromax is currently the sole manufacturer of our products, we are not
entirely dependent on Electromax to manufacture our products. We have
relationships with a limited number of other third-party manufacturers, one of
which currently builds our prototypes, and some of which have the capacity
necessary to assemble, test and ship our products. Because we maintain an
inventory of parts sufficient to enable us to continue manufacturing our
products for at least two months, we would be able to supply these other
third-party manufacturers with parts to commence the assembly, testing and
shipping of our products within a couple of weeks

                                       31
<PAGE>

of the loss of any of our third-party manufacturers. However, the loss of any of
our third-party manufacturers would prevent us from meeting our scheduled
product deliveries to our customers and would materially and adversely affect
our business, results of operations and financial condition.

       For our SmartEdge products, we will use a similar manufacturing model,
with Flash Electronics as the primary contractor.

       We plan to share manufacturing knowledge and processes between the
primary contract manufacturers for the SMS and SmartEdge products, in an effort
to reduce our risk associated with each manufacturer.

COMPETITION

       The broadband access markets we are targeting, including digital
subscriber line, cable and wireless are new and rapidly evolving and we expect
these markets to be highly competitive. In addition, we expect that new
competitors will emerge as the market for broadband access itself evolves due to
technological innovation and regulatory changes. We encounter current or
potential competition from public and private companies providing routers
connecting to the Internet backbone, access concentrators and subscriber
aggregation systems.

       The market for regional data networks is a more mature market and
therefore highly competitive with established vendors and many new market
entrants.

       Cisco, the leading provider of routers connecting to the Internet
backbone, offers products that compete directly with both our SMS and SmartEdge
products, and also provides a comprehensive range of broadband access and
optical networking systems. Nortel Networks also provides both subscriber
management systems as well as a wide range of optical networking products used
to create regional data and voice networks.

       In the subscriber management market, we expect companies that offer
access concentrators and routers to incorporate incremental subscriber
management functionality into their products. These companies include Lucent
Technologies. There are also private companies that provide subscriber
management features in access concentrators or routing platforms, and many
private companies that are designing products to address different issues
involved with building regional networks.

       In the regional network market, established competitors include Alcatel,
Cisco, Fujitsu, Lucent Technologies and Nortel Networks. In addition, there are
numerous emerging companies addressing different technical issues affecting this
market.

       Some of our current and potential competitors are large public companies
that have longer operating histories and significantly greater financial,
technical, marketing and other resources than we do. As a result, these
competitors are able to devote greater resources to the development, promotion,
sale and support of their products. In addition, our competitors with large
market capitalizations or cash reserves are much better positioned than we are
to acquire other companies, including our competitors, and thereby acquire new
technologies or products that may displace our product lines. Any of these
acquisitions could give the acquiring competitor a strategic advantage that
would materially adversely affect our business, results of operations and
financial condition.

       Many of our competitors have significantly more established customer
support and professional services organizations than we do. In addition, many of
our competitors have much greater name recognition and have a more extensive
customer base, broader customer relationships and broader product offerings than
us, including relationships with many of our current and potential customers.
These companies can leverage their customer relationships and broader product
offerings and adopt aggressive pricing policies to gain market share. As a
result, we may not be able to maintain a competitive position against current or
future competitors. Our failure to maintain and enhance our competitive position
within the market could seriously harm our business, results of operations and
financial condition.

PATENTS AND PROPRIETARY RIGHTS

       Our success and ability to compete are dependent on our ability to
develop and maintain the proprietary aspects of our technology. We rely on a
combination of patent, trademark, copyright and trade secret laws, employee and
third-party nondisclosure agreements and licensing arrangements to protect our
intellectual property. These legal protections afford only limited protection
for our technology. We have one patent application pending in the United States
and we have no foreign patents or patent applications. Our pending patent
application may not result

                                       32
<PAGE>

in the issuance of any patents. If any patent is issued, it might be invalidated
or circumvented or otherwise fail to provide us any meaningful protection. In
addition, we cannot be certain that others will not independently develop
substantially equivalent intellectual property or otherwise gain access to our
trade secrets or intellectual property, or disclose our intellectual property or
trade secrets, or that we can meaningfully protect our intellectual property.
Our failure to protect our intellectual property effectively could have a
material adverse effect on our business, financial condition or results of
operations. We have licensed technology from third parties for incorporation
into our units, and we expect to continue to enter into such agreements for
future products. Our licenses may result in royalty payments to third parties,
the cross-license of technology by us or payment of other consideration. If our
arrangements are not concluded on commercially reasonable terms, our business,
financial condition or results of operations could be materially adversely
affected.

FACILITIES

       As of May 31, 2000, our principal administrative, sales, marketing and
research and development facilities occupied approximately 150,000 square feet
in total in Sunnyvale and San Jose, California pursuant to leases that expire at
various dates from December 2000 through 2004. In October 1999, we signed a
lease agreement for a total of approximately 196,000 square feet in San Jose,
California to replace the existing locations as their lease terms expire. We
moved our research and development operations into the first 97,000 square foot
building as of April 2000. During the first quarter of 2001, we will move into
the second building occupying 99,000 square feet.

       Additionally, we have an option on a third building that is 76,000 square
feet. We will continue to monitor our space requirements and will exercise our
option should the space become necessary. We have sales offices throughout the
United States, including regional sales offices in California, Colorado,
Georgia, Virginia and Washington as well as international offices in Vancouver,
B.C., Rotterdam, Holland, Hong Kong, Taipei, Taiwan, Seoul, Korea and Singapore.
We believe that our existing facilities and facilities for which we have
committed are adequate.

LEGAL PROCEEDINGS

       We are not aware of any pending legal proceedings against us that,
individually or in the aggregate, would have a material adverse effect on our
business, results of operations or financial condition. We may in the future be
party to litigation arising in the course of our business, including claims that
we allegedly engaged in unfair hiring practices or infringed upon third-party
trademarks and other intellectual property rights. These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources.


                                       33
<PAGE>

                            DESCRIPTION OF THE NOTES

       The notes were issued under an indenture between us and Norwest Bank
Minnesota, National Association, as trustee. Because this section is a summary,
it does not describe every aspect of the notes and the indenture. The following
summaries of certain provisions of the indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, the
detailed provision of the notes and the indenture, including the definitions
therein of certain terms.

GENERAL

       The notes are general, unsecured obligations of ours. The notes are
subordinated, which means that they rank behind certain of our indebtedness as
described below. The notes are limited to $500,000,000 aggregate principal
amount. We are required to repay the principal amount of the notes in full on
April 1, 2007.

       The notes bear interest at the rate of 5% per annum. We will pay interest
on the notes on April 1 and October 1 of each year, commencing on October 1,
2000. Interest payable per $1,000 principal amount of notes for the period from
March 29, 2000 to October 1, 2000 will be $25.2778.

       You may convert the notes into shares of our common stock initially at
the conversion rate stated on the front cover of this prospectus at any time
before the close of business on the maturity date, unless the notes have been
previously redeemed or repurchased. Holders of notes called for redemption or
submitted for repurchase will be entitled to convert the notes up to and
including the business day immediately preceding the date fixed for redemption
or repurchase. The conversion rate may be adjusted as described below.

       We may redeem the notes at our option at any time on or after the third
business day after April 1, 2003, in whole or in part, at the redemption prices
set forth below under "--Optional Redemption by Redback," plus accrued and
unpaid interest to the redemption date; provided that we may not redeem the
notes on or after the third business day after April 1, 2003 and before April 1,
2005 unless the closing price for our common stock exceeds 140% of the
conversion price for at least 20 trading days within a period of 30 consecutive
trading days ending within five trading days of our notice of redemption.

       If there is a change in control of us, you will have the right to require
us to repurchase your notes as described below under "--Repurchase at Option of
Holders Upon a Change in Control."

FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES

       The notes were issued:

       o   only in fully registered form;

       o   without interest coupons; and

       o   in denominations of $1,000 and greater multiples.

       The notes are evidenced by global notes which were deposited with the
trustee as custodian for DTC and registered in the name of Cede & Co., as
nominee of DTC. The global notes and any notes issued in exchange for the global
notes are subject to restrictions on transfer and bear the legend regarding
those restrictions set forth under "Notice to Investors." Except as set forth
below, record ownership of the global notes may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.

       The global notes will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee unless either of the following occurs:

       o   DTC notifies us that it is unwilling, unable or no longer qualified
           to continue acting as the depositary for the global notes;

       o   Redback, at its option, notifies the trustee in writing that it
           elects to cause the issuance of the notes in certificated form; or

       o   an event of default with respect to the notes represented by the
           global notes has occurred and is continuing.

                                       34

<PAGE>

       In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global notes will be registered.

       DTC or its nominee are considered the sole owner and holder of the global
notes for all purposes, and as a result:

       o   you cannot get notes registered in your name if they are represented
           by the global note;

       o   you cannot receive physical certificated notes in exchange for your
           beneficial interest in the global notes;

       o   you will not be considered to be the owner or holder of the global
           note or any note it represents for any purpose; and

       o   all payments on the global note will be made to DTC or its nominee.

       The laws of some jurisdictions require that certain kinds of purchasers
can only own securities in definitive, certificated form. These laws may limit
your ability to transfer your beneficial interests in the global notes to these
types of purchasers.

       Only institutions, such as a securities broker or dealer, that have
accounts with DTC or its nominee (called participants) and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global notes. The only place where the ownership of beneficial interests in the
global notes appears and the only way the transfer of those interests can be
made is on the records kept by DTC (for their participants' interests) and the
records kept by those participants (for interests of persons held by
participants on their behalf).

       Secondary trading in bonds and notes of corporate issuers is generally
settled in clearinghouse (that is, next-day) funds. In contrast, beneficial
interests in a global note usually trade in DTC's same-day funds settlement
system, and settle in immediately available funds. We make no representations as
to the effect that settlement in immediately available funds will have on
trading activity in those beneficial interests.

       We will make cash payments of interest on and principal of and the
redemption or repurchase price of the global notes, as well as any payment of
liquidated damages, to Cede & Co., the nominee for DTC, as the registered owner
of the global notes. We will make these payments by wire transfer of immediately
available funds on each payment date.

       We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the notes represented by the global note as
shown on DTC's records, unless DTC has reason to believe that it will not
receive payment on that payment date. Payments by participants to owners of
beneficial interests in notes represented by the global notes held through
participants will be the responsibility of those participants, as is now the
case with securities held for the accounts of customers registered in street
name.

       We will send any redemption notices to Cede & Co. We understand that if
less than all the notes are being redeemed, DTC's practice is to determine by
lot the amount of the holdings of each participant to be redeemed.

       We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an omnibus proxy to us as soon as possible after the record date. The
omnibus proxy assigns Cede's consenting or voting rights to those participants
to whose accounts the notes are credited on the record date identified in a
listing attached to the omnibus proxy.

       Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global notes to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.

       DTC has advised us that it will take any action permitted to be taken by
a holder of notes, including the presentation of notes for exchange, only at the
direction of one or more participants to whose account with DTC interests in the
global note are credited and only in respect of such portion of the principal
amount of the notes represented by the global note as to which such participant
or participants has or have given such direction.

                                   35
<PAGE>

       DTC has also advised us as follows:

       o   DTC is a:

           o    limited purpose trust company organized under the laws of the
                State of New York,

           o    member of the Federal Reserve System,

           o    clearing corporation within the meaning of the Uniform
                Commercial Code, as amended, and

           o    clearing agency registered pursuant to the provisions of
                Section 17A of the Exchange Act.

       o   DTC was created to hold securities for its participants and
           facilitate the clearance and settlement of securities transactions
           between participants through electronic book-entry changes in
           accounts of its participants.

       o   Participants include securities brokers and dealers, banks, trust
           companies and clearing corporations and may include certain other
           organizations.

       o   Certain participants, or their representatives, together with other
           entities, own DTC.

       o   Indirect access to the DTC System is available to other entities such
           as banks, brokers, dealers and trust companies that clear through or
           maintain a custodial relationship with a participant, either directly
           or indirectly.

