EXHIBIT 2.1

                      AGREEMENT AND PLAN OF REORGANIZATION

                                      AMONG

                           WESTAMERICA BANCORPORATION,

                                WESTAMERICA BANK,

                             REDWOOD EMPIRE BANCORP

                                       AND

                          NATIONAL BANK OF THE REDWOODS

                           DATED AS OF AUGUST 25, 2004



                      AGREEMENT AND PLAN OF REORGANIZATION

      THIS AGREEMENT AND PLAN OF REORGANIZATION, dated as of August 25, 2004, is
among WESTAMERICA BANCORPORATION, a California corporation ("Westamerica"),
WESTAMERICA BANK, a California banking corporation ("WAB"), REDWOOD EMPIRE
BANCORP, a California corporation ("Redwood Empire"), and NATIONAL BANK OF THE
REDWOODS, a national banking association ("NBR").

                                    RECITALS

      A. The Boards of Directors of Westamerica, WAB, Redwood Empire and NBR
deem it advisable and in the best interests of Westamerica, WAB, Redwood Empire,
NBR and their respective shareholders that Westamerica, WAB, Redwood Empire and
NBR enter into a business combination whereby Redwood Empire shall merge with
and into Westamerica (the "Merger") and NBR shall thereafter merge with and into
WAB (the "Bank Merger" and together with the Merger, the "Mergers").

      B. This Agreement and the Merger Agreement, as defined herein, have been
approved by the Boards of Directors of Westamerica, WAB, Redwood Empire and NBR,
and will be submitted for approval of the shareholders of Redwood Empire at a
special meeting of Redwood Empire's shareholders upon the terms and subject to
the conditions set forth herein.

      C. The Merger is intended to qualify as a tax-free reorganization within
the meaning of the provisions of Section 368 of the Internal Revenue Code of
1986, as amended (the "IRC"), with respect to the shares of Westamerica common
stock to be issued in connection with the Merger.

      D. Pursuant to the Merger and subject to the terms and conditions hereof,
each share of Redwood Empire common stock (other than fractional shares or any
shares as to which dissenters' rights have been perfected) shall be converted
into the right to receive cash and that number of shares of Westamerica common
stock determined in accordance with Section 2.1, below, subject to adjustment as
more fully set forth in this Agreement.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, representations and warranties contained herein and in the Merger
Agreement, the parties hereto agree as follows:

1. THE MERGER AND BANK MERGER.

      1.1 EFFECTIVE DATE.

            (a) MERGER. Subject to the terms and conditions of this Agreement,
the Merger shall become effective upon the filing with the California Secretary
of State of a duly executed Agreement of Merger substantially in the form
attached hereto as Exhibit A (the "Merger Agreement") and officers' certificates
prescribed by Section 1103 of the California General Corporation Law (the
"GCL"), or at such time thereafter as is provided in the Merger

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Agreement (the "Effective Time"). The date on which the Effective Date occurs as
specified in the Merger Agreement shall be referred to herein as the "Effective
Date."

            (b) BANK MERGER. The Bank Merger shall become effective upon the
filing with the California Secretary of State and the California Department of
Financial Institutions (the "DFI") of a duly executed Agreement of Merger
satisfactory to Westamerica (the "Bank Merger Agreement") and officers'
certificates prescribed by Section 1103 of the GCL.

      1.2 EFFECT OF THE MERGERS.

            (a) MERGER. Subject to the terms and conditions of this Agreement
and the Merger Agreement, on the Effective Date, Redwood Empire shall be merged
with and into Westamerica and Westamerica shall be the surviving corporation
(the "Surviving Corporation") in the Merger. All assets, rights, goodwill,
privileges, immunities, powers, franchises and interests of Redwood Empire and
Westamerica in and to every type of property (real, personal and mixed) and
choses in action, as they exist as of the Effective Date, including
appointments, designations and nominations and all other rights and interests as
trustee, executor, administrator, registrar of stocks and bonds, guardian of
estate, assignee, receiver and in every other fiduciary capacity, shall pass and
be transferred to and vest in the Surviving Corporation by virtue of the Merger
on the Effective Date without any deed, conveyance or other transfer; the
separate existence of Redwood Empire shall cease and the corporate existence of
Westamerica as the Surviving Corporation shall continue unaffected and
unimpaired by the Merger; and the Surviving Corporation shall be deemed to be
the same entity as each of Redwood Empire and Westamerica and shall be subject
to all of their duties and liabilities of every kind and description. The
Surviving Corporation shall be responsible and liable for all the liabilities
and obligations of each of Westamerica and Redwood Empire; and any claim
existing or action or proceeding pending by or against Westamerica or Redwood
Empire may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in its place. Neither the rights of creditors nor
any liens upon the property of either Westamerica or Redwood Empire shall be
impaired by reason of the Merger.

            (b) BANK MERGER. Subject to the terms and conditions of this
Agreement and the Bank Merger Agreement, promptly after the Effective Date, NBR
shall be merged with and into WAB and WAB shall be the surviving corporation
(the "Surviving Bank") in the Bank Merger. The effect of the Bank Merger shall
be as provided by applicable law. The Surviving Bank shall be responsible and
liable for all the liabilities and obligations of each of WAB and NBR; and any
claim existing or action or proceeding pending by or against WAB or NBR may be
prosecuted as if the Bank Merger had not taken place, or the Surviving Bank may
be substituted in its place. Neither the rights of creditors nor any liens upon
the property of either WAB or NBR shall be impaired by reason of the Bank
Merger.

2. CONVERSION AND CANCELLATION OF SHARES

      2.1 CONVERSION OF COMMON STOCK OF REDWOOD EMPIRE.

            (a) CANCELLATION OF SHARES HELD BY REDWOOD EMPIRE SUBSIDIARIES. All
shares of common stock of Redwood Empire ("Redwood Empire Shares" and each a
"Redwood

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Empire Share") that are owned directly or indirectly by any subsidiary of
Redwood Empire (other than shares held in trust or otherwise for the benefit of
a third party or as pledgee) shall be cancelled and retired and shall cease to
exist, and no Merger Consideration (as defined below) shall be delivered in
exchange therefor.

            (b) CONVERSION. On the Effective Date, by virtue of the Merger and
without any action on the part of the holder of any Redwood Empire Share, each
outstanding Redwood Empire Share (other than fractional shares or any shares as
to which dissenters' rights have been perfected) shall be converted into the
right to receive per share merger consideration (the "Merger Consideration") in
the amount of $28.74 per share, consisting of $11.49 in cash (the "Cash
Portion") and $17.25 in shares of the common stock, without par value, of
Westamerica ("Westamerica common stock" or "Westamerica Shares") (the "Stock
Portion"), subject to the adjustments described in subsection (c) below.

            (c) CONVERSION OF STOCK PORTION. The number of Westamerica Shares
into which the Stock Portion of each Redwood Empire Share shall be converted
(the "Stock Portion Exchange Ratio") shall be equal to the following, in each
case rounded to four decimal places:

                  (i) if the Westamerica Average Closing Price is not less than
      $45.4950 and not more than $55.6050, a fraction (i) the numerator of which
      is $17.25 and (ii) the denominator of which is the Westamerica Average
      Closing Price (as defined below);

                  (ii) if the Westamerica Average Closing Price is greater than
      $55.6050, a fraction (i) the numerator of which is $17.25 and (ii) the
      denominator of which is $55.6050.

                  (iii) if the Westamerica Average Closing Price is less than
      $45.4950, a fraction (i) the numerator of which is $17.25 and (ii) the
      denominator of which is $45.4950.

                  (iv) "Westamerica Average Closing Price" means the average of
      the closing prices of Westamerica Shares quoted on the Nasdaq National
      Market as reported in The Wall Street Journal on each of the last 20
      trading days on which trades in Westamerica's shares occur ending on the
      day which is the day prior to two Business Days prior to the Effective
      Date, whether or not trades occurred on those days, rounded to four
      decimal places. As used herein, "Business Day" shall mean a day on which
      banks in the State of California are not authorized or required by law to
      be closed.

                  (v) For example, assuming the base market price for
      Westamerica common stock is $50.55, the top end of the collar is $55.6050,
      and the low end of the collar is $45.4950:

                        (x) if the Westamerica Average Closing Price is $52.50,
            then the Stock Portion Exchange Ratio would have a numerator of
            $17.25 and a denominator of $52.50; the Stock Portion Exchange Ratio
            would therefore be 0.3286; the Stock Portion Exchange Ratio times
            one share of Westamerica common stock would have a nominal value at
            that time of 0.3286 multiplied by

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            $52.50 or $17.25, and the Merger Consideration would consist of a
            Cash Portion of $11.49 plus a Stock Portion of $17.25 for a total of
            $28.74;

                        (y) if the Westamerica Average Closing Price is $57.50,
            then the Stock Portion Exchange Ratio would have a numerator of
            $17.25 and a denominator of $55.6050; the Stock Portion Exchange
            Ratio would therefore be 0.3102; the Stock Portion Exchange Ratio
            times one share of Westamerica common stock would have a nominal
            value at that time of 0.3102 multiplied by $57.50 or $17.8365, and
            the Merger Consideration would consist of a Cash Portion of $11.49
            plus a Stock Portion of $17.8365 for a total of $29.3265;

                        (z) if the Westamerica Average Closing Price is $42.50,
            then the Stock Portion Exchange Ratio would have a numerator of
            $17.25 and a denominator of $45.4950; the Stock Portion Exchange
            Ratio would therefore be 0.3792; the Stock Portion Exchange Ratio
            times one share of Westamerica common stock would have a nominal
            value at that time of 0.3792 multiplied by $42.50 or $16.1160, and
            the Merger Consideration would equal a Cash Portion of $11.49 plus a
            Stock Portion of $16.1160 for a total of $27.6060.

            Provided, if Westamerica is required to make a Lake County
Divestiture (as defined in Section 7(i)), then the Stock Portion, the Cash
Portion and the Merger Consideration shall be reduced in accordance with the
following table:



If the volume of deposits that                                         Over $10          Over $20
Westamerica is required to divest      Initial          Up to       million to $20    million to $30     Over $30
in Lake County is                       value        $10 million       million           million          million
                                                                                          
Stock Portion                           $17.25         $17.19            $17.16            $17.10         $17.07
Cash Portion                             11.49          11.45             11.43             11.39          11.37
Merger Consideration                     28.74          28.64             28.59             28.49          28.44


and references in this subsection (c) above to "$11.49," "$17.25" and "$28.74"
shall be deemed to be references to the applicable respective reduced values in
the table above.

            (d) CANCELLATION AND EXCHANGE OF REDWOOD EMPIRE SHARES. Upon
conversion of Redwood Empire Shares into the Merger Consideration in accordance
with the foregoing, all Redwood Empire Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
certificate previously representing any such shares shall thereafter represent
the cash and Westamerica Shares (and cash for fractional shares) into which such
Redwood Empire Shares have been converted. Certificates previously representing
Redwood Empire Shares (other than dissenting shares) shall be exchanged for cash
and certificates representing whole shares of Westamerica common stock issued in
consideration therefor upon the surrender of such certificates in accordance
with Section 2.3.

            (e) RIGHTS AS SHAREHOLDERS. From and after the Effective Date, the
holders of certificates formerly representing Redwood Empire Shares shall cease
to have any rights with

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respect thereto other than any dissenters' rights they have perfected pursuant
to Chapter 13 of the GCL.

            (f) REDWOOD EMPIRE DISSENTING SHARES. Any Redwood Empire Shares held
by "dissenting shareholders" within the meaning of Chapter 13 of the GCL and
which the holders thereof have not withdrawn or caused to lose their status as
"dissenting shareholders" shall not be converted into the Merger Consideration,
but shall, after the Effective Date, be entitled to only such rights as are
granted them by Chapter 13 of the GCL. Each dissenting shareholder who is
entitled to payment for such shareholder's Redwood Empire Shares shall receive
such payment therefor from the Surviving Corporation in an amount determined
pursuant to Chapter 13 of the GCL.

      2.2 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Westamerica common stock shall be issued to holders of
Redwood Empire Shares. In lieu thereof, each such holder entitled to a fraction
of a share of Westamerica common stock shall receive, at the time of surrender
of the certificate or certificates representing such holder's Redwood Empire
Shares, an amount in cash equal to the Westamerica Average Closing Price
multiplied by the fraction of a share of Westamerica common stock to which such
holder otherwise would be entitled. No such holder shall be entitled to
dividends, voting rights, interest on the value of, or any other rights in
respect of a fractional share. Fractional shares shall be determined on an
aggregate basis for each Redwood Empire shareholder and not on a per share
basis.

      2.3 SURRENDER OF REDWOOD EMPIRE SHARES.

            (a) Prior to the Effective Date, Westamerica shall appoint
Computershare Investor Services, LLC, or its successor, or any other bank or
trust company (having capital of at least $150 million) mutually acceptable to
Redwood Empire and Westamerica, as exchange agent (the "Exchange Agent") for the
purpose of exchanging certificates representing the Redwood Empire Shares. At
the Effective Date, Westamerica shall deliver to the Exchange Agent cash and
certificates representing the number of Westamerica Shares required to be
delivered to holders of Redwood Empire Shares as the aggregate Merger
Consideration pursuant to Article 2 of this Agreement. Westamerica shall direct
the Exchange Agent to mail, promptly after the Effective Date, to each holder of
a certificate or certificates which immediately prior to the Effective Date
represented outstanding Redwood Empire Shares a letter of transmittal and
instructions for use in effecting the surrender of such certificates in exchange
for certificates representing shares of Westamerica common stock and cash as
provided in this Agreement, both of which shall be reasonably satisfactory to
Redwood Empire. Each holder of Redwood Empire Shares converted pursuant to
Section 2.1, upon surrender to the Exchange Agent of one or more certificates
for such Redwood Empire Shares for cancellation, will be entitled to receive the
amount of cash and a certificate representing the number of Westamerica Shares
determined in accordance with Section 2.1. Each certificate representing
Westamerica Shares will bear a notation incorporating by reference the Amended
Rights Agreement of Westamerica, and certificates representing the Westamerica
Shares will evidence and entitle the holders thereof to certain rights as set
forth in and subject to the terms of the Amended Rights Agreement (the
"Rights"). Certificates issued for the Westamerica Shares shall be deemed to be
certificates for the Rights.

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            (b) No dividends or other distributions of any kind which are
declared payable to shareholders of record of the Westamerica Shares after the
Effective Date will be paid to persons entitled to receive such certificates for
Westamerica Shares until such persons surrender their certificates representing
Redwood Empire Shares. Upon surrender of such certificate representing Redwood
Empire Shares, the holder thereof shall be paid, without interest, any dividends
or other distributions with respect to the Westamerica Shares as to which the
record date and payment date occurred on or after the Effective Date and on or
before the date of surrender.

            (c) If any certificate for Westamerica Shares is to be issued in a
name other than that in which the certificate for Redwood Empire Shares
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer costs, taxes or other expenses required by reason of the
issuance of certificates for such Westamerica Shares in a name other than the
registered holder of the certificate surrendered, or such persons shall
establish to the satisfaction of Westamerica and the Exchange Agent that such
costs, taxes or other expenses have been paid or are not applicable.

