REDWOOD EMPIRE BANCORP

                            10,000 Capital Securities


                            10.20% Capital Securities
               (Liquidation Amount $1,000.00 per Capital Security)


                               PLACEMENT AGREEMENT

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

                                                                February 9, 2001



First Tennessee Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
Two World Trade Center
New York, New York  10048

Ladies and Gentlemen:

     Redwood Empire Bancorp, a California  corporation (the "Company"),  and its
financing  subsidiary,  Redwood Statutory Trust I, a Connecticut statutory trust
(the "Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement with you as placement  agents (the "Placement  Agents"),
as follows:

Section 1. Issuance and Sale of Securities.

     1.1.  Introduction.  The Offerors  propose to issue and sell at the Closing
(as  defined in Section  2.3.1  hereof)  10,000 of the  Trust's  10.20%  Capital
Securities,  with a liquidation  amount of $1,000.00  per capital  security (the
"Capital  Securities"),  to Preferred  Term  Securities II, Ltd., a company with
limited  liability  established  under  the  laws  of the  Cayman  Islands  (the
"Purchaser") pursuant to the terms of a Subscription  Agreement entered into, or
to be entered into on or prior to the Closing Date, between the Offerors and the
Purchaser (the "Subscription  Agreement"),  the form of which is attached hereto
as Exhibit A and incorporated herein by this reference.

     1.2.  Operative  Agreements.  The  Capital  Securities  shall be fully  and
unconditionally  guaranteed on a subordinated  basis by the Company with respect
to distributions and amounts payable upon  liquidation,  redemption or repayment
(the  "Guarantee")   pursuant  and  subject  to  the  Guarantee  Agreement  (the
"Guarantee  Agreement"),  to be dated as of the Closing  Date and  executed  and
delivered by the Company and State Street Bank and Trust Company of Connecticut,
National Association, as trustee (the "Guarantee Trustee"), for the benefit from
time to time of the holders of the Capital Securities.  The entire proceeds from
the sale by the Trust to the holders of the Capital Securities shall be combined
with the entire proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities"), and shall be used by the Trust to purchase
$10,310,000  in principal  amount




<PAGE>

of  the  10.20%  Junior   Subordinated   Deferrable   Interest  Debentures  (the
"Debentures") of the Company.  The Capital  Securities and the Common Securities
for the Trust shall be issued pursuant to an Amended and Restated Declaration of
Trust  among  State  Street  Bank and Trust  Company  of  Connecticut,  National
Association,   as  institutional  trustee  (the  "Institutional  Trustee"),  the
Administrators  named  therein,  and the Company,  to be dated as of the Closing
Date and in substantially the form heretofore  delivered to the Placement Agents
(the "Trust Agreement"). The Debentures shall be issued pursuant to an Indenture
(the  "Indenture"),  to be dated as of the Closing Date, between the Company and
State Street Bank and Trust Company of  Connecticut,  National  Association,  as
indenture trustee (the "Indenture  Trustee").  The documents  identified in this
Section  1.2 and in  Section  1.1  are  referred  to  herein  as the  "Operative
Documents."

     1.3. Rights of Purchaser.  The Capital Securities shall be offered and sold
by the  Trust  directly  to the  Purchaser  without  registration  of any of the
Capital Securities,  the Debentures or the Guarantee under the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities laws
in reliance upon exemptions from the registration requirements of the Securities
Act and other applicable  securities laws. The Company agrees that the Purchaser
shall be and  hereby is  entitled  to the  benefit  of,  and to rely  upon,  the
provisions  of this  Agreement  which are  incorporated  by  reference  into the
Subscription Agreement.  The Offerors and the Placement Agents have entered into
this Agreement to set forth their  understanding  as to their  relationship  and
their respective rights, duties and obligations.

     1.4. Legends.  Upon original  issuance thereof,  and until such time as the
same is no longer  required under the applicable  requirements of the Securities
Act, the Capital  Securities  and Debentures  certificates  shall each contain a
legend as required pursuant to any of the Operative Documents.

Section 2. Purchase of Capital Securities.

     2.1.  Exclusive  Rights;  Purchase  Price.  From the date hereof  until the
Closing Date (which date may be extended by mutual agreement of the Offerors and
the Placement  Agents),  the Offerors  hereby grant to the Placement  Agents the
exclusive  right  to  arrange  for the  sale of the  Capital  Securities  to the
Purchaser at a purchase price of $1,000.00 per Capital Security.

     2.2.  Subscription  Agreement.  The Offerors hereby agree to evidence their
acceptance of the  subscription  by  countersigning  a copy of the  Subscription
Agreement and returning the same to the Placement Agents.

     2.3. Closing and Delivery of Payment.

          2.3.1.  Closing;  Closing  Date.  The sale and purchase of the Capital
Securities by the Offerors to the  Purchaser  shall take place at a closing (the
"Closing")  at the offices of Lewis,  Rice & Fingersh,  L.C., at 10:00 a.m. (St.
Louis Time) on February  22, 2001,  or such other  business day as may be agreed
upon by the Offerors and the Placement  Agents (the "Closing  Date");  provided,
however,  that in no event shall the Closing Date occur later than  February 28,
2001 unless  consented to by the  Purchaser.  Payment by the Purchaser  shall be
payable in the manner set forth in the Subscription  Agreement and shall be made
prior to or on the Closing Date.

          2.3.2.  Delivery.  The certificate for the Capital Securities shall be
in definitive form, registered in the name of the Purchaser and in the aggregate
amount of the Capital Securities purchased by the Purchaser.

          2.3.3.  Transfer  Agent.  The Offerors  shall deposit the  certificate
representing  the Capital  Securities  with the  Institutional  Trustee or other
appropriate party prior to the Closing Date.

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<PAGE>

     2.4. Placement Agents' Fees and Expenses.

          2.4.1.  Placement Agents' Compensation.  Because the proceeds from the
sale of the Capital Securities shall be used to purchase the Debentures from the
Company,  the  Company  shall  pay an  aggregate  of $30.00  for each  $1,000 of
principal  amount of  Debentures  sold to the Trust  (excluding  the  Debentures
related to the Common  Securities  purchased  by the  Company).  Of this amount,
$15.00 for each $1,000.00 of principal  amount of Debentures shall be payable to
First  Tennessee  Capital  Markets and $15.00 for each  $1,000.00  of  principal
amount of  Debentures  shall be payable to Keefe,  Bruyette & Woods,  Inc.  Such
amount shall be delivered to the Trustee or such other person  designated by the
Placement Agents on the Closing Date and shall be allocated  between and paid to
the respective Placement Agents as directed by the Placement Agents.

          2.4.2. Costs and Expenses. Whether or not this Agreement is terminated
or the  sale of the  Capital  Securities  is  consummated,  the  Company  hereby
covenants  and  agrees  that it shall  pay or cause to be paid  (directly  or by
reimbursement)  all reasonable costs and expenses incident to the performance of
the  obligations  of the  Offerors  under this  Agreement,  including  all fees,
expenses and  disbursements  of counsel and  accountants  for the Offerors;  the
reasonable costs and charges of any trustee, transfer agent or registrar and the
fees and  disbursements  of counsel to any trustee,  transfer agent or registrar
attributable  to the  Debentures  and the  Capital  Securities;  all  reasonable
expenses  incident  to the  preparation,  execution  and  delivery  of the Trust
Agreement,  the Indenture, and the Guarantee; and all other reasonable costs and
expenses incident to the performance of the obligations of the Company hereunder
and under the Trust Agreement.

     2.5. Failure to Close. If any of the conditions to the Closing specified in
this  Agreement  shall  not  have  been  fulfilled  to the  satisfaction  of the
Placement  Agents or if the Closing  shall not have  occurred on or before 10:00
a.m.   (Eastern   Time)  on  February   28,  2001,   then  each  party   hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further  obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; provided, however, that
the obligations of the parties under Sections 2.4.2 and 9 hereof shall not be so
relieved and shall continue in full force and effect.

Section  3.  Closing  Conditions.  The  obligations  of the  Purchaser  and  the
Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing  Date,  of the  representations  and  warranties  of the Offerors
contained in this Agreement,  to the accuracy, at and as of the Closing Date, of
the  statements  of the  Offerors  made  in any  certificates  pursuant  to this
Agreement,  to the performance by the Offerors of their  respective  obligations
under this  Agreement,  to  compliance,  at and as of the Closing  Date,  by the
Offerors with their respective agreements herein contained, and to the following
further conditions:

     3.1.  Opinions of Counsel.  On the Closing Date, the Placement Agents shall
have received the  following  favorable  opinions,  each dated as of the Closing
Date:  (a) from  Sullivan & Cromwell,  counsel for the Offerors and addressed to
the Purchaser and the Placement  Agents in  substantially  the form set forth on
Exhibit B-1 attached hereto and incorporated herein by this reference,  (b) from
Bingham Dana LLP, special  Connecticut  counsel to the Offerors and addressed to
the Purchaser,  the Placement Agents and the Offerors, in substantially the form
set  forth on  Exhibit  B-2  attached  hereto  and  incorporated  herein by this
reference and (c) from Lewis, Rice & Fingersh,  L.C., special tax counsel to the
Offerors,  and addressed to the Offerors, in substantially the form set forth on
Exhibit B-3 attached hereto and incorporated  herein by this reference,  subject
to the receipt by Lewis, Rice & Fingersh,  L.C. of a representation  letter from
the  Company  in the  form  set  forth  in  Exhibit  B-3  completed  in a manner
reasonably  satisfactory  to Lewis,  Rice & Fingersh,  L.C.  (collectively,  the
"Offerors'  Counsel  Opinions").  In rendering the Offerors'  Counsel  Opinions,
counsel to the Offerors  may rely as to factual  matters  upon



                                       3
<PAGE>

certificates or other documents furnished by officers, directors and trustees of
the Offerors (copies of which shall be delivered to the Placement Agents and the
Purchaser) and by government officials, and upon such other documents as counsel
to the Offerors may, in their  reasonable  opinion,  deem appropriate as a basis
for the  Offerors'  Counsel  Opinions.  Counsel to the  Offerors may specify the
jurisdictions  in which  they are  admitted  to  practice  and that they are not
admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction.  If the Offerors' counsel is not admitted to practice in
the State of New York, the opinion of Offerors' counsel may assume, for purposes
of the  opinion,  that the laws of the State of New York are  identical,  in all
respects  material to the opinion,  to the  internal  laws of the state in which
such counsel is admitted to practice.

     3.2.  Officer's  Certificate.  At the Closing  Date,  the Purchaser and the
Placement  Agents  shall have  received  certificates  from the Chief  Executive
Officer of the  Company,  dated as of the  Closing  Date,  stating  that (i) the
representations and warranties of the Offerors set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Offerors have complied with
all  agreements  and satisfied  all  conditions on their part to be performed or
satisfied at or prior to the Closing Date, (ii) since the date of this Agreement
the  Offerors  have  not  incurred  any  liability  or  obligation,   direct  or
contingent,  or  entered  into  any  material  transactions,  other  than in the
ordinary  course of  business,  which is  material  to the  Offerors,  and (iii)
covering such other matters as the Placement Agents may reasonably request.

     3.3.  Administrator's  Certificate.  At the Closing Date, the Purchaser and
the  Placement  Agents  shall  have  received  a  certificate  of  one  or  more
Administrators  of the Trust,  dated as of the Closing  Date,  stating  that the
representations  and  warranties  of the Trust set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.

     3.4. Purchase Permitted by Applicable Laws; Legal Investment.  The purchase
of and payment for the Capital  Securities  shall (a) not be  prohibited  by any
applicable law or governmental regulation,  (b) not subject the Purchaser or the
Placement Agents to any penalty or, in the reasonable  judgment of the Purchaser
and the  Placement  Agents,  other  onerous  condition  under or pursuant to any
applicable law or governmental regulation,  and (c) be permitted by the laws and
regulations of the jurisdictions to which the Purchaser and the Placement Agents
are subject.

     3.5.  Consents and Permits.  The Company and the Trust shall have  received
all consents,  permits and other  authorizations,  and made all such filings and
declarations,  as may be required from any person or entity pursuant to any law,
statute,  regulation or rule (federal, state, local and foreign), or pursuant to
any  agreement,  order or decree to which the Company or the Trust is a party or
to which it is subject, in connection with the transactions contemplated by this
Agreement.

     3.6. Sale of Purchaser Securities. The Purchaser shall have sold securities
issued by the  Purchaser  in an amount  such that the net  proceeds of such sale
shall be (i)  available on the Closing Date and (ii) in an amount  sufficient to
purchase the Capital Securities.

     3.7. Information.  Prior to or on the Closing Date, the Offerors shall have
furnished  to the  Placement  Agents  such  further  information,  certificates,
opinions and documents  addressed to the  Purchaser  and the  Placement  Agents,
which  the  Placement  Agents  may  reasonably   request,   including,   without
limitation,  a complete set of the Operative Documents or any other documents or
certificates  required  by this  Section  3;  and all  proceedings  taken by the
Offerors  in  connection  with  the  issuance,  offer  and  sale of the  Capital
Securities as herein  contemplated shall be reasonably  satisfactory in form and
substance to the Placement Agents.