       The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note. Further, we and the trustee are not responsible for maintaining,
supervising or reviewing any of those records.

CONVERSION RIGHTS

       You have the option to convert any portion of the principal amount of any
note that is an integral multiple of $1,000 into shares of our common stock at
any time on or prior to the close of business on the maturity date. The
conversion rate will be equal to 5.2430 shares per each $1,000 principal amount
of notes which is equivalent to a conversion price of approximately $190.73 per
share. Your right to convert a note called for redemption or delivered for
repurchase will terminate at the close of business on the business day
immediately preceding the redemption date or repurchase date for that note,
unless we default in making the payment due upon redemption or repurchase.

       You may convert all or part of any note by delivering the note at the
Corporate Trust Office of the trustee in the Borough of Manhattan, The City of
New York, accompanied by a duly signed and completed conversion notice, a copy
of which may be obtained by the trustee. The conversion date will be the date on
which the note and the duly signed and completed conversion notice are so
delivered.

       As promptly as practicable on or after the conversion date, we will issue
and deliver to the trustee a certificate or certificates for the number of full
shares of our common stock issuable upon conversion, together with payment in
lieu of any fraction of a share. The certificate will then be sent by the
trustee to the conversion agent for delivery to the holder. The shares of our
common stock issuable upon conversion of the notes will be fully paid and
nonassessable and will rank equally with the other shares of our common stock.

       If you surrender a note for conversion on a date that is not an interest
payment date, you will not be entitled to receive any interest for the period
from the next preceding interest payment date to the conversion date, except as
described below in this paragraph. Any note surrendered for conversion during
the period from the close of business on any regular record date to the opening
of business on the next succeeding interest payment date (except notes, or
portions thereof, called for redemption on a redemption date or to be
repurchased on a repurchase date for which the right to convert would terminate
during such period) must be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the principal amount of notes
being surrendered for conversion. In the case of any note which has been
converted after any regular record date but before the next succeeding interest
payment date, interest payable on such interest payment date shall be payable on
such interest payment date notwithstanding such conversion, and such interest
shall be paid to the holder of such note on such regular record date.


                                   36
<PAGE>

       No other payment or adjustment for interest, or for any dividends in
respect of our common stock, will be made upon conversion. Holders of our common
stock issued upon conversion will not be entitled to receive any dividends
payable to holders of our common stock as of any record time or date before the
close of business on the conversion date. We will not issue fractional shares
upon conversion. Instead, we will pay cash based on the market price of our
common stock at the close of business on the conversion date.

       You will not be required to pay any taxes or duties relating to the issue
or delivery of our common stock on conversion but you will be required to pay
any tax or duty relating to any transfer involved in the issue or delivery of
our common stock in a name other than yours. Certificates representing shares of
our common stock will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.

       The conversion rate will be subject to adjustment for, among other
       things:

       o   dividends and other distributions payable in our common stock on
           shares of our capital stock,

       o   the issuance to all holders of our common stock of rights, options or
           warrants entitling them to subscribe for or purchase our common stock
           at less than the then current market price of such common stock as of
           the record date for shareholders entitled to receive such rights,
           options or warrants,

       o   subdivisions, combinations and reclassifications of our common stock,

       o   distributions to all holders of our common stock of evidences of our
           indebtedness, shares of capital stock, cash or assets, including
           securities, but excluding:

           o    those dividends, rights, options, warrants and distributions
                referred to above,

           o    dividends and distributions paid exclusively in cash, and

           o    distributions upon mergers or consolidations discussed below,

       o   distributions consisting exclusively of cash, excluding any cash
           portion of distributions referred to in the bullet point immediately
           above, or cash distributed upon a merger or consolidation to which
           the next succeeding bullet point applies, to all holders of our
           common stock in an aggregate amount that, combined together with:

           o    other all-cash distributions made within the preceding 365-day
                period in respect of which no adjustment has been made, and

           o    any cash and the fair market value of other consideration
                payable in connection with any tender offer by us or any of our
                subsidiaries for our common stock concluded within the preceding
                365-day period in respect of which no adjustment has been made,

           exceeds 10% of our market capitalization, being the product of the
           current market price per share of the common stock on the record date
           for such distribution and the number of shares of common stock then
           outstanding, and

       o   the successful completion of a tender offer, which would constitute a
           tender offer under the federal securities laws, made by us or any of
           our subsidiaries for our common stock which involves an aggregate
           consideration that, together with:

           o    any cash and other consideration payable in a tender offer
                by us or any of our subsidiaries for our common stock expiring
                within the 365-day period preceding the expiration of that
                tender offer in respect of which no adjustment has been made,
                and

           o    the aggregate amount of any all cash distributions referred
                to in the immediately preceding bullet point above to all
                holders of our common stock within the 365-day period preceding
                the expiration of that tender offer in respect of which no
                adjustments have been made,

           exceeds 10% of our market capitalization on the expiration of such
           tender offer.

       We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. We will not be required to make any adjustment to the conversion
rate until the cumulative adjustments amount to 1.0% or more of the


                                        37
<PAGE>

conversion rate. We will compute all adjustments to the conversion rate and will
give notice by mail to holders of the registered notes of any adjustments.

       In any case in which we consolidate or merge with or into another entity
or in which another entity is merged into us, or in case of any sale or transfer
of all or substantially all of our assets, each note then outstanding will
become convertible only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of common stock into which the notes were
convertible immediately prior to the consolidation or merger or sale or
transfer. The preceding sentence will not apply to a merger which does not
result in any reclassification, conversion, exchange or cancellation of the
common stock.

       We may increase the conversion rate for any period of at least 20 days,
upon at least 15 days notice, if our board of directors determines that the
increase would be in our best interest. The board of directors' determination in
this regard will be conclusive. We will give holders of notes at least 15 days'
notice of such an increase in the conversion rate. Any increase, however, will
not be taken into account for purposes of determining:

       o   whether the closing price of our common stock exceeds the conversion
           price by 105% in connection with an event which otherwise would be a
           change in control as defined below; or

       o   whether the closing price of our common stock exceeds the conversion
           price by 140% for purposes of determining whether we may call the
           notes for redemption under "Optional Redemption by Redback" below.

       If at any time we make a distribution of property to our stockholders
that would be taxable to such stockholders as a dividend for United States
federal income tax purposes, such as distributions of evidences of indebtedness
or assets by us, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
indenture, the number of shares into which notes are convertible is increased,
that increase may be deemed for United States federal income tax purposes to be
the payment of a taxable dividend to holders of notes. See "Certain United
States Federal Income and Estate Tax Consequences--U.S. Holders."

SUBORDINATION

       The notes are subordinated and, as a result, the payment of the
principal, any premium and interest, including liquidated damages, on the notes,
including amounts payable on any redemption or repurchase, will be subordinated
to the prior payment in full, in cash or other payment satisfactory to holders
of senior debt, of all of our senior debt. The notes are also effectively
subordinated to any debt or other liabilities of our subsidiaries. As of March
31, 2000, we had approximately $16 million of senior debt and our subsidiaries
had approximately $281,000 of indebtedness and other liabilities in aggregate
(excluding intercompany liabilities).

       Senior debt is defined in the indenture to mean: the principal of, and
premium, if any, and interest, including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding, on, and
all fees and other amounts payable in connection with, the following, whether
absolute or contingent, secured or unsecured, due or to become due, outstanding
on the date of the indenture or thereafter created, incurred or assumed:

       o   our indebtedness evidenced by a credit or loan agreement, note, bond,
           debenture or other written obligation,

       o   all of our obligations for money borrowed,

       o   all of our obligations evidenced by a note or similar instrument
           given in connection with the acquisition of any businesses,
           properties or assets of any kind,

       o   our obligations:

           o    as lessee under leases required to be capitalized on the
                balance sheet of the lessee under generally accepted accounting
                principles, or

           o    as lessee under other leases for facilities, capital equipment
                or related assets, whether or not capitalized, entered into or
                leased for financing purposes,


                                             38
<PAGE>

       o   all of our obligations under interest rate and currency swaps, caps,
           floors, collars, hedge agreements, forward contracts or similar
           agreements or arrangements,

       o   all of our obligations with respect to letters of credit, bankers'
           acceptances and similar facilities, including reimbursement
           obligations with respect to the foregoing,

       o   all of our obligations issued or assumed as the deferred purchase
           price of property or services, but excluding trade accounts payable
           and accrued liabilities arising in the ordinary course of business,

       o   all obligations of the type referred to in the above clauses of
           another person and all dividends of another person, the payment of
           which, in either case, we have assumed or guaranteed, or for which we
           are responsible or liable, directly or indirectly, jointly or
           severally, as obligor, guarantor or otherwise, or which are secured
           by a lien on our property, and

       o   renewals, extensions, modifications, replacements, restatements and
           refundings of, or any indebtedness or obligation issued in exchange
           for, any such indebtedness or obligation described in the above
           clauses of this definition.

       Senior debt will not include the notes or any other indebtedness or
obligation if its terms or the terms of the instrument under which or pursuant
to which it is issued expressly provide that it is not superior in right of
payment to the notes.

       We may not make any payment on account of principal, premium or interest,
including liquidated damages, if any, on the notes, or redemption or repurchase
of the notes, if:

       o   we default in our obligations to pay principal, premium, interest or
           other amounts on our senior debt, including a default under any
           redemption or repurchase obligation, and the default continues beyond
           any applicable grace period; or

       o   any other default occurs and is continuing on any designated senior
           debt; and

           o    the default permits the holders of the designated senior debt to
                accelerate its maturity, and

           o    the trustee has received a notice (a payment blockage
                notice) of the default from us, the holder of such debt or such
                other person permitted to give such notice under the indenture.

       If payments of the notes have been blocked by a payment default on senior
debt, payments on the notes may resume when the payment default has been cured
or waived or ceases to exist.

       If payments on the notes have been blocked by a nonpayment default,
payments on the notes may resume on the earlier of:

       o   the date the nonpayment default is cured or waived or ceases to exist
           , or

       o   179 days after the payment blockage notice is received.

       No nonpayment default that existed on the day a payment blockage notice
in respect of a nonpayment default was delivered to the trustee can be used as
the basis for any subsequent payment blockage notice. In addition, once a holder
of designated senior debt has blocked payment on the notes by giving a payment
blockage notice in respect of a nonpayment default, no new period of payment
blockage can be commenced unless and until:

       o   365 days have elapsed since the effectiveness of the immediately
           prior payment blockage notice in respect of a nonpayment default; and

       o   all scheduled payments of principal, any premium and interest with
           respect to the notes that have come due have been paid in full in
           cash.

       Designated senior debt means our obligations under any particular senior
debt in which the instrument creating or evidencing the same or the assumption
or guarantee thereof, or related agreements or documents to which we are a
party, expressly provides that such indebtedness shall be designated senior debt
for purposes of the indenture. The instrument, agreement or other document
evidencing any designated senior debt may place limitations and conditions on
the right of such senior debt to exercise the rights of designated senior debt.


                                        39
<PAGE>

       In addition, all principal, premium, if any, interest and other amounts
due on all senior debt must be paid in full in cash before you are entitled to
receive any payment otherwise due upon any acceleration of the principal on the
notes as a result of:

       o   an event of default of the notes, or

       o   payment or distribution of our assets to creditors upon any
           dissolution, winding up, liquidation or reorganization, whether
           voluntary or involuntary, marshaling of assets, assignment for the
           benefit of creditors, or in bankruptcy, insolvency, receivership or
           other similar proceedings.

       In the event of insolvency, creditors who are holders of senior debt may
recover more, ratably, than you because of this subordination. The subordination
may result in a reduction or elimination of payments on the notes to you.

       In addition, the notes are structurally subordinated to all indebtedness
and other liabilities of our subsidiaries, including trade payables and lease
obligations. This occurs because our right to receive any assets of our
subsidiaries upon their liquidation or reorganization, and your right to
participate in those assets, is effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors, except to the extent that we
are recognized as a creditor of such subsidiary. If we are recognized as a
creditor of that subsidiary, our claims would still be subordinate to any
security interest in the assets of the subsidiary and any indebtedness of the
subsidiary senior to us.