            (d) All dividends or distributions, and any cash to be paid pursuant
to Section 2.2 in lieu of fractional shares, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered certificates representing
Redwood Empire Shares and unclaimed at the end of one year from the Effective
Date, shall (together with any interest earned thereon) at such time be paid or
redelivered by the Exchange Agent to Westamerica, and after such time any holder
of a certificate representing Redwood Empire Shares who has not surrendered such
certificate to the Exchange Agent shall, subject to applicable law, look as a
general creditor only to Westamerica for payment or delivery of such dividends
or distributions or cash, as the case may be.

      2.4 NO FURTHER TRANSFERS OF REDWOOD EMPIRE SHARES. At the Effective Date,
the stock transfer books of Redwood Empire shall be closed and no transfer of
Redwood Empire Shares theretofore outstanding shall thereafter be made.

      2.5 ADJUSTMENTS. If, between the date of this Agreement and the Effective
Date, the outstanding shares of Westamerica common stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within such period, the Westamerica Average Closing Price and the number of
Westamerica Shares to be issued and delivered in the Merger in exchange for the
Stock Portion of each outstanding Redwood Empire Share and shall be
correspondingly adjusted.

      2.6 TREATMENT OF STOCK OPTIONS. Each person holding one or more options to
purchase Redwood Empire Shares pursuant to the Redwood Empire 1991 Stock Option
Plan or 2001 Stock Option Plan (each as amended, collectively, the "Option
Plan") (or who was granted an option as a result of his or her commencement of
employment by Redwood Empire or NBR) (all such options being collectively
hereinafter referred to as the "Redwood Options") shall have the right, in his
or her discretion, to:

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            (a) Exercise prior to or at the Effective Time (which exercise may
be made subject to the Effective Time having occurred) any Redwood Options
outstanding that were exercisable prior to the Effective Time, including those
that become exercisable on an accelerated basis under their terms or the terms
of grant of which provide for such acceleration (any Redwood Empire Shares
covered by any such options which are exercised at or immediately prior to the
Effective Time, to be exchanged for the Merger Consideration upon the occurrence
of the Effective Time); and/or

            (b) Have any options that are not exercised converted into an option
to purchase shares of Westamerica common stock in the following manner:

                  (i) Following the Effective Time, shares of Westamerica common
      stock shall be substituted under the options for Redwood Empire Shares
      based on the Option Exchange Ratio (as defined below) in a form acceptable
      to Westamerica. Specifically, each option shall be deemed to continue as
      an option to purchase the number of shares of Westamerica common stock
      equal to the Option Exchange Ratio multiplied by the number of Redwood
      Empire Shares previously covered by such option and rounded down to the
      nearest whole share at an option exercise price for each such share of
      Westamerica common stock equal to the previous option exercise price for
      each Redwood Empire Share divided by the Option Exchange Ratio and rounded
      up to the nearest whole cent. Except as specified below, each Redwood
      Empire stock option shall otherwise continue on terms and conditions that
      are consistent with those that were applicable at the Effective Time.

                  (ii) The "Option Exchange Ratio" means a fraction, (a) the
      numerator of which is the sum of (1) the Cash Portion plus (2) the Stock
      Portion Exchange Ratio multiplied by the Westamerica Average Closing
      Price, and (b) the denominator of which is the applicable denominator used
      in Section 2.1(c) to determine the Stock Portion Exchange Ratio.

                  (iii) Redwood Empire shall amend the terms of the Option Plan
      and obtain any required shareholder approval of such Option Plan
      amendments and shall amend, as necessary, any and all option agreements
      (including obtaining any required participant consents) prior to the
      Effective Time to make them consistent with this Section 2.6.

      2.7 EFFECT ON WESTAMERICA COMMON STOCK. At and after the Effective Time,
each outstanding share of Westamerica common stock shall remain an outstanding
share of Westamerica common stock and shall not be converted or otherwise
affected by the Merger.

      2.8 DIRECTORS OF THE SURVIVING CORPORATION. Immediately after the
Effective Time, the Board of Directors of the Surviving Corporation shall be
comprised of the persons serving as directors of Westamerica immediately prior
to the Effective Time. Such persons shall serve until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified.

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      2.9 EXECUTIVE OFFICERS OF THE SURVIVING CORPORATION. Immediately after the
Effective Time, the executive officers of the Surviving Corporation shall be
comprised of the persons serving as executive officers of Westamerica
immediately prior to the Effective Time. Such persons shall serve until the
earlier of their resignation or termination.

      2.10 DIRECTORS OF THE SURVIVING BANK. Immediately after the Effective
Time, the Board of Directors of the Surviving Bank shall be comprised of the
persons serving as directors of WAB immediately prior to the Effective Time.
Such persons shall serve until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified.

3. COVENANTS OF THE PARTIES.

      3.1 COVENANTS OF WESTAMERICA.

            (a) RESERVATION, ISSUANCE AND REGISTRATION OF WESTAMERICA COMMON
STOCK. Westamerica shall reserve and make available for issuance in connection
with the Merger and in accordance with the terms of this Agreement (i) the
Westamerica Shares; and (ii) the maximum number of shares of Westamerica common
stock to which the option holders of Redwood Empire may be entitled pursuant to
Section 2.6 above at or after the Effective Date. All Westamerica Shares will,
when issued and delivered pursuant to and in accordance with the terms of this
Agreement, be duly authorized, validly issued, fully paid and nonassessable.
Westamerica shall file and cause to be declared effective pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), one or more registration
statements covering all such shares and shall cause all such shares to be issued
in compliance with the 1933 Act and in compliance with all applicable state
securities laws and regulations. Westamerica shall either: (i) as soon as
practicable after the Effective Time, file a registration statement on Form S-3
or Form S-8, as the case may be (or any successor or other appropriate forms),
with respect to the shares of Westamerica common stock subject to Redwood
Options and use its commercially reasonable best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Redwood Options remain outstanding; or (ii) issue substitute
options with substantially the same terms, and having the same economic benefits
as the options for which they are issued as substitute options but subject, in
the case of directors of Redwood Empire, to the effect of Section 3.2(r), under
an existing Westamerica option plan for which Westamerica maintains an effective
S-8 registration statement and use its commercially reasonable best efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such substitute options remain outstanding.

            (b) NASDAQ LISTING. Westamerica shall cause the Westamerica Shares
to be issued in the Merger and pursuant to the Redwood Options as provided in
Section 2.6 to be approved for listing on the Nasdaq National Market, subject to
official notice of issuance, prior to the Effective Time.

            (c) GOVERNMENT APPROVALS. Prior to the Effective Date, Westamerica,
with the cooperation of Redwood Empire, shall use its commercially reasonable
best efforts in good faith to take or cause to be taken as promptly as
practicable all such steps as shall be necessary to obtain (i) the prior
approval of the Merger by the Board of Governors of the Federal Reserve

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System (the "FRB") under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), and the Bank Merger Act, as amended, (ii) the DFI under the California
Financial Code, and (iii) all other consents and approvals of government
agencies as are required by law or otherwise, and shall do any and all acts
deemed by Westamerica to be necessary or appropriate in order to cause the
Merger and the Bank Merger to be consummated on the terms provided in this
Agreement as promptly as practicable. All approvals referred to in clauses (i),
(ii) and (iii) of this Section 3.1(c) are hereinafter referred to collectively
as the "Government Approvals." Westamerica and WAB shall use their commercially
reasonable best efforts in good faith to file all applications for the
Government Approvals within 45 calendar days after the execution of this
Agreement, subject to the availability with reasonable efforts of the required
financial and other information, to the cooperation of Redwood Empire and NBR
where otherwise necessary for a complete application and to the occurrence of
unforeseen circumstances not within Westamerica's reasonable control that impair
Westamerica's ability (despite the exercise of good faith efforts) to complete
and file all such applications within such time, but in such event Westamerica
shall nevertheless be obligated to make such filings as promptly as reasonably
practicable. Westamerica agrees to use commercially reasonable best efforts to
respond within five Business Days to comments or requests, if any, received from
bank regulators in connection with any such applications, within ten Business
Days to comments or requests, if any, received from the U.S. Department of
Justice, and within ten Business Days to comments or requests, if any, received
from the Securities and Exchange Commission (the "Commission"), and in each case
sooner if reasonably practicable. If it is not reasonably practicable to respond
within such times in any instance, Westamerica shall so advise Redwood Empire,
which shall not unreasonably withhold, delay or condition its consent to a later
filing so long as Westamerica continues to pursue such matters diligently and in
a commercially reasonable manner.

            (d) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Westamerica shall promptly (and in any event within two Business
Days) give oral and written notice to Redwood Empire upon becoming aware of the
occurrence or impending or threatened occurrence of any event which would, or
could reasonably be expected to, cause or constitute a breach or inaccuracy of
any of the representations or warranties or a breach of any of the covenants of
Westamerica or WAB contained or referred to in the Merger Agreement or this
Agreement and shall use its best efforts to prevent the same or remedy the same
promptly.

            (e) FINANCIAL STATEMENTS.

                  (i) Westamerica has delivered or has made available to Redwood
      Empire prior to the Effective Date true and correct copies of (x) all
      financial statements and proxy statements issued to Westamerica
      shareholders and/or directors after December 31, 2002 and prior to the
      date hereof, (y) its consolidated statements of income, changes in
      shareholders' equity and statements of cash flows for March 31, 2004, and
      for the years ended December 31, 2003, 2002 and 2001, and (z) consolidated
      balance sheets at March 31, 2004 and at December 31, 2003, 2002 and 2001.
      Such consolidated financial statements at and for the years ended December
      31, 2003, 2002 and 2001 have been audited by KPMG LLP and its
      predecessors, independent public accountants ("KPMG"), and include an
      opinion of such accounting firm to the effect that such financial
      statements have been prepared in accordance with generally accepted
      accounting principles ("GAAP") and present fairly, in all material
      respects, the

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      consolidated financial position, results of operations and cash flows of
      Westamerica at the dates indicated and for the periods then ending. The
      opinions of KPMG do not contain any qualifications.

                  (ii) Westamerica shall deliver or make available to Redwood
      Empire at or prior to the Effective Date true and correct copies of (x)
      all financial statements and proxy statements issued to Westamerica
      shareholders and/or directors on or after the date hereof and through the
      Effective Date, (y) its consolidated statements of income, changes in
      shareholders' equity and statements of cash flows for all quarters and
      years ended after March 31, 2004, and (z) consolidated balance sheets for
      all quarters and years ending after March 31, 2004. Such consolidated
      financial statements for years ending after March 31, 2004 and prior to
      the Effective Date shall be audited by KPMG, and shall include an opinion
      of KPMG to the effect that such financial statements have been prepared in
      accordance with GAAP and present fairly, in all material respects, the
      consolidated financial position, results of operations and cash flows of
      Westamerica at the date indicated and for such period then ending. Such
      opinion of KPMG shall not contain any qualifications.

            (f) PRESS RELEASES. Westamerica and WAB shall not issue any press
release or written statement for general circulation relating to the Merger,
this Agreement or the Merger Agreement unless previously provided to Redwood
Empire for review and approval (which approval will not be unreasonably withheld
or delayed) and shall cooperate with Redwood Empire in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement or the Merger; provided that Westamerica may, without
the consent of Redwood Empire, make any disclosure with regard to this Agreement
or the Merger that it determines is required under any applicable law or
regulation.

            (g) BUSINESS COMBINATIONS. Prior to the Closing, Westamerica and WAB
shall not initiate, solicit or knowingly encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal which constitutes, or would
reasonably be expected to lead to, any Business Combination (as such term is
defined below), unless such proposal is expressly conditioned upon, or the
completion of such Business Combination would not materially interfere with, the
performance by Westamerica or its successor in interest of its obligations under
this Agreement; provided that the foregoing shall not preclude Westamerica from
responding to an unsolicited bona fide written proposal for such a Business
Combination from another person. Prior to the Closing, Westamerica and WAB shall
not accept any offer from any third party regarding a Business Combination of
Westamerica with any other entity unless

      (i) such offer is expressly conditioned upon, or the completion of such
Business Combination would not materially interfere with, the performance by
Westamerica or its successor in interest of its obligations under this Agreement
or

      (ii) Westamerica has complied with the first sentence of this Section
3.1(g), Westamerica concludes in good faith (after consultation with a financial
advisor of recognized reputation in similar transactions) that the proposed
Business Combination constitutes or is reasonably likely to result in a Superior
Proposal (as defined in Section 3.2(j)(iv) but substituting "Westamerica"

                                       10


for "Redwood Empire" in such definition) and the Board of Directors of
Westamerica reasonably determines in good faith (after consultation with outside
legal counsel) that failure to do so would be inconsistent with its fiduciary
duties under applicable law, and Westamerica concurrently terminates this
Agreement pursuant to Section 11(b)(xii) and pays to Redwood Empire the
Termination Fee as provided in Section 11(d).

In the event Westamerica fails to comply with the provisions of this Section
3.1(g), Redwood Empire shall be entitled to terminate this Agreement without any
liability to Westamerica or any agent thereof pursuant to Section 11(b);
provided, however, that the obligations and liabilities of Westamerica set forth
in Section 11(d) hereof shall continue in full force and effect. For purposes of
this Section 3.1(g), "Business Combination" shall mean any of the following
involving Westamerica or any of its subsidiaries and any person other than
Redwood Empire or any of its affiliates: any merger, consolidation, share
exchange or other business combination; a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets of Westamerica or its
subsidiaries representing 15% or more of the consolidated assets of Westamerica
and its subsidiaries; a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock), representing 15% or
more of the voting power of Westamerica or its subsidiaries; or a tender offer
or exchange offer for at least 15% or more of the outstanding shares of
Westamerica; provided, for purposes of clause (ii) of this Section 3.1(g),
references to "15% or more" shall be deemed to be references to "a majority."

            (h) DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY INSURANCE
COVERAGE. From and after the Effective Date, the Surviving Corporation shall, to
the fullest extent permitted by applicable law, indemnify, defend and hold
harmless, and provide advancement of defense costs and other expenses to, each
person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer or director of Redwood Empire or
any of its subsidiaries (the "Indemnified Persons") against all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid in
settlement of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of Redwood Empire or
any of its subsidiaries, and pertaining to any matter existing or occurring, or
any acts or omissions occurring, at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time (including matters,
acts or omissions occurring in connection with the approval of this Agreement
and the consummation of the transactions contemplated hereby), to the same
extent such persons are indemnified or have the right to advancement of expenses
as of the date of this Agreement by Redwood Empire or any of its subsidiaries
pursuant to Redwood Empire's or any such subsidiaries' Articles of Incorporation
or Association, Bylaws and indemnification agreements, if any, in existence on
the date hereof with any directors or officers of Redwood Empire and its
subsidiaries. Upon the Effective Date, any former Redwood Empire officers who
become officers of Westamerica (including any subsidiaries thereof) shall be
included in Westamerica's directors' and officers' insurance policy. Prior to
the Effective Date, Redwood Empire may purchase tail insurance coverage under
its current policies of directors' and officers' liability insurance for a term
not to exceed three years from the Effective Time with respect to claims arising
from facts or events which occurred prior to the Effective Date; provided,
however, that the total premium payment for such insurance shall not exceed
$75,000. Except as required by applicable law or under the bylaws of

                                       11


Westamerica or WAB, neither Westamerica nor WAB will have any further obligation
hereunder with respect to the indemnification of any person who now is or
hereafter becomes a director or executive officer of Redwood Empire for acts or
events occurring before the Effective Date. If the Surviving Corporation or any
of its successors or assigns consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or transfers or conveys all or substantially all of its
properties or assets to any person, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 3.1(h).