     If any condition  specified in this Section 3 shall not have been fulfilled
when  and  as  required  in  this  Agreement,  or if  any  of  the  opinions  or
certificates  mentioned  above  or  elsewhere  in this  Agreement



                                       4
<PAGE>

shall not be  reasonably  satisfactory  in form and  substance to the  Placement
Agents,  this  Agreement may be terminated by the Placement  Agents by notice to
the  Offerors  at any time at or  prior  to the  Closing  Date.  Notice  of such
termination  shall  be given to the  Offerors  in  writing  or by  telephone  or
facsimile confirmed in writing.

Section 4.  Conditions  to the Offerors'  Obligations.  The  obligations  of the
Offerors to sell the Capital  Securities  to the Purchaser  and  consummate  the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and  as of the  Closing  Date,  of the  representations  and  warranties  of the
Placement  Agents  contained  in this  Agreement  and to the  following  further
conditions:

     4.1.  Executed  Agreement.  The  Offerors  shall  have  received  from  the
Placement   Agents  an  executed   copy  of  this Agreement.

     4.2.  Fulfillment  of Other  Obligations.  The Placement  Agents shall have
fulfilled  all of their other  obligations  and duties  required to be fulfilled
under this Agreement prior to or at the Closing.

Section 5. Representations and Warranties of the Offerors.  The Offerors jointly
and severally represent and warrant to the Placement Agents and the Purchaser as
follows:

     5.1.  Securities Law Matters.

          (a) Neither the Company nor the Trust,  nor any of their  "Affiliates"
(as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation
D")), nor any person acting on its or their behalf has,  directly or indirectly,
made offers or sales of any security,  or solicited  offers to buy any security,
under  circumstances  that would require the  registration of any of the Capital
Securities,  the  Guarantee  and the  Debentures  or any other  securities to be
issued or which may be issued by the Purchaser (collectively,  the "Securities")
under the Securities Act.

          (b) Neither the  Company nor the Trust,  nor any of their  Affiliates,
nor any person acting on its or their behalf  (other than the Placement  Agents)
has (i) offered for sale or solicited  offers to purchase the  Securities,  (ii)
engaged or will engage,  in any "directed selling efforts" within the meaning of
Regulation S under the Securities Act with respect to the  Securities,  or (iii)
engaged in any form of offering,  general  solicitation  or general  advertising
(within the meaning of Regulation D) in connection with any offer or sale of any
of the Securities or any other securities to be issued or which may be issued by
the Purchaser.

          (c)  The  Securities  satisfy  the  eligibility  requirements  of Rule
144A(d)(3) under the Securities Act.

          (d) Neither the Company nor the Trust is an "investment company" or an
entity "controlled" by an "investment  company," in each case within the meaning
of  Section  3(a)  of the  Investment  Company  Act of  1940,  as  amended  (the
"Investment  Company  Act")  without  regard to Section  3(c) of the  Investment
Company Act.

          (e) Neither the Company nor the Trust has paid or agreed to pay to any
person  or  entity  (other  than the  Placement  Agents)  any  compensation  for
soliciting another to purchase any of the Securities.

     5.2.  Organization,  Standing and Qualification of the Trust. The Trust has
been duly created and is validly  existing in good standing as a statutory trust
under the Connecticut  Statutory Trust Act (the "Statutory  Trust Act") with the
power and authority to own property and to conduct the business it transacts and
proposes to transact  and to enter into and  perform its  obligations  under the
Operative



                                       5
<PAGE>

Documents.  The Trust is duly qualified to transact business as a foreign entity
and is in good  standing in each  jurisdiction  in which such  qualification  is
necessary,  except where the failure to so qualify or be in good standing  would
not have a material  adverse effect on the Trust. The Trust is not a party to or
otherwise bound by any agreement other than the Operative  Documents.  The Trust
is and will, under current law, be classified for federal income tax purposes as
a grantor trust and not as an association taxable as a corporation.

     5.3. The Trust  Agreement.  The Trust Agreement has been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
by  the  Company  and  the  Administrators  of  the  Trust,  and,  assuming  due
authorization,  execution and delivery by the Institutional  Trustee,  will be a
valid and binding obligation of the Company and such Administrators, enforceable
against them in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation and other laws
relating  to or  affecting  creditors'  rights  generally,  and  (b) to  general
principles  of  equity  (regardless  of  whether  considered  and  applied  in a
proceeding  in  equity  or at  law)  ("Bankruptcy  and  Equity").  Each  of  the
Administrators  of the  Trust  is an  employee  of the  Company  or a  financial
institution  subsidiary  of the  Company  and has been  duly  authorized  by the
Company to execute and deliver the Trust Agreement.

     5.4. The Guarantee  Agreement and the Indenture.  Each of the Guarantee and
the Indenture  has been duly  authorized by the Company and, on the Closing Date
will have been duly  executed and  delivered by the Company,  and,  assuming due
authorization,  execution and delivery by the Guarantee Trustee,  in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture,  will
be a valid and  binding  obligation  of the  Company  enforceable  against it in
accordance with its terms, subject to Bankruptcy and Equity.

     5.5. The Capital Securities and Common  Securities.  The Capital Securities
and the Common  Securities have been duly authorized by the Trust Agreement and,
when issued and delivered  against  payment  therefor on the Closing Date to the
Purchaser,  in the case of the Capital  Securities,  and to the Company,  in the
case of the Common  Securities,  will be validly issued and represent  undivided
beneficial  interests in the assets of the Trust. None of the Capital Securities
or the Common  Securities is subject to preemptive or other similar  rights.  On
the Closing Date, all of the issued and  outstanding  Common  Securities will be
directly owned by the Company free and clear of any pledge,  security  interest,
claim, lien or other encumbrance.

     5.6.  The  Debentures.  The  Debentures  have been duly  authorized  by the
Company and, at the Closing Date,  will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture,  and,
when  authenticated  in the manner  provided for in the  Indenture and delivered
against  payment  therefor  by the  Trust,  will  constitute  valid and  binding
obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance  with their terms,  subject to Bankruptcy  and
Equity.

     5.7. Power and Authority. This Agreement has been duly authorized, executed
and delivered by the Company and the Trust and constitutes the valid and binding
obligation of the Company and the Trust, enforceable against the Company and the
Trust in accordance with its terms, subject to Bankruptcy and Equity.

     5.8. No Defaults.  The Trust is not in violation of the Trust Agreement or,
to the knowledge of the  Administrators,  any  provision of the Statutory  Trust
Act. The execution,  delivery and performance by the Company or the Trust of the
Operative  Documents  to  which  it is a  party,  and  the  consummation  of the
transactions   contemplated  herein  or  therein,  will  not  conflict  with  or
constitute  a breach  of, or a default  under,  or  result  in the  creation  or
imposition of any lien,  charge or other encumbrance upon any property or assets
of the Trust, the Company or any of the Company's  subsidiaries  pursuant to any


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<PAGE>

contract,  indenture,  mortgage, loan agreement, note, lease or other instrument
to which the  Trust,  the  Company or any of its  subsidiaries  is a party or by
which it or any of them may be bound,  or to which any of the property or assets
of any of them is subject, except for a conflict,  breach, default, lien, charge
or encumbrance  which could not reasonably be expected to have an adverse effect
on the  consummation of the  transactions  contemplated  herein or therein or an
adverse  effect on the condition  (financial or otherwise),  earnings,  affairs,
business,  prospects of the Company and its subsidiaries taken as whole, whether
or not  occurring  in the  ordinary  course of  business  (a  "Material  Adverse
Effect"), nor will such action result in any violation of the Trust Agreement or
the Statutory Trust Act or require the consent, approval, authorization or order
of any court or governmental agency or body.

     5.9.  Organization,  Standing and  Qualification of the Company The Company
has been duly  incorporated  and is validly  existing as a  corporation  in good
standing under the laws of California,  with all requisite  corporate  power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing as a foreign  corporation in each jurisdiction  where the nature of its
activities requires such qualification,  except where the failure of the Company
to be so  qualified  would  not,  singly or in the  aggregate,  have a  Material
Adverse Effect.

     5.10.  Subsidiaries  of the  Company.  Each of the  Company's  "significant
subsidiaries"  (as defined in Section 1-02 of Regulation  S-X to the  Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized  and is validly  existing and in good  standing  under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority  to own its  properties  and conduct the  business  it  transacts  and
proposes to transact,  and is duly qualified to transact business and is in good
standing  as a foreign  entity  in each  jurisdiction  where  the  nature of its
activities  requires  such  qualification,  except  where  the  failure  of such
Significant  Subsidiaries  to  be so  qualified  would  not,  singly  or in  the
aggregate, have a Material Adverse Effect.

     5.11.  Permits.  The Company and each of its Significant  Subsidiaries have
all requisite power and authority,  and all necessary  material  authorizations,
approvals, orders, licenses,  certificates and permits of and from regulatory or
governmental  officials,  bodies and tribunals, to own or lease their respective
properties and to conduct their  respective  businesses as now being  conducted,
except  such  authorizations,  approvals,  orders,  licenses,  certificates  and
permits which,  if not obtained and  maintained,  would have a Material  Adverse
Effect,  and neither the Company  nor any of the  Significant  Subsidiaries  has
received any notice of proceedings relating to the revocation or modification of
any such authorizations,  approvals,  orders, licenses,  certificates or permits
which, singly or in the aggregate,  if the failure to be so licensed or approved
is the  subject of an  unfavorable  decision,  ruling or  finding,  would have a
Material Adverse Effect; and the Company and its Significant Subsidiaries are in
compliance with all applicable laws, rules, regulations and orders and consents,
the violation of which would have a Material Adverse Effect.

     5.12.  Conflicts,   Authorizations  and  Approvals.  Except  as  previously
disclosed to the Placement Agents in writing, neither the Company nor any of the
Significant Subsidiaries is in violation of its respective charter or by-laws or
similar organizational  documents or in default in the performance or observance
of any obligation,  agreement,  covenant or condition contained in any contract,
indenture,   mortgage,  loan  agreement,  note,  lease  or  other  agreement  or
instrument to which either the Company or any of the Significant Subsidiaries is
a party,  or by  which  it or any of them  may be  bound or to which  any of the
property  or assets of the  Company or any of the  Significant  Subsidiaries  is
subject,  the effect of which  violation or default in performance or observance
would have a Material Adverse Effect.

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<PAGE>

     5.13.  Bank  Holding  Company  Act,  Federal  Reserve and  Federal  Deposit
Insurance Corporation.  The Company is duly registered as a bank holding company
under the Bank  Holding  Company  Act of 1956,  as  amended,  or as a  financial
holding  company under the  Gramm-Leach-Bliley  Act and the  regulations  of the
Board of Governors of the Federal  Reserve System (the "Federal  Reserve"),  and
the deposit  accounts  of the  Company's  subsidiary  bank(s) are insured by the
Federal Deposit Insurance  Corporation  ("FDIC") to the fullest extent permitted
by law and the rules and  regulations of the FDIC,  and no  proceedings  for the
termination of such insurance are pending or threatened.

     5.14. Financial Statements.

          (a)  Financial  Statements.  The  consolidated  balance  sheets of the
Company and all of its  subsidiaries  as of December  31, 1999 and  December 31,
1998 and related  consolidated  income  statements  and statements of changes in
shareholders'  equity for the three (3) years ended  December 31, 1999  together
with the notes thereto,  and the consolidated  balance sheets of the Company and
all of its  subsidiaries  as of September 30, 2000 and the related  consolidated
income statements and statements of changes in shareholders' equity for the nine
(9)  months  then  ended,  copies  of each of which  have been  provided  to the
Placement Agents (together, the "Financial  Statements"),  have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis  (except as may be disclosed  therein) and fairly  present in all material
respects the  financial  position and the results of  operations  and changes in
shareholders'  equity of the Company and all of its subsidiaries as of the dates
and for the  periods  indicated  (subject,  in the  case  of  interim  financial
statements,  to normal recurring  year-end  adjustments,  none of which shall be
material). The books and records of the Company and all of its subsidiaries have
been,  and are being,  maintained  in all material  respect in  accordance  with
generally  accepted  accounting  principles and any other  applicable  legal and
accounting requirements and reflect only actual transactions.

          (b) FRY-9C.  The Company's  report on FRY-9C dated  September 30, 2000
(the "FRY-9C")  previously  provided to the Placement  Agents is the most recent
available  such  report  and the  information  therein  fairly  presents  in all
material  respects  the  financial  position  of  the  Company  and  all  of its
subsidiaries.