       The indenture does not limit our ability to incur senior debt or our
ability or the ability of our subsidiaries to incur any other indebtedness.

OPTIONAL REDEMPTION BY REDBACK

       On or after the third business day after April 1, 2003, we may redeem the
notes in whole or in part, at the prices set forth below. If we elect to redeem
all or part of the notes, we will give at least 30, but no more than 60 days
notice to you. We may only redeem the notes on or after the third business day
after April 1, 2003 and before April 1, 2005 if the closing price of our common
stock exceeds 140% of the conversion price for at least 20 trading days within a
period of 30 consecutive trading days ending within five trading days of the
date of the notice of redemption.

       The redemption price, expressed as a percentage of principal amount, is
as follows for the following periods:
<TABLE>
<CAPTION>

                                                                                                     REDEMPTION
 PERIOD                                                                                                PRICE
---------                                                                                           -------------
<S>                                                                                                 <C>
Beginning on the third business day after April 1, 2003 and ending on March 31, 2004.............        102.857%
Beginning on April 1, 2004 and ending on March 31, 2005..........................................        102.143%
Beginning on April 1, 2005 and ending on March 31, 2006..........................................        101.429%
Beginning on April 1, 2006 and ending on March 31, 2007..........................................        100.714%
</TABLE>

and thereafter is equal to 100% of the principal amount. In each case, we will
pay interest to, but excluding, the redemption date.

       No sinking fund is provided for the notes, which means that the indenture
does not require us to redeem or retire the notes periodically.

PAYMENT AND CONVERSION

       We will make all payments of principal and interest on the notes by
dollar check drawn on an account maintained at a bank in The City of New York.
If you hold registered notes with a face value greater than $2,000,000, at your
request we will make payments of principal or interest to you by wire transfer
to an account maintained by you at a bank in The City of New York. Payment of
any interest on the notes will be made to the person in whose name the note, or
any predecessor note, is registered at the close of business on March 15 or
September 15, whether or not a business day, immediately preceding the relevant
interest payment date (a regular record date). If you hold registered notes with
a face value in excess of $2,000,000 and you would like to receive payments by
wire transfer, you will be required to provide the trustee with wire transfer
instructions at least 15 days prior to the relevant payment date.


                                        40
<PAGE>

       Payments on any global note registered in the name of DTC or its nominee
will be payable by the trustee to DTC or its nominee in its capacity as the
registered holder under the indenture. Under the terms of the indenture, we and
the trustee will treat the persons in whose names the notes, including any
global note, are registered as the owners for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the trustee nor any of our
agents or the trustee's agents has or will have any responsibility or liability
for:

       o   any aspect of DTC's records or any participant's or indirect
           participant's records relating to or payments made on account of
           beneficial ownership interests in the global note, or for
           maintaining, supervising or reviewing any of DTC's records or any
           participant's or indirect participant's records relating to the
           beneficial ownership interests in the global note, or

       o   any other matter relating to the actions and practices of DTC or any
           of its participants or indirect participants.

       We will not be required to make any payment on the notes due on any day
which is not a business day until the next succeeding business day. The payment
made on the next succeeding business day will be treated as though it were paid
on the original due date and no interest will accrue on the payment for the
additional period of time.

       Notes may be surrendered for conversion at the Corporate Trust Office of
the trustee in the Borough of Manhattan, New York. Notes surrendered for
conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable.

       We have initially appointed the trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the notes have been delivered to the trustee for cancellation, or moneys
sufficient to pay the principal of, premium, if any, and interest on the notes
have been made available for payment and either paid or returned to us as
provided in the indenture, the trustee will maintain an office or agency in the
Borough of Manhattan, New York for surrender of notes for conversion. Notice of
any termination or appointment and of any change in the office through which any
paying agent or conversion agent will act will be given in accordance with
"--Notices" below.

       All moneys deposited with the trustee or any paying agent, or then held
by us, in trust for the payment of principal of, premium, if any, or interest on
any notes which remain unclaimed at the end of two years after the payment has
become due and payable will be repaid to us, and you will then look only to us
for payment.

REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL

       If a change in control as defined below occurs, you will have the right,
at your option, to require us to repurchase all of your notes not previously
called for redemption, or any portion of the principal amount thereof, that is
equal to $1,000 or an integral multiple of $1,000. The price we are required to
pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to, but excluding, the repurchase date.

       At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock valued at 95% of the average of the
closing prices of our common stock for the five trading days immediately
preceding and including the third trading day prior to the repurchase date. We
may only pay the repurchase price in our common stock if we satisfy conditions
provided in the indenture.

       Within 30 days after the occurrence of a change in control, we are
obligated to give to you notice of the change in control and of the repurchase
right arising as a result of the change of control. We must also deliver a copy
of this notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of our notice irrevocable
written notice to the trustee of your exercise of your repurchase right,
together with the notes with respect to which the right is being exercised. We
are required to repurchase the notes on the date that is 45 days after the date
of our notice.

       A change in control will be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:

       o   any person, including any syndicate or group deemed to be a "person"
           under Section 13(d)(3) of the Exchange Act, acquires a beneficial
           ownership, directly or indirectly, through a purchase, merger or
           other acquisition transaction or series of transactions, of shares of
           our capital stock entitling the person to


                                             41
<PAGE>

           exercise 50% or more of the total voting power of all shares of our
           capital stock that is entitled to vote generally in elections of
           directors, other than an acquisition by us, any of our subsidiaries
           or any of our employee benefit plans; or

       o   we merge or consolidate with or into any other person, any merger of
           another person into us or we convey, sell, transfer or lease all or
           substantially all of our assets to another person, other than any
           such transaction pursuant to which the holders of 50% or more of the
           total voting power of all shares of our capital stock entitled to
           vote generally in elections of directors immediately prior to such
           transaction have the entitlement to exercise, directly or indirectly,
           50% or more of the total voting power of all shares of capital stock
           entitled to vote generally in the election of directors of the
           continuing or surviving corporation immediately after such
           transaction.

       However, a change in control will not be deemed to have occurred if the
closing price per share of our common stock for any five trading days within the
period of 10 consecutive trading days ending immediately after the later of the
change in control or the public announcement of the change in control, in the
case of a change in control relating to an acquisition of capital stock, or the
period of 10 consecutive trading days ending immediately before the change in
control, in the case of change in control relating to a merger, consolidation or
asset sale, equals or exceeds 105% of the conversion price of the notes in
effect on each of those trading days.

       For purposes of these provisions:

       o   the conversion price is equal to $1,000 divided by the conversion
           rate;

       o   whether a person is a beneficial owner will be determined in
           accordance with Rule 13d-3 under the Exchange Act; and

       o   a person includes any syndicate or group that would be deemed to be
           a person under Section 13(d)(3) of the Exchange Act.

       The rules and regulations promulgated under the Exchange Act require the
dissemination of prescribed information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to you. We will comply with these rules and regulations to the
extent they apply at that time.

       We may, to the extent permitted by applicable law, at any time purchase
notes in the open market, by tender at any price or by private agreement. Any
note that we purchase may, to the extent permitted by applicable law and subject
to restrictions contained in the purchase agreement with the underwriters, be
re-issued or resold or may, at our option, be surrendered to the trustee for
cancellation. Any notes surrendered for cancellation may not be re-issued or
resold and will be canceled promptly.

       The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of all or substantially all of
our assets. There is no precise, established definition of the phrase
substantially all under applicable law. Accordingly, your ability to require us
to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.

       The foregoing provisions would not necessarily provide you with
protection if we are involved in a highly leveraged or other transaction that
may adversely affect you.

       Our ability to repurchase notes upon the occurrence of a change in
control is subject to important limitations. Some of the events constituting a
change in control could result in an event of default under our senior debt.
Moreover, a change in control could cause an event of default under, or be
prohibited or limited by, the terms of our senior debt. As a result, unless we
were to obtain a waiver, a repurchase of the notes in cash could be prohibited
under the subordination provisions of the indenture until the senior debt is
paid in full. Although we have the right to repurchase the notes with our common
stock, subject to certain conditions, we cannot assure you that we would have
the financial resources, or would be able to arrange financing, to pay the
repurchase price in cash for all the notes that might be delivered by holders of
notes seeking to exercise the repurchase right. If we were to fail to repurchase
the notes when required following a change in control, an event of default under
the indenture would occur, whether or not such repurchase is permitted by the
subordination provisions of the indenture. Any such default may, in turn, cause
a default under our senior debt. See "--Subordination".


                                       42
<PAGE>

MERGERS AND SALES OF ASSETS BY REDBACK

       We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:

       o   the person formed by such consolidation or into or with which we are
           merged or the person to which our properties and assets are so
           conveyed transferred, sold or leased, shall be a corporation, limited
           liability company, partnership or trust organized and existing under
           the laws of the United States, any State within the United States or
           the District of Columbia and, if we are not the surviving person, the
           surviving person assumes the payment of the principal of, premium, if
           any, and interest on the notes and the performance of our other
           covenants under the indenture, and

       o   immediately after giving effect to the transaction, no event of
           default, and no event that, after notice or lapse of time or both,
           would become an event of default, will have occurred and be
           continuing.

EVENTS OF DEFAULT

       The following will be events of default under the indenture:

       o   we fail to pay principal of or premium, if any, on any note when due,
           whether or not prohibited by the subordination provisions of the
           indenture;

       o   we fail to pay any interest, including liquidated damages, on any
           note when due, which failure continues for 30 days, whether or not
           prohibited by the subordination provisions of the indenture;

       o   we fail to provide notice of a change in control or to consummate a
           change in control offer to purchase;

       o   we fail to perform any other covenant in the indenture, which failure
           continues for 60 days after written notice as provided in the
           indenture;

       o   any indebtedness under any bonds, debentures, notes or other
           evidences of indebtedness for money borrowed, or any guarantee
           thereto, by us or any of our significant subsidiaries in an aggregate
           principal amount in excess of $25 million is not paid when due either
           at its stated maturity or upon acceleration thereof, and such
           indebtedness is not discharged, or such acceleration is not rescinded
           or annulled, within a period of 30 days after notice as provided in
           the indenture; and

       o   certain events of bankruptcy, insolvency or reorganization involving
           us or any of our significant subsidiaries.

       Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any holder, unless the holder shall
have furnished reasonable indemnity to the trustee. Subject to providing
indemnification to the trustee, the holders of a majority in aggregate principal
amount of the outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee.

       If an event of default other than an event of default arising from events
of insolvency, bankruptcy or reorganization occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of the outstanding
notes may, subject to the subordination provisions of the indenture, accelerate
the maturity of all notes. However, after such acceleration, but before a
judgment or decree based on acceleration, the holders of a majority in aggregate
principal amount of outstanding notes may, under certain circumstances, rescind
and annul the acceleration if all events of default, other than the non-payment
of principal of the notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in the indenture. If an
event of default arising from events of insolvency, bankruptcy or reorganization
occurs, then the principal of, and accrued interest on, all the notes will
automatically become immediately due and payable without any declaration or
other act on the part of the holders of the notes or the trustee. For
information as to waiver of defaults, see "--Meetings, Modification and Waiver"
below.


                                        43
<PAGE>

       You will not have any right to institute any proceeding with respect to
the indenture, or for any remedy under the indenture, unless:

       o   you give the trustee written notice of a continuing event of default;

       o   the holders of at least 25% in aggregate principal amount of the
           outstanding notes have made written request and furnished reasonable
           indemnity to the trustee to institute proceedings;

       o   the trustee has not received from the holders of a majority in
           aggregate principal amount of the outstanding notes a direction
           inconsistent with the written request; and

       o   the trustee shall have failed to institute such proceeding within 60
           days of the written request.

       However, these limitations do not apply to a suit instituted by you for
the enforcement of payment of the principal of, premium, if any, or interest,
including liquidated damages, on your note on or after the respective due dates
expressed in your note or your right to convert your note in accordance with the
indenture.