            (i) EMPLOYEE BENEFITS. For purposes of all Redwood Empire, NBR,
Westamerica and WAB employee benefit plans (including vacation policies) under
which an employee's benefit depends, in whole or in part, on length of service,
credit will be given to employees of Redwood Empire or its subsidiaries for
service previously credited with Redwood Empire or its subsidiaries prior to the
Effective Time. Westamerica shall also use its commercially reasonable best
efforts to cause each welfare benefit plan of Westamerica or its subsidiaries to
waive (i) any preexisting condition restriction that was waived under the terms
of any analogous plan of Redwood Empire or its subsidiaries for Redwood Empire
employees actually enrolled in such a plan immediately prior to the Effective
Time or (ii) any waiting period limitation that would otherwise be applicable to
such employee on or after the Effective Time to the extent such employee had
satisfied any similar waiting period limitation under an analogous welfare
benefit plan of Redwood Empire or its subsidiaries prior to the Effective Time.

            (j) DIVIDENDS. After the date of this Agreement, each of Westamerica
and Redwood Empire shall coordinate with the other as to the payment of
dividends with respect to the Westamerica common stock and the Redwood Empire
common stock and the record dates and payment dates relating thereto, it being
the intention of the parties hereto that holders of Westamerica common stock and
Redwood Empire common stock shall not receive two dividends, or fail to receive
one dividend, for any single calendar quarter with respect to their shares of
Westamerica common stock and/or Redwood Empire common stock or any shares of
Westamerica common stock that any such holder receives in exchange for shares of
Redwood Empire common stock in the Merger.

            (k) SECTION 16. Assuming that Redwood Empire delivers to Westamerica
the Section 16 Information (as defined below) reasonably in advance of the
Effective Time, the Board of Directors of Westamerica, or a committee of
non-employee directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the 1934 Act), shall reasonably promptly thereafter and in any
event prior to the Effective Time adopt a resolution providing that the receipt
by the Redwood Empire Insiders (as defined below) of Westamerica common stock in
exchange for shares of Redwood Empire common stock and of options to purchase
Westamerica common stock upon conversion of Redwood Options, in each case
pursuant to the transactions contemplated hereby and to the extent that such
securities are listed in the Section 16 Information provided by Redwood Empire
to Westamerica prior to the Effective Time, are intended to be exempt from
liability pursuant to Section 16(b) under the 1934 Act such that any such
receipt shall be so exempt. "Section 16 Information" shall mean information
accurate in all material respects regarding the Redwood Empire Insiders, the
number of shares of Redwood Empire common stock held by each of them and the
number and description of Redwood

                                       12


Options held by each of them. "Redwood Empire Insiders" shall mean those
officers and directors of Redwood Empire who are subject to the reporting
requirements of Section 16(a) of the 1934 Act and who are listed in the Section
16 Information.

            (l) TAX-FREE REORGANIZATION TREATMENT. Westamerica shall not, and
shall not permit any of its subsidiaries to, intentionally take or cause to be
taken any action, whether before or after the Effective Time, which would
reasonably be expected to disqualify the Merger as a reorganization within the
meaning of Section 368(a) of the Code.

      3.2 COVENANTS OF REDWOOD EMPIRE.

            (a) APPROVAL BY REDWOOD EMPIRE SHAREHOLDERS. Redwood Empire shall
cause the Merger, this Agreement and the Merger Agreement to be submitted
promptly for the approval of its shareholders at a special meeting to be called
and held in accordance with applicable laws. Redwood Empire shall use its best
efforts to cause such meeting of its shareholders to take place as promptly as
reasonably practicable after the Commission declares the Westamerica
Registration Statement effective. In connection with the call of such meeting,
Redwood Empire shall cause such proxy materials, with any amendments thereto
that may in the judgment of its counsel be necessary or desirable, to set forth
each Redwood Empire director's commitment to vote his or her shares of Redwood
Empire stock in favor of the transactions contemplated hereby and to be mailed
to its shareholders (the proxy materials, together with any amendments or
supplements thereto, being herein referred to as the "Proxy Statement"). The
Board of Directors of Redwood Empire shall at all times prior to and during such
meeting of Redwood Empire shareholders recommend that the transactions
contemplated hereby be adopted and approved and use its best efforts to obtain
the requisite affirmative vote of the holders of the outstanding Redwood Empire
Shares for the approval and adoption of this Agreement and the Merger; provided,
however, that the Board of Directors of Redwood Empire may withdraw, modify or
change its recommendation to the shareholders if the Board determines, in good
faith, following consultation with legal counsel, that failure to do so would be
inconsistent with its fiduciary duties under applicable law. Within 30 calendar
days after the time of execution and delivery of this Agreement, members of the
Board of Directors of Redwood Empire shall deliver to Westamerica undertakings
in the form attached hereto as Exhibit B (each a "Director Support and Voting
Agreement") confirming such directors' approval of the transactions contemplated
hereby, setting forth such directors' commitment to vote his or her shares of
Redwood Empire stock in favor of the transactions contemplated by this Agreement
and setting forth such directors' commitment to use their best efforts to cause
the shareholders of Redwood Empire to adopt and approve the transactions
contemplated by this Agreement, subject to the proviso in the immediately
preceding sentence and any regulatory constraints. Concurrently with the
execution of this Agreement, Redwood Empire shall deliver to Westamerica the
undertakings of B. John Barry, Thomas J. Barry, Jessica M. Barry, Michael B.
Barry and Cheryl Sandeen in the form attached hereto as Exhibit B-1 (each a
"Voting Agreement") confirming such shareholders' approval of the transactions
contemplated by this Agreement and setting forth their respective commitments to
vote their shares of Redwood Empire stock in favor of the transactions
contemplated by this Agreement. Except with the prior approval of Westamerica or
pursuant to Section 3.2(j), neither Redwood Empire nor any member of its Board
of Directors shall, at the Redwood Empire shareholders' meeting, submit any
other matters for approval of its shareholders.

                                       13


            (b) SHAREHOLDER LISTS AND OTHER INFORMATION. After execution hereof,
Redwood Empire shall from time to time make available to Westamerica, upon
request, a list of its shareholders and their addresses, a list showing all
transfers of Redwood Empire common stock and such other information as
Westamerica shall reasonably request regarding both the ownership and prior
transfers of Redwood Empire common stock.

            (c) GOVERNMENT APPROVALS. Redwood Empire will cooperate in all
reasonable respects with Westamerica and WAB in their undertaking to obtain the
Government Approvals, and Redwood Empire further agrees, subject to the
continuing fiduciary duty of the Board of Directors of Redwood Empire to the
shareholders of Redwood Empire as provided in Section 3.2(a), to take such
actions as may be reasonably requested by Westamerica to cause the Merger to be
consummated on the terms provided in the Merger Agreement and this Agreement as
promptly as is practicable.

            (d) NEW BRANCHES AND LEASES. Redwood Empire shall not create any new
branches or enter into any acquisitions or leases of real property (except
acquisition of real property through foreclosure or in lieu of foreclosure of a
security interest), including new leases and lease extensions, without the prior
written approval of Westamerica, which approval will not be unreasonably
withheld, delayed or conditioned.

            (e) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Redwood Empire shall promptly (and in any event within two Business
Days) give oral and written notice to Westamerica upon becoming aware of the
occurrence or impending or threatened occurrence of any event which would, or
could reasonably be expected to, cause or constitute a breach or inaccuracy of
any of the representations or warranties or a breach of any of the covenants of
Redwood Empire or NBR contained or referred to in this Agreement and shall use
its best efforts to prevent the same or remedy the same promptly.

            (f) FINANCIAL STATEMENTS.

                  (i) Redwood Empire has delivered or has made available to
      Westamerica prior to the Effective Date true and correct copies of (x) all
      financial statements and proxy statements issued to Redwood Empire
      shareholders and/or directors after December 31, 2003 and prior to the
      date hereof, (y) its consolidated statements of income, changes in
      shareholders' equity and statements of cash flows for March 31, 2004, and
      for the years ended December 31, 2003, 2002 and 2001, and (z) consolidated
      balance sheets at March 31, 2004 and at December 31, 2003, 2002 and 2001.
      Such consolidated financial statements at and for the years ended December
      31, 2003, 2002 and 2001 have been audited by Crowe Chizek and Company LLC,
      independent public accountants ("Crowe Chizek"), and include an opinion of
      such accounting firm to the effect that such financial statements have
      been prepared in accordance with GAAP and present fairly, in all material
      respects, the consolidated financial position, results of operations and
      cash flows of Redwood Empire at the dates indicated and for the periods
      then ending. The opinions of Crowe Chizek do not contain any
      qualifications.

                  (ii) Redwood Empire shall deliver or make available to
      Westamerica at or prior to the Effective Date true and correct copies of
      (x) all financial statements and

                                       14



      proxy statements issued to Redwood Empire shareholders and/or directors on
      or after the date hereof and through the Effective Date, (y) its
      consolidated statements of income, changes in shareholders' equity and
      statements of cash flows for all quarters and years ending after March 31,
      2004, and (z) consolidated balance sheets for all quarters and years
      ending after March 31, 2004. Such consolidated financial statements for
      years ending after March 31, 2004, shall be audited by Crowe Chizek, and
      shall include an opinion of Crowe Chizek to the effect that such financial
      statements have been prepared in accordance with GAAP and present fairly,
      in all material respects, the consolidated financial position, results of
      operations and cash flows of Redwood Empire at the date indicated and for
      such period then ending. Such opinion of Crowe Chizek shall not contain
      any qualifications.

                  (iii) Redwood Empire shall deliver to Westamerica copies of
      all annual management letters and opinions, and shall make available to
      Westamerica for inspection all reviews, correspondence and other documents
      in the files of Redwood Empire, prepared by Crowe Chizek or any other
      certified public accountant engaged by Redwood Empire and delivered to
      Redwood Empire or any of its subsidiaries since January 1, 2001.

                  (iv) Redwood Empire has delivered or shall deliver to
      Westamerica true and complete copies of Redwood Empire's Annual Report to
      Shareholders for the years ended December 31, 2003, 2002, 2001, 2000, and
      1999, all proxy statements and other written material furnished to Redwood
      Empire's shareholders since December 31, 1999, and all other material
      reports, including call reports, relating to Redwood Empire filed by
      Redwood Empire or NBR with the FRB, Office of the Comptroller of the
      Currency ("OCC") or Federal Deposit Insurance Corporation (the "FDIC"),
      during 1999 through 2003 and in 2004 prior to the Effective Date. As of
      their respective dates, each of the documents described in the preceding
      sentence complied or shall comply in all material respects with all legal
      and regulatory requirements applicable thereto.

                  (v) To confirm satisfaction of the conditions in Section 7(o)
      and (p), at least two Business Days before the Closing Date or, if
      applicable, such earlier date specified in clause (ii) of the final
      paragraph of Article 7, Redwood Empire shall provide to Westamerica a
      certificate of its chief financial officer as to Redwood Empire's
      Shareholders' Equity, loans and deposits, and allowance for loan losses
      and written assurance of Redwood Empire's independent accountants under,
      or consistent with the standards of, SAS 100 to the effect that the
      accountants are not aware that the financial statements of Redwood Empire
      as of the latest practicable date preceding the Effective Time or, if
      applicable, the earlier date described in clause (ii) of the final
      paragraph of Article 7 (the "SAS 100 Date") from which Shareholders'
      Equity is determined for purposes of Section 7(o) and (p) require any
      material modifications in order to comply with GAAP. Westamerica shall be
      permitted reasonable review and inquiry with respect to the calculation of
      Shareholders' Equity and the supporting certificate.

                  (vi) Redwood Empire will maintain internal controls over
      financial reporting (as required by Rule 13a-15(f) under the 1934 Act).
      Redwood Empire will provide Westamerica with an assessment of such
      internal controls, cooperate with

                                       15


      Westamerica in assessing the effectiveness of such internal controls and
      identify to Westamerica the framework used to evaluate the effectiveness
      of such internal controls.

            (g) COMPENSATION. The Redwood Empire Disclosure Schedule discloses
the name of the recipient and amount of any severance compensation owed or to be
paid by Redwood Empire or any of its subsidiaries or any of their successors in
connection with completion of the Merger. Except as disclosed in the Redwood
Empire Disclosure Schedule, Redwood Empire shall stay within its 2004
compensation budget, shall operate in a manner consistent with past practices
for June salary increases and shall provide to Westamerica a schedule setting
forth those individuals with base salaries over $40,000 for whom increases in
compensation have been approved, their current compensation and amounts of
approved increases. Without limiting the generality of the foregoing provisions,
Redwood Empire shall be entitled to pay (i) the Core Bank Incentive Bonuses to
its employees, prorated for the portion of the fiscal year 2004 which shall have
elapsed to the Effective Date, as disclosed in Section 3(g) of the Redwood
Empire Disclosure Schedule to the extent that such bonuses are within Redwood
Empire's 2004 compensation budget, are consistent with the terms of its Core
Bank Incentive Plan and have been accrued prior to or at the time of payment on
the financial statements of Redwood Empire (except that general retention pool
amounts shall be paid only after Redwood Empire has advised Westamerica of the
proposed recipients), (ii) those bonuses to executive officers under the
Executive Officer Bonus Program, prorated for the portion of the fiscal year
2004 which shall have elapsed to the Effective Date, as disclosed in Section
3(g) of the Redwood Empire Disclosure Schedule, and (iii) those retention
payment amounts disclosed in the Redwood Empire Disclosure Schedule. Redwood
Empire will continue to accrue on its financial statements on a monthly basis
for the expense of amounts that will be payable to employees of Redwood Empire
and its subsidiaries after Closing (which amounts Westamerica shall cause to be
paid when due) under its Commercial Loan Officer 2004 Commission Plan, 2004
Business Development Officer Commission Plan and RMS 2004 Incentive Compensation
Plan. Redwood Empire will not adjust base salaries or award other forms of
compensation (including but not limited to compensation through any profit
sharing, pension, retirement, severance, incentive or other employee benefit
program or arrangement) to employees other than pursuant to the June 2004
compensation adjustment without the prior written consent of Westamerica (which
consent shall not be unreasonably withheld, delayed or conditioned). Without the
prior consent of Westamerica, which Westamerica shall not unreasonably withhold,
delay or condition, Redwood Empire shall not hire any new employee.