          (c) No Material  Adverse  Change.  Since the  respective  dates of the
Financial  Statements and the FRY-9C,  there has been no material adverse change
or  development  with  respect to the  financial  condition  or  earnings of the
Company and all of its subsidiaries, taken as a whole.

     5.15. Regulatory Enforcement Matters. Except as previously disclosed to the
Placement Agents in writing,  neither the Company nor any of its subsidiaries is
subject or is party to, or has  received  any notice or advice  that any of them
may  become  subject  or party  to,  any  investigation  with  respect  to,  any
cease-and-desist   order,   agreement,   consent   agreement,    memorandum   of
understanding or other regulatory  enforcement action,  proceeding or order with
or by, or is a party to any commitment  letter or similar  undertaking to, or is
subject to any  directive  by, or has been since January 1, 1998, a recipient of
any  supervisory  letter from, or since  January 1, 1998,  has adopted any board
resolutions  at the request of, any  Regulatory  Agency (as defined  below) that
currently  restricts  in any material  respect the conduct of their  business or
that in any material  manner  relates to their  capital  adequacy,  their credit
policies,  their management or their business (each, a "Regulatory  Agreement"),
nor has the Company or any of its  subsidiaries  been advised  since  January 1,
1998, by any Regulatory Agency that it is considering  issuing or requesting any
such Regulatory Agreement. There is no material unresolved violation,  criticism
or  exception by any  Regulatory  Agency with respect to any report or statement
relating to any examinations of the Company or any of its subsidiaries.  As used
herein,  the term "Regulatory  Agency" means any federal or state agency charged
with the  supervision  or  regulation  of banks or bank  holding  companies,  or



                                       8
<PAGE>

engaged in the insurance of bank deposits,  or any court,  administrative agency
or commission or other governmental agency,  authority or instrumentality having
supervisory  or regulatory  authority  with respect to the Company or any of its
Significant Subsidiaries.

     5.16. No Material Change.  Except as previously  disclosed to the Placement
Agents in writing,  since December 31, 1999,  there has been no material adverse
change or  development  with respect to the condition  (financial or otherwise),
earnings, affairs, business,  prospects or results of operations of the Offerors
on a consolidated basis.

     5.17.  No  Undisclosed  Liabilities.  Neither  the  Company  nor any of its
subsidiaries  has any  material  liability,  whether  known or unknown,  whether
asserted or  unasserted,  whether  absolute or  contingent,  whether  accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including  any  liability  for  taxes  (and  there is no past or  present  fact,
situation,  circumstance,  condition  or other  basis for any  present or future
action, suit, proceeding,  hearing, charge,  complaint,  claim or demand against
the Company or its subsidiaries  giving rise to any such liability),  except (i)
for liabilities set forth in the Financial  Statements,  (ii) normal fluctuation
in the amount of the  liabilities  referred to in clause (i) above  occurring in
the ordinary course of business of the Company and all of its subsidiaries since
the date of the most recent balance sheet included in the Financial  Statements,
and (iii) as may be specifically disclosed in writing to the Placement Agents.

     5.18. Litigation. Except as previously disclosed to the Placement Agents in
writing, no charge, investigation,  action, suit or proceeding is pending or, to
the knowledge of the Offerors,  threatened, against or affecting the Offerors or
any of their  respective  properties  before or by any courts or any regulatory,
administrative  or governmental  official,  commission,  board,  agency or other
authority or body, or any arbitrator, wherein an unfavorable decision, ruling or
finding  could  have a  Material  Adverse  Effect  or an  adverse  effect on the
consummation of this Agreement or the transactions contemplated herein.

     5.19.  Deferral of  Interest  Payments  on  Debentures.  The Company has no
present  intention to exercise  its option to defer  payments of interest on the
Debentures  as  provided  in  the  Indenture.  The  Company  believes  that  the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the  Debentures
are outstanding is remote because of the  restrictions  that would be imposed on
the  Company's  ability to declare or pay dividends or  distributions  on, or to
redeem, purchase,  acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal,  interest or premium on, or repay,  repurchase or redeem,  any of its
debt securities that rank pari passu in all respects with, or junior in interest
to, the Debentures.

Section  6.  Representations  and  Warranties  of  the  Placement  Agents.  Each
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:

     6.1. Organization, Standing and Qualification.

          (a) First  Tennessee  Capital Markets is a division of First Tennessee
Bank, N.A., a national banking association duly organized,  validly existing and
in good  standing  under the laws of the  United  States,  with  full  power and
authority to own,  lease and operate its  properties and conduct its business as
currently being conducted.  First Tennessee Capital Markets is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction  in which it owns or leases property or conducts its business so as
to require  such  qualification  and in which the  failure to so qualify  would,
individually  or in  the  aggregate,  have  a  material  adverse  effect  on the
condition (financial or otherwise),  earnings, business, prospects or results of
operations of First Tennessee Capital Markets.

                                       9
<PAGE>

          (b) Keefe,  Bruyette & Woods, Inc. is a corporation,  validly existing
and in good  standing  under the laws of the State of New York,  with full power
and authority to own,  lease and operate its properties and conduct its business
as currently being conducted. Keefe, Bruyette & Woods, Inc. is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction  in which it owns or leases property or conducts its business so as
to require  such  qualification  and in which the  failure to so qualify  would,
individually  or in  the  aggregate,  have  a  material  adverse  effect  on the
condition (financial or otherwise),  earnings, business, prospects or results of
operations of Keefe, Bruyette & Woods, Inc.

     6.2. Power and Authority.  The Placement  Agent has all requisite power and
authority to enter into this  Agreement,  and this  Agreement  has been duly and
validly   authorized,   executed  and  delivered  by  the  Placement  Agent  and
constitutes  the legal,  valid and binding  agreement  of the  Placement  Agent,
enforceable  against the Placement Agent in accordance with its terms, except as
the  enforcement  thereof may be limited by general  principles of equity and by
bankruptcy or other laws relating to or affecting  creditors'  rights  generally
and except as any  indemnification  or  contribution  provisions  thereof may be
limited under applicable securities laws.

     6.3. General Solicitation. In the case of the offer and sale of the Capital
Securities,  no form of general  solicitation or general advertising was used by
the  Placement  Agent or its  representatives  including,  but not  limited  to,
advertisements,  articles,  notices  or other  communications  published  in any
newspaper,  magazine or similar medium or broadcast over  television or radio or
any  seminar  or  meeting  whose  attendees  have been  invited  by any  general
solicitation  or  general  advertising.  Neither  the  Placement  Agent  nor its
representatives  have engaged or will engage in any "directed  selling  efforts"
within the meaning of Regulation S under the  Securities Act with respect to the
Capital Securities.

     6.4. Purchaser.  The Placement Agent has made such reasonable inquiry as is
necessary  to a  determination  that the  Purchaser  is  acquiring  the  Capital
Securities  for its own  account  and that the  Purchaser  does  not  intend  to
distribute the Capital  Securities in contravention of the Securities Act or any
other applicable  securities laws and that the Purchaser is not a "U.S.  person"
as that term is defined under Rule 902 of the Securities Act.

     6.5. Qualified Institutional Buyers and Qualified Purchasers. The Placement
Agent has not  offered or sold and will not arrange for the offer or sale of the
Capital Securities except (i) in an offshore transaction complying with Rule 903
of Regulation S under the  Securities  Act or (ii) to those the Placement  Agent
reasonably  believes  are  "accredited  investors"  (as  defined  in Rule 501 of
Regulation  D under the  Securities  Act) or (iii) in any other manner that does
not require  registration of the Capital Securities under the Securities Act and
that in connection  with each such sale,  the Placement  Agent has taken or will
take reasonable steps to ensure that the purchaser of any Capital  Securities is
aware  that  such  sale is being  made in  reliance  on an  exemption  under the
Securities Act.

     6.6.   Offering   Circulars.   Neither  the  Placement   Agents  nor  their
representatives  will include any non-public  information about the Company, the
Trust or any of their  affiliates  in any  registration  statement,  prospectus,
offering  circular or private  placement  memorandum used in connection with any
purchase of Capital  Securities  without the prior written  consent of the Trust
and the Company.

Section 7. Covenants of the Offerors.  The Offerors  covenant and agree with the
Placement Agents and the Purchaser as follows:

     7.1. Compliance with Representations and Warranties. During the period from
the date of this  Agreement to the Closing  Date,  the Offerors  shall use their
best  efforts  and take all  action  necessary  or  appropriate  to cause  their
representations  and  warranties  contained in Section 5 hereof to be true as of



                                       10
<PAGE>

the Closing Date, after giving effect to the  transactions  contemplated by this
Agreement, as if made on and as of the Closing Date.

     7.2. Sale and Registration of Securities. The Offerors and their Affiliates
shall not nor shall any of them permit any person  acting on their behalf (other
than the Placement  Agents),  to directly or indirectly (i) sell, offer for sale
or solicit  offers to buy or otherwise  negotiate in respect of any security (as
defined in the Securities  Act) that would or could be integrated  with the sale
of the Capital  Securities in a manner that would require the registration under
the Securities Act of the Capital Securities, the Debentures or the Guarantee or
(ii)  make  offers  or sales  of any  security,  or  solicit  offers  to buy any
security,  under circumstances that would require the registration of any of the
securities under the Securities Act.

     7.3. Use of Proceeds. The Trust shall use the proceeds from the sale of the
Capital Securities to purchase the Debentures from the Company.

     7.4.  Investment  Company.  The  Offerors  shall not engage,  or permit any
subsidiary to engage,  in any activity which would cause it or any subsidiary to
be an "investment company" under the provisions of the Investment Company Act.

     7.5.  Reimbursement  of  Expenses.  If the sale of the  Capital  Securities
provided  for  herein is not  consummated  because  any  condition  set forth in
Section 3 hereof is not  satisfied,  or because  of any  refusal,  inability  or
failure on the part of the Company or the Trust to perform any agreement  herein
or comply  with any  provision  hereof  other  than by reason of a breach by the
Placement  Agents,  the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket  expenses (including reasonable
fees and disbursements of counsel) in an amount not to exceed $50,000 that shall
have been incurred by them in connection with the proposed  purchase and sale of
the Capital Securities. Notwithstanding the foregoing, the Company shall have no
obligation to reimburse the Placement Agents for their out-of-pocket expenses if
the sale of the Capital  Securities  fails to occur  because the  condition  set
forth in Section 3.6 is not satisfied or because either of the Placement  Agents
fails to fulfill a condition set forth in Section 4.

     7.6. Directed Selling Efforts,  Solicitation and Advertising. In connection
with any offer or sale of any of the  Securities,  the  Offerors  shall not, nor
shall  either of them  permit any of their  Affiliates  or any person  acting on
their behalf,  (other than the Placement  Agents) to (i) engage in any "directed
selling  efforts" within the meaning of Regulation S under the Securities Act or
(ii) engage in any form of general solicitation or general advertising (with the
meaning of Regulation D under the Securities Act).

     7.7.  Compliance with Rule 144A(d)(4)  under the Securities Act. So long as
any of the Securities are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3)  under the Securities  Act, the Offerors will,  during
any period in which they are not subject to and in compliance with Section 13 or
15(d) of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act"),
or the Offerors are not exempt from such reporting  requirements pursuant to and
in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder
of such restricted  securities and to each prospective  purchaser (as designated
by such holder) of such restricted  securities,  upon the request of such holder
or  prospective  purchaser,  any  information  required  to be  provided by Rule
144A(d)(4)  under the  Securities  Act.  This covenant is intended to be for the
benefit  of the  holders,  and the  prospective  purchasers  designated  by such
holders,  from  time  to time of such  restricted  securities.  The  information
provided by the  Offerors  pursuant to this  Section 7.7 hereof will not, at the
date thereof,  contain any untrue  statement of a material fact or omit to state
any material  fact  necessary to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading.

                                       11
<PAGE>

     7.8.  Quarterly  Reports.  Within 50 days of the end of each  calendar year
quarter and within 100 days of the end of each calendar year, the Offerors shall
submit to The Chase  Manhattan  Bank a  completed  quarterly  report in the form
attached hereto as Exhibit D. The Offerors  acknowledge and agree that The Chase
Manhattan Bank and its  successors  and assigns is a third party  beneficiary of
this provision.

Section 8. Covenants of the Placement Agents.  The Placement Agents covenant and
agree with the Offerors that,  during the period from the date of this Agreement
to the Closing Date, the Placement  Agents shall use their best efforts and take
all  action  necessary  or  appropriate  to  cause  their   representations  and
warranties  contained in Section 6 hereof to be true as of Closing  Date,  after
giving effect to the transactions  contemplated by this Agreement, as if made on
and as of the Closing Date. The Placement  Agents further covenant and agree not
to engage in hedging  transactions with respect to the Capital Securities unless
such transactions are conducted in compliance with the Securities Act.

Section 9. Indemnification.