       We are required to furnish to the trustee annually a statement as to our
performance of certain of our obligations under the indenture and as to any
default in such performance.

MEETINGS, MODIFICATION AND WAIVER

       The indenture contains provision for convening meetings of the holders of
notes to consider matters affecting their interests.

       Certain limited modifications of the indenture may be made without the
necessity of obtaining the consent of the holders of the notes. Other
modifications and amendments of the indenture may be made, and certain past
defaults by us may be waived, either:

       o   with the written consent of the holders of not less than a majority
           in aggregate principal amount of the notes at the time outstanding,
           or

       o   by the adoption of a resolution, at a meeting of holders of the notes
           at which a quorum is present, by the holders of at least 66% in
           aggregate principal amount of the notes represented at such meeting.

       The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the notes at
the time outstanding and, at any reconvened meeting adjourned for lack of a
quorum, 25% of such aggregate principal amount.

       However, a modification or amendment requires the consent of the holder
of each outstanding note affected if it would:

       o   change the stated maturity of the principal or interest of a note;

       o   reduce the principal amount of, or any premium or interest on, any
           note;

       o   modify the provisions with respect to the repurchase right of holders
           of notes in a manner adverse to the holders;

       o   change the place or currency of payment on a note;

       o   impair the right to institute suit for the enforcement of any payment
           on any note;

       o   modify our obligation to maintain an office or agency in New York
           City;

       o   modify the subordination provisions in a manner that is adverse to
           the holders of the notes;

       o   adversely affect the right to convert the notes;

       o   reduce the above-stated percentage of the principal amount of the
           holders whose consent is needed to modify, amend or waive compliance
           with certain provisions of the indenture;

       o   reduce the percentage required for the adoption of a resolution or
           the quorum required at any meeting of holders of notes at which a
           resolution is adopted.


                                          44
<PAGE>

REGISTRATION RIGHTS

       When we issued the notes, we entered into a registration rights agreement
and agreed to file the shelf registration statement of which this prospectus is
a part. Under the registration rights agreement we also agreed, for the benefit
of the holders of the notes and the shares of common stock issuable upon
conversion of the notes, commonly referred to as the registrable securities,
that we will, at our expense:

       o   use our reasonable efforts to cause the shelf registration statement
           to be declared effective under the Securities Act by September 25,
           2000, subject to our right to postpone having the shelf registration
           statement declared effective for an additional 90 days in limited
           circumstances; and

       o   use our reasonable efforts to keep effective the shelf registration
           statement until the earlier of two years after the date the notes are
           issued or such time as there are no outstanding registrable
           securities.

       We will be permitted to suspend the use of the prospectus that is part of
the shelf registration statement in connection with the sales of registrable
securities during prescribed periods of time for reasons relating to pending
corporate developments, public filings with the SEC and other events. The
periods during which we can suspend the use of the prospectus may not, however,
exceed a total of 60 days in any 90 day period or a total of 120 days in any
365-day period. We will provide to each holder of registrable securities copies
of the prospectus that is a part of the shelf registration statement, notify
each holder when the shelf registration statement has become effective and take
certain other actions required to permit public resales of the registrable
securities.

       Liquidated damages, will accrue on the notes if on or prior to September
25, 2000, the shelf registration statement is not declared effective. In that
case, liquidated damages will accrue on the notes from and including the day
following the registration default to but excluding the day on which the
registration default has been cured. Liquidated damages will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
interest payment date following the date on which the liquidated damages began
to accrue.

       The rates at which liquidated damages will accrue will be as follows:

       o   0.25% of the principal amount per annum to and including the 90th day
           after the registration default; and

       o   0.5% of the principal amount per annum from and after the 91st day
           after the registration default.

       In addition, the interest rate on the notes will be increased if:

       o   the shelf registration statement ceases to be effective, or we
           otherwise prevent or restrict holders of registrable securities from
           making sales under the shelf registration statement, for more than 60
           days, whether or not consecutive; or

       o   the shelf registration statement ceases to be effective, or we
           otherwise prevent or restrict holders of registrable securities from
           making sales under the shelf registration statement, for more than
           120 days, whether or not consecutive, during any 365 day period.

       In either event, the interest rate on the notes will increase by an
additional 0.50% per annum from the first day that the 60 day or 120 day period
is exceeded, whichever occurs first. The increased rate will continue until the
earlier of the following:

       o   the time the shelf registration statement again becomes effective or
           the holders of registrable securities are again able to make sales
           under the shelf registration statement, depending on which event
           triggered the increase in interest rate; or

       o   the earlier of two years after the date the notes are issued or such
           time as there are no outstanding registrable securities.

       A holder who elects to sell any registrable securities pursuant to the
shelf registration statement:

       o   will be required to be named as a selling security holder in the
           related prospectus;

       o   may be required to deliver a prospectus to purchasers;

       o   may be subject to certain civil liability provisions under the
           Securities Act in connection with those sales; and


                                       45
<PAGE>

       o   will be bound by the provisions of the registration rights agreement
           that apply to a holder making such an election, including certain
           indemnification provisions.

       We have agreed in the registration rights agreement to use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted on the Nasdaq National Market. However, if the common stock
is not then quoted on the Nasdaq National Market, we will use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted or listed on whichever market or exchange the common stock is
then quoted or listed, upon effectiveness of the shelf registration statement.

       This summary of certain provisions of the registration rights agreement
is not complete and is subject to, and qualified in its entirety by reference
to, all the provisions of the registration rights agreement, a copy of which
will be made available to beneficial owners of the notes upon request to us.

NOTICES

       Notice to holders of the registered notes will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of such mailing.

REPLACEMENT OF NOTES

       We will replace any note that becomes mutilated, destroyed, stolen or
lost at the expense of the holder upon delivery to the trustee of the mutilated
notes or evidence of the loss, theft or destruction satisfactory to us and the
trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory
to the trustee and us may be required at the expense of the holder of the note
before a replacement note will be issued.

PAYMENT OF STAMP AND OTHER TAXES

       We will pay all stamp and other duties, if any, which may be imposed by
the United States or any political subdivision thereof or taxing authority
thereof or therein with respect to the issuance of the notes or of shares of
stock upon conversion of the notes. We will not be required to make any payment
with respect to any other tax, assessment or governmental charge imposed by any
government or any political subdivision thereof or taxing authority thereof or
therein.

GOVERNING LAW

       The indenture and the notes are governed by and construed in accordance
with the laws of the State of New York, United States of America.

THE TRUSTEE

       If an event of default occurs and is continuing, the trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the holders of notes, unless they shall have
furnished to the trustee reasonable security or indemnity.


                                   46
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

       We are authorized to issue 750,000,000 shares of common stock, $0.0001
par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value
per share. As of the close of business on May 31, 2000, 147,906,269 shares of
common stock, no shares of preferred stock, options to purchase 21,330,421
shares of common stock and warrants to purchase 692,472 shares of common stock
were issued and outstanding.

COMMON STOCK

       Our amended and restated certificate authorizes the issuance of up to
750,000,000 shares of common stock, $0.0001 par value per share. Holders of
common stock are entitled to one vote per share on all matters submitted to a
vote of stockholders and do not have cumulative voting rights. Accordingly,
holders of a majority of the shares of common stock entitled to vote in any
election of directors may elect all of the directors standing for election.
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the board of directors out of funds legally available
therefor and subject to any preferential dividend rights of any then outstanding
preferred stock. In the event of a liquidation, dissolution or winding up of
Redback, the holders of common stock are entitled to share ratably all assets of
Redback available after the payment of debts and all other liabilities and
subject to any preferential dividend rights of any then outstanding preferred
stock. Holders of common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are, and the shares
issuable by Redback upon the conversion of the notes will be, when issued and
paid for, fully paid and nonassessable.

PREFERRED STOCK

       We have an authorized class of undesignated preferred stock consisting of
10,000,000 shares, $0.0001 par value per share. The board of directors is
authorized, subject to any limitation prescribed by law, without further
stockholder approval, to issue from time to time up to 10,000,000 shares of
preferred stock, in one or more series. Each such series of preferred stock
shall have such number of shares, designations, preferences, voting powers,
qualifications and special or relative rights or privileges as shall be
determined by the board of directors, which may include, among others, dividend
rights, voting rights, redemption and sinking fund provisions, liquidation
preferences, conversion rights and preemptive rights.

       Our stockholders have granted the board of directors authority to issue
the preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of holders of any preferred stock that may be issue in
the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, a majority
of our outstanding voting stock. We have no present plans to issue any shares of
the preferred stock.

WARRANTS

       As of May 31, 2000, there were warrants outstanding to purchase an
aggregate of 692,472 shares of common stock, at exercise prices ranging from
$0.79 per share to $102.34 per share.

REGISTRATION RIGHTS

       Pursuant to the terms of an amended and restated Investors' Rights
Agreement, some holders of our common stock are entitled to rights with respect
to the registration of their shares under the Securities Act. Under the terms of
our agreement with the holders of these shares, if we propose to register any of
our securities under the Securities Act, either for our own account or for the
account of other stockholders exercising registration rights, these holders are
entitled to notice of that registration and are entitled to include shares of
their registrable common stock therein. Additionally, these holders are also
entitled to demand registration rights pursuant to which they may require us to
file a registration statement under the Securities Act at our expense with
respect to their shares of common stock, and require us to use our best efforts
to effect that registration. Further, the holders of these demand rights may
require us to file additional registration statements on Form S-3. All of these
registration rights are subject to conditions and limitations, including the
right of the underwriters of an offering to limit the number of shares


                                       47
<PAGE>

included in that registration and our right not to effect a requested
registration within six months following an offering of our securities.

EFFECT OF SELECTED PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS,
AND THE DELAWARE ANTITAKEOVER STATUTE

       We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to exceptions, Section 203 of Delaware law prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
that the interested stockholder became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.

SHAREHOLDER ACTION; SPECIAL MEETING OF SHAREHOLDERS

       Our certificate of incorporation provides that all stockholder actions
must be effected at a duly called meeting and not by a consent in writing. The
bylaws provide that our stockholders may call a special meeting of stockholders
only upon a request of stockholders owning at least 50% of our capital stock.
These provisions of the certificate of incorporation and bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of us. These provisions are intended to enhance the likelihood of continuity and
stability in the composition of the board of directors and in the policies
formulated by the board of directors and to discourage transactions that may
involve an actual or threatened change of control of us. These provisions are
designed to reduce our vulnerability to an unsolicited acquisition proposal. The
provisions also are intended to discourage tactics that may be used in proxy
fights. However, these provisions could have the effect of discouraging others
from making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. These provisions also may have the effect
of preventing changes in our management.

TRANSFER AGENT AND REGISTRAR

       The Transfer Agent and Registrar for our common stock is U.S. Stock
Transfer Corporation.



                                       48
<PAGE>

        CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES

     The following is a general discussion of certain U.S. federal income and
estate tax consequences to beneficial owners of the notes or underlying common
stock. This discussion is based upon the Internal Revenue Code of 1986, as
amended (the Code), U.S. Treasury Regulations (regulations), Internal Revenue
Service (IRS) rulings and pronouncements, and judicial decisions now in effect,
all of which are subject to change, possibly with retroactive effect.

     This discussion is for general information only and does not address all
aspects of U.S. federal income taxation that may be relevant to beneficial
owners of the notes or common stock. This discussion does not describe the tax
consequences:

     o    arising under the laws of any foreign, state or local jurisdiction,
          including any applicable treaty,

     o    that may be relevant to particular beneficial owners in light of their
          personal circumstances, such as holders subject to the U.S. federal
          alternative minimum tax, or

     o    to certain types of beneficial owners, such as certain financial
          institutions, insurance companies, tax-exempt entities, dealers in
          securities, persons who hold the notes or common stock in connection
          with a straddle, hedging or conversion transaction for U.S. federal
          income tax purposes, or persons that have a functional currency other
          than the U.S. dollar, who may be subject to special rules.