            (h) CONDUCT OF BUSINESS IN THE ORDINARY COURSE. Prior to the
Effective Time:

                  (i) Except as provided otherwise in this Agreement, Redwood
      Empire and its subsidiaries shall conduct their respective businesses in
      the ordinary course as heretofore conducted. For purposes of this
      Agreement, the "Ordinary Course of Business" shall consist of the banking
      and related businesses as presently conducted by Redwood Empire and its
      subsidiaries and permitted under the BHCA, Federal Deposit Insurance Act
      (the "FDI Act"), National Bank Act and other applicable laws. Unless
      Westamerica has given its prior written consent to any act or omission to
      the contrary (which consent shall not be unreasonably withheld, delayed or
      conditioned), Redwood Empire and its subsidiaries shall, through the
      Effective Date, cause its officers to:

                                       16


                  (A) use their commercially reasonable best efforts to preserve
      its business and business organizations intact;

                  (B) use their commercially reasonable best efforts to preserve
      the goodwill of customers and others having business relations with
      Redwood Empire and take no action that would impair the benefit to
      Westamerica of the goodwill of Redwood Empire and NBR or the other
      benefits of the Mergers;

                  (C) consult with Westamerica as to the making of any decisions
      or the taking of any actions in matters other than in the Ordinary Course
      of Business;

                  (D) maintain its properties in customary repair, working order
      and condition (reasonable wear and tear excepted);

                  (E) comply with all laws, regulations and decrees applicable
      to the conduct of their businesses;

                  (F) keep in force at not less than its present limits all
      policies of insurance (including deposit insurance of the FDIC) to the
      extent reasonably practicable in light of the prevailing market conditions
      in the insurance industry;

                  (G) use their commercially reasonable best efforts, subject to
      Section 3.2(g), to keep available to Westamerica the services of its
      present officers and employees (it being understood that Redwood Empire or
      NBR shall have the right to terminate the employment of any officer or
      employee in accordance with its customary employment procedures);

                  (H) comply with all orders, agreements and memoranda of
      understanding made by or with the FRB, the Federal Reserve Bank of San
      Francisco (the "FRBSF"), the OCC, the FDIC or any other regulatory
      authority of competent jurisdiction, and promptly (and in any event within
      two Business Days) forward to Westamerica all communications received from
      or sent by Redwood Empire or any of its subsidiaries to any such authority
      that are not prohibited by such authority from being so disclosed and
      inform Westamerica of any material restrictions imposed by any
      governmental authority on the business of Redwood Empire or any of its
      subsidiaries;

                  (I) file in a timely manner (taking into account any
      extensions duly obtained) all reports, tax returns and other documents
      required to be filed with federal, state, local and other authorities;

                  (J) conduct a Phase I environmental audit prior to foreclosure
      on any property and provide the results of such audit to and consult with
      Westamerica regarding the significance of the audit prior to the
      foreclosure on any such property;

                                       17


                  (K) not sell, lease, pledge, assign, encumber or otherwise
      dispose of any of its respective assets except in the Ordinary Course of
      Business, for adequate value, without recourse and consistent with its
      customary practice;

                  (L) with respect to any extension of credit in excess of
      $10,000, not waive or release any right or collateral or cancel or
      compromise any debt or claim, except in the Ordinary Course of Business;

                  (M) not make, renegotiate, renew, increase, extend or purchase
      any loans, advances or loan commitments, in each case to any of its
      respective officers, directors or any affiliated or related persons of
      such directors or officers except in the Ordinary Course of Business
      consistent with established loan procedures and in compliance with FRB
      Regulation O;

                  (N) not take any action to create, relocate or terminate the
      operations of any banking office or branch, or to form any new subsidiary
      or affiliated entity;

                  (O) not settle or otherwise take any action to release or
      reduce any of its respective rights with respect to any litigation
      involving a claim of more than $10,000 in which it is a party;

                  (P) consult with Westamerica on problem loan workout
      strategies.

            (ii) Redwood Empire and NBR shall not, without first having obtained
the written consent of Westamerica (which consent shall not be unreasonably
withheld, delayed or conditioned), cause or permit the officers of Redwood
Empire or any of its subsidiaries to:

                  (A) commit to any loan or extension of credit or any renewal
      of any outstanding credit in excess of $500,000, provided that
      Westamerica's consent shall be deemed given unless it objects and states
      the basis of its objection in writing, or verbally with prompt written
      confirmation, within one Business Day after receipt of written notice
      directed to authorized Westamerica personnel, together with sufficient
      supporting information to allow Westamerica to make an informed judgment,
      and Westamerica shall not unreasonably withhold its consent; provided,
      further, that any consent given by Westamerica shall be binding only if
      given by authorized Westamerica personnel identified on a list signed by
      Westamerica's President and delivered to Redwood Empire concurrently with
      the execution of this Agreement or as later modified by Westamerica;
      provided, however, as long as those new credits or renewals conform to
      Redwood Empire's existing underwriting standards and applicable regulatory
      standards and are not classified or criticized, such extensions of credit
      or renewals shall be approved by Westamerica (or consent deemed given
      within one Business Day in the absence of written objection); provided
      further, however, Redwood Empire shall be permitted (without obtaining
      Westamerica's prior consent) to change interest rates

                                       18


      charged on any outstanding credit or on categories of outstanding or new
      credits so long as such changes in interest rates maintain or exceed
      preexisting spreads to market interest rates;

                  (B) materially change the characteristics of its loan
      portfolio, including loan types, interest rates (except to maintain or
      exceed preexisting spreads to market interest rates), terms, duration and
      other terms offered;

                  (C) purchase any investment security with a maturity in excess
      of two years or that would result in a lengthening of the overall duration
      of its investment portfolio, or sell any investment security in which a
      gain is recognized;

                  (D) accept any deposits with a rate of interest in excess of
      the rate paid on similar accounts of comparable maturity by WAB plus five
      basis points or materially change the characteristics of its deposit
      portfolio, including deposit types, interest rates and terms offered,
      provided that Westamerica shall not withhold its consent to a request for
      an exception to this restriction if the request is based on a reasonable
      business purpose consistent with existing operations of Redwood Empire;

                  (E) commit to any new capital commitments or expenditures in
      excess of $25,000 for any individual item or $50,000 in the aggregate
      other than commitments or expenditures disclosed in Section 4(o) of the
      Redwood Empire Disclosure Schedule;

                  (F) commit to any new contract or extend any existing contract
      (including, but not limited to, data processing or servicing but excluding
      agreements to extend credit) that would obligate it for an aggregate
      amount over time in excess of $25,000 for any individual contract or
      $50,000 in the aggregate; provided that Westamerica's consent shall be
      deemed given unless it objects and states the basis of its objection in
      writing, or verbally with prompt written confirmation, within two Business
      Days after receipt of written notice directed to authorized Westamerica
      personnel, together with sufficient supporting information to allow
      Westamerica to make an informed judgment;

                  (G) accelerate the vesting of pension or other benefits except
      as contractually obligated as of the date hereof; or

                  (H) except as for properties specified in Section 3(h)(ii)(H)
      of the Redwood Empire Disclosure Schedule, knowingly acquire, own, possess
      or have a collateral or contingent interest or purchase option in any
      properties or other assets which contain or have located within or thereon
      any hazardous or toxic waste material or substance unless the location of
      such hazardous or toxic waste material or other substance or its use
      thereon conforms in all respects with all federal, state and local laws,
      rules, regulations or other provisions regulating the discharge of
      materials into the environment.

                                       19


            (i) PRESS RELEASES. Redwood Empire and NBR shall not issue any press
release or written statement for general circulation relating to this Agreement
or the Merger unless previously provided to Westamerica for review and approval
(which approval will not be unreasonably withheld or delayed) and shall
cooperate with Westamerica in the development and distribution of all news
releases and other public information disclosures with respect to this Agreement
or the Merger; provided that Redwood Empire may, without the consent of
Westamerica, make any disclosure with regard to this Agreement or the Merger
that it determines is required under any applicable law or regulation.

            (j) NO MERGER OR SOLICITATION.

                  (i) Redwood Empire and NBR shall not initiate, solicit or
      knowingly encourage (including by way of furnishing information or
      assistance), or take any other action to facilitate, any inquiries or the
      making of any proposal which constitutes, or would reasonably be expected
      to lead to, any Competing Transaction (as such term is defined below), or
      negotiate or have any discussions with any person in furtherance of such
      inquiries or to obtain a Competing Transaction, or agree to or endorse any
      Competing Transaction, or approve or recommend, or propose to approve or
      recommend, or execute or enter into, any letter of intent, agreement in
      principle, merger agreement, asset purchase or share exchange or issuance
      agreement, option agreement, or other similar agreement related to any
      Competing Transaction or propose or agree to do any of the foregoing, or
      authorize any of Redwood Empire's or any of its subsidiaries' officers,
      directors or employees or any investment banker, financial advisor,
      attorney, accountant or any other representative retained by it or any of
      its affiliates (the "Representatives") to take any such action, and will
      cause the Representatives and the Redwood Empire subsidiaries not to take
      any such action, and Redwood Empire shall promptly (within 24 hours)
      notify Westamerica (orally and in writing) of all of the relevant details
      relating to all inquiries and proposals which it may receive relating to
      any of such matters, including the identity of the offeror or person
      making the request or inquiry. For purposes of this Agreement, "Competing
      Transaction" shall mean any of the following involving Redwood Empire or
      any of its subsidiaries and any person other than Westamerica or any of
      its affiliates: any merger, consolidation, share exchange or other
      business combination; a sale, lease, exchange, mortgage, pledge, transfer
      or other disposition of assets of Redwood Empire or its subsidiaries
      representing 15% or more of the consolidated assets of Redwood Empire and
      its subsidiaries; a sale of shares of capital stock (or securities
      convertible or exchangeable into or otherwise evidencing, or any agreement
      or instrument evidencing, the right to acquire capital stock),
      representing 15% or more of the voting power of Redwood Empire or its
      subsidiaries; or a tender offer or exchange offer for at least 15% of the
      outstanding shares of Redwood Empire.

                  (ii) Redwood Empire shall notify Westamerica (orally and in
      writing) within 24 hours of the receipt of any such inquiries, proposals
      or offers, the request for any such information, or the initiation or
      continuation of any such negotiations or discussions which are sought to
      be initiated or continued with Redwood Empire.

                  (iii) Notwithstanding any other provision in this Section
      3.2(j) or any other provision of this Agreement, prior to the duly
      convened Redwood Empire

                                       20


      shareholders' meeting upon which the Merger shall be voted, and subject to
      compliance with the other terms of this Section 3.2(j) and to first
      entering into a confidentiality agreement having provisions that are no
      less favorable to Redwood Empire than those contained in that certain
      Confidentiality Agreement dated April 27, 2004, between Redwood Empire and
      Westamerica (the "Confidentiality Agreement"), the Board of Directors of
      Redwood Empire shall be permitted to engage in discussions or negotiations
      with, and provide nonpublic information or data to, any person in response
      to an unsolicited bona fide written proposal for a Competing Transaction
      by such person first made after the date hereof which the Board of
      Directors of Redwood Empire concludes in good faith (after consultation
      with a financial advisor of recognized reputation in similar transactions)
      constitutes or is reasonably likely to result in a Superior Proposal (as
      defined below), and to recommend such Superior Proposal to the holders of
      Redwood Empire common stock, if and only to the extent that, the Board of
      Directors of Redwood Empire reasonably determines in good faith (after
      consultation with outside legal counsel) that failure to do so would be
      inconsistent with its fiduciary duties under applicable law; provided,
      that Redwood Empire shall have given Westamerica (orally and in writing)
      at least 48 hours prior notice of its intent to do so before taking the
      first of any such actions with any one such person; provided, further,
      that Redwood Empire and the Board of Directors of Redwood Empire shall
      keep Westamerica informed of the status and terms of any such proposals,
      offers, discussions or negotiations on a prompt basis, including by
      providing a copy of all material documentation or correspondence relating
      thereto. Notwithstanding any other provision in this Section 3.2(j) or any
      other provision of this Agreement, Redwood Empire may waive any provision
      of any confidentiality agreement entered into as provided above if the
      Board of Directors of Redwood Empire, in the exercise of its fiduciary
      duties under applicable law, reasonably determines in good faith (after
      consultation with outside legal counsel) that the failure to take such
      action would be inconsistent with its fiduciary duties under applicable
      law and Redwood Empire also contemporaneously waives similar provisions of
      the Confidentiality Agreement.

                  (iv) For purposes of this Agreement, "Superior Proposal" shall
      mean a bona fide written proposal for a Competing Transaction which the
      Board of Directors of Redwood Empire concludes in good faith, after
      consultation with a financial advisor of recognized reputation in similar
      transactions and its legal advisors, taking into account all legal,
      financial, regulatory and other aspects of the proposal and the person
      making the proposal (y) is more favorable to Redwood Empire's shareholders
      from a financial point of view than the transactions contemplated by this
      Agreement, and (z) is fully financed or reasonably capable of being fully
      financed, reasonably likely to receive all required governmental approvals
      on a timely basis and otherwise reasonably capable of being completed on
      the terms proposed; provided that, for purposes of this definition of
      "Superior Proposal", the term Competing Transaction shall have the meaning
      assigned to such term in this Section 3.2(j), except that the reference to
      "15% or more" in the definition of Competing Transaction shall be deemed
      to be a reference to "a majority". Nothing in this Section 3.2(j) shall
      prohibit Redwood Empire or its Board of Directors from taking and
      disclosing to the Redwood Empire shareholders a position with respect to a
      Competing Transaction to the extent required under the Securities Exchange
      Act of 1934 (the "1934 Act") or the rules and regulations thereunder, or
      from making such disclosure to the Redwood Empire shareholders which,
      after consultation with outside

                                       21


      legal counsel, the Board determines is otherwise required under applicable
      law; provided, that taking any such action required to comply with any
      such obligations shall not in any way limit or modify the effect that any
      action so taken has under any other provision of this Agreement,
      including, without limitation, Section 11(b)(ix).

            (k) EMPLOYEE BENEFIT PLANS. Redwood Empire agrees that any of its
employee benefit plans shall, at the request of Westamerica, be terminated,
frozen, modified or merged into the corresponding employee benefit plan of
Westamerica, immediately before, on or after the Effective Date (but conditioned
as to its effectiveness on actual completion of the Merger), as determined by
Westamerica in its sole discretion and to the extent permitted by such plan
without violating the rights of employees.

            (l) CHANGES IN CAPITAL STOCK. At or after the date hereof and at or
prior to the Effective Time, except with the prior written consent of
Westamerica, Redwood Empire shall not amend its Articles of Incorporation or
Bylaws; make any change in its authorized, issued or outstanding capital stock
or any other equity security; issue, sell, pledge, assign or otherwise encumber
or dispose of, or purchase, redeem or otherwise acquire, any of its stock or
other equity securities or enter into any agreement, call or commitment of any
character so to do; grant, issue, or accelerate the vesting of any stock option
relating to, right to acquire, or security convertible into, shares of its
capital stock or other equity security; purchase, redeem, retire or otherwise
acquire (other than in a fiduciary capacity) any shares of, or any security
convertible into, its capital stock or other equity security, or agree to do any
of the foregoing, or permit any of its subsidiaries to do any of the foregoing,
except that nothing herein shall prohibit the issuance of shares with respect to
options outstanding at the date of this Agreement (as provided for in Section
2.6).

            (m) DIVIDENDS. Except for quarterly dividends not exceeding $0.21
per share and otherwise consistent with past practice and the provisions of
Section 3.1(j), Redwood Empire shall not declare, set aside, or pay any dividend
or other distribution in respect of its common stock (including, without
limitation, any stock dividend or distribution).

            (n) ACCOUNTING METHODS. Redwood Empire shall not change its methods
of accounting in effect at December 31, 2003, except as required by changes in
GAAP as concurred in by its independent auditors or as required by this
Agreement.

            (o) AFFILIATES. At the time of mailing of the Proxy Statement to the
shareholders of Redwood Empire, Redwood Empire shall deliver to Westamerica a
letter identifying all persons who are, at the time this Agreement is submitted
for approval to the shareholders of Redwood Empire, "affiliates" of Redwood
Empire for purposes of Rule 145 under the 1933 Act. Redwood Empire shall use all
commercially reasonable efforts to cause each person named in the letter
delivered by it to deliver to Westamerica within 30 days after the date of this
Agreement, or as soon thereafter as such persons are identified, a written
"affiliates" agreement, in substantially the form attached hereto as Exhibit C,
providing that such person shall dispose of the Westamerica common stock to be
received by such person in the Merger only in accordance with applicable law.