     9.1. Indemnification  Obligation.  The Offerors shall jointly and severally
indemnify and hold  harmless the Placement  Agents and the Purchaser and each of
their respective agents, employees,  officers and directors and each person that
controls either of the Placement  Agents or the Purchaser  within the meaning of
Section 15 of the  Securities Act or Section 20 of the Exchange Act, and agents,
employees,  officers and directors or any such  controlling  person of either of
the  Placement  Agents  or  the  Purchaser  (each  such  person  or  entity,  an
"Indemnified  Party")  from and  against any and all  losses,  claims,  damages,
judgments,  liabilities or expenses, joint or several, to which such Indemnified
Party may become  subject  under the  Securities  Act, the Exchange Act or other
federal or state  statutory  law or  regulation,  or at common law or  otherwise
(including in settlement of any litigation,  if such settlement is effected with
the written consent of the Offerors),  insofar as such losses, claims,  damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part,  (a) any untrue  statement
or alleged  untrue  statement of a material  fact  contained in any  information
(whether  written or oral) or documents  executed in favor of, furnished or made
available to the Placement  Agents or the Purchaser by the Offerors,  or (b) any
omission or alleged  omission to state in any  information  (whether  written or
oral) or documents  furnished or made  available to the Placement  Agents or the
Purchaser  by the  Offerors a material  fact  required  to be stated  therein or
necessary to make the statements  therein not  misleading,  and shall  reimburse
each  Indemnified  Party for any legal and other  expenses as such  expenses are
reasonably  incurred by such Indemnified Party in connection with investigating,
defending,  settling,  compromising  or paying  any such  loss,  claim,  damage,
judgments,  liability,  expense or action  described  in this  Section  9.1.  In
addition to their other  obligations  under this Section 9, the Offerors  hereby
agree that,  as an interim  measure  during the  pendency of any claim,  action,
investigation,  inquiry or other  proceeding  arising out of, or based upon,  or
related to the matters described above in this Section 9.1, they shall reimburse
each  Indemnified  Party on a quarterly basis for all reasonable  legal or other
expenses incurred in connection with  investigating or defending any such claim,
action, investigation, inquiry or other proceeding,  notwithstanding the absence
of a  judicial  determination  as to the  propriety  and  enforceability  of the
possibility  that such  payments  might later be held to have been improper by a
court  of  competent   jurisdiction.   To  the  extent  that  any  such  interim
reimbursement  payment is so held to have been improper,  each Indemnified Party
shall  promptly  return such amounts to the  Offerors  together  with  interest,
determined on the basis of the prime rate (or other commercial  lending rate for
borrowers of the highest credit  standing)  announced from time to time by First
Tennessee Bank, N.A. (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an  Indemnified  Party  within  30 days of a  request  for
reimbursement,  shall  bear  interest  at the  Prime  Rate from the date of such
request.

                                       12
<PAGE>

     9.2. Conduct of Indemnification  Proceedings.  Promptly after receipt by an
Indemnified  Party  under this  Section 9 of notice of the  commencement  of any
action,  such  Indemnified  Party shall,  if a claim in respect thereof is to be
made against the  Offerors  under this Section 9, notify the Offerors in writing
of the  commencement  thereof;  but the omission to so notify the Offerors shall
not  relieve  them  from  any  liability  which  the  Offerors  may  have to any
Indemnified  Party.  In case any such action is brought  against any Indemnified
Party and such  Indemnified  Party seeks or intends to seek  indemnity  from the
Offerors,  the Offerors shall be entitled to participate  in, and, to the extent
that they may wish,  to assume  the  defense  thereof  with  counsel  reasonably
satisfactory to such Indemnified Party; provided,  however, if the defendants in
any such action  include  both the  Indemnified  Party and the  Offerors and the
Indemnified  Party shall have reasonably  concluded that there may be a conflict
between the  positions of the Offerors and the  Indemnified  Party in conducting
the defense of any such action or that there may be legal defenses  available to
it and/or other  Indemnified  Parties which are different  from or additional to
those available to the Offerors,  the Indemnified  Party shall have the right to
select  separate  counsel  to  assume  such  legal  defenses  and  to  otherwise
participate in the defense of such action on behalf of such  Indemnified  Party.
Upon  receipt of notice  from the  Offerors to such  Indemnified  Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel,  the Offerors  shall not be liable to such  Indemnified  Party
under this Section 9 for any legal or other  expenses  subsequently  incurred by
such  Indemnified  Party in connection  with the defense  thereof unless (i) the
Indemnified  Party  shall have  employed  such  counsel in  connection  with the
assumption  of legal  defenses in  accordance  with the proviso in the preceding
sentence (it being  understood,  however,  that the Offerors shall not be liable
for the expenses of more than one separate counsel  representing the Indemnified
Parties who are parties to such  action),  or (ii) the  Offerors  shall not have
employed counsel  reasonably  satisfactory to the Indemnified Party to represent
the  Indemnified  Party within a reasonable time after notice of commencement of
the  action,  in each of which  cases the fees and  expenses  of counsel of such
Indemnified Party shall be at the expense of the Offerors.

     9.3. Contribution. If the indemnification provided for in this Section 9 is
required  by its  terms,  but is for any  reason  held to be  unavailable  to or
otherwise  insufficient to hold harmless an Indemnified  Party under Section 9.1
in respect of any losses, claims,  damages,  liabilities or expenses referred to
herein or therein,  then the  Offerors  shall  contribute  to the amount paid or
payable by such Indemnified  Party as a result of any losses,  claims,  damages,
judgments,  liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the  Indemnified  Party,  on the other hand,  from the offering of
such Capital Securities,  or (ii) if the allocation provided by clause (i) above
is not permitted by applicable  law, in such  proportion  as is  appropriate  to
reflect not only the relative  benefits referred to in clause (i) above but also
the relative fault of the Offerors and the Placement  Agents in connection  with
the  statements  or  omissions  or  inaccuracies  in  the   representations  and
warranties  herein or other  breaches  which  resulted in such  losses,  claims,
damages,  judgments,  liabilities  or  expenses,  as well as any other  relevant
equitable  considerations.  The  respective  relative  benefits  received by the
Offerors, on the one hand, and the Placement Agents, on the other hand, shall be
deemed to be in the same proportion,  in the case of the Offerors,  as the total
price paid to the  Offerors for the Capital  Securities  sold by the Offerors to
the Purchaser (net of the compensation  paid to the Placement Agents  hereunder,
but before deducting expenses),  and in the case of the Placement Agents, as the
compensation  received by them,  bears to the total of such  amounts paid to the
Offerors  and received by the  Placement  Agents as  compensation.  The relative
fault of the Offerors and the Placement  Agents shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or the omission or alleged omission of a material fact or the
inaccurate or the alleged inaccurate  representation  and/or warranty relates to
information  supplied by the Offerors or the  Placement  Agents and the parties'
relative intent, knowledge,  access to information and opportunity to correct or
prevent such  statement or omission.  The amount paid or payable by a party as a
result of the losses,  claims,  damages,  judgments,  liabilities  and  expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably  incurred by such party



                                       13
<PAGE>

in  connection  with  investigating  or  defending  any  action  or  claim.  The
provisions  set forth in Section 9.2 with respect to notice of  commencement  of
any action  shall apply if a claim for  contribution  is made under this Section
9.3; provided, however, that no additional notice shall be required with respect
to any action for which notice has been given under  Section 9.2 for purposes of
indemnification.  The Offerors and the Placement  Agents agree that it would not
be just  and  equitable  if  contribution  pursuant  to this  Section  9.3  were
determined by pro rata allocation or by any other method of allocation that does
not take  account of the  equitable  considerations  referred to in this Section
9.3.  The amount  paid or payable by an  Indemnified  Party,  as a result of the
losses, claims, damages, judgments,  liabilities or expenses referred to in this
Section 9.3 shall be deemed to  include,  subject to the  limitations  set forth
above,  any legal or other  expenses  reasonably  incurred  by such  Indemnified
Party, in connection with  investigating  or defending any such action or claim.
In no event shall the liability of the Placement  Agents hereunder be greater in
amount  than the  dollar  amount  of the  compensation  (net of  payment  of all
expenses)  received  by the  Placement  Agents  upon  the  sale  of the  Capital
Securities giving rise to such obligation.  No person found guilty of fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be entitled to  contribution  from any person who was not found  guilty of
such fraudulent misrepresentation.

     9.4.  Additional  Remedies.  The  indemnity  and  contribution   agreements
contained in this Section 9 are in addition to any  liability  that the Offerors
may otherwise have to any Indemnified Party.

     9.5.  Additional  Indemnification.  The Company  shall  indemnify  and hold
harmless  the Trust  against  all loss,  liability,  claim,  damage and  expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.

Section 10. Rights and Responsibilities of Placement Agents.

     10.1.  Reliance.  In  performing  their  duties under this  Agreement,  the
Placement Agents shall be entitled to rely upon any notice, signature or writing
which  they  shall in good  faith  believe  to be  genuine  and to be  signed or
presented by a proper party or parties.  The Placement  Agents may rely upon any
opinions or certificates  or other documents  delivered by the Offerors or their
counsel or designees to either the Placement Agents or the Purchaser.

     10.2.  Rights of Placement  Agents.  In connection  with the performance of
their duties under this Agreement,  the Placement Agents shall not be liable for
any error of  judgment  or any action  taken or  omitted to be taken  unless the
Placement  Agents were  grossly  negligent or engaged in willful  misconduct  in
connection  with such  performance  or  non-performance.  No  provision  of this
Agreement  shall require the Placement  Agents to expend or risk their own funds
or  otherwise  incur any  financial  liability  on behalf  of the  Purchaser  in
connection with the performance of any of their duties hereunder.  The Placement
Agents  shall be under no  obligation  to  exercise  any of the rights or powers
vested in them by this Agreement.

Section 11. Miscellaneous.

     11.1. Notices. Prior to the Closing, and thereafter with respect to matters
pertaining to this Agreement only, all notices and other communications provided
for  or  permitted   hereunder  shall  be  made  in  writing  by  hand-delivery,
first-class mail, telex,  telecopier or overnight air courier  guaranteeing next
day delivery:



                                       14
<PAGE>

         if to the Placement Agents, to:

                                    First Tennessee Capital Markets
                                    845 Crossover Lane, Suite 150
                                    Memphis, Tennessee  38117
                                    Telecopier:  (901) 435-4706
                                    Telephone:  (800) 456-5460
                                    Attention:  James D. Wingett

                                            and

                                    Keefe, Bruyette & Woods, Inc.
                                    Two World Trade Center
                                    New York, New York  10048
                                    Telecopier:  (212) 323-8404
                                    Telephone:  (800) 966-1559
                                    Attention:  Mitch Kleinman, Esq.

         with a copy to:

                                    Lewis, Rice & Fingersh, L.C.
                                    500 North Broadway, Suite 2000
                                    St. Louis, Missouri  63102
                                    Telecopier:  (314) 241-6056
                                    Telephone:  (314) 444-7600
                                    Attn:  Thomas C. Erb, Esq.

                                            and

                                    Brown & Wood LLP
                                    One World Trade Center
                                    New York, New York  10048
                                    Telecopier:  (212) 839-5599
                                    Telephone:  (212) 839-5300
                                    Attention:  Renwick Martin, Esq.

         if to the Offerors, to:

                                    Redwood Empire Bancorp
                                    111 Santa Rosa Avenue
                                     Santa Rosa, California 95404
                                    Telecopier: 707-522-5784
                                    Telephone: 707-573-4800
                                    Attn: James Beckwith

                                       15
<PAGE>

         with a copy to:

                                    Sullivan & Cromwell
                                    1888 Century Park East
                                    Los Angeles, CA  90067
                                    Telecopier: 310-712-8800
                                    Telephone: 310-712-6604
                                    Attn: Christopher J. Kerezsi

     All such notices and communications shall be deemed to have been duly given
(i) at the time delivered by hand, if personally  delivered,  (ii) five business
days after being deposited in the mail, postage prepaid,  if mailed,  (iii) when
answered back, if telexed, (iv) the next business day after being telecopied, or
(v) the next  business  day  after  timely  delivery  to a  courier,  if sent by
overnight  air  courier  guaranteeing  next day  delivery.  From and  after  the
Closing,  the  foregoing  notice  provisions  shall be  superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Company,  and their respective counsel,  may change their respective
notice  addresses  from time to time by written  notice to all of the  foregoing
persons.

     11.2. Parties in Interest,  Successors and Assigns. Except as expressly set
forth  herein,  this  Agreement is made solely for the benefit of the  Placement
Agents,  the Purchaser and the Offerors and any person controlling the Placement
Agents,  the  Purchaser  or the  Offerors and their  respective  successors  and
assigns;  and no other person shall acquire or have any right under or by virtue
of this  Agreement.  This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties.

     11.3. Counterparts. This Agreement may be executed by the parties hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original  and all of which  taken  together  shall  constitute  one and the same
agreement.