This discussion assumes that each holder has acquired the notes at their
original offering price and holds the notes and common stock received upon
conversion thereof as capital assets within the meaning of Section 1221 of the
Code. We have not sought any ruling from the IRS with respect to statements made
and the conclusions reached in this discussion and there can be no assurance
that the IRS will agree with such statements and conclusions.

     For purposes of this discussion, the term U.S. holder means a beneficial
owner who or that:

     o    is a citizen or resident of the United States;

     o    is a corporation or partnership created or organized in or under the
          laws of the United States or a political subdivision thereof, unless,
          in the case of a partnership, future regulations provide to the
          contrary;

     o    is an estate the income of which is subject to U.S. federal income
          taxation regardless of its source;

     o    is a trust if a U.S. court is able to exercise primary supervision
          over the administration of the trust and one more U.S. persons, within
          the meaning of Section 7701(a)(30) of the Code, have authority to
          control all substantial decisions of the trust; or

     o    is otherwise subject to U.S. federal income taxation on a net income
          basis in respect of the notes or common stock.

As used herein, a non-U.S. holder means a beneficial owner who or that is not a
U.S. holder. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THEIR
PARTICIPATION IN THIS OFFERING, AND THEIR OWNERSHIP AND DISPOSITION OF THE NOTES
OR COMMON STOCK, INCLUDING THE EFFECT THAT THEIR PARTICULAR CIRCUMSTANCES MAY
HAVE ON SUCH TAX CONSEQUENCES.

U.S. HOLDERS

     INTEREST ON NOTES. Interest paid on a note will be taxable to a U.S. holder
as ordinary interest income, at the time that such interest is accrued or
actually or constructively received, in accordance with such U.S. holder's
method of accounting for U.S. federal income tax purposes. In general, if the
terms of a debt instrument entitle a holder to receive payments other than fixed
periodic interest that exceed the issue price of the instrument, the holder may
be required to recognize additional interest as "original issue discount" over
the term of the instrument. The notes were not issued with original issue
discount. We may be required to make additional payments to holders of the notes
as liquidated damages if we do not file or cause to be declared effective the
shelf registration statement of which this prospectus is a part, as described
under "Description of Notes--Registration Rights." The original issue discount
rules allow contingent payments such as these to be disregarded in computing a
holder's interest income if, as of the date the notes were issued, the
contingency was "remote." We believe that as of the date the notes were


                                       49
<PAGE>


issued, the possibility that we would pay liquidated damages was remote. Our
determination in this regard is binding on U.S. Holders unless they disclose
their contrary position. If, contrary to expectations, we pay liquidated
damages, U.S. Holders would be required to recognize additional interest income.

     CONVERSION OF NOTES. A U.S. holder of a note generally will not recognize
gain or loss on the conversion of the note into common stock. Such U.S. holder's
aggregate tax basis in the common stock received upon conversion of the note
will be equal to the U.S. holder's adjusted tax basis in the note at the time of
conversion, less any portion of that basis allocable to cash received in lieu of
a fractional share. The holding period of the common stock received upon
conversion of a note generally will include the period during which the U.S.
holder held such convertible note prior to the conversion.

     Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for such fractional share. Gain or loss
recognized on the receipt of cash paid in lieu of such fractional share
generally will be capital gain or loss equal to the difference between the
amount of cash received and the amount of tax basis allocable to the fractional
share.

     ADJUSTMENT OF CONVERSION RATE. The conversion rate of the notes is subject
to adjustment in certain circumstances. Under Section 305(c) of the Code,
adjustments that have the effect of increasing the proportionate interest of
U.S. holders of the notes in our assets or earnings (for example, an adjustment
following a distribution of property, by us to our stockholders) may in some
circumstances give rise to deemed distributions to U.S. holders. Similarly, a
failure to adjust the conversion rate of the notes to reflect a stock dividend
or other event increasing the proportionate interest of shareholders of
outstanding common stock can in some circumstances give rise to deemed
distributions to such shareholders. Deemed distributions will be treated as a
dividend, return of capital or capital gain in accordance with the earnings and
profits rules discussed under "Distributions on Common Stock" below.

     DISTRIBUTIONS ON COMMON STOCK. Distributions on common stock will
constitute a dividend for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. Dividends paid to U.S. holders that are U.S. corporations
may qualify for the dividends-received deduction. Noncorporate taxpayers and
certain corporations are not entitled to the dividends-received deduction.

     To the extent, if any, that a U.S. holder receives a distribution on common
stock that would otherwise constitute a dividend for U.S. federal income tax
purposes but that exceeds our current and accumulated earnings and profits, such
distribution will be treated first as a nontaxable return of capital reducing
the U.S. holder's tax basis in the common stock. Any such distributions in
excess of the U.S. holder's tax basis in the common stock will be treated as
capital gain.

     SALE OR EXCHANGE OF NOTES OR COMMON STOCK. In general, subject to the
discussion under "Market Discount and Bond Premium" below:

     o    a U.S. Holder of a note will recognize capital gain or loss upon the
          sale, redemption, retirement or other disposition of the note measured
          by the difference between the amount of cash and the fair market value
          of any property received, except to the extent attributable to the
          payment of accrued interest, and such U.S. Holder's adjusted tax basis
          in the note; and

     o    a U.S. Holder of common stock received upon conversion of a
          convertible note will recognize capital gain or loss upon the sale,
          exchange, redemption or other disposition of the common stock under
          rules similar to the computation of gain or loss on the disposition of
          the notes. However, special rules may apply to a redemption of common
          stock which may result in the proceeds of the redemption being treated
          as a dividend.

In general, the maximum tax rate for noncorporate taxpayers on long-term capital
gain is 20% with respect to capital assets, including the notes and common
stock, but only if they have been held for more than 12 months at the time of
disposition. The deductibility of capital losses is subject to limitations.

     MARKET DISCOUNT AND BOND PREMIUM. The resale of notes may be affected by
the impact on a purchaser of the market discount and bond premium provisions of
the Code. For this purpose, the market discount on a note generally will be
equal to the amount, if any, by which the stated redemption price at maturity of
the note immediately after its acquisition exceeds the U.S. holder's adjusted
tax basis in the note. Subject to a DE MINIMIS exception, these provisions
generally require a U.S. holder who acquires a note at a market discount to
treat as


                                       50
<PAGE>


ordinary income (i) any gain recognized on the taxable disposition of such
convertible note to the extent of the accrued market discount on such note at
the time of disposition and (ii) unrealized appreciation on certain non-taxable
dispositions, unless the U.S. holder elects to include accrued market discount
in income currently. If a U.S. holder makes a gift of a convertible note,
accrued market discount, if any, will be recognized as if such U.S. holder had
sold such note for a price equal to the fair market value of the note. In
general, market discount will be treated as accruing on a straight-line basis
over the remaining term of the note at the time of acquisition, or, at the
election of the U.S. holder, under a constant yield method. A U.S. holder who
acquires a convertible note at a market discount and who does not elect to
include accrued market discount in income currently may be required to defer the
deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the note until the note (or common stock
received upon conversion) is disposed of in a taxable transaction. An election
to include accrued market discount currently will apply to all debt instruments
acquired by the U.S. holder on or after the first day of the taxable year to
which election applies and may be revoked only with the consent of the IRS. If a
U.S. holder acquires a note with market discount and receives common stock upon
conversion of the note, the amount of accrued market discount not previously
included in income with respect to the note through the date of conversion will
be treated as ordinary income upon the disposition of the common stock.

     The Bond Premium on a convertible note generally will be equal to the
amount, if any, by which the U.S. Holder's adjusted tax basis in the note
exceeds all amounts payable on the note, excluding stated interest, immediately
after its acquisition. In general, a U.S. holder may elect to amortize bond
premium over the remaining term of the convertible note on a constant yield
method. For the purpose of computing the amount of bond premium allocable to any
accrual period, we will be presumed to exercise our call option if the use of
the call date as the maturity date and the corresponding redemption price as the
stated redemption price at maturity results in a smaller amortizable bond
premium for the period ending on such call date. See Description of the Notes-
Optional Redemption by Redback. The amount of bond premium allocable to any
accrual period is offset against the stated interest allocable to such accrual
period (any excess may be deducted, subject to certain limitations). An election
to amortize bond premium applies to all taxable debt instruments held at the
beginning of the first day of the taxable year to which such election applies
and thereafter acquired by the U.S. holder and may be revoked only with the
consent of the IRS.

NON-U.S. HOLDERS

     PAYMENTS OF INTEREST. Generally, payments of interest on the notes to, or
on behalf of, a non-U.S. holder will not be subject to U.S. federal withholding
tax if:

     o    the non-U.S. holder does not actually or constructively own 10% or
          more of the total combined voting power of all classes of our stock;

     o    the non-U.S. Holder is not:

          o    a controlled foreign corporation for U.S. federal income tax
               purposes that is related to us through stock ownership, or

          o    a bank that received the note on an extension of credit made
               pursuant to a loan agreement entered into in the ordinary course
               of its trade or business; and

     o    the non-U.S. holder provides a statement signed under penalties of
          perjury that includes its name and address and certifies that it is
          not a U.S. person in compliance with applicable requirements of the
          regulations, or an exemption is otherwise established.

If these requirements cannot be satisfied, a non-U.S. holder will be subject to
U.S. federal withholding tax at a rate of 30%, or lower treaty rate, if
applicable, on interest payments on the notes.

     CONVERSION OF NOTES. A non-U.S. holder generally will not be subject to
U.S. federal withholding tax on the conversion of a note into common stock. To
the extent a non-U.S. holder receives cash in lieu of a fractional share on the
conversion, such cash may give rise to gain that would be subject to the rules
described below with respect to the sale or exchange of a note or common stock.
See "Sale or Exchange of Notes or Common Stock" below.

     ADJUSTMENT OF CONVERSION RATE. The conversion rate of the notes is subject
to adjustment in certain circumstances. Any such adjustment could, in certain
circumstances, give rise to a deemed distribution to non-U.S.


                                       51
<PAGE>


holders of the notes. In such case, the deemed distribution would be subject to
the rules below regarding withholding of U.S. federal tax on dividends in
respect of common stock. See "Distributions on Common Stock" below.

     DISTRIBUTIONS ON COMMON STOCK. Distributions on common stock will
constitute a dividend for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. Dividends paid on common stock held by a non-U.S. holder
will be subject to U.S. federal withholding tax at a rate of 30%, or lower
treaty rate, if applicable.

     SALE OR EXCHANGE OF NOTES OR COMMON STOCK. In general, a non-U.S. holder
will not be subject to U.S. federal withholding tax on gain recognized upon the
sale or other disposition, including a redemption, of a note or common stock
received upon conversion thereof unless the non-U.S. holder:

     o    is a nonresident alien individual who is present in the United States
          for 183 or more days in the taxable year in which the gain is realized
          and certain other conditions are satisfied; or

     o    is subject to tax pursuant to the provisions of U.S. tax law
          applicable to certain U.S. expatriates.

     U.S. ESTATE TAX. Notes owned or treated as owned by an individual who is
not a citizen or resident, as specially defined for U.S. federal estate tax
purposes, of the United States at the time of death (nonresident decedent) will
not be included in the nonresident decedent's gross estate for U.S. federal
estate tax purposes as a result of the nonresident decedent's death, provided
that, at the time of death, the nonresident decedent does not own, actually or
constructively, 10% or more of the total combined voting power of all classes of
our stock and payments with respect to such notes would not have been
effectively connected with the conduct of a trade or business in the United
States by the nonresident decedent. Common stock owned or treated as owned by a
nonresident decedent will be included in the nonresident decedent's gross estate
for U.S. federal estate tax purposes as a result of the nonresident decedent's
death. Subject to applicable treaty limitations, if any, a nonresident
decedent's estate may be subject to U.S. federal estate tax on property included
in the estate for U.S. federal estate tax purposes.