                                       22


            (p) ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of Redwood
Empire, the proper officers and directors of each party to this Agreement shall
take all such necessary or appropriate action.

            (q) ACCESS TO PROPERTIES, BOOKS AND RECORDS; CONFIDENTIALITY. Prior
to the Effective Time, subject to the terms of the Confidentiality Agreement,
Redwood Empire shall give Westamerica and its counsel and accountants full
access, during normal business hours and upon reasonable request, to all of its
and its subsidiaries' properties, books, contracts, commitments and records
including, but not limited to, the corporate, financial and operational records,
papers, reports, instructions, procedures, tax returns and filings, tax
settlement letters, material contracts or commitments, regulatory examinations
and correspondence and shall allow Westamerica to make copies of such materials
(to the extent not legally prohibited) and shall furnish Westamerica with all
such information concerning its affairs as Westamerica may reasonably request;
provided, however, that Redwood Empire is not required to provide any
information if such provision would cause a loss of the attorney-client
privilege enjoyed by Redwood Empire or any of its subsidiaries. Redwood Empire
shall also use its commercially reasonable best efforts to cause Crowe Chizek to
make available to Westamerica, its accountants, counsel and other agents, to the
extent reasonably requested in connection with such review, Crowe Chizek's work
papers and documentation relating to its audits of the books and records of
Redwood Empire.

            (r) NONCOMPETITION/NONSOLICITATION AGREEMENTS. Redwood Empire shall
use its best efforts to have each director of Redwood Empire execute a
Confidentiality and Nonsolicitation Agreement in the form of Exhibit D
("Confidentiality and Nonsolicitation Agreement"), or a Noncompetition Agreement
in the form attached hereto as Exhibit D-1 ("Noncompetition Agreement"),
pursuant to which each director shall agree to certain nonsolicitation covenants
and either (i) to refrain from certain activities in competition with
Westamerica and WAB or (ii) to exercise any options to acquire shares of Redwood
Empire common stock that are converted in the Merger to options to acquire
shares of Westamerica common stock within 90 days after the Effective Date or to
consent to the termination of such options upon the conclusion of such period.

            (s) CLASSIFICATIONS AND LITIGATION DEVELOPMENTS. Redwood Empire
agrees to promptly (and in any event within two Business Days) advise
Westamerica in writing of (i) all other real estate owned ("OREO"), loans,
leases, other extensions of credit or commitments, or other interest-bearing
assets of Redwood Empire or any of its subsidiaries that have been classified
subsequent to the date hereof by any internal bank examiner or any bank
regulatory agency as "Other Loans Especially Mentioned", "Substandard",
"Doubtful", "Loss", or words of similar import in the case of loans (or that
would have been so classified, in the case of other assets, had they been loans)
and (ii) the classification of any loan as substandard, doubtful or loss, the
filing or threatened filing of any and all legal actions or other proceedings or
investigations which if determined adversely to Redwood Empire are reasonably
likely to have a material adverse effect on Redwood Empire, compliance with its
obligations under this Agreement or the satisfaction of any condition to closing
under this Agreement, and any significant developments arising in connection
with said actions, proceedings or investigations. Notwithstanding the

                                       23


above, Redwood Empire shall be under no obligation to disclose to Westamerica
any such classification by any bank regulatory agency where such disclosure
would violate any obligation of confidentiality of Redwood Empire imposed by
such bank regulatory agency.

            (t) ACCOUNTING ADJUSTMENT BEFORE CLOSING. Redwood Empire agrees to
make such accounting adjustments as Westamerica shall reasonably request
immediately before Closing to conform Redwood Empire's accounting to
Westamerica's accounting and methodology for determining its allowance for loan
losses, provided that any such adjustment shall be disregarded for purposes of
Section 7(o).

            (u) CONSENTS. Where required by law or by agreements with third
parties, Redwood Empire shall use commercially reasonable efforts to obtain from
third parties, prior to the Effective Date, all consents to the transactions
contemplated by this Agreement, where failure to obtain such consents would or
would reasonably be expected to have a material adverse effect on Redwood Empire
or Westamerica or that will or would reasonably be expected to prevent
Westamerica from realizing any substantial portion of the economic benefits of
the transactions contemplated by this Agreement.

            (v) CASH RECONCILIATION. At the close of business on the last
Business Day before the Effective Time, Redwood Empire shall conduct a cash
reconciliation at its branches and shall permit Westamerica to observe or
participate in such reconciliation.

            (w) TAX RETURNS. Redwood Empire shall deliver to Westamerica copies
of all its and its subsidiaries' tax returns with respect to taxes payable to
the United States of America and the State of California for the fiscal years
ended December 31, 2003 (when available), 2002, 2001, 2000 and 1999.

      3.3 INFORMATION AND CONFIDENTIALITY.

            (a) INFORMATION AND CONFIDENTIALITY. Each party shall use its best
efforts to cause its officers, directors, employees, auditors, agents, and
attorneys to cooperate with the other in the reasonable requests for information
by the other parties hereto. Each party shall treat as confidential all such
information in the same manner as each party treats similar confidential
information of its own, and if this Agreement is terminated, each party shall
continue to treat all such information as confidential and to cause its
employees to keep all such information confidential and shall return such
documents theretofore delivered by any other party as such other party shall
request, and shall use such information, or cause it to be used, solely for the
purposes of evaluating and completing the transactions contemplated hereby;
provided that each party may disclose any such information to the extent
required by federal or state securities laws or otherwise required by any
governmental agency or authority, or by GAAP. The foregoing confidentiality
obligations shall not apply in respect of any information publicly available or
to any information previously known to the party in question, the use of which
is not otherwise restricted.

            (b) ASSET REVIEW.

                  (i) Redwood Empire shall continue to engage its internal asset
      review examiners to identify potential losses with respect to loans,
      leases and OREO. Redwood

                                       24


      Empire shall have reviewed all nonperforming assets and other classified
      or criticized assets as of a date within three months preceding the
      Effective Date and all loans of $250,000 or more up to $500,000 originated
      after the date of this Agreement. Redwood Empire shall promptly provide a
      copy of reports of such reviews to Westamerica. All loans, leases or OREO
      of Redwood Empire may be reviewed by Westamerica as part of its ongoing
      due diligence and Westamerica may provide a report thereon to Redwood
      Empire setting forth Westamerica's grading or other assessment thereof
      (including accounting treatment and loss recognition).

                  (ii) Redwood Empire may accept and implement Westamerica's
      grading or other assessments (including accounting treatment and loss
      recognition) concerning loans, leases or OREO. In case of any dispute
      between Westamerica and Redwood Empire with respect to classification or
      grading of loans, the amount of reserve appropriate for a classified loan
      or the adequacy of Redwood Empire's allowance for loan losses in
      accordance with the terms of this Agreement, Westamerica and Redwood
      Empire shall use their best efforts to resolve such dispute. If they do
      not resolve the dispute, Redwood Empire and Westamerica shall refer the
      matter for resolution by a mutually agreed (after mutual full disclosure
      of existing and prior relationships with each party) third party
      experienced in reviewing loans and loan portfolios (the "Independent Loan
      Reviewer") or, in the case of OREO, a mutually agreed (after mutual full
      disclosure of existing and prior relationships with each party) third
      party experienced in appraising properties of the kind in question (the
      "Independent Appraiser").

                  (iii) The Independent Loan Reviewer or Independent Appraiser
      shall immediately review and/or appraise said loan(s) or OREO utilizing
      GAAP, applicable regulatory accounting principles ("RAP") and related
      standards as enforced by the FRB. If the Independent Loan Reviewer
      believes it necessary to retain an Independent Appraiser, Westamerica and
      Redwood Empire shall mutually agree on the Independent Appraiser.

                  (iv) Redwood Empire agrees to recognize on its books and
      records all additional loan provisions and loan losses and record all OREO
      at their net realizable value (and record related OREO expenses) based on
      the review/appraisal by the Independent Loan Reviewer or Independent
      Appraiser no later than the last day of month in which the determination
      is made. With respect to any OREO, based on all known information
      available from time to time, if it appears that Redwood Empire's then
      current independent appraisals may not be accurate or upon request of and
      at the expense of Westamerica, Redwood Empire shall promptly obtain
      updated independent appraisals by an Independent Appraiser and provide
      copies of all such appraisals to Westamerica. Any new or additional
      write-downs or OREO expenses shall be recorded immediately upon receiving
      any updated independent appraisal. Westamerica and Redwood Empire agree to
      accept the views of the Independent Loan Reviewer and Independent
      Appraiser with respect to loan grades, loan provisions, collateral and
      OREO values and related matters under this section. When this method
      results in a determination that a loan or asset should have a reserve
      amount or an additional reserve amount associated with it, the reserve
      shall be created by an addition to the allowance for loan losses and not
      by a reallocation of amounts in the existing allowance, except to the
      extent that the allowance

                                       25


      and each portion of the allowance, including the unallocated portion, are
      justified under GAAP applied on a consistent basis both before and after
      any such reallocation. The parties agree that adjustments made under this
      section shall be deemed consistent with GAAP. With respect to any asset
      the value of which is in dispute, Westamerica shall consent to a sale by
      Redwood Empire or any of its subsidiaries of such asset to a director or
      shareholder of Redwood Empire at the higher of the appraised value
      established by this review process or the minimum price required by
      applicable law, or such higher price as Redwood Empire and the buyer may
      agree.

                  (v) Except as provided otherwise above, Redwood Empire and
      Westamerica shall each pay one half of all fees and expenses of the
      Independent Loan Reviewer and any Independent Appraiser.

      3.4 COOPERATION. All parties to this Agreement shall cooperate with each
other and use their commercially reasonable best efforts to promptly prepare and
file all necessary documentation, to effect all applications, notices, petitions
and filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties that are necessary or
advisable to consummate the transactions contemplated by this Agreement. The
parties shall confer on a regular basis, report on operational matters, policies
and banking practices and promptly advise the other orally and in writing of any
change or event that has caused or could reasonably be expected to cause or
constitute a material failure of a condition in this Agreement.

4. REPRESENTATIONS AND WARRANTIES OF REDWOOD EMPIRE AND NBR.

      The following representations and warranties by Redwood Empire to
Westamerica are qualified by the Redwood Empire Disclosure Schedule (the
"Redwood Empire Disclosure Schedule") delivered by Redwood Empire to Westamerica
at the time this Agreement is signed. The Redwood Empire Disclosure Schedule
shall refer to the representation or warranty to which exceptions or matters
disclosed therein relate; provided, however, that an exception or matter
disclosed with respect to one representation or warranty shall also be deemed
disclosed with respect to each other warranty or representation to which the
exception or matter reasonably relates. The inclusion of any item in such
Redwood Empire Disclosure Schedule shall not be deemed an admission that such
item is a material fact, event or circumstance or that such item has or had, or
would reasonably be expected to have, individually or in the aggregate, a
material adverse effect.

            (a) CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENTS. Redwood
Empire is a corporation duly incorporated, validly existing and in good standing
under California law and is a registered bank holding company under the BHCA.
NBR is a national banking association duly incorporated, validly existing and in
good standing under the laws of the United States and holds a currently valid
license issued by the OCC to engage in the commercial banking business in
California at the offices in which such business is conducted. Subject to the
approval of this Agreement and the transactions contemplated hereby by the FRB,
Redwood Empire and NBR have all necessary corporate power to enter into this
Agreement and to carry out all of the terms and provisions hereof and thereof to
be carried out by them. Neither Redwood Empire nor any of its subsidiaries is
subject to any order of or agreement or

                                       26


understanding with the FRB, OCC, FDIC or any other regulatory authority having
jurisdiction over its business or any of its assets or properties. Neither the
scope of the business of Redwood Empire or NBR nor the location of its
properties requires it to be licensed to do business in any jurisdiction other
than the State of California. NBR's deposits are insured by the FDIC in the
manner and to the full extent provided by law.

            (b) ARTICLES, BYLAWS, BOOKS AND RECORDS. The copies of the Articles
of Incorporation and Bylaws of Redwood Empire and the Articles of Association
and Bylaws of NBR that shall be delivered to Westamerica promptly after the date
hereof are complete and accurate copies thereof as in effect on the date hereof.
The minute books of Redwood Empire and NBR that shall be made available to
Westamerica contain a materially complete and accurate record of all meetings of
the Boards of Director (and committees thereof) and shareholders. The corporate
books and records (including financial statements) of Redwood Empire and NBR
fairly reflect the material transactions to which Redwood Empire or NBR is a
party or by which its properties are subject or bound, and such books and
records have been properly kept and maintained. The Articles of Incorporation
and Bylaws of Redwood Empire and the Articles of Association and Bylaws of NBR
and all amendments thereto have been duly approved by all requisite corporate
action and by the appropriate regulatory authority to the extent required by
law.

            (c) COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. Each of Redwood
Empire and its subsidiaries: (i) has the corporate power to own or lease its
properties and to conduct its business as currently conducted, (ii) in all
material respects has complied with, and is not in default of, any laws,
regulations, ordinances, orders or decrees applicable to the conduct of its
business and the ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank Secrecy Act),
rules and regulations relating to the offer, sale or issuance of securities, and
the operation of a commercial bank, (iii) has not failed to file with the proper
federal, state, local or other authorities any material report or other document
required to be so filed, (iv) has all approvals, authorizations, consents,
licenses, clearances and orders of, and has currently effective all
registrations with, all governmental and regulatory authorities which are
necessary to the business and operations of it as now being conducted, and (v)
has not received notification, formally or informally, from any agency or
department of any federal, state or local government or any regulatory agency or
the staff thereof (A) asserting that it is not in compliance with any of the
statutes, regulations or ordinances which such government or regulatory
authority enforces, or (B) threatening to revoke any licenses, franchise, permit
or governmental authorization.

            (d) EXECUTION AND DELIVERY OF THE AGREEMENT.

                  (i) The execution and delivery of this Agreement has been duly
      authorized by the required majority approval of the respective Boards of
      Directors of Redwood Empire and NBR and, when this Agreement and the
      Merger have been duly approved by the affirmative vote of the holders of a
      majority of the outstanding shares of Redwood Empire common stock at a
      meeting of shareholders duly called and held and by Redwood Empire as the
      sole shareholder of NBR, this Agreement and the Mergers will be duly and
      validly authorized by all necessary corporate action on the part of
      Redwood Empire and NBR. Actions taken by the Board of Directors of Company
      and to be taken

                                       27


      by the shareholders of Redwood Empire are sufficient to render
      inapplicable to this Agreement and the transactions contemplated hereby
      all state takeover statutes and any similar "takeover" or "interested
      stockholder" law.

                  (ii) This Agreement has been duly executed and delivered by
      Redwood Empire and NBR and (assuming due execution and delivery by
      Westamerica and WAB) constitutes the legal and binding obligations of
      Redwood Empire and NBR (subject to applicable bankruptcy, insolvency and
      civil laws affecting creditors' rights generally, and subject, as to
      enforceability, to equitable principles of general applicability).