     11.4.  Headings.  The headings in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

     11.5.  Governing Law. THIS AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE INTERNAL LAWS (AND NOT THE LAWS  PERTAINING TO CONFLICTS OF
LAWS) OF THE STATE OF NEW YORK.

     11.6. Entire Agreement.  This Agreement,  together with the other Operative
Documents and the other documents delivered in connection with this transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive  statement of the
agreement  and  understanding  of the  parties  hereto in respect of the subject
matter  contained  herein  and  therein.  There are no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, together with the other Operative Documents, supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.

     11.7.  Severability.  In the event  that any one or more of the  provisions
contained  herein,  or the  application  thereof in any  circumstances,  is held
invalid,  illegal or unenforceable in any respect for any reason,  the validity,
legality and  enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Placement Agents' and the Purchaser's  rights and
privileges shall be enforceable to the fullest extent permitted by law.

                                       16
<PAGE>

     11.8. Survival. The Placement Agents and the Offerors,  respectively, agree
that the representations, warranties and agreements made by each of them in this
Agreement and in any certificate or other instrument  delivered  pursuant hereto
shall  remain in full force and effect and shall  survive the  delivery  of, and
payment for, the Capital Securities.

                       signatures appear on the next page




                                       17
<PAGE>




     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  of this  Agreement  and deliver  such  counterpart  to the  Offerors
whereupon this Agreement will become binding  between us in accordance  with its
terms.

                                 Very truly yours,

                                 REDWOOD EMPIRE BANCORP


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------


                                 REDWOOD STATUTORY TRUST I


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:  Administrator



CONFIRMED AND ACCEPTED,
as of the date first set forth above


FIRST TENNESSEE CAPITAL MARKETS,
a division of First Tennessee Bank, N.A.,
as a Placement Agent


By:
   --------------------------------------
Name:
     ------------------------------------
Title:
      -----------------------------------


KEEFE, BRUYETTE & WOODS, INC.
a New York corporation, as a Placement Agent


By:
   --------------------------------------
Name:
     ------------------------------------
Title:
      -----------------------------------



                                       18
<PAGE>






                                    EXHIBIT A
                         FORM OF SUBSCRIPTION AGREEMENT


                            REDWOOD STATUTORY TRUST I
                             REDWOOD EMPIRE BANCORP


                             SUBSCRIPTION AGREEMENT

                                FEBRUARY 22, 2001

     THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among Redwood Statutory
Trust I (the "Trust"), a statutory trust created under the Connecticut Statutory
Trust Act (Chapter 615 of Title 34 of the Connecticut General Statutes,  Section
500, et seq.),  Redwood  Empire  Bancorp,  a  California  corporation,  with its
principal offices located at 111 Santa Rosa Avenue, Santa Rosa, California 95404
(the "Company" and, collectively with the Trust, the "Offerors"),  and Preferred
Term Securities II, Ltd. (the "Purchaser").

                                    RECITALS:

     A. The Trust desires to issue 10,000 of its 10.20% Capital  Securities (the
"Capital   Securities"),   liquidation   amount  $1,000  per  Capital  Security,
representing  an undivided  beneficial  interest in the assets of the Trust (the
"Offering"),  to be issued  pursuant to an Amended and Restated  Declaration  of
Trust (the "Declaration") by and among the Company,  State Street Bank and Trust
Company of Connecticut,  National Association, the administrators named therein,
and the  holders  (as  defined  therein),  which  Capital  Securities  are to be
guaranteed  by the Company  with  respect to  distributions  and  payments  upon
liquidation,  redemption  and  otherwise  pursuant  to the terms of a  Guarantee
Agreement  between  the  Company  and State  Street  Bank and Trust  Company  of
Connecticut, National Association, as trustee (the "Guarantee"); and

     B. The proceeds  from the sale of the Capital  Securities  will be combined
with the  proceeds  from the sale by the  Trust  to the  Company  of its  common
securities,  and will be used by the Trust to purchase an  equivalent  amount of
10.20% Junior  Subordinated  Deferrable  Interest Debentures of the Company (the
"Debentures")  to be  issued  by the  Company  pursuant  to an  indenture  to be
executed by the Company and State Street Bank and Trust Company of  Connecticut,
National Association, as trustee (the "Indenture"); and

     C. In  consideration  of the  premises and the mutual  representations  and
covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

     1.1.  Upon the  execution of this  Subscription  Agreement,  the  Purchaser
hereby  agrees to purchase from the Trust 10,000  Capital  Securities at a price
equal to $1,000 per Capital Security (the "Purchase Price") and the Trust agrees
to sell such Capital  Securities to the Purchaser for said Purchase  Price.  The
rights  and  preferences  of  the  Capital  Securities  are  set  forth  in  the
Declaration.  The Purchase  Price is payable in immediately  available  funds on
February  22,  2001,  or such other  business  day as may



                                       A-1
<PAGE>

be  designated  by the  Purchaser,  but in no event later than February 28, 2001
(the "Closing  Date").  The Offerors  shall provide the Purchaser  wire transfer
instructions no later than 1 day following the date hereof.

     1.2. The certificate for the Capital  Securities  shall be delivered by the
Trust on the Closing Date to the Purchaser or its designee.

     1.3.  The  Placement  Agreement,  dated  February  9, 2001 (the  "Placement
Agreement"),  among the Offerors and the  Placement  Agents  identified  therein
includes  certain  representations  and warranties,  covenants and conditions to
closing  and  certain  other  matters  governing  the  Offering.  The  Placement
Agreement  is hereby  incorporated  by  reference  into this  Agreement  and the
Purchaser  shall be entitled to each of the  benefits  of the  Placement  Agents
under the Placement  Agreement and shall be entitled to enforce the  obligations
of the Offerors under such Placement Agreement as fully as if the Purchaser were
a party to such Placement Agreement.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     2.1. The Purchaser  understands and  acknowledges  that neither the Capital
Securities,  the  Debentures nor the Guarantee  have been  registered  under the
Securities  Act of  1933,  as  amended  (the  "Securities  Act"),  or any  other
applicable  securities  law,  are  being  offered  for  sale  by  the  Trust  in
transactions not requiring registration under the Securities Act, and may not be
offered,  sold,  pledged or otherwise  transferred  by the  Purchaser  except in
compliance with the registration requirements of the Securities Act or any other
applicable  securities  laws,  pursuant  to  an  exemption  therefrom  or  in  a
transaction not subject thereto.

     2.2. The  Purchaser  represents,  warrants and  certifies  that it is not a
"U.S.  person" as such term is defined  in Rule 902 under the  Securities  Act ,
that it is not acquiring the  securities  for the account or benefit of any U.S.
person,  and that the  offer and sale of  Capital  Securities  to the  Purchaser
constitutes an "offshore transaction" under Regulation S of the Securities Act.

     2.3. The  Purchaser  represents  and  warrants  that it is  purchasing  the
Capital Securities for its own account, for investment,  and not with a view to,
or for offer or sale in connection with, any  distribution  thereof in violation
of the  Securities  Act or other  applicable  securities  laws,  subject  to any
requirement  of law that the  disposition of its property be at all times within
its  control  and  subject to its  ability  to resell  such  Capital  Securities
pursuant to an effective  registration  statement  under the  Securities  Act or
under Rule 144A or any other  exemption from  registration  available  under the
Securities Act.

     2.4. The Purchaser has full power and authority to execute and deliver this
Agreement,  to make the representations and warranties  specified herein, and to
consummate the transactions  contemplated herein and it has full right and power
to subscribe for Capital Securities and perform its obligations pursuant to this
Agreement.

     2.5. Purchaser is a Cayman Islands Company whose business includes issuance
of certain notes and acquiring the Capital  Securities and it has such knowledge
and  experience  in  financial  and  business  matters  that  it is  capable  of
evaluating the merits and risks of purchasing  the Capital  Securities and it is
aware that it may be required to bear the economic  risk of an investment in the
Capital Securities.

                                       A-2
<PAGE>

                                  ARTICLE III

                                  MISCELLANEOUS

     3.1.  Any notice or other  communication  given  hereunder  shall be deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

                  To the Offerors:    Redwood Empire Bancorp
                                      111 Santa Rosa Avenue
                                      Santa Rosa, California 95404
                                      Telecopier: 707-522-5784
                                      Telephone: 707-573-4800
                                      Attn: James Beckwith

                  To the Purchaser:   Preferred Term Securities II, Ltd.
                                      c/o QSPV, Limited
                                      P.O. Box 1093 GT
                                      Queensgate House
                                      South Church Street
                                      George Town, Grand Cayman
                                      Grand Cayman Islands, British West Indies
                                      Attention:  The Directors/603484
                                      Fax:  (345) 945-7100

          Unless otherwise expressly provided herein, notices shall be deemed to
have been  given on the date of  mailing,  except  notice of change of  address,
which shall be deemed to have been given when received.

     3.2. This Agreement  shall not be changed,  modified or amended except by a
writing  signed by the  parties to be  charged,  and this  Agreement  may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

     3.3. Upon the execution  and delivery of this  Agreement by the  Purchaser,
this Agreement  shall become a binding  obligation of the Purchaser with respect
to the purchase of Capital Securities as herein provided.

     3.4.  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY
OF THE  PARTIES  HERETO,  THE  PARTIES  EXPRESSLY  AGREE  THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

     3.5. The parties  agree to execute and deliver all such further  documents,
agreements  and  instruments  and take such other and  further  action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

     3.6.  This  Agreement may be executed in one or more  counterparts  each of
which shall be deemed an original,  but all of which shall  together  constitute
one and the same instrument.

                     Signatures appear on the following page

                                      A-3
<PAGE>

     IN  WITNESS  WHEREOF,  I have set my hand the day and  year  first  written
above.


PREFERRED TERM SECURITIES II, LTD.


By:
   ------------------------------------
Print Name:
            ---------------------------
Title:
       --------------------------------

     IN WITNESS WHEREOF,  this Subscription  Agreement is agreed to and accepted
as of the day and year first written above.


                                        REDWOOD EMPIRE BANCORP


                                        By:     /s/ Patrick W. Kilkenny
                                           -------------------------------------

                                        Name:   Patrick W. Kilkenny
                                             -----------------------------------

                                        Title:  President & CEO
                                              ----------------------------------



                                        REDWOOD STATUTORY TRUST I


                                        By:     /s/ Patrick W. Kilkenny
                                           -------------------------------------

                                        Name:   Patrick W. Kilkenny
                                             -----------------------------------

                                         Title:  Administrator











                                      A-4
<PAGE>


                                   EXHIBIT B-1
                         FORM OF COMPANY COUNSEL OPINION
                                February 22, 2001

Preferred Term Securities II, Ltd.            First Tennessee Capital Markets
P. O. Box 1093 GT                             845 Crossover Lane, Suite 150
Queensgate House                              Memphis, Tennessee  38117
South Church Street
George Town, Grand Cayman                     Keefe, Bruyette & Woods, Inc.
Grand Cayman Islands                          Two World Trade Center
British West Indies                           New York, New York  10048

Ladies and Gentlemen:

     We have acted as  counsel to Redwood  Empire  Bancorp  (the  "Company"),  a
California  corporation in connection with a certain Placement Agreement,  dated
February 9, 2001, (the "Placement  Agreement"),  between the Company and Redwood
Statutory  Trust I (the  "Trust"),  on one  hand,  and First  Tennessee  Capital
Markets and Keefe, Bruyette & Woods, Inc. (the "Placement Agents"), on the other
hand.  Pursuant  to the  Placement  Agreement,  and  subject  to the  terms  and
conditions  stated  therein,  the Trust  will issue and sell to  Preferred  Term
Securities II, Ltd. (the "Purchaser"), $10,000,000 aggregate principal amount of
10.20% Capital  Securities  (liquidation  amount $1,000.00 per capital security)
(the "Capital Securities").

     Capitalized terms used herein and not otherwise defined shall have the same
meaning ascribed to them in the Placement Agreement

     The law covered by the opinions  expressed  herein is limited to the law of
the United States of America and of the State of California.

     We have made such investigations of law as, in our judgment, were necessary
to render  the  following  opinions.  We have also  reviewed  (a) the  Company's
Articles of Incorporation, as amended, and its By-Laws, as amended; and (b) such
corporate  documents,  records,  information and certificates of the Company and
its subsidiaries, certificates of public officials or government authorities and
other  documents as we have deemed  necessary or  appropriate as a basis for the
opinions hereinafter expressed. As to certain facts material to our opinions, we
have  relied,   with  your   permission,   upon   statements,   certificates  or
representations,  including  those  delivered  or made in  connection  with  the
above-referenced  transaction,  of  officers  and other  representatives  of the
Company and its subsidiaries and the Trust.