IRS REPORTING AND BACKUP WITHHOLDING

     Certain noncorporate U.S. holders may be subject to IRS reporting and
backup withholding at a rate of 31% on payments of interest on the notes,
dividends on common stock and proceeds from the sale or other disposition of the
notes or common stock. Backup withholding will only be imposed where the
noncorporate U.S. holder:

     o    fails to furnish its taxpayer identification number (TIN), which would
          ordinarily be his or her social security number;

     o    furnishes an incorrect TIN;

     o    is notified by the IRS that he or she has failed to properly report
          payments of interest or dividends; or

     o    under certain circumstances, fails to certify, under penalties of
          perjury, that he or she has furnished a correct TIN and has not been
          notified by the IRS that he or she is subject to backup withholding.

We must also institute backup withholding on payments made to a U.S. holder if
instructed to do so by the IRS. A failure to provide us with a correct TIN may
also subject a U.S. holder to penalties imposed by the IRS.

     We will report annually to the IRS and to each non-U.S. holder any interest
and dividends paid with respect to a note or common stock, respectively, that is
subject to U.S. federal withholding tax or that is exempt from such tax under an
applicable treaty or the Code. We will also report to the IRS and to each
non-U.S. person such income paid which is exempt from federal withholding tax
because it is effectively connected with such non-U.S. person's U.S. trade or
business. However, a non-U.S. holder will not be subject to IRS reporting or
backup withholding if the payor has received appropriate certification
statements from or on behalf of the non-U.S. holder and provided that the payor
does not have actual knowledge that the non-U.S. holder is a U.S. person. The
payment of the proceeds from the disposition of the notes or common stock to or
through the U.S. office of any U.S. or foreign broker will be subject to IRS
reporting and possibly backup withholding unless the owner certifies as to its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a note
or common stock to or through a non-U.S. office of a non-U.S. broker


                                       52
<PAGE>


that is not a U.S. related person will not be subject to IRS reporting or backup
withholding. For this purpose, a U.S. related person is:

     o    a controlled foreign corporation for U.S. federal income tax purposes;

     o    a non-U.S. person 50% or more of whose gross income from all sources
          for the three year period ending with the close of its taxable year
          preceding the payment, or for such part of the period that the broker
          has been in existence, is derived from the activities that are
          effectively connected with the conduct of a U.S. trade or business; or

     o    with respect to payments made after December 31, 2000, a foreign
          partnership, if at any time during its tax year, one or more of its
          partners are U.S. persons, as defined in regulations, who in the
          aggregate hold more than 50% of the income or capital interest in the
          partnership or if, at any time during its tax year, such foreign
          partnership is engaged in a United States trade or business.

     In the case of the payment of proceeds from the disposition of notes or
common stock to or through a non-U.S. office of a broker that is a U.S. related
person, the regulations require IRS reporting on the payment unless the broker
has documentary evidence in its files that the owner is a non-U.S. holder and
the broker has no knowledge to the contrary. Backup withholding will not apply
to payments made through foreign offices of a broker that is a U.S. person or a
U.S. related person, absent actual knowledge that the payee is a U.S. person.

     Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against such holder's U.S. federal income tax
liability, if any, or will otherwise be refundable, provided that the requisite
procedures are followed. Holders of the notes or common stock should consult
their own tax advisors regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption, if applicable.

PROSPECTIVE FINAL REGULATIONS

     Final regulations were issued on October 6, 1997 and amended on May 15,
2000 which modify the requirements imposed on a non-U.S. holder and certain
intermediaries for establishing the recipient's status as a non-U.S. holder
eligible for exemption from U.S. federal withholding tax and backup withholding
described above. The new regulations generally are effective for payments made
after January 1, 2001, subject to certain transition rules. In general, the new
regulations do not significantly alter the substantive withholding and IRS
reporting requirements, but, rather, unify current certification procedures and
forms and clarify reliance standards. In addition, the new regulations impose
more stringent conditions on the ability of financial intermediaries acting for
a non-U.S. holder to provide certifications on behalf of the non-U.S. holder,
which may require such intermediaries to enter into an agreement with the IRS
which provides, among other things, for periodic audits by an IRS approved
external auditor or the IRS of certain documentation with respect to such
certifications. Non-U.S. holders should consult their own tax advisors to
determine the effects of the application on the new regulations on their
particular circumstances.

                                       53
<PAGE>

                                 SELLING HOLDERS

     The notes were originally issued by us and sold by Goldman, Sachs & Co.,
FleetBoston Robertson Stephens Inc., Dain Rauscher Incorporated, Lehman Brothers
Inc. and U.S. Bancorp Piper Jaffray Inc. as the initial purchasers in
transactions exempt from the registration requirements of the Securities Act to
persons reasonably believed by the initial purchasers to be qualified
institutional buyers. Selling holders, including their transferees, pledgees or
donees or their successors, may from time to time offer and sell pursuant to
this prospectus any or all of the notes and the common stock into which the
notes are convertible.


     The following table sets forth information, as of July 19, 2000, with
respect to the selling holders and the principal amounts of notes and amounts of
common stock beneficially owned by each selling holder that may be offered under
this prospectus. The information is based on information provided by or on
behalf of the selling holders. The selling holders may offer all, some or none
of the notes or common stock into which the notes are convertible. Because the
selling holders may offer all or some portion of the notes or the common stock,
no estimate can be given as to the amount of the notes or the common stock that
will be held by the selling holders upon termination of any sales. In addition,
the selling holders identified below may have sold, transferred or otherwise
disposed of all or a portion of their notes or common stock since the date on
which they provided the information regarding their notes or common stock in
transactions exempt from the registration requirements of the Securities Act. No
selling holder named in the table below beneficially owns one percent or more of
our common stock assuming conversion of a selling holder's notes.



<TABLE>
<CAPTION>

                                                                                                     SHARES OF
                                                                                                     COMMON STOCK
                                                          NOTES        NUMBER OF                     BENEFICIALLY
                               NOTES                   BENEFICIALLY    SHARES OF       NUMBER OF     OWNED AFTER
                            BENEFICIALLY               OWNED AFTER      COMMON         SHARES OF     OFFERING
                               OWNED        NOTES      OFFERING (1)     STOCK          COMMON         (1)(2)
                             PRIOR TO       OFFERED    (IN $1,000)   BENEFICIALLY      STOCK        (IN $1,000)
                             OFFERING       HEREBY     ------------  OWNED PRIOR TO    OFFERED     --------------
 NAME OF SELLING HOLDERS    (IN $1,000)   (IN $1,000)   #       %     OFFERING (2)     HEREBY        #       %
--------------------------  -----------  ------------  -----   ----  --------------  -----------   ------  ------
<S>                             <C>           <C>         <C>     <C>      <C>           <C>          <C>      <C>
AIG/National Union Fire
   Insurance..............       1,850         1,850      0       0          9,699         9,699       0       0
AIM Charter Fund..........      80,000        80,000      0       0        419,440       419,440       0       0
AIM VI Growth and Income
   Fund...................      25,000        25,000      0       0        131,075       131,075       0       0
Argent Classic
   Convertible Arbitrage
   Fund (Bermuda) Ltd.....      20,000        20,000      0       0        104,860       104,860       0       0
Arkansas Teachers
   Retirement System......       2,765         2,765      0       0         14,496        14,496       0       0
Aventis Pension Master
   Trust..................          40            40      0       0            209           209       0       0
Baptist Health of South
   Florida................         134           134      0       0            702           702       0       0
BBT Fund, L.P.............      20,000        20,000      0       0        104,860       104,860       0       0
Bear, Stearns & Co. Inc...         500           500      0       0          2,621         2,621       0       0
Boston Museum of Fine
   Arts...................         108           108      0       0            566           566       0       0
Champion International
   Corporation............         489           489      0       0          2,563         2,563       0       0
Chrysler Corporation
   Master Retirement Trust       2,410         2,410      0       0         12,635        12,635       0       0
Clinton Riverside
   Convertible Portfolio
   Limited................       2,500         2,500      0       0         13,107        13,107       0       0
Daiwa Securities America
   Inc....................       3,000         3,000      0       0         15,729        15,729       0       0
Delaware PERS.............       2,675         2,675      0       0         14,025        14,025       0       0
Delta Air Lines Master
   Trust..................         905           905      0       0          4,744         4,744       0       0
Deutsche Bank Securities,
   Inc....................      57,300        57,300      0       0        300,423       300,423       0       0
Dreyfus Founders Growth
   and Income Fund........       5,400         5,400      0       0         28,312        28,312       0       0
Engineers Joint Pension
   Fund...................         374           374      0       0          1,960         1,960       0       0
Fidelity Convertible......
Fidelity Financial Trust..      13,970        13,970      0       0         73,244        73,244       0       0
First Republic Bank.......         100           100      0       0            524           524       0       0
Granville Capital
   Corporation............       2,500         2,500      0       0         13,107        13,107       0       0
HT Insight Convertible
   Securities Fund........         500           500      0       0          2,621         2,621       0       0
</TABLE>



                                       54
<PAGE>


<TABLE>
<CAPTION>
                                                                                                     SHARES OF
                                                                                                     COMMON STOCK
                                                           NOTES       NUMBER OF                     BENEFICIALLY
                               NOTES                    BENEFICIALLY   SHARES OF       NUMBER OF     OWNED AFTER
                            BENEFICIALLY                OWNED AFTER     COMMON         SHARES OF     OFFERING
                               OWNED        NOTES       OFFERING (1)    STOCK          COMMON         (1)(2)
                             PRIOR TO       OFFERED     (IN $1,000)  BENEFICIALLY      STOCK        (IN $1,000)
                             OFFERING       HEREBY     ------------  OWNED PRIOR TO    OFFERED     --------------
 NAME OF SELLING HOLDERS    (IN $1,000)   (IN $1,000)   #       %     OFFERING (2)     HEREBY        #       %
--------------------------  -----------  ------------  -----   ----  --------------  -----------   ------  ------
<S>                              <C>           <C>        <C>     <C>        <C>           <C>         <C>     <C>
IBM Retirement Plan--High
   Income.................         145           145      0       0            760           760       0       0
ICI American Holdings
   Trust..................       1,425         1,425      0       0          7,471         7,471       0       0
Island Holdings...........         110           110      0       0            576           576       0       0
JMG Capital Partners, LP..       5,200         5,200      0       0         27,263        27,263       0       0
JMG Triton Offshore Fund
   Ltd....................       7,400         7,400      0       0         38,798        38,798       0       0
KBC Financial Products....         160           160      0       0            838           838       0       0
Kentfield Trading, Ltd.
   N/c....................       5,700         5,700      0       0         29,885        29,885       0       0
Liberty View Funds L.P....       1,000         1,000      0       0          5,243         5,243       0       0
Maxim Founders Growth &
   Income Portfolio.......       1,500         1,500      0       0          7,864         7,864       0       0
Motion Picture Industry
   Health Plan - Active...         280           280      0       0          1,468         1,468       0       0
Motion Picture Industry
   Health Plan - Retired..         140           140      0       0            734           734       0       0
MSD Portfolio
   L.P.-Investments.......       6,500         6,500      0       0         34,079        34,079       0       0
Nalco Chemical Company....         755           755      0       0          3,958         3,958       0       0
New York Life Insurance
   and Annuity Corporation       3,000         3,000      0       0         15,729        15,729       0       0
New York Life Insurance
   Company................      23,000        23,000      0       0        120,589       120,589       0       0
Nicholas-Applegate
   Convertible Fund.......       1,054         1,054      0       0          5,526         5,526       0       0
OCM Convertible Trust.....       1,070         1,070      0       0          5,610         5,610       0       0
Pacific Life Insurance
   Company................       1,500         1,500      0       0          7,864         7,864       0       0
Partner Reinsurance
   Company, Ltd...........         480           480      0       0          2,516         2,516       0       0
Physicians Life...........         294           294      0       0          1,541         1,541       0       0
Pilgrim Convertible Fund..       3,812         3,812      0       0         19,986        19,986       0       0
Robertson Stephens........      13,000        13,000      0       0         68,159        68,159       0       0
Salomon Brothers Asset
   Management, Inc........      23,400        23,400      0       0        122,686       122,686       0       0
San Diego City Retirement.         752           752      0       0          3,942         3,942       0       0
San Diego County
   Convertible............       1,825         1,825      0       0          9,568         9,568       0       0
San Diego County
   Employee's Retirement
   Association............         100           100      0       0            524           524       0       0
Starvest Combined Porfolio       2,400         2,400      0       0         12,583        12,583       0       0
State Employees'
   Retirement Fund of the
   State of Delaware......       1,220         1,220      0       0          6,396         6,396       0       0
State of Connecticut
   Combined Investment
   Funds..................       2,725         2,725      0       0         14,287        14,287       0       0
State of Oregon Equity....       8,575         8,575      0       0         44,958        44,958       0       0
Strong Large Cap Growth
   Fund, Inc..............       1,250         1,250      0       0          6,553         6,553       0       0
TCW Group, Inc............          50            50      0       0            262           262       0       0
The Travelers Life
   Insurance Company......      30,000        30,000      0       0        157,290       157,290       0       0
Transamerica Life
   Insurance & Annuity Co.       2,000         2,000      0       0         10,486        10,486       0       0
Tribeca Investments LLC...      46,000        46,000      0       0        241,178       241,178       0       0
Triton Capital
   Investments Ltd........       5,150         5,150      0       0         27,001        27,001       0       0
Value Line Convertible
   Fund, Inc..............         500           500      0       0          2,621         2,621       0       0
Vanguard Convertible
   Securities Fund, Inc...       2,770         2,770      0       0         14,523        14,523       0       0
Wake Forest University....         714           714      0       0          3,743         3,743       0       0
White River Securities
   L.L.C..................         500           500      0       0          2,621         2,621       0       0
Winchester Convertible
   Plus Ltd...............         250           250      0       0          1,310         1,310       0       0
Writers Guild--Industry
   Health Fund............         232           232      0       0          1,216         1,216       0       0
Zeneca Holdings Trust.....       1,100         1,100      0       0          5,767         5,767       0       0
</TABLE>