                  (iii) The execution and delivery by Redwood Empire and NBR of
      this Agreement and the consummation of the transactions provided for in
      this Agreement (A) do not violate any provision of the Articles of
      Incorporation or Bylaws of Redwood Empire or Articles of Association or
      Bylaws of NBR, any provision of federal or state law or any governmental
      rule or regulation (assuming (1) receipt of the Government Approvals, (2)
      receipt of the requisite Redwood Empire shareholder approval, (3) due
      registration of the Westamerica Shares under the 1933 Act, (4) receipt of
      appropriate permits or approvals under state securities or "blue sky"
      laws, and (5) accuracy of the representations of Westamerica set forth
      herein), and (B) except as set forth in Section 4(d) of the Redwood Empire
      Disclosure Schedule, do not require any consent of any person under,
      conflict with or result in a breach of, or accelerate the performance
      required by any of the terms of, any material debt instrument, lease,
      license, covenant, agreement or understanding to which Redwood Empire or
      any of its subsidiaries is a party or by which it is bound or any order,
      ruling, decree, judgment, arbitration award or stipulation to which
      Redwood Empire any of its subsidiaries is subject, or constitute a default
      thereunder or result in the creation of any lien, claim, security
      interest, encumbrance, charge, restriction or right of any third party of
      any kind whatsoever upon any of the properties or assets of Redwood Empire
      or any of its subsidiaries.

            (e) CAPITALIZATION. The authorized capital of Redwood Empire
consists of 10,000,000 shares of common stock, no par value, of which 4,952,123
shares are duly authorized, validly issued, fully paid and nonassessable and
currently outstanding, and 2,000,000 shares of preferred stock no par value, of
which no shares have been issued or are outstanding. All outstanding shares of
common stock have been issued in compliance with all applicable securities laws.
No other equity securities of Redwood Empire have been issued or are
outstanding. There are currently outstanding Redwood Options to purchase 311,685
shares of Redwood Empire common stock issued pursuant to the Option Plan and
options to purchase 32,000 shares of Redwood Empire common stock issued other
than pursuant to the Option Plan as described in Section 4(e) of the Redwood
Empire Disclosure Schedule. The weighted average exercise price of such options
is $12.22 per share. Said options were granted and, upon issuance in accordance
with the terms of the outstanding options said shares shall be issued, in
compliance with all applicable securities laws. The authorized capital of NBR
consists of 4,000,000 shares of common stock, par value $2.77 7/9 per share, all
of the outstanding shares of which are duly authorized, validly issued, fully
paid and nonassessable (except as provided in the National Bank Act) and owned
by Redwood Empire. Otherwise, there are no outstanding (i) options, agreements,
calls or commitments of any character which would obligate Redwood Empire or

                                       28


NBR to issue, sell, pledge, assign or otherwise encumber or dispose of, or to
purchase, redeem or otherwise acquire, any common stock or any other equity
security of Redwood Empire or NBR, or (ii) warrants or options relating to,
rights to acquire, or debt or equity securities convertible into, shares of
common stock or any other equity security of Redwood Empire or NBR to which
Redwood Empire or NBR is a party.

            (f) EQUITY INTERESTS. Except as set forth in Section 4(f) of the
Redwood Empire Disclosure Schedule and for (i) Redwood Empire's equity interest
in NBR, Redwood Statutory Trust I, a Connecticut statutory trust, and Redwood
Statutory Trust II, a Connecticut statutory trust, (ii) NBR's equity interest in
Valley Mortgage Corporation and Redwood Merchant Services, Inc., each of which
is inactive, and (iii) securities acquired in foreclosure or in lieu of
foreclosure in the Ordinary Course of Business, neither Redwood Empire nor NBR
owns, directly or indirectly, any equity interest in any bank, corporation, or
other entity. Section 4(f) of the Redwood Empire Disclosure Schedule sets forth
the authorized capitalization, number and ownership of outstanding equity
securities and existence of warrants or options relating to, rights to acquire,
or debt or equity securities convertible into, equity securities of each of
Redwood Empire's subsidiaries other than NBR. All of the issued and outstanding
shares of capital stock or other equity ownership interests of each subsidiary
of Redwood Empire or NBR (other than NBR) are owned by Redwood Empire or NBR,
directly or indirectly, free and clear of any material liens, pledges, charges
and security interests and similar encumbrances ("Liens"), and all of such
shares or equity ownership interests are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. No such significant
subsidiary has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
subsidiary.

            (g) SECURITIES LAW FILINGS. Since December 31, 1998, Redwood Empire
has filed and will file all documents required to be filed by it under the 1933
Act, the 1934 Act, the Investment Company Act of 1940, the Investment Advisors
Act of 1940 and the Trust Indenture Act of 1939, all as amended, and that as of
their respective dates, none of these documents contained as of the date of the
filing thereof any untrue statement of material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made or will be made
not misleading.

            (h) FINANCIAL STATEMENTS, REGULATORY REPORTS. No financial statement
or other document provided or to be provided to Westamerica as required by
Section 3.2(f) hereof, as of the date of such document, contained, or as to
documents to be delivered after the date hereof, will contain, any untrue
statement of a material fact, or, at the date thereof, omitted or will omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such statements were or will
be made, not misleading; provided, however, that information as of a later date
included with such financial statements or other documents provided or to be
provided to Westamerica shall be deemed to modify information supplied to
Westamerica as of any earlier date. Redwood Empire and NBR have filed all
material documents and reports relating to Redwood Empire or NBR required to be
filed with the FRB, the FDIC, the OCC, or any other governmental authority
having jurisdiction over its business or any of its assets or properties. All
such reports conform in all material respects

                                       29


with the requirements promulgated by such regulatory agencies. Except as set
forth in Section 4(h) of the Redwood Empire Disclosure Schedule, all compliance
or corrective action relating to Redwood Empire or any of its subsidiaries
required by governmental authorities and regulatory agencies having jurisdiction
over Redwood Empire or any of its subsidiaries has been taken. Neither Redwood
Empire nor any of its subsidiaries is subject to any order, agreement or written
directive from or with any regulatory authority with respect to its assets or
business except for matters of general application. Redwood Empire and its
subsidiaries have paid all assessments made or imposed by any governmental
agency. The consolidated financial records of Redwood Empire have been, and are
being and shall be, maintained in all material respects in accordance with all
applicable legal and accounting requirements sufficient to insure that all
transactions reflected therein are, in all material respects, executed in
accordance with management's general or specific authorization and recorded in
conformity with GAAP, or applicable RAP, at the time in effect. The data
processing equipment, data transmission equipment, related peripheral equipment
and software used by Redwood Empire in the operation of its business to generate
and retrieve financial records are adequate for the current needs of Redwood
Empire.

            (i) COMMUNITY REINVESTMENT ACT. NBR has received a rating of
"satisfactory" in its most recent examination or interim review with respect to
the Community Reinvestment Act. NBR has not been advised of any material
supervisory concerns regarding its compliance with the Community Reinvestment
Act.

            (j) TAX RETURNS. As used in this Agreement, "tax" or "taxes" means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not and including any
obligation to indemnify or otherwise assume or succeed to the tax liability of
any other person.

                  (i) Each of Redwood Empire and NBR has timely filed all
      federal, state, county, local and foreign tax returns required to be filed
      by it, including, without limitation, estimated tax, use tax, excise tax,
      real property and personal property tax reports and returns, employer's
      withholding tax returns, other withholding tax returns and Federal
      Unemployment Tax Returns, and all other reports or other information
      required to be filed by it with respect thereto, and each such return,
      report or other information was, when filed, complete and accurate in all
      material respects. Each of Redwood Empire and NBR has paid all taxes, fees
      and other governmental charges, including any interest and penalties
      thereon, when they have become due, except those that are being contested
      in good faith, which contested matters have been disclosed in the Redwood
      Empire Disclosure Schedule. Each of Redwood Empire and NBR has recorded
      adequate reserves for all unpaid tax liabilities, including all tax
      benefits previously claimed with respect to its ownership of NBR Real
      Estate Investment Trust or any other real estate investment trust or
      similar vehicle. Neither Redwood Empire nor NBR has been requested to give
      and neither has given any currently effective waivers extending the
      statutory period of limitation applicable to any tax return required to be
      filed by it for any period. There are no claims pending against Redwood
      Empire or NBR for any alleged

                                       30


      deficiency in the payment of any taxes, and neither Redwood Empire nor NBR
      knows of any pending or threatened audits, investigations or claims for
      unpaid taxes or relating to any liability in respect of any taxes. Since
      December 31, 2003, there have been no events, including a change in
      ownership, that would result in a reappraisal and establishment of a new
      base-year full value for purposes of Article XIIIA of the California
      Constitution, of any real property owned in whole or in part by Redwood
      Empire or NBR or to the best of Redwood Empire's or NBR's knowledge, of
      any real property leased by Redwood Empire or NBR (disregarding for this
      purpose the acquisition of real property through foreclosure or in lieu of
      foreclosure of a security interest).

                  (ii) Each of Redwood Empire and NBR has withheld and paid all
      material taxes required to have been withheld and paid in connection with
      any amounts paid or owing to any employee, independent contractor,
      creditor, stockholder, or other third party.

                  (iii) Neither Redwood Empire nor NBR has filed any
      consolidated federal income tax return as a member of an "affiliated
      group" (within the meaning of Section 1504 of the Code) where Redwood
      Empire was not the common parent of the group. Neither Redwood Empire nor
      NBR is or has been a party to any tax allocation agreement or arrangement
      pursuant to which it has any contingent, successor, or outstanding
      liability for the taxes of anyone other than Redwood Empire and NBR.
      Redwood Empire is not required to include in income any adjustment
      pursuant to Section 481(a) of the Code, no such adjustment has been
      proposed by the IRS and no pending request for permission to change any
      accounting method has been submitted by Redwood Empire.

                  (iv) Neither Redwood Empire nor NBR has constituted either a
      "distributing corporation" or a "controlled corporation" in a distribution
      of stock qualifying for tax-free treatment under Section 355 of the Code
      (x) in two years prior to the date of this Agreement or (y) in a
      distribution which could otherwise constitute part of a "plan" or "series
      of related transactions" (within the meaning of Section 355(e) of the
      Code) in conjunction with the transactions contemplated by this Agreement.

            (k) ABSENCE OF CERTAIN CHANGES. Since December 31, 2003, there has
been (i) no material adverse change with respect to Redwood Empire, (ii) no
amendment, modification, or termination of any existing, or entering into of any
new, contract, agreement, plan, lease, license, permit or franchise that is
material to Redwood Empire or any of its subsidiaries, except in the Ordinary
Course of Business, and (iii) no disposition by Redwood Empire or any of its
subsidiaries of one or more assets that, individually or in the aggregate, are
material to it, except sales of assets in the Ordinary Course of Business. The
incurrence and payment of Merger-related expenses not exceeding those disclosed
in the Redwood Empire Disclosure Schedule shall not in themselves constitute a
material adverse change for this purpose, but the determination of all other
financial requirements in this Agreement shall include the effect of
Merger-related expenses.

            (l) NO UNDISCLOSED LIABILITIES. Except as set forth in Section 4(l)
of the Redwood Empire Disclosure Schedule, and except for items for which
reserves have been

                                       31


established in the unaudited consolidated balance sheets of Redwood Empire as of
March 31, 2004, neither Redwood Empire nor any of its subsidiaries has incurred
or discharged, and is not legally obligated with respect to, any indebtedness,
liability (including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar arrangement) or obligation
(accrued or contingent, whether due or to become due, and whether or not
subordinated to the claims of its general creditors), other than as a result of
operations in the Ordinary Course of Business after such date. Except as set
forth in Section 4(l) of the Redwood Empire Disclosure Schedule, no agreement
pursuant to which any loans or other assets have been or will be sold by Redwood
Empire or any of its subsidiaries entitle the buyer of such loans or other
assets, unless there is material breach of a representation or covenant by the
seller, to cause Redwood Empire or any of its subsidiaries to repurchase such
loan or other asset or the buyer to pursue any other form of recourse against
Redwood Empire or any of its subsidiaries. Redwood Empire and its subsidiaries
have not knowingly made and shall not make any representations or covenants in
any such agreement that contained or shall contain any untrue statement of a
material fact or omitted or shall omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which such representations and/or covenants were made or shall be made,
not misleading. No cash, stock or other dividend or any other distribution with
respect to the stock of Redwood Empire (other than regular quarterly cash
dividends consistent with past practice) has been declared, set aside or paid,
nor have any shares of the stock of Redwood Empire been purchased, redeemed or
otherwise acquired, directly or indirectly, by Redwood Empire since December 31,
2003.

            (m) INDEMNIFICATION. Other than pursuant to the provisions of their
respective Articles of Incorporation or Articles of Association, as the case may
be, or Bylaws, or as disclosed in Section 4(m) of the Redwood Empire Disclosure
Schedule, or pursuant to non-material contracts entered into in the Ordinary
Course of Business, neither Redwood Empire nor any of its subsidiaries is a
party to any indemnification agreement with any of its present or past officers,
directors, employees, agents or other persons who serve or served in any other
capacity with any other enterprise at the request of Redwood Empire or any of
its subsidiaries, and to the best knowledge of Redwood Empire, there are no
claims for which any person would be entitled to indemnification by Redwood
Empire or any of its subsidiaries if such provisions were deemed in effect.

            (n) PROPERTIES AND LEASES.

                  (i) Section 4(n) of the Redwood Empire Disclosure Schedule
      sets forth each office, branch, facility and other place of business of
      Redwood Empire and its subsidiaries, its address, function and whether it
      is owned or leased by Redwood Empire. Redwood Empire and its subsidiaries
      have good and marketable title, free and clear of all liens and
      encumbrances and the right of possession, subject to existing leaseholds,
      to all real properties and good title to all other property and assets,
      tangible and intangible, reflected in the Redwood Empire consolidated
      balance sheet as of December 31, 2003 (except property held as lessee
      under leases disclosed in Section 4(n) of the Redwood Empire Disclosure
      Schedule and except personal property sold or otherwise disposed of since
      December 31, 2003 in the Ordinary Course of Business), except (a) liens
      for taxes or assessments not delinquent; (b) liens, encumbrances and
      imperfections of title not created or suffered to be created by Redwood
      Empire nor actually known to Redwood

                                       32


      Empire; (c) such other liens and encumbrances and imperfections of title
      as do not materially and adversely affect the value of such property as
      reflected in the Redwood Empire consolidated balance sheet as of December
      31, 2003, or as currently shown on the books and records of Redwood Empire
      and which do not interfere with or impair the present and continued use;
      or (d) exceptions disclosed in title reports and preliminary title
      reports, copies of which shall be provided to Westamerica. To the actual
      knowledge of Redwood Empire, all tangible properties of Redwood Empire and
      its subsidiaries conform in all material respects with all applicable
      ordinances, regulations and zoning laws. All tangible properties of
      Redwood Empire and its subsidiaries are in a good state of maintenance and
      repair, normal wear and tear excepted, and are adequate for the current
      business of Redwood Empire and its subsidiaries. Except for its main
      office at 111 Santa Rosa Avenue, in Santa Rosa, as to which Section 4(n)
      of the Redwood Empire Disclosure Schedule, to the knowledge of Redwood
      Empire, provides complete and accurate information, (A) no properties of
      Redwood Empire or any of its subsidiaries are the subject of any pending
      or, to Redwood Empire's actual knowledge, threatened investigation, claim
      or proceeding relating to the use, storage or disposal on such property of
      or contamination of such property by any toxic or hazardous waste material
      or substance; nor, to Redwood Empire's actual knowledge, are any
      properties in which Redwood Empire or any of its subsidiaries holds a
      collateral or contingent interest or purchase option subject to any such
      pending or threatened investigation, claim or proceeding, and (B) to
      Redwood Empire's actual knowledge, except as set forth in Section
      3(h)(ii)(H) of the Redwood Empire Disclosure Schedule, none of Redwood
      Empire and any of its subsidiaries owns, possesses or has a collateral or
      contingent interest or purchase option in any properties or other assets
      which contain or have located within or thereon any hazardous or toxic
      waste material or substance unless the location of such hazardous or toxic
      waste material or other substance or its use thereon conforms in all
      material respects with all federal, state and local laws, rules,
      regulations or other provisions regulating the discharge of materials into
      the environment. As to any asset not owned or leased by Redwood Empire or
      one of its subsidiaries, Redwood Empire and its subsidiaries have not
      controlled, directed or participated in the operation or management of any
      such asset or any facilities or enterprise conducted thereon in such a
      manner as to cause Redwood Empire or any of its subsidiaries to be deemed
      by a court of competent jurisdiction to be an owner or operator of such
      asset under applicable environmental laws.