     Based upon and subject to the foregoing and the further  qualifications set
forth below, we are of the opinion as of the date hereof that:

     1. The Company has been duly incorporated and is validly existing under the
laws of the State of California and is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended.  Each of the Significant
Subsidiaries is duly organized,  validly existing and in good standing under the
laws  of  its  jurisdiction  of  organization.  Each  of  the  Company  and  the
Significant  Subsidiaries has full corporate power and authority to own or lease
its  properties  and to conduct  its  business  as such  business  is  currently
conducted  in  all  material  respects.  To  the  best  of  our  knowledge,  all
outstanding  shares of capital stock of the Significant  Subsidiaries  have been
duly authorized and

                                     B-1-1
<PAGE>

validly issued,  and are fully paid and nonassessable  except to the extent such
shares  may be  deemed  assessable  under 12 U.S.C.  Section  1831o or 12 U.S.C.
Section 55.

     2. The issuance, sale and delivery of the Debentures in accordance with the
terms and conditions of the Placement  Agreement and the Operative Documents has
been duly  authorized  by all necessary  actions of the Company.  Other than for
outstanding  stock  options and  warrants  issued by the Company with respect to
shares of common stock of the Company,  there are no  preemptive or other rights
to subscribe for or to purchase any shares of capital stock or equity securities
of the  Company  or  the  Significant  Subsidiaries  pursuant  to the  corporate
Articles of  Incorporation or Charter,  By-Laws or other governing  documents of
the Company or the Significant  Subsidiaries,  or, to the best of our knowledge,
any agreement or other instrument to which either Company or the Subsidiaries is
a party or by which the Company or the Significant Subsidiaries may be bound.

     3. The Company has all requisite  corporate power to enter into and perform
its obligations  under the Placement  Agreement and the Subscription  Agreement,
and the Placement  Agreement and the  Subscription  Agreement have been duly and
validly  authorized,  executed and delivered by the Company and  constitute  the
legal,  valid and binding  obligations of the Company  enforceable in accordance
with their terms,  except as the  enforcement  thereof may be limited by general
principles of equity and by bankruptcy or other laws affecting creditors' rights
generally, and except as the indemnification and contribution provisions thereof
may be limited under  applicable laws and certain  remedies may not be available
in the case of a non-material breach.

     4. Each of the Indenture,  the Trust Agreement and the Guarantee  Agreement
has been duly authorized,  executed and delivered by the Company, and is a valid
and legally binding obligation of the Company enforceable in accordance with its
terms,  subject  to  the  effect  of  bankruptcy,  insolvency,   reorganization,
receivership,  moratorium  and other laws  affecting  the rights and remedies of
creditors generally and of general principles of equity.

     5. The Debentures have been duly authorized,  executed and delivered by the
Company,  are entitled to the benefits of the Indenture and are legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with  their   terms,   subject  to  the   effect  of   bankruptcy,   insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

     6.  Neither  the  Company,  the Trust,  nor any other  subsidiaries  of the
Company is in breach or violation of, or default  under,  with or without notice
or lapse of time or both, its articles of Incorporation  or Charter,  By-Laws or
other governing documents  (including without limitation,  the Trust Agreement).
The  execution,  delivery and  performance  of the  Placement  Agreement and the
Operative Documents and the consummation of the transactions contemplated by the
Placement  Agreement  and the  Operative  Documents do not and will not conflict
with, result in the creation or imposition of any material lien, claim,  charge,
encumbrance  or  restriction  upon any  property or assets of the Company or its
subsidiaries  pursuant to, or  constitute a material  breach or violation of, or
constitute a material default under,  with or without notice or lapse of time or
both,   any  of  the  terms,   provisions  or  conditions  of  the  Articles  of
Incorporation or Charter, By-Laws or other governing documents of the Company or
its  subsidiaries,  or to the  best of our  knowledge,  any  material  contract,
indenture,  mortgage,  deed of trust,  loan or credit  agreement,  note,  lease,
franchise,  license or any other agreement or instrument to which the Company or
its  subsidiaries is a party or by which any of them or any of their  respective
properties  may be bound or any order,  decree,  judgment,  franchise,  license,
permit, rule or regulation of any court, arbitrator, government, or governmental
agency or instrumentality,  domestic or foreign, known to us having jurisdiction
over the  Company  or its  subsidiaries  or any of their  respective  properties
which,  in each case,  is  material to the  Company  and its  subsidiaries  on a
consolidated basis.

                                     B-1-2
<PAGE>

     7. Except for filings, registrations or qualifications that may be required
by applicable securities laws, no authorization,  approval, consent or order of,
or filing,  registration or qualification  with, any person (including,  without
limitation,  any court,  governmental  body or authority) is required  under the
laws of the State of California in connection with the transactions contemplated
by the Placement  Agreement and the Operative  Documents in connection  with the
offer  and sale of the  Capital  Securities  as  contemplated  by the  Placement
Agreement and the Operative Documents.

     8. To the best of our knowledge (i) no action, suit or proceeding at law or
in equity is pending or threatened to which the Offerors or its  subsidiaries is
or may be a  party,  and  (ii) no  action,  suit or  proceeding  is  pending  or
threatened against or affecting the Offerors or its subsidiaries or any of their
properties,  before or by any court or governmental official,  commission, board
or other administrative agency, authority or body, or any arbitrator, wherein an
unfavorable  decision,  ruling or finding could reasonably be expected to have a
material adverse effect on the consummation of the transactions  contemplated by
the Placement  Agreement and the Operative Documents or the issuance and sale of
the Capital  Securities as contemplated  therein or the condition  (financial or
otherwise),  earnings,  affairs,  business,  or  results  of  operations  of the
Offerors and its subsidiaries on a consolidated basis.

     9. It is not necessary in connection  with the offering,  sale and delivery
of the Capital  Securities,  the Debentures and the Guarantee  Agreement (or the
Guarantee)  to register the same under the  Securities  Act of 1933, as amended,
under  the  circumstances  contemplated  in  the  Placement  Agreement  and  the
Subscription Agreement.

     10.  Neither  the Company  nor the Trust is an  "investment  company" or an
entity "controlled" by an "investment  company," in each case within the meaning
of the Investment Company Act of 1940, as amended.

     The opinion expressed in the first two sentences of numbered paragraph 1 of
this Opinion Letter is based solely upon certain  certificates and confirmations
issued by the applicable  governmental officer or authority with respect to each
of the Company and the Subsidiaries.

     With  respect to the  foregoing  opinions,  since no member of this firm is
actively  engaged in the  practice  of law in the States of  Connecticut  or New
York,  we do not express any opinions as to the laws of such states and have (i)
relied, with your approval, upon the opinion of Bingham Dana LLP with respect to
matters of  Connecticut  law and (ii)  assumed,  with your  approval and without
rendering any opinion to such effect, that the laws of the State of New York are
substantively  identical to the laws of the State of California,  without regard
to conflict of law provisions.

     This Opinion Letter is rendered to you solely pursuant to Section 3.1(a) of
the Placement Agreement.  As such, it may be relied upon by you only and may not
be used or relied upon by any other  person for any purpose  whatsoever  without
our prior written consent.

                                Very truly yours,




                                     B-1-3
<PAGE>





                                   EXHIBIT B-2
                       FORM OF CONNECTICUT COUNSEL OPINION
TO THE PARTIES LISTED
ON SCHEDULE I HERETO

Ladies and Gentlemen:

     We have acted as special counsel in the State of Connecticut  (the "State")
for Redwood  Statutory  Trust I (the  "Trust"),  a Connecticut  statutory  trust
formed  pursuant to the Amended and  Restated  Declaration  of Trust (the "Trust
Agreement")  dated as of February 22, 2001,  among  Redwood  Empire  Bancorp,  a
California  corporation (the "Sponsor"),  State Street Bank and Trust Company of
Connecticut,  National  Association,  a  national  banking  association  ("State
Street"),   in  its  capacity  as  Institutional   Trustee  (the  "Institutional
Trustee"),  and Patrick W.  Kilkenny,  James E.  Beckwith  and Gregory J. Smith,
each, an individual,  (each, an "Administrator") in connection with the issuance
by the Trust to the Holders (as defined in the Trust  Agreement)  of its capital
securities (the "Capital  Securities") pursuant to the Placement Agreement dated
as of February 9, 2001 (the "Placement Agreement"), the issuance by the Trust to
the Sponsor of its Common  Securities,  pursuant to the Trust  Agreement and the
acquisition by the Trust from the Sponsor of Debentures,  issued pursuant to the
Indenture dated as of February 22, 2001 (the "Indenture").

     The Institutional Trustee has requested that we deliver this opinion to you
in accordance with Section 3.1(b) of the Placement Agreement.  Capitalized terms
not otherwise defined herein shall have the meanings specified in, or defined by
reference in or set forth in the Operative Documents (as defined below).

     Our representation of the Trust has been as special counsel for the limited
purposes stated above. As to all matters of fact (including factual  conclusions
and characterizations  and descriptions of purpose,  intention or other state of
mind),   we  have  relied,   with  your   permission,   entirely  upon  (i)  the
representations  and  warranties  of the  parties  set  forth  in the  Operative
Documents  and (ii)  certificates  delivered  to us by the  management  of State
Street, and have assumed, with your permission, without independent inquiry, the
accuracy of those representations, warranties and certificates.

     We have  examined  the  following  documents to which the Trust is a party,
each of which is dated the date hereof, unless otherwise noted:

                           (i)      the Trust Agreement;

                           (ii)     the Placement Agreement;

                           (iii)    the Subscription Agreement

                           (iv)     the Certificate of Common Securities;

                           (v)      the Certificate of Capital Securities;

                           (vi)     the Guarantee Agreement;

                           (vii)    the Certificate of Trust; and


                                     B-2-1

<PAGE>

                           (vii)    a  Certificate  of Legal  Existence  for the
                                    Trust  obtained  from the  Secretary  of the
                                    State  of the  State  of  Connecticut  dated
                                    [______________]  (the "Certificate of Legal
                                    Existence").

     The  documents  referenced  in  subparagraphs  (i)  through  (v)  above are
hereinafter referred to collectively as the "Operative Documents."

     We  have  also  examined  originals,  or  copies,  certified  or  otherwise
identified to our  satisfaction,  of such other corporate and public records and
agreements,  instruments,  certificates  and other  documents  as we have deemed
necessary  or  appropriate  for the  purposes of  rendering  this  opinion.  For
purposes of our opinion rendered in paragraph 1 below, with respect to the legal
existence of the Trust,  our opinion relies  entirely upon and is limited by the
Certificate of Legal Existence, which is attached hereto as Exhibit A.

     We have assumed,  with your  permission,  the genuineness of all signatures
(other than those on behalf of State Street,  the Guarantee  Trustee,  Indenture
Trustee,  Institutional  Trustee and the Trust), the conformity of the originals
of all documents  reviewed by us as copies, the authenticity and completeness of
all  original  documents  reviewed  by us in original or copy form and the legal
competence  of  each  individual   executing  any  document  (other  than  those
individuals  executing  documents  on  behalf  of State  Street,  the  Guarantee
Trustee, Indenture Trustee, Institutional Trustee and the Trust).

     When an opinion set forth below is given to the best of our  knowledge,  or
to our  knowledge,  or with  reference to matters of which we are aware or which
are known to use, or with another similar qualification,  the relevant knowledge
or awareness is limited to the actual  knowledge or awareness of the  individual
lawyers in the firm who have  participated  directly  and  substantively  in the
specific  transactions  to which this opinion relates and without any special or
additional  investigation  undertaken for the purposes of this opinion except as
indicated herein.

     For the purposes of this opinion we have made such examination of law as we
have deemed  necessary.  The opinions  expressed below are limited solely to the
internal  substantive  laws of the State (as  applied  by courts  located in the
State without  regard to choice of law) and we express no opinion as to the laws
of any other  jurisdiction.  To the  extent to which  this  opinion  deals  with
matters  governed by or relating to the laws of any other state or jurisdiction,
we have assumed, with your permission, that the Operative Documents are governed
by the internal substantive laws of the State.

     We  express no opinion  as to (i) the  effect of  suretyship  defenses,  or
defenses  in  the  nature  thereof,  with  respect  to  the  obligations  of any
applicable  guarantor,  joint obligor,  surety,  accommodation  party,  or other
secondary  obligor or any  provisions  of the Trust  Agreement  with  respect to
indemnification  or  contribution  and (ii) the accuracy or  completeness of any
exhibits or schedules to the Operative Documents.  No opinion is given herein as
to the  choice  of law or  internal  substantive  rules of law that any court or
other  tribunal  may apply to the  transactions  contemplated  by the  Operative
Documents.  No opinion is expressed  herein as to the  application  or effect of
federal  securities laws or as to the securities or so-called "Blue Sky" laws of
Connecticut or of any other state or other jurisdiction.