                                       55
<PAGE>

--------------
  (1)  It is unknown if, when or in what amounts a selling securityholder may
       offer securities for sale and we do not know that the selling
       securityholders will sell any or all of the securities offered hereby.
       Because the selling securityholders may offer all or some of the
       securities pursuant to this prospectus, and because there are currently
       no other agreements, arrangements or understandings with respect to the
       sale of any of the securities that will be held by the selling
       securityholders, no estimate can be given as to the amount of the
       securities that will be held by the selling securityholders after
       completion of the offering made by this prospectus. However, for purposes
       of this table, we have assumed that, after completion of the offering, no
       securities will be held by the selling securityholders.
  (2)  The number of securities beneficially owned is determined under the rules
       of the SEC and the information is not necessarily indicative of
       beneficial ownership for any other purpose. Under those rules, beneficial
       ownership includes any securities as to which the individual has sole or
       shared voting power or investment power and also any securities which the
       individual has the right to acquire within 60 days after July 19, 2000
       through the exercise of any stock option or other right. The inclusion in
       the table of securities, however, does not constitute an admission that
       the selling securityholders are direct or indirect beneficial owners of
       those securities. The selling securityholders have sole voting power and
       investment power with respect to all securities of capital stock listed
       as owned by the selling securityholders.


                                       56
<PAGE>

                              PLAN OF DISTRIBUTION

     The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and our common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.

     The notes and common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at prices related to
the prevailing market prices, at varying prices determined at the time of sale,
or at negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions:

     o    on any national securities exchange or U.S. inter-dealer system of a
          registered national securities association on which the notes or our
          common stock may be listed or quoted at the time of sale;

     o    in the over-the-counter market;

     o    in transactions otherwise than on these exchanges or systems or in the
          over-the-counter market;

     o    through the writing of options, whether the options are listed on an
          options exchange or otherwise; or

     o    through the settlement of short sales.

     In connection with the sale of the notes and common stock, the selling
holders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the notes or
common stock in the course of hedging the positions they assume. The selling
holders may also sell the notes or common stock short and deliver these
securities to close out their short positions, or loan or pledge the notes or
common stock to broker-dealers that in turn may sell these securities.

     The aggregate proceeds to the selling holders from the sale of the notes or
common stock offered by them will be the purchase price of the notes or common
stock less discounts and commissions, if any. Each of the selling holders
reserves the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of notes or common stock
to be made directly or through agents. We will not receive any of the proceeds
from this offering.

     Our common stock is listed for trading on The Nasdaq National Market. The
notes are currently eligible for trading in The Portal Market of the National
Association of Securities Dealers, Inc.

     In order to comply with the securities laws of some states, if applicable,
the notes and common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the notes
and common stock may not be sold unless they have been registered or qualified
for sale or an exemption from registration or qualification requirements is
available and is complied with.

     The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act. Selling holders
who are "underwriters" within the meaning of Section 2(11) of the Securities Act
will be subject to the prospectus delivery requirements of the Securities Act.
The selling holders have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M.

     In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus.

     To the extent required, the specific notes or shares of our common stock to
be sold, the names of the selling holders, the respective purchase prices and
public offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part.


                                       57
<PAGE>

     We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and our common stock under applicable
federal and state securities laws under specific circumstances and at specific
times. The registration rights agreement provides for cross-indemnification of
the selling holders and us and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and our common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders of incident to the offering and sale of the notes and our common
stock. We estimate that our total expenses of the offering of the notes and
common stock will be approximately $349,900.


                                       58
<PAGE>
                                  LEGAL MATTERS

       The validity of the notes offered hereby will be passed upon for us by
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo Park,
California. As of the date of this prospectus, certain partners of Gunderson
Dettmer Stough Villeneuve Franklin & Hachigian, LLP beneficially own shares of
our common stock.

                                     EXPERTS

       The financial statements of Redback as of December 31, 1998 and 1999 and
for each of the three years in the period ended December 31, 1999 incorporated
in this prospectus by reference to the Annual Report on Form 10-K for the year
ended December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

       The financial statements of Siara as of December 31, 1998 and 1999 and
for the period from inception (July 20, 1998) through December 31, 1998, the
year ended December 31, 1999, and the period from inception (July 20, 1998)
through December 31, 1999 incorporated in this prospectus by reference to
Redback's Proxy Statement included within the Registration Statement on Form S-4
Amendment Number 1 (No. 333-95947) have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

                       WHERE YOU CAN FIND MORE INFORMATION

       This prospectus is part of a registration statement that we filed with
the SEC. The registration statement, including the attached exhibits, contain
additional relevant information about us and our common stock. The rules and
regulations of the SEC allow us to omit some of the information included in the
registration statement from this prospectus. In addition, we file reports, proxy
statements and other information with the SEC under the Exchange Act. You may
read and copy any of this information at the following locations of the SEC:

 Public Reference Room   New York Regional Office   Chicago Regional Office
450 Fifth Street, N.W.     7 World Trade Center         Citicorp Center
       Room 1024                Suite 1300          500 West Madison Street
Washington, D.C. 20549   New York, New York 10048         Suite 1400
                                                   Chicago, Illinois 60661-2511

Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
website at http://www.sec.gov. The SEC file number for our documents filed under
the Exchange Act is 0-25853.

       The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This prospectus
incorporates by reference important business and financial information about us.
The information incorporated by reference is considered to be a part of this
prospectus, except for any such information that is superceded by information
included directly in this document, and later information that we file with the
SEC will automatically update and supercede all of such information.

       We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:

       1.    Our Annual Report on Form 10-K for the year ended December 31,
1999, filed on February 11, 2000;

       2.    Our Current Report on Form 8-K filed with the SEC on March 20,
2000;

       3.    Our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2000, filed on May 15, 2000;

                                       59
<PAGE>

       4     Our Proxy Statement dated February 7, 2000, included within the
Registration Statement on Form S-4 Amendment Number 1 filed on February 7, 2000
in connection with our March 8, 2000 Special Meeting of Stockholders (File No.
333-95947); and


       5.    Our Current Report on Form 8-K filed with the SEC on July 20, 2000.

       6.    All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to the effectiveness of the
registration statement.


       You may obtain a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                               Investor Relations
                              1195 Borregas Avenue
                               Sunnyvale, CA 94089
                                  (408)571-5200

                                       60
<PAGE>

              INDEX TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

Unaudited Pro Forma Combined Financial Data..........................      F-2
Unaudited Pro Forma Combined Statement of Operations
 for the year ended December 31, 1999................................      F-3
Unaudited Pro Forma Combined Statement of Operations
 for the three months ended March 31, 2000...........................      F-4
Notes to Unaudited Pro Forma Combined Financial Data.................      F-5




                                      F-1

<PAGE>


                   UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

     On March 8, 2000, Redback merged with Siara in a transaction accounted for
as a purchase. In connection with the Merger, Redback issued 57,388,818 shares
of its common stock and options and warrants to purchase 5,295,038 shares of its
common stock. The consolidated financial statements include the results of
operations of Siara commencing on March 9, 2000. The purchase price, including
the value of options and warrants issued in connection with the Merger and
professional fees directly related to the acquisition, was approximately $4.5
billion.

     The following unaudited pro forma combined statements of operations for the
year ended December 31, 1999 and the three months ended March 31, 2000 present
the effect of the merger between Redback and Siara as if the merger occurred as
of the beginning of the periods indicated.

     The unaudited pro forma combined financial data are based on the estimates
and assumptions set forth in the notes to such statements. The unaudited pro
forma combined financial data are not necessarily indicative of the results that
would have been achieved had the transaction been consummated as of the dates
indicated or that may be achieved in the future.

     The unaudited pro forma combined financial data should be read in
conjunction with the historical financial statements of Redback and the
historical financial statements of Siara and other financial information
pertaining to Redback and Siara including "Redback Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Siara Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference herein and "Risk Factors" included herein.

                                      F-2
<PAGE>

              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1999
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                         HISTORICAL
                                               -------------------------------                       PRO FORMA
                                                  REDBACK           SIARA         ADJUSTMENTS        COMBINED
                                               ---------------  --------------  ----------------   --------------
<S>                                            <C>              <C>             <C>                <C>
Net revenues................................   $       64,274                                      $      64,274
Cost of revenues............................           18,665                   $         3,450 (A)       22,115
                                               ---------------  --------------  ----------------   --------------
Gross profit................................           45,609                            (3,450)          42,159
                                               ---------------  --------------  ----------------   --------------
Operating expenses:
   Research and development.................           21,125   $      18,318                             39,443
   Selling, general and administrative......           30,208           6,889                             37,097
   Amortization of intangibles..............                                          1,116,564 (B)    1,116,564
   Amortization of deferred stock
     compensation...........................            4,033          68,847           (68,847)(C)        4,033
                                               ---------------  --------------  ----------------   --------------
       Total operating expenses.............           55,366          94,054         1,047,717        1,197,137
                                               ---------------  --------------  ----------------   --------------
Loss from operations........................           (9,757)        (94,054)       (1,051,167)      (1,154,978)
Interest income (expense), net..............            1,838            (663)                             1,175
                                               ---------------  --------------  ----------------   --------------
Net loss....................................   $       (7,919)  $     (94,717)  $    (1,051,167)   $  (1,153,803)
                                               ===============  ==============  ================   ==============
Basic and diluted net loss per share........   $        (0.15)  $      (16.34)                     $      (13.39)
                                               ===============  ==============                     ==============
Shares used in computing net loss
   per share (D)............................       53,388,000       5,796,000        32,804,000       86,192,000
                                               ===============  ==============  ================   ==============
</TABLE>


     SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA.