                  (ii) All properties held by Redwood Empire and its
      subsidiaries under leases are held under valid, binding and enforceable
      leases (subject to applicable bankruptcy, insolvency and civil laws
      affecting creditors' rights generally, and subject, as to enforceability,
      to equitable principles of general applicability), with such exceptions as
      are not material and do not interfere with the conduct of the business of
      Redwood Empire or its subsidiaries, and Redwood Empire and its
      subsidiaries enjoy quiet and peaceful possession of such leased property.
      Neither Redwood Empire nor any of its subsidiaries is in default in any
      respect under any material lease, agreement or obligation regarding its
      properties to which it is a party or by which it is bound.

                  (iii) Except as disclosed in Section 4(n) of the Redwood
      Empire Disclosure Schedule, none of Redwood Empire's or any of its
      subsidiaries' rights and

                                       33


      obligations under the leases referred to in Section 4(n)(ii) above require
      the consent of any other party to the transaction contemplated by this
      Agreement.

            (o) MATERIAL CONTRACTS. Except as disclosed in Section 4(o) of the
Redwood Empire Disclosure Schedule (and except for loans, loan commitments and
letters of credit or similar obligations arising in the Ordinary Course of
Business of NBR), neither Redwood Empire nor any of it subsidiaries is a party
to or bound by any contract or other agreement which involves aggregate future
payments by or to it of more than $25,000 and which is made for a fixed period
expiring more than one year from the date hereof, and neither Redwood Empire nor
any of it subsidiaries is a party to or bound by any agreement not made in the
Ordinary Course of Business which is to be performed at or after the date
hereof. Each of the contracts and agreements disclosed in Section 4(o) of the
Redwood Empire Disclosure Schedule is a legal and binding obligation (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which, with notice or
passage of time, or both, could become a breach or default) exists with respect
thereto. No power of attorney or similar authorization given directly or
indirectly by Redwood Empire or any of its subsidiaries is currently
outstanding.

            (p) CLASSIFIED LOANS. Except as disclosed in Section 4(p) of the
Redwood Empire Disclosure Schedule, there are no loans presently owned by
Redwood Empire or any of its subsidiaries that have been classified by any bank
examiner, outside loan reviewer, accountant or management as "Other Loans
Especially Mentioned," "Substandard," "Doubtful," or "Loss" or classified using
categories with similar import and all loans or portions thereof classified
"Loss" have been charged off. Notwithstanding the above, Redwood Empire shall
not be under any obligation to disclose to Westamerica any such classification
by any bank examiner where such disclosure would violate any obligation of
confidentiality of Redwood Empire imposed by the FDIC, the OCC or other
regulator. Redwood Empire and its subsidiaries regularly review and
appropriately classify loans in accordance with all applicable legal and
regulatory requirements and generally accepted banking practices. All loans and
investments of Redwood Empire and its subsidiaries are legal, valid and binding
obligations enforceable in accordance with their respective terms and are not
subject to any setoffs, counterclaims or disputes (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of general
applicability), except as disclosed in Section 4(p) of the Redwood Empire
Disclosure Schedule or reserved for in the unaudited consolidated balance sheet
of Redwood Empire as of March 31, 2004, and were duly authorized under and made
in compliance with applicable federal and state laws and regulations. Redwood
Empire and its subsidiaries have no extensions of credit, investments,
guarantees, indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to create
acceptances, or to repurchase securities, federal funds or other assets) other
than those documented on the books and records of Redwood Empire.

            (q) RESTRICTIONS ON INVESTMENTS. Except for pledges to secure public
and trust deposits and repurchase agreements in the Ordinary Course of Business
and to secure advances from the Federal Home Loan Bank of San Francisco, none of
the investments reflected in the Redwood Empire consolidated balance sheet as of
December 31, 2003, and none of the

                                       34


investments made by Redwood Empire since December 31, 2003, are subject to any
restriction, whether contractual or statutory, which materially impairs the
ability of Redwood Empire or any of its subsidiaries freely to dispose of such
investment at any time. With respect to all material repurchase agreements to
which Redwood Empire, NBR or any Redwood Empire Subsidiary, is a party, Redwood
Empire, NBR or Redwood Empire Subsidiary has a valid, perfected first lien or
security interest in the government securities or other collateral securing each
such repurchase agreement, and the value of the collateral securing each such
repurchase agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement. Except for any securities sold subject to
repurchase obligations in the normal course of business and any loans or loan
participations subject to customary repurchase obligations, none of Redwood
Empire, NBR or Redwood Empire Subsidiaries has sold or otherwise disposed of any
assets in a transaction in which the acquirer of such assets or other person has
the right, either conditionally or absolutely, to require Redwood Empire, NBR or
any Redwood Empire Subsidiary to repurchase or otherwise reacquire any such
assets.

            (r) EMPLOYMENT CONTRACTS AND BENEFITS

                  (i) Section 4(r) of the Redwood Empire Disclosure Schedule
      lists all bonus, incentive compensation, profit-sharing, pension,
      retirement, stock purchase, stock option, deferred compensation,
      severance, hospitalization, medical, dental, vision, group insurance,
      death benefits, disability and other fringe benefit plans, trust
      agreements, arrangements and commitments which Redwood Empire maintains,
      contributes to or has any outstanding liability in respect of (including
      but not limited to such plans, agreements, arrangements and commitments
      applicable to former employees or retired employees, or for which such
      persons are eligible), if any (the "Benefit Plans" and each a "Benefit
      Plan"), and any and all contracts of employment and has made available to
      Westamerica any Board of Directors' minutes (or committee minutes)
      authorizing, approving or guaranteeing such Plans and contracts. There are
      no agreements or understandings, either written or oral, between Redwood
      Empire and any person which would result in the payment of any
      consideration as a result of any of the transactions contemplated by this
      Agreement other than as disclosed in Section 4(r) of the Redwood Empire
      Disclosure Schedule. Redwood Empire has heretofore delivered to
      Westamerica true, correct and complete copies of each Benefit Plan, and
      with respect to each such Benefit Plan true, correct and complete copies
      of (a) any associated trust, custodial, insurance or service agreements,
      (b) any annual report, actuarial report, or disclosure materials
      (including specifically any summary plan descriptions) submitted to any
      governmental agency or distributed to participants or beneficiaries
      thereunder in the current or any of the three (3) preceding calendar years
      and (c) the most recently received IRS determination letters and any
      governmental advisory opinions, rulings, compliance statements, closing
      agreements, or similar materials specific to such Benefit Plan.

                  (ii) Except as disclosed in Section 4(r) of the Redwood Empire
      Disclosure Schedule, the consummation of the transactions contemplated by
      this Agreement will not: (i) entitle any current or former employee of
      Redwood Empire or any of its subsidiaries to severance pay, unemployment
      compensation or any similar payment; (ii) accelerate the time of payment
      or vesting, or increase the amount of any compensation due to, or in
      respect of, any current or former employee of Redwood

                                       35


      Empire or any of its subsidiaries; (iii) result in or satisfy a condition
      to the payment of compensation that would, in combination with any other
      payment, result in an "excess parachute payment" within the meaning of IRC
      section 280G(b) or would not be fully deductible as a result of IRC
      section 162(m) or any corresponding provision of state, local or foreign
      tax law; or (iv) constitute or involve a prohibited transaction (as
      defined in ERISA section 406 or IRC section 4975), constitute or involve a
      breach of fiduciary responsibility within the meaning of ERISA section
      502(l) or otherwise violate Part 4 of Subtitle B of Title I of ERISA.

                  (iii) Except with respect to the Redwood Options, each Benefit
      Plan can be amended, terminated or otherwise discontinued after the
      Effective Date, without material liability to the Westamerica (other than
      ordinary administration expenses and severance obligations disclosed in
      Section 4(r) of the Redwood Empire Disclosure Schedule). Redwood Empire
      has not announced its intention, or undertaken (whether or not legally
      bound) to modify or terminate any Benefit Plan or adopt any arrangement or
      program which, once established, would come within the definition of a
      Benefit Plan.

                  (iv) With respect to each Benefit Plan which is an employee
      benefit plan (as defined in Section 3(3) of ERISA) and which is subject to
      the reporting, disclosure and record retention requirements set forth in
      the IRC and Part 1 of Subtitle B of Title I of ERISA and the regulations
      thereunder, each of such requirements has been fully met on a timely
      basis.

                  (v) With respect to each Benefit Plan which is an employee
      benefit plan (as defined in Section 3(3) of ERISA) and which is subject to
      Part 4 of Subtitle B of Title I of ERISA, none of the following now exists
      or has existed within the six-year period ending on the date hereof:

                        (1) Any act or omission constituting a material
            violation of Section 402 of ERISA;

                        (2) Any act or omission constituting a violation of
            Section 403 of ERISA;

                        (3) Any act or omission by Redwood Empire or any of its
            subsidiaries, or by any director, officer or employee thereof,
            constituting a violation of Sections 404 and 405 of ERISA;

                        (4) To the knowledge of Redwood Empire or any of its
            subsidiaries, any act or omission by any other person constituting a
            violation of Sections 404 or 405 of ERISA;

                        (5) Any act or omission which constitutes a violation of
            Sections 406 or 407 of ERISA and is not exempted by Section 408 of
            ERISA or which constitutes a violation of Section 4975(c) of the IRC
            and is not exempted by Section 4975(d) of the IRC; or

                                       36



                        (6) Any act or omission constituting a violation of
            Sections 503, 510 or 511 of ERISA.

                  (vi) All contributions, premiums or other payments due from
      Redwood Empire and its subsidiaries to (or under) any Benefit Plan have
      been fully paid or adequately provided for on the audited financial
      statements for the year ended December 31, 2003 and period ended March 31,
      2004. All accruals thereon (including, where appropriate, proportional
      accruals for partial periods) have been made in accordance with GAAP
      consistently applied on a reasonable basis.

                  (vii) Each Benefit Plan complies with all applicable
      requirements of (A) the Age Discrimination in Employment Act of 1967, as
      amended, and the regulations thereunder and (B) Title VII of the Civil
      Rights Act of 1964, as amended, and the regulations thereunder.

                  (viii) Each Benefit Plan complies with all applicable
      requirements of the health care continuation coverage provisions of the
      Consolidated Omnibus Budget Reconciliation Act of 1985, and the
      regulations thereunder.

                  (ix) Redwood Empire has disclosed in Section 4(r) of the
      Redwood Empire Disclosure Schedule the names of each director, officer and
      employee of Redwood Empire and each of its subsidiaries.

                  (x) Neither Redwood Empire nor any of its subsidiaries has,
      prior to the Effective Date, in any material respect, violated any of the
      health care continuation requirements of COBRA, the requirements of FMLA,
      the requirements of the Health Insurance Portability and Accountability
      Act of 1996, the requirements of the Women's Health and Cancer Rights Act
      of 1998, the requirements of the Newborns' and Mothers' Health Protection
      Act of 1996, or any amendment to each such act, or any similar provisions
      of state law applicable to its Employees.

                  (xi) As of the date hereof, Redwood Empire and any entity with
      which Redwood Empire could be considered a single employer under 29 U.S.C.
      section 2101(a)(1) or under any relevant case law, has not incurred any
      liability or obligation under the Worker Adjustment and Retraining
      Notification Act, as it may be amended from time to time, and within the
      90-day period immediately following the date hereof, will not incur any
      such liability or obligation if, during such 90-day period, only
      terminations of employment in the normal course of operations occur.

            (s) COMPLIANCE WITH ERISA. Neither Redwood Empire nor any of
its subsidiaries has, since its inception, either maintained or contributed to
an employee pension benefit plan, as defined in Section 3(2) of ERISA, including
multi-employer plans, other than the Redwood Empire Bancorp 401(k) Profit
Sharing Plan (the "Redwood Plan"). With respect to the Redwood Plan, as of the
Effective Time (i) the form of the Redwood Plan, to the best of Redwood Empire's
knowledge, has in all material respects been (and currently is) in compliance
with all the requirements of Section 401 or Section 408 of the IRC, as
applicable; (ii) Redwood Empire shall not have amended the Redwood Plan or
administered the Redwood Plan in a

                                       37


manner inconsistent with such requirements; (iii) no contributions have exceeded
the limitations set forth in Section 415 of the IRC; (iv) all required and
necessary filings with the Internal Revenue Service ("IRS"), Department of Labor
and any other governmental agencies with respect to the Redwood Plan for all
periods ending at or prior to the Effective Time will have been made on a timely
basis by Redwood Empire and the plan administrator; (v) there shall have been no
material violation of Parts 1 and 4 of Subtitle B of Title I of ERISA or of
Section 4975 of the IRC; and (vi) there shall have been no action, claim or
demand of any kind known to Redwood Empire brought or threatened by any
potential claimant or representative of such claimant under the Redwood Plan or
Trust where Redwood Empire may be either (A) liable directly on such action,
claim or demand, or (B) obligated to indemnify any person, group of persons or
entity with respect to such action, claim or demand, unless such action, claim
or demand is covered by adequate reserves reflected in Redwood Empire's December
31, 2003, financial statements or an insurer of Redwood Empire has agreed to
defend against and pay the amount of any resulting liability without
reservation.

            (t)   ABSENCE OF CERTAIN MATTERS OR ARRANGEMENTS.

                  (i) There is no pending or threatened legal action, proceeding
      or investigation, other than routine claims for benefits, concerning any
      Benefit Plan or to the best knowledge of Redwood Empire any fiduciary or
      service provider thereof and, to the best knowledge of Redwood Empire,
      there is no basis for any such legal action, proceeding or investigation.

                  (ii) No communication, report or disclosure has been made
      regarding any Benefit Plan which, at the time made, did not accurately
      reflect the material terms and operations of the Benefit Plan.

                  (iii) No Benefit Plan provides welfare benefits subsequent to
      termination of employment to employees or their beneficiaries except to
      the extent required by applicable state insurance laws and Title I, Part 6
      of ERISA.

                  (iv) No Benefit Plan is a multi-employer plan, as defined in
      Section 3(37) of ERISA, or a plan subject to Section 302 or Title IV of
      ERISA or Section 412 of the Code.