     Our opinion,  with your  permission,  is further  subject to the  following
exceptions, qualifications and assumptions:

               (a) We have assumed  without any independent  investigation  that
          (i) each party to the  Operative  Documents,  other than State Street,
          the Guarantee Trustee,  Indenture Trustee,  Institutional  Trustee and
          the Trust, as applicable,  at all times relevant  thereto,  is validly
          existing and in good standing  under the laws of the  jurisdiction  in
          which it is  organized,  and is  qualified  to do business and in good
          standing under the laws of each jurisdiction  where such qualification
          is

                                     B-2-2
<PAGE>

          required generally or necessary in order for such party to enforce its
          rights  under  such  Operative  Documents,  (ii)  each  party  to  the
          Operative  Documents,  at all times relevant thereto,  had and has the
          full  power,  authority  and  legal  right  under its  certificate  of
          incorporation,  partnership  agreement,  by-laws,  and other governing
          organizational  documents, and the applicable corporate,  partnership,
          or other enterprise legislation and other applicable laws, as the case
          may be (other than State  Street,  the  Guarantee  Trustee,  Indenture
          Trustee,  Institutional Trustee or the Trust) to execute,  deliver and
          to perform its obligations under, the Operative  Documents,  and (iii)
          each party to the Operative  Documents  other than State  Street,  the
          Guarantee  Trustee,  Indenture Trustee,  Institutional  Trustee or the
          Trust has duly  executed and  delivered  each of such  agreements  and
          instruments to which it is a party and that the execution and delivery
          of such agreements and instruments and the  transactions  contemplated
          thereby  have  been  duly  authorized  by  proper  corporate  or other
          organizational proceedings as to each such party.

               (b) We have assumed  without any  independent  investigation  (i)
          that the  Institutional  Trustee,  the Sponsor and the  Administrators
          have  received  the  agreed  to  and  stated   consideration  for  the
          incurrence  of  the  obligations  applicable  to it  under  the  Trust
          Agreement and each of the other Operative Documents, (ii) that each of
          the Operative  Documents  (other than the Trust Agreement) is a valid,
          binding and  enforceable  obligation  of each party thereto other than
          the Trust, State Street and the Institutional  Trustee, as applicable;
          and, for the purposes of this  opinion  letter,  we herein also assume
          that each of the Operative  Documents (other than the Trust Agreement)
          constitutes  a valid,  binding  and  enforceable  obligation  of State
          Street, the Guarantee Trustee and the Indenture Trustee, as applicable
          under  Connecticut  and federal  law (as to which such  matters we are
          delivering  to you a separate  opinion  letter on this date,  which is
          subject to the assumptions,  qualifications  and limitations set forth
          therein).

               (c) The  enforcement  of any  obligations  of State  Street,  the
          Sponsor  and  the  Administrators,  as  applicable,  under  the  Trust
          Agreement and the  obligations of the Trust under the other  Operative
          Documents  may be limited  by the  receivership,  conservatorship  and
          supervisory powers of bank regulatory agencies  generally,  as well as
          by bankruptcy, insolvency,  reorganization,  moratorium, marshaling or
          other laws and rules of law  affecting  the  enforcement  generally of
          creditors'  rights and  remedies  (including  such as may deny  giving
          effect to waivers of debtors' or guarantors'  rights);  and we express
          no opinion as to the status under any  fraudulent  conveyance  laws or
          fraudulent  transfer laws of any of the  obligations  of State Street,
          the  Sponsor,  the  Administrators  or  the  Trust  under  any  of the
          Operative Documents.

               (d)  We  express  no  opinion  as to  the  enforceability  of any
          particular  provision of the Trust  Agreement  or the other  Operative
          Documents relating to remedies after default.

               (e) We express no opinion as the  availability of any specific or
          equitable relief of any kind.

               (f) The  enforcement of any rights may in all cases be subject to
          an  implied  duty  of good  faith  and  fair  dealing  and to  general
          principles of equity  (regardless  of whether such  enforceability  is
          considered in a proceeding at law or in equity).

               (g)  We  express  no  opinion  as to  the  enforceability  of any
          particular provision of any of the Operative Documents relating to (i)
          waivers of rights to object to  jurisdiction  or venue, or consents to
          jurisdiction  or venue,  (ii)  waivers  of rights to (or  methods  of)
          service of  process,  or rights to trial by jury,  or other  rights or
          benefits bestowed by operation of law, (iii) waivers of any applicable
          defenses,  setoffs,  recoupments,  or  counterclaims,  (iv) waivers or
          variations of provisions  which are not capable of waiver or variation
          under Sections  1-102(3),  9-501(3) or other provisions of the Uniform
          Commercial  Code  ("UCC")  of the  State,  (v) the  grant of powers

                                     B-2-3
<PAGE>

          of  attorney  to  any  person  or  entity,   or  (vi)  exculpation  or
          exoneration  clauses,  indemnity  clauses,  and  clauses  relating  to
          releases or waivers of unmatured claims or rights.

               (h) We express  no opinion as to the effect of events  occurring,
          circumstances  arising,  or  changes  of  law  becoming  effective  or
          occurring,  after the date  hereof on the  matters  addressed  in this
          opinion  letter,  and we assume  no  responsibility  to inform  you of
          additional or changed facts, or changes in law, of which we may become
          aware.

               (i) We express no opinion as to any requirement that any party to
          the Operative Documents (or any other persons or entities  purportedly
          entitled to the benefits  thereof)  qualify or register to do business
          in any  jurisdiction  in  order  to be  able  to  enforce  its  rights
          thereunder or obtain the benefits thereof.

     Based upon the foregoing and subject to the limitations and  qualifications
set forth herein, we are of the opinion that:

     1. The Trust has been duly  formed and is validly  existing  as a statutory
trust under the Connecticut  Statutory Trust Act, Chapter 615 of Title 34 of the
Connecticut General Statutes, Section 500, et seq. (the "Act").

     2. The Trust Agreement  constitutes a valid and binding obligation of State
Street and the Institutional  Trustee  enforceable  against State Street and the
Institutional Trustee in accordance with the terms thereof.

     3. The Trust  Agreement  constitutes a valid and binding  obligation of the
Sponsor  and  the  Administrators,  enforceable  against  the  Sponsor  and  the
Administrators in accordance with its terms.

     4. The Trust has the requisite trust power and authority to (a) execute and
deliver, and to perform its obligations under, the Operative Documents,  and (b)
perform its obligations under such Operative Documents.

     5.  Each  of  the  Operative  Documents  to  which  the  Trust  is a  party
constitutes a valid and binding obligation of the Trust, enforceable against the
Trust in accordance with the terms thereof

     6. The Capital  Securities have been duly authorized by the Trust under the
Trust Agreement, and the Capital Securities, when duly executed and delivered to
the Holders in  accordance  therewith,  will be validly  issued,  fully paid and
nonassessable and will evidence undivided  beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust Agreement.

     7. The Common  Securities have been duly authorized by the Trust Agreement,
and the Common  Securities,  when duly  executed and delivered to the Company in
accordance  with  the  Trust   Agreement,   the  Placement   Agreement  and  the
Subscription Agreement and delivered and paid for in accordance therewith,  will
be validly  issued,  fully paid and  nonassessable  and will evidence  undivided
beneficial  interests  in the  assets of the Trust and will be  entitled  to the
benefits of the Trust Agreement.

     8.  Neither  the  execution,  delivery or  performance  by the Trust of the
Operative  Documents,   the  consummation  by  the  Trust  of  the  transactions
contemplated  thereby,  nor  compliance  by the Trust  with any of the terms and
provisions  thereof,  (a) violates the Trust  Agreement,  or, to the best of our
knowledge,  contravenes  or will  contravene  any provision of, or constitutes a
default  under,  or results in any breach of, or results in the  creation of any
lien (other than as permitted  under the Operative  Documents)  upon property of
the Trust under,  any  indenture,  mortgage,  chattel  mortgage,  deed of trust,
conditional  sales  contract,  bank loan or credit  agreement,  license or other
agreement or instrument,  in


                                B-2-4

<PAGE>

each  case  known  to us,  to which it is a party or by which it is bound or (b)
violates any applicable  Connecticut law governing the Trust, or, to the best of
our  knowledge,  any judgment or order of any court or other  tribunal,  in each
case known to us, applicable to or binding on it.

     9. No consent, approval, order or authorization of, giving of notice to, or
registration  with, or taking of any other action in respect of, any Connecticut
governmental  authority  regulating  the Trust is  required  for the  execution,
delivery,  validity or performance  of, or the carrying out by, the Trust of any
of the transactions contemplated by the Operative Documents, other than any such
consent, approval, order, authorization,  registration,  notice or action as has
been duly obtained, given or taken.

     10. The Holders, as the beneficial holders of the Capital Securities,  will
be  entitled  to  the  same  limitation  of  personal   liability   extended  to
shareholders of domestic corporations organized under the laws of the State.

     11. Under the Trust  Agreement,  the issuance of the Capital  Securities is
not subject to preemptive rights.

     12.  Assuming  that the Trust  will not be  taxable  as a  corporation  for
federal income tax purposes,  but rather will be classified for such purposes as
a  grantor  trust,  the  Trust  will not be  subject  to any  tax,  fee or other
government  charge under the laws of the state of  Connecticut  or any political
subdivision thereof.

     This  opinion  is  rendered  solely for the  benefit of those  institutions
listed on Schedule I hereto and their  successors and assigns in connection with
the transactions  contemplated by the Operative Documents and may not be used or
relied upon by any other person or for any other purpose.

                                Very truly yours,



                                BINGHAM DANA LLP













                                     B-2-5
<PAGE>





                                   SCHEDULE I


     State Street Bank and Trust Company of Connecticut, National Association

     State Street Bank and Trust Company

     First Tennessee Capital Markets

     Keefe, Bruyette & Woods, Inc.

     Preferred Term Securities II, Ltd.

     Preferred Term Securities II, Inc.

     Redwood Empire Bancorp

     Sullivan & Cromwell










                                     B-2-6
<PAGE>



                            EXHIBIT A TO EXHIBIT B-2
                         CERTIFICATE OF LEGAL EXISTENCE
                                  See Tab No. 8


















                                     B-2-7
<PAGE>





                                   EXHIBIT B-3

                           FORM OF TAX COUNSEL OPINION




Redwood Empire Bancorp

Redwood Statutory Trust I

First Tennessee Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee 38117

Keefe, Bruyette & Woods
7020 South County Line Road
Burr Ridge, Illinois 60521

Ladies and Gentlemen:

     We have acted as special  tax  counsel to  Redwood  Empire  Bancorp  and to
Redwood  Statutory  Trust I in  connection  with the  proposed  issuance  of (i)
Capital Securities, liquidation amount $1,000 per Capital Security (the "Capital
Securities") of Redwood  Statutory  Trust I, a statutory  business trust created
under  the laws of  Connecticut  (the  "Trust"),  pursuant  to the  terms of the
Amended and  Restated  Declaration  of Trust  dated as of  February  22, 2001 by
Redwood Empire Bancorp, a California  corporation (the "Company"),  State Street
Bank and Trust Company of Connecticut,  National  Association,  as institutional
trustee,  and Patrick W.  Kilkenny,  James E. Beckwith and Gregory J. Smith,  as
Administrators  (the "Trust  Agreement"),  (ii) Junior  Subordinated  Deferrable
Interest  Debentures  (the  "Corresponding  Debentures")  of the Company  issued
pursuant to the terms of an  Indenture  dated as of  February  22, 2001 from the
Company  to State  Street  Bank  and  Trust  Company  of  Connecticut,  National
Association,  as trustee  (the  "Indenture"),  to be sold by the  Company to the
Trust,  and (iii) the  Guarantee  Agreement  of the Company  with respect to the
Capital  Securities dated as of February 22, 2001 (the "Guarantee")  between the
Company  and  State  Street  Bank and Trust  Company  of  Connecticut,  National
Association,  as guarantee trustee. The Capital Securities and the Corresponding
Debentures  are to be issued  as  contemplated  by the  Offering  Circular  (the
"Offering  Circular") dated [_______]  prepared by Preferred Term Securities II,
Ltd.,  an entity  formed  under the  Companies  Law of the Cayman  Islands,  and
Preferred Term Securities II, Inc., a Delaware corporation.

     We have examined originals or copies,  certified or otherwise identified to
our  satisfaction,  of documents,  corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion  including (i)
the Offering Circular,  (ii) the Indenture,  (iii) the form of the Corresponding
Debentures  attached as an exhibit to the Indenture,  (iv) the Trust  Agreement,
(v) the Guarantee,  and (vi) the form of Capital Securities Certificate attached
as  an  exhibit  to  the  Trust  Agreement   (collectively   the   "Documents").
Furthermore,  we have relied upon certain statements and representations made by
the Company and upon the  opinion of Bingham  Dana LLP as to certain  matters of
Connecticut  law. In such  examination,  we have assumed the authenticity of all
documents submitted to us as originals,  the conformity to original documents of
all  documents   submitted  to  us  as  certified  or  photostatic  copies,  the
authenticity of the originals of such latter  documents,  the genuineness of all
signatures and the  correctness  of all  representations  made therein.  We have
further  assumed that there are no  agreements  or  understandings  contemplated
therein other than those contained in the Documents.