                                      F-3
<PAGE>
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED MARCH 31, 2000

                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               HISTORICAL
                                                       ----------------------------                      PRO FORMA
                                                         REDBACK         SIARA        ADJUSTMENTS         COMBINED
                                                       ------------   -------------  -------------     --------------
<S>                                                   <C>            <C>            <C>               <C>
Net revenues........................................   $     34,163                                    $       34,163
Cost of revenues....................................          8,297                  $         645 (A)          8,942
                                                       ------------   -------------  -------------     --------------
Gross profit........................................         25,866                           (645)            25,221
                                                       ------------   -------------  -------------     --------------
Operating expenses:
   Research and development.........................         12,139           6,862                            19,001
   Selling, general and administrative..............         13,255           4,347                            17,602
   Amortization of intangibles......................         70,604                        208,538 (B)        279,142
   In-process research and development                       15,300                        (15,300)(A)
   Amortization of deferred stock compensation......            535          80,574        (80,574)(C)            535
                                                       ------------   -------------  -------------     --------------
       Total operating expenses.....................        111,833          91,783        112,664            316,280
                                                       ------------   -------------  -------------     --------------
Loss from operations................................        (85,967)        (91,783)      (113,309)          (291,059)
Interest income (expense), net......................            730            (573)                              157
                                                       ------------   -------------  -------------     --------------
Net loss............................................   $    (85,237)  $     (92,356) $    (113,309)    $     (290,902)
                                                       ============   =============  =============     ==============
Basic and diluted net loss per share................   $      (0.96)  $       (5.44)                   $        (2.51)
                                                       ============   =============                    ==============
Shares used in computing net loss                        89,137,000      16,986,000     26,782,000        115,919,000
   per share (D) ...................................   ============   =============  =============     ==============
</TABLE>

     SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA.


                                       F-4
<PAGE>

                      NOTES TO UNAUDITED PRO FORMA
                         COMBINED FINANCIAL DATA

Note 1--Basis of Presentation:

       On March 8, 2000, Redback and Siara completed their merger, which
was accounted for as a purchase. In connection with the merger, Redback
issued 57,388,818 shares of its common stock and options and warrants to
purchase 5,295,038 shares of its common stock. The purchase price,
including the value of options and warrants issued in connection with
the merger and professional fees directly related to the merger, was
approximately $4.5 billion.

       The estimated value of the Redback common stock is approximately
$142.00 per share based on the average closing price of Redback's common
stock for the five-day period including the date of the announcement of
the signing of the merger agreement and the two days preceding and
succeeding such date. The value of the options and warrants to purchase
Redback's common stock is approximately $140.77 per share, determined
using the Black-Scholes pricing model.

       The preliminary allocation of the purchase price using balances
as of March 8, 2000 is summarized below (in thousands):

Tangible assets acquired..............................   $      10,078
Developed technology acquired.........................          13,800
In-process research and development...................          15,300
In-place workforce....................................          27,500
Non-compete agreements................................          10,000
Goodwill..............................................       4,425,180
Assumed liabilities...................................         (35,380)
                                                         --------------
         Net assets acquired..........................   $   4,466,478
                                                         ==============

       The fair value allocation to in-process research and development
was determined by identifying the research projects for which
technological feasibility has not been achieved and which have no
alternative future use at the merger date, assessing the stage and
expected date of completion of the research and development effort at
the merger date, and calculating the net present value of the cash flows
expected to result from the successful deployment of the new technology
resulting from the in-process research and development effort.

       The stages of completion were determined by estimating the costs
and time incurred to date relative to the costs and time incurred to
develop the in-process technology into a commercially viable technology
or product, while considering the relative difficulty of completing the
various tasks and obstacles necessary to attain technological
feasibility. As of the date of the acquisition, Siara had five projects
in process that ranged from 24%-80% complete.

       The estimated net present value of cash flows was based on
incremental future cash flows from revenues expected to be generated by
the technologies in the process of development, taking into account the
characteristics and applications of the technologies, the size and
growth rate of existing and future markets and an evaluation of past and
anticipated technology and product life cycles. Estimated net future
cash flows included allocations of operating expenses and income taxes
but excluded the expected completion costs of the in-process projects,
and were discounted at a rate of 26% to arrive at a net present value.
The discount rate included a factor that took into account the
uncertainty surrounding the successful deployment of in-process
technology projects. This net present value was allocated to in-process
research and development based on the percentage of completion at the
merger date.

       The amounts allocated to in-process research and development was
charged to the statement of operations in the three month period ended
March 31, 2000.

                                   F-5
<PAGE>

                      NOTES TO UNAUDITED PRO FORMA
                   COMBINED FINANCIAL DATA (CONTINUED)

Note 2--Pro Forma Adjustments:

       A     To reflect amortization of developed technology over
             the estimated useful life of four years as if the
             acquisition had occurred as of the beginning of the periods
             indicated. The amount allocated to in-process research and
             development has not been included in the unaudited pro
             forma combined statement of operations as it is
             nonrecurring.

       B     To reflect amortization of goodwill, workforce and
             non-compete agreements over their estimated useful lives of
             four, three and two years, respectively, as if the
             acquisition occurred as of the beginning of the periods
             indicated.

       C     To eliminate amortization of deferred stock
             compensation related to Siara stock options and warrants
             which is duplicative, as the fair value of the unvested
             options and warrants has been included in the purchase
             price and results in additional goodwill amortization.

       D     Unaudited pro forma combined basic and diluted net
             loss per share is computed using the weighted average
             number of common shares outstanding during the period
             including the effect of shares issued in the Merger as if
             such shares were issued at the beginning of the periods
             indicated.

                                  F-6
<PAGE>


=======================================================



THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE
FILED WITH THE SEC. YOU SHOULD RELY ONLY ON THE
INFORMATION OR REPRESENTATIONS PROVIDED IN THIS
PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER
OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION
IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THE DOCUMENT.






                   TABLE OF CONTENTS
                                                 PAGE
Summary..........................................   1
Risk Factors.....................................   8
Disclosure Regarding Forward-Looking
   Statements....................................  18
Ratio of Earnings to Fixed Charges...............  19
Use of Proceeds..................................  19
Business.........................................  20
Description of the Notes.........................  34
Description of Capital Stock.....................  47
Certain United States Federal Income and Estate
   Tax Consequences .............................  49
Selling Holders..................................  54
Plan of Distribution.............................  57
Legal Matters....................................  59
Experts..........................................  59
Where You Can Find More Information..............  59



=======================================================




========================================================



                     $500,000,000


                   [REDBACK LOGO]


  5% CONVERTIBLE SUBORDINATED NOTES DUE APRIL 1, 2007

       (and Shares of Common Stock issuable upon
               conversion of the Notes)










                     -------------



                    July ___, 2000



                    --------------




========================================================
<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

       The following table sets forth the various expenses to be incurred in
connection with the registration of the securities being registered hereby, all
of which will be borne by us (except any underwriting discounts and commissions
and expenses incurred by the selling stockholders for brokerage, accounting, tax
or legal services or any other expenses incurred by the selling stockholders in
disposing of the shares). All amounts shown are estimates except the Securities
and Exchange Commission registration fee.

        Securities and Exchange Commission Registration Fee....  $   132,000
        Legal Fees and Expenses................................  $   100,000
        Accounting Fees and Expenses...........................  $    75,000
        Miscellaneous..........................................  $    42,900
                                                                 -------------
               Total...........................................  $   349,900
                                                                 =============

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

       Redback's certificate of incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the Delaware General
Corporation Law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.

       Redback's bylaws provide that Redback shall indemnify its directors and
officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under Delaware
law. Redback has also entered into indemnification agreements with its officers
and directors containing provisions that may require Redback, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers and
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified.

ITEM 16. EXHIBITS.

       The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.

       (a)   Exhibits

EXHIBIT
NUMBER       DESCRIPTION
-------      -------------

  4.1*       Form of Note for Registrant's 5% Convertible Subordinated Note, due
             April 1, 2007
  4.2*       Indenture, dated as of March 29, 2000, between Registrant and
             Norwest Bank Minnesota, National Association, as trustee

  4.3*       Registration Rights Agreement, dated March 29, 2000, among
             Registrant and Goldman, Sachs & Co., FleetBoston Robertson Stephens
             Inc., Dain Rauscher Incorporated, Lehman Brothers Inc. and U.S.
             Bancorp Piper Jaffray Inc.

  5.1**      Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
             Hachigian, LLP
 12.1        Computation of Ratio of Earnings to Fixed Charges

 23.1        Consent of PricewaterhouseCoopers LLP
 23.2        Consent of PricewaterhouseCoopers LLP


 23.3**      Consent of Gunderson Dettmer Stough Villeneuve Franklin &
             Hachigian, LLP (included in the opinion filed as Exhibit 5.1).

 24.1**      Power of Attorney (reference is made to the signature page of this
             Registrant Statement).
 25.1**      Statement of Eligibility of Trustee.

--------------
    *  Incorporated by reference from Exhibits to the Registrant's Quarterly
       Report on Form 10-Q for the quarter ended March 31, 2000, filed on May
       15, 2000.


   **  Previously filed


                                      II-1
<PAGE>

ITEM 17. UNDERTAKINGS.

       The undersigned Registrant hereby undertakes:

       (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.

       (2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

       (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

       Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

       The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.

       For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

                                      II-2
<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sunnyvale, State of California, on
this 21st day of July, 2000.


                                REDBACK NETWORKS INC.


                                By:/s/  Craig M. Gentner
                                        ---------------------------------------
                                Craig M. Gentner
                                Senior Vice President of Finance,
                                Chief Financial Officer and Corporate Secretary

     Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.


<TABLE>
<CAPTION>

         SIGNATURE                  TITLE                                             DATE
<S>                         <C>                                                   <C>
/s/ CRAIG M. GENTNER*       President,Chief Executive Officer
----------------------------and Director (PRINCIPAL EXECUTIVE OFFICER)            July 21, 2000
Vivek Ragavan

/s/ CRAIG M. GENTNER        Senior Vice President of Finance,
----------------------------Chief Financial Officer and Corporate Secretary
Craig M. Gentner            and Corporate Secretary (PRINCIPAL FINANCIAL OFFICER) July 21, 2000



/s/ CRAIG M. GENTNER*       Director, Vice Chairman of the Board
----------------------------
Dennis L. Barsema                                                                 July 21, 2000

/s/ CRAIG M. GENTNER*       Director
----------------------------
James R. Flach                                                                    July 21, 2000

/s/ CRAIG M. GENTNER*       Director
----------------------------
Promod Hague                                                                      July 21, 2000

/s/ CRAIG M. GENTNER*       Director
----------------------------
Vinod Khosla                                                                      July 21, 2000

/s/ CRAIG M. GENTNER*       Director
----------------------------
William H. Kurtz                                                                  July 21, 2000

/s / CRAIG M. GENTNER*      Director, Chairman of the Board
----------------------------
Pierre R. Lamond                                                                  July 21, 2000

/s/ CRAIG M. GENTNER*       Director
----------------------------
Daniel J. Warmenhaven                                                             July 21, 2000


*BY: /s/ CRAIG M. GENTNER
----------------------------
Craig M. Gentner
Attorney-in-fact
</TABLE>


<PAGE>

                                  EXHIBIT INDEX

  EXHIBIT
  NUMBER     DESCRIPTION
  ---------  ------------
     4.1*    Form of Note for Registrant's 5% Convertible Subordinated Note, due
             April 1, 2007
     4.2*    Indenture, dated as of March 29, 2000, between Registrant and
             Norwest Bank Minnesota, National Association, as trustee
     4.3*    Registration Rights Agreement, dated March 29, 2000, among
             Registrant and Goldman, Sachs & Co., FleetBoston Robertson Stephens
             Inc., Dain Rauscher Incorporated, Lehman Brothers Inc. and U.S.
             Bancorp Piper Jaffray Inc.

     5.1**   Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
             Hachigian, LLP
    12.1     Computation of Ratio of Earnings to Fixed Charges

    23.1     Consent of PricewaterhouseCoopers LLP
    23.2     Consent of PricewaterhouseCoopers LLP

    23.3**   Consent of Gunderson Dettmer Stough Villeneuve Franklin &
             Hachigian, LLP (included in the opinion filed as Exhibit 5.1).
    24.1**   Power of Attorney (reference is made to the signature page of this
             Registrant Statement).
    25.1**   Statement of Eligibility of Trustee.

--------------
   *   Incorporated by reference from Exhibits to the Registrant's
       Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed
       on May 15, 2000.

   **  Previously filed.




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