                                     B-3-1
<PAGE>

     Based upon the foregoing, and assuming (i) that the final Documents will be
substantially identical to the forms examined, (ii) full compliance with all the
terms of the final Documents,  and (iii) the accuracy of representations made by
the Company and delivered to us, we are of the opinion that:

     (a)  The  Corresponding  Debentures will be classified as indebtedness  for
          U.S. federal income tax purposes.

     (b)  The  Trust  will be  characterized  as a  grantor  trust and not as an
          association  taxable  as a  corporation  for U.S.  federal  income tax
          purposes.

     The  opinions  expressed  above are  based on  existing  provisions  of the
Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  existing  Treasury
regulations, published interpretations of the Code and such Treasury regulations
by the Internal  Revenue  Service,  and existing court  decisions,  any of which
could be changed at any time.  Any such changes may or may not be  retroactively
applied,  and may result in federal  income tax  consequences  that  differ from
those  reflected  in the  opinions  set forth  above.  We note that  there is no
authority  directly  on  point  dealing  with  securities  such  as the  Capital
Securities  or with  transactions  of the type  described  herein,  and that the
authorities   on  which   this   opinion   is  based  are   subject  to  various
interpretations.  Further,  you should be aware that opinions of counsel have no
official  status and are not  binding  on the  Internal  Revenue  Service or the
courts.  Accordingly, we can provide no assurance that the interpretation of the
federal  income tax laws set forth in our opinions will prevail if challenged by
the IRS in an administrative or judicial proceeding.

     We have also  assumed  that each  transaction  contemplated  herein will be
carried out strictly in accordance with the Documents. Any variance in the facts
may result in Federal income tax  consequences  that differ from those reflected
in the opinions set forth above.

     Additionally,  we  undertake  no  obligation  to update this opinion in the
event there is either a change in the legal authorities, in the facts (including
the taking of any action by any party to any of the  transactions  described  in
the Documents  relating to such  transactions) or in the Documents on which this
opinion is based, or an inaccuracy in any of the  representations  or warranties
upon which we have relied in rendering this opinion.

     We express no opinion with respect to any matter not specifically addressed
by the foregoing  opinions,  including state or local tax  consequences,  or any
federal,  state, or local issue not specifically referred to and discussed above
including, without limitation, the effect on the matters covered by this opinion
of the laws of any other jurisdiction.

     This letter is delivered  for the benefit of the specified  addressees  and
may not be relied  upon by any other  person.  No portion of this  letter may be
quoted or otherwise referred to in any document or delivered to any other person
or entity without the express  written consent of Lewis,  Rice & Fingersh,  L.C.
This opinion letter is rendered as of the date set forth above.

                                Very truly yours,

                                LEWIS, RICE & FINGERSH, L.C.







                                     B-3-2
<PAGE>




Lewis, Rice & Fingersh, L.C.
500 N. Broadway, Suite 2000
St. Louis, Missouri  63102
Attention:  Lawrence H. Weltman, Esq.


     Re:  Representations  Concerning the Issuance of 10.20% Junior Subordinated
          Deferrable  Interest  Debentures  (the  "Debentures")  to the  Redwood
          Statutory  Trust I (the  "Trust")  and Sale of Trust  Securities  (the
          "Trust Securities") of the Trust

Ladies and Gentlemen:

     In accordance  with your request,  Redwood Empire  Bancorp (the  "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax  consequences  of
the issuance by the Company of the  Debentures  to the Trust and the sale of the
Trust Securities.

     Company hereby represents that:

     1. The sole  assets of the Trust will be the  Debentures,  proceeds  of the
Debentures, or both.

     2.  The  Company  intends  to use the net  proceeds  from  the  sale of the
Debentures for general corporate purposes.

     3. The Trust was not formed to  conduct  any trade or  business  and is not
authorized to conduct any trade or business.  The Trust exists for the exclusive
purposes  of (i)  issuing  and  selling  the Trust  Securities,  (ii)  using the
proceeds from the sale of Trust Securities to acquire the Debentures,  and (iii)
engaging only in activities necessary or incidental thereto.

     4. The Trust was formed to  facilitate  direct  investment in the assets of
the Trust,  and the existence of multiple  classes of ownership is incidental to
that  purpose.  There is no intent to provide  holders of such  interests in the
Trust with diverse interests in the assets of the Trust.

     5. The Company intends to create a debtor-creditor relationship between the
Company, as debtor, and the Trust, as a creditor,  upon the issuance and sale of
the  Debentures to the Trust by the Company.  The Company will (i) record and at
all times  continue to reflect the  Debentures as  indebtedness  on its separate
books  and  records  for  financial  accounting  purposes,  and (ii)  treat  the
Debentures as indebtedness for all United States tax purposes.

     6. During each year,  the Trust's  income will  consist  solely of payments
made by the Company with respect to the  Debentures.  Such  payments will not be
derived from the active conduct of a financial  business by the Trust.  Both the
Company's  obligation to make such payments and the  measurement  of the amounts
payable by the Company are defined by the terms of the  Debentures.  Neither the
Company's  obligation to make such payments nor the  measurement  of the amounts
payable  by the  Company  is  dependent  on income or  profits of Company or any
affiliate of the Company.

     7. The Company expects that it will be able to make, and will make,  timely
payment of principal and interest  pursuant to the terms of the Debentures  with
available capital or accumulated earnings.

<PAGE>

     8. The Company presently has no intention to defer interest payments on the
Debentures,  and it  considers  the  likelihood  of such a deferral to be remote
because,  if it were to exercise  its right to defer  payments of interest  with
respect  to the  Debentures,  it would not be  permitted  to  declare or pay any
dividends  or  distributions  on,  or  redeem,  purchase,  acquire,  or  make  a
liquidation  payment  with  respect to, any capital  stock of the Company or any
affiliate of the Company (other than payments of dividends or  distributions  to
the Company) or make any payment of principal of or interest or premium, if any,
on or repay,  repurchase,  or redeem any debt  securities  of the Company or any
affiliate of the Company that rank pari passu in all respects  with or junior in
interest to the Debentures, in each case subject to limited exceptions stated in
Section 2.11 of the Indenture dated as of February 22, 2001.

     9.  Immediately  after the issuance of the Debentures,  the  debt-to-equity
ratio of the Company  (excluding  deposit  liabilities  from the Company's debt)
will be within  standard  banking  industry norms and, in any event,  will be no
higher than four to one (4 : 1).

     10. To the best of our  knowledge,  the Company is currently in  compliance
with all federal,  state, and local capital  requirements,  except to the extent
that  failure  to comply  with any such  requirements  would not have a material
adverse effect on the Company and its affiliates.

     11. The Company will not issue any class of common stock or preferred stock
senior to the Debentures during their term.

     12. The Internal Revenue Service has not challenged the interest  deduction
on any class of the  Company's  subordinated  debt in the last ten (10) years on
the basis that such debt constitutes equity for federal income tax purposes.

         The above  representations  are  accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise  notified by us in writing.  The undersigned  understands that you
will rely on the foregoing in connection with rendering  certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.

                                Very truly yours,

                                REDWOOD EMPIRE BANCORP


Date: _______________ 2001      By:      /s/ Patrick W. Kilkenny

                                Title    President



<PAGE>




                                    EXHIBIT C
                              COMPANY SUBSIDIARIES
National Bank of the Redwoods
Valley Financial Mortgage Corporation
Redwood Merchant Services, Inc.

















                                       C-1
<PAGE>




                                    EXHIBIT D
                            FORM OF QUARTERLY REPORT

Mr. Frederick Agu
Preferred Term Securities II, Ltd.
c/o The Chase Manhattan Bank
600 Travis Street
50th Floor
Houston, TX  77002



Redwood Empire Bancorp
As of [March 30, June 30, September 30 or December 31], 20__.*


Tier 1 Capital to Risk Weighted Assets                    ________

Ratio of Double Leverage                                  ________

Non-Performing Assets to Loans and OREO                   ________

Ratio of Reserves to Non-Performing Loans                 ________

Ratio of Net Charge-Offs to Loans                         ________

Return on Average Assets                                  ________

Net Interest Margin                                       ________

Efficiency Ratio                                          ________

Ratio of Loans to Assets                                  ________

Ratio of Loans to Deposits                                ________

Total Assets                                          $   ________

Year to Date Net Income                               $   ________



____________________________
*A table describing the quarterly report  calculation  procedures is provided on
page D-2









                                       D-1
<PAGE>



<TABLE>

<S>                     <C>                                                     <C>
----------------------- ------------------------------------------------------  --------------------------------------------

Report Item             Corresponding FRY-9C or LP Line Items                   Description of Calculation
----------------------- ------------------------------------------------------  --------------------------------------------

"Tier 1 Capital" to     (BHCK8274/BHCKA223)                                     Tier 1 Risk Ratio:  Core Capital
Risk Weighted Assets                                                            (Tier 1)/Risk-Adjusted Assets.
----------------------- ------------------------------------------------------- --------------------------------------------
Ratio of Double         (BHCP3239+BHCP1273+BHCP0201)/(BHCP3210-                 Total equity investments (plus goodwill
Leverage                BHCP3164-BHCP3165-BHCP3163-BHCP3238-                    and intangibles) in subsidiaries divided by
                        BHCP4485-BHCP0087-BHCP0536-BHCP0202-                    the total equity capital.  This field is
                        BHCP0203)                                               calculated at the parent company level.
                                                                                "Subsidiaries" include bank, bank holding
                                                                                company, and nonbank subsidiaries.
----------------------- ------------------------------------------------------- --------------------------------------------
Non-Performing Assets   (BHCK5525-BHCK3506+BHCK5526-                            Total Nonperforming Assets
to Loans and OREO       BHCK3507+BHCK2744)/(BHCK2122+BHCK2744)                  (NPLs+Foreclosed Real Estate+Other
                                                                                Nonaccrual & Repossessed Assets)/Total
                                                                                Loans + Foreclosed Real Estate.
----------------------- ------------------------------------------------------- --------------------------------------------
Ratio of Reserves to    (BHCK3123+BHCK3128)/(BHCK5525-                          Total Loans Loss and Allocated Transfer
Non-Performing Loans    BHCK3506+BHCK5526-BHCK3507                              Risk Reserves/Total Nonperforming Loans
                                                                                (Nonaccrual + Restructured).
----------------------- ------------------------------------------------------- --------------------------------------------
Ratio of Net            (BHCK4635-BHCK4605)/(BHCK3516)                          Net chargeoffs for the period as a
Charge-Offs to Loans                                                            percentage of average loans.
----------------------- ------------------------------------------------------- --------------------------------------------
Return on Assets        (BHCK4340/BHCK3368)                                     Net Income as a percentage of Assets.
----------------------- ------------------------------------------------------- --------------------------------------------
Net Interest Margin     (BHCK4519/BHCK3402)                                     (Net Interest Income Fully Taxable
                                                                                Equivalent, if available / Average Earning
                                                                                Assets)
----------------------- ------------------------------------------------------- --------------------------------------------
Efficiency Ratio        (BHCK4093)/(BHCK4519+BHCK4079)                          (Noninterest Expense less Foreclosed
                                                                                Property Expense and Amortization of
                                                                                Intangibles Expense)/ (Net Interest Income
                                                                                Fully Taxable Equivalent, if available,
                                                                                plus Noninterest Income)
----------------------- ------------------------------------------------------- --------------------------------------------
Ratio of Loans to       (BHCK2125/BHCK2170)                                     Total Loans & Leases (Net of Unearned
Assets                                                                          Income & Gross of Reserve)/ Total Assets
----------------------- ------------------------------------------------------- --------------------------------------------
Ratio of Loans to       (BHCK2125)/(BHDM6631+BHDM6636+BHFN6631                  Total Loans & Leases (Net of Unearned
Deposits                +BHFN6636)                                              Income & Gross of Reserve)/ Total Deposits
                                                                                (Includes Domestic and Foreign Deposits)
----------------------- ------------------------------------------------------- --------------------------------------------
Total Assets            (BHCK2170)                                              The sum of total assets.  Includes cash and
                                                                                balances due from depository institutions;
                                                                                securities; federal funds sold and securities
                                                                                purchased under agreements to resell;
                                                                                loans and lease financing receivables;
                                                                                trading assets; premises and fixed assets;
                                                                                other real estate owned; investments in
                                                                                unconsolidated subsidiaries and associated
                                                                                companies; customer's liability on
                                                                                acceptances outstanding; intangible assets;
                                                                                and other assets.
----------------------- ------------------------------------------------------- --------------------------------------------
Net Income              (BHCK4300)                                              The sum of income (loss) before
                                                                                extraordinary  items and other  adjustments
                                                                                and extraordinary   items;   and   other
                                                                                adjustments,   net   of   income   taxes.


----------------------- ------------------------------------------------------- --------------------------------------------
</TABLE>




                                      D-2