                  (v) No Benefit Plan includes any trust or other entity
      intended to qualify as a "voluntary employees' beneficiary association"
      within the meaning of Section 501(c)(9) of the Code.

            (u) COLLECTIVE BARGAINING AND EMPLOYMENT AGREEMENTS. Except as
provided in this Agreement or as disclosed in Section 4(u) of the Redwood Empire
Disclosure Schedule, neither Redwood Empire nor any of its subsidiaries has any
union or collective bargaining or written employment agreements, contracts or
other agreements with any labor organization or with any member of management,
or any management or consultation agreement not terminable at will by it without
liability, and no such contract or agreement has been requested by, or is under
discussion by management with, any group of employees, any member of management
or any other person. There are no material controversies pending between

                                       38


Redwood Empire or any of its subsidiaries and any current or former employees,
and to the best of its knowledge, there are no efforts presently being made by
any labor union seeking to organize any of such employees.

            (v) COMPENSATION OF OFFICERS AND EMPLOYEES. Except as disclosed in
Section 4(v) of the Redwood Empire Disclosure Schedule, no officer or employee
of Redwood Empire or any of its subsidiaries is receiving aggregate direct
remuneration at a rate exceeding $40,000 per annum. Except as disclosed in
Section 4(v) of the Redwood Empire Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Redwood Empire or any
of its subsidiaries or Westamerica to any employee of Redwood Empire or any of
its subsidiaries. Except as disclosed in Section 4(v) of the Redwood Empire
Disclosure Schedule, no employee of Redwood Empire or any of its subsidiaries is
entitled under any existing contract or arrangement to receive or will receive
from Redwood Empire or any of its subsidiaries a partial-year bonus if the
Merger or Bank Merger is completed before December 31, 2004.

            (w) LEGAL ACTIONS AND PROCEEDINGS. Except as disclosed in Section
4(w) o the Redwood Empire Disclosure Schedule, neither Redwood Empire nor any of
its subsidiaries is a party to, or so far as Redwood Empire is aware, threatened
with, and to its knowledge, there is no reasonable basis for, any legal action
or other proceeding or investigation before any court, any arbitrator of any
kind or any government agency; and neither Redwood Empire nor any of its
subsidiaries is subject to any potential adverse claim, the outcome of which
could involve the payment or receipt by Redwood Empire or any of its
subsidiaries of any amount in excess of $25,000, unless an insurer of Redwood
Empire has agreed to defend against and pay the amount of any resulting
liability without reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by Redwood Empire or any of
its subsidiaries of a monetary amount, which could materially adversely affect
Redwood Empire or any of its subsidiaries or its business or property or the
transactions contemplated hereby except as disclosed in Section 4(w) of the
Redwood Empire Disclosure Schedule. As of the date hereof, Redwood Empire has no
knowledge of any pending or threatened claims or charges under the Community
Reinvestment Act, before the Equal Employment Opportunity Commission, the
California Department of Fair Housing & Economic Development, the California
Unemployment Appeals Board (except claims or charges in the ordinary course of
business that are not expected to have a material adverse effect), or any human
relations commission. There is no labor dispute, strike, slow-down or stoppage
pending or, to the best of the knowledge of Redwood Empire, threatened against
Redwood Empire or any of its subsidiaries.

            (x) INTELLECTUAL PROPERTY. To the best knowledge of Redwood Empire,
Redwood Empire and NBR own or have a valid license to use all trademarks, trade
names and service marks (including any registrations or applications for
registration of any of the foregoing) (collectively, "Intellectual Property")
necessary to carry on their business substantially as currently conducted,
except where such failures to own or validly license such Intellectual Property
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on Redwood Empire. Neither Redwood Empire nor NBR has
received any notice of infringement of or conflict with, and to Redwood Empire's
knowledge, there are no infringements of or conflicts with, the rights of others
with respect to the use of any Intellectual

                                       39


Property that, individually or in the aggregate, in either such case, would
reasonably be expected to have a material adverse effect on Redwood Empire.

            (y) DERIVATIVE TRANSACTIONS.

                  (i) Except as would not have a material adverse effect on
      Redwood Empire, all Derivative Transactions (as defined herein) entered
      into by Redwood Empire or any of its subsidiaries were entered into in
      accordance with applicable rules, regulations and policies of any
      governmental authority, and in accordance with the investment, securities,
      commodities, risk management and other policies, practices and procedures
      employed by Redwood Empire and its subsidiaries, and were entered into
      with counterparties who are financially responsible and able to understand
      (either alone or in consultation with their advisers) and to bear the
      risks of such Derivative Transactions; and to Redwood Empire's knowledge,
      there are no material breaches, violations or defaults or allegations or
      assertions of such by any party thereunder.

                  (ii) "Derivative Transactions" means any swap transaction,
      option, warrant, forward purchase or sale transaction, futures
      transaction, cap transaction, floor transaction or collar transaction
      relating to one or more currencies, commodities, bonds, equity securities,
      loans, interest rates, credit-related events or conditions or any indexes,
      or any other similar transaction or combination of any of these
      transactions, including collateralized mortgage obligations or other
      similar instruments or any debt or equity instruments evidencing or
      embedding any such types of transactions, and any related credit support,
      collateral or other similar arrangements related to such transactions;
      provided that, for the avoidance of doubt, the term "Derivative
      Transactions" shall not include any Redwood Options.

            (z) FACTS AFFECTING GOVERNMENT APPROVALS. To the best knowledge of
Redwood Empire, there is no fact, event or condition applicable to Redwood
Empire or any of its subsidiaries that will, or reasonably could be expected to,
adversely affect the likelihood of securing the Government Approvals required to
complete the Merger and the other transactions contemplated by this Agreement.

            (aa) RETENTION OF BROKER OR CONSULTANT. No broker, agent, finder,
consultant or other party (other than legal, compliance, loan auditors and
accounting advisors) has been retained by Redwood Empire or any of its
subsidiaries or is entitled to be paid based upon any agreements, arrangements
or understandings made by Redwood Empire or any of its subsidiaries in
connection with any of the transactions contemplated by this Agreement, except
that Redwood Empire has engaged Hovde Financial LLC in connection with this
Agreement and has provided Westamerica with a true and complete copy of its
engagement agreement with Hovde Financial LLC.

            (bb) INSURANCE. Section 4(bb) of the Redwood Empire Disclosure
Schedule lists all insurance policies and bonds maintained by Redwood Empire and
any of its subsidiaries, including name of insurer, type of coverage, policy
limit, annual premiums and expiration date. Redwood Empire and each of its
subsidiaries is and continuously since its inception has been, insured with
reputable insurers against all risks normally insured against by banks, and all
of the

                                       40


insurance policies and bonds maintained by Redwood Empire and its subsidiaries
are in full force and effect, Redwood Empire and its subsidiaries are not in
default thereunder and all material claims thereunder have been filed in due and
timely fashion. In the best judgment of the management of Redwood Empire, such
insurance coverage is adequate for Redwood Empire and its subsidiaries. Since
December 31, 2003, there has not been any damage to, destruction of, or loss of
any assets of Redwood Empire or any of its subsidiaries not covered by insurance
that would have a material adverse effect on Redwood Empire.

            (cc) LOAN LOSS ALLOWANCE. The allowance for loan losses in the
Redwood Empire consolidated balance sheets dated December 31, 2003 and each
subsequent period end prior to the Effective Date and as of the Effective Date
was and will be determined by application of Redwood Empire's policies and
procedures on a basis consistently applied from prior periods and is or will be
adequate in all material respects under the requirements of GAAP consistently
applied, and all applicable state and federal laws and regulations to provide
for possible loan losses on outstanding loans, net of recoveries. Redwood Empire
has disclosed in Section 4(cc) of the Disclosure Schedule, and will promptly
(and in any event within two Business Days) inform Westamerica of the amounts of
all OREO, loans, leases, other extensions of credit or commitments, or other
interest-bearing assets of Redwood Empire or any of its subsidiaries that have
been classified as of the date hereof or hereafter by any internal bank examiner
or any bank regulatory agency as "Other Loans Especially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import in the case of
loans (or that would have been so classified, in the case of other assets, had
they been loans). Notwithstanding the above, Redwood Empire shall be under no
obligation to disclose to Westamerica any such classification by any bank
regulatory agency where such disclosure would violate any obligation of
confidentiality of Redwood Empire imposed by such bank regulatory agency.

            (dd) TRANSACTIONS WITH AFFILIATES. Except as may arise in the
Ordinary Course of Business, neither Redwood Empire nor any of its subsidiaries
has extended credit, committed itself to extend credit, or transferred any asset
to or assumed or guaranteed any liability of the employees or directors of
Redwood Empire or any of its subsidiaries, or any spouse or child of any of
them, or to any of their "affiliates" or "associates" as such terms are defined
in Rule 405 under the 1933 Act. Neither Redwood Empire nor any of its
subsidiaries has entered into any other transactions with the directors of
Redwood Empire or NBR or any spouse or child of any of them, or any of their
affiliates or associates, except as disclosed in Section 4(dd) of the Redwood
Empire Disclosure Schedule. All such transactions have been on terms no less
favorable to Redwood Empire than those which would prevail in an arm's-length
transaction with an independent third party.

            (ee) INFORMATION IN WESTAMERICA REGISTRATION STATEMENT. The
information pertaining to Redwood Empire and its subsidiaries which has been or
will be furnished to Westamerica for or on behalf of Redwood Empire for
inclusion in the Westamerica Registration Statement, the Prospectus (as
hereinafter defined) or the Proxy Statement, or in the applications to be filed
to obtain the Government Approvals (the "Applications"), does not and will not
contain any untrue statement of any material fact or omit or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that information of a later date shall be deemed
to modify information as of an earlier date. All financial

                                       41


statements of Redwood Empire included in the Prospectus and Proxy Statement will
present fairly the consolidated financial condition and results of operations of
Redwood Empire at the dates and for the periods covered by such statements in
accordance with GAAP consistently applied throughout the periods covered by such
statements. Redwood Empire shall promptly (and in any event within two Business
Days) advise Westamerica in writing if, prior to the Effective Time, Redwood
Empire shall obtain knowledge of any facts that would make it necessary to amend
the Westamerica Registration Statement, the Proxy Statement or any Application,
or to supplement the Prospectus, in order to make the statements therein not
misleading or to comply with applicable law.

            (ff) ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty by Redwood Empire or NBR and no statement by Redwood Empire or NBR
in any certificate, agreement, schedule or other document furnished in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make such representation, warranty or statement
not misleading to Westamerica; provided, however, that information as of a later
date shall be deemed to modify information as of an earlier date.

            (gg) NO BROKERED DEPOSITS. NBR does not now have and shall not
accept prior to or have on the Effective Date any "brokered deposits" as such
deposits are defined by the FDIC.

            (hh) INTERNAL CONTROLS. Redwood Empire has (a) designed disclosure
controls and procedures (as defined in Rule 13a-15(e) under the 1934 Act) to
ensure that information relating to it that is required to be disclosed in its
reports under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission's rules and forms; (b)
evaluated the effectiveness of its disclosure controls and procedures and
presented in its periodic reports most recently filed with the Commission the
conclusions of its senior officers about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by such report
based on that evaluation; and (c) disclosed in such report any change in its
internal control over financial reporting that occurred during its most recent
reporting period that has materially affected, or is reasonably likely to
materially affect, its internal control over financial reporting. Redwood Empire
has disclosed, based on its most recent evaluation of internal control over
financial reporting, to its auditors and the audit committee of its board of
directors: (i) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect its ability to record, process, summarize
and report financial information; and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in
Redwood Empire's internal control over financial reporting.

5.    REPRESENTATIONS AND WARRANTIES OF WESTAMERICA AND WAB.

      Westamerica and WAB represent and warrant to Redwood Empire and NBR that:

            (a) CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENT. Westamerica
is a corporation duly incorporated, validly existing and in good standing under
California law and is a registered bank holding company under the BHCA. WAB is a
California banking

                                       42


corporation duly incorporated, validly existing and in good standing under the
laws of the State of California and holds a currently valid license issued by
the DFI to engage in the commercial banking business in California at the
offices in which such business is conducted. Subject to the approval of this
Agreement and the transactions contemplated hereby by the FRB, Westamerica and
WAB have all necessary corporate power to enter into this Agreement and to carry
out all of the terms and provisions hereof and thereof to be carried out by
them. Neither Westamerica nor any of its subsidiaries is subject to any order of
the FRB, the FDIC, the DFI or any other regulatory authority having jurisdiction
over its or their business or any of its or their assets or properties. Neither
the scope of the business of Westamerica or WAB nor the location of its
properties requires it to be licensed to do business in any jurisdiction other
than the State of California. Westamerica is the sole shareholder of WAB. WAB is
a member of the Federal Reserve System. WAB's deposits are insured by the FDIC
in the manner and to the full extent provided by law.

            (b) CORPORATE STATUS AND POWER OF WESTAMERICA AND WAB. Prior to and
as of the Effective Time, Westamerica and WAB will be corporations duly
incorporated, validly existing and in good standing under the laws of the State
of California and will have the corporate power to enter into the Merger
Agreement and to carry out all of the terms and provisions thereof to be carried
out by each of them.

            (c) ARTICLES, BYLAWS, BOOKS AND RECORDS. The copies of the Articles
of Incorporation and Bylaws of Westamerica to be delivered to Redwood Empire are
complete and accurate copies thereof as in effect on the date hereof. The
corporate books and records (including financial statements) of Westamerica
fairly reflect the material transactions to which Westamerica or any of its
subsidiaries is a party or by which any of their properties are subject or
bound, and such books and records have been properly kept and maintained. The
Articles of Incorporation and Bylaws of Westamerica and all amendments thereto
have been duly approved by all requisite corporate action and said Articles of
Incorporation and all amendments thereto have been duly filed with the
California Secretary of State.

            (d) COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. Westamerica and
each of its subsidiaries (i) has the corporate power to own or lease its
properties and to conduct its business as currently conducted, (ii) has complied
with, and is not in default of any laws, regulations, ordinances, orders or
decrees applicable to the conduct of its business and the ownership of its
properties, including but not limited to all federal and state laws (including
but not limited to the Bank Secrecy Act), rules and regulations relating to the
offer, sale or issuance of securities, and the operation of its subsidiary
commercial banks, other than where such noncompliance or default is not likely
to result in a material limitation on the conduct of the business of Westamerica
or its subsidiaries, taken as a whole, or is not likely to otherwise have a
material adverse effect on Westamerica, (iii) has not failed to file with the
proper federal, state, local or other authorities any material report or other
document required to be so filed, (iv) has all material approvals,
authorizations, consents, licenses, clearances and orders of, and has currently
effective all registrations with, all governmental and regulatory authorities
which are necessary in all material respects to the respective businesses and
operations of Westamerica and its subsidiaries as they are now being conducted,
and (v) has received no notification, formally or informally, from any agency or
department of any federal, state or local government or any regulatory agency or
the staff thereof (A) asserting that Westamerica or its subsidiaries are not in

                                       43


material compliance with any of the statutes, regulations or ordinances which
such governmental or regulatory authority enforces, or (B) threatening to revoke
any material licenses, franchise, permit or governmental authorization of
Westamerica or its subsidiaries.

            (e) EXECUTION AND DELIVERY OF THE AGREEMENT.

                  (i) The execution and delivery of this Agreement has been duly
      and validly authorized by the Boards of Directors of Westamerica and WAB
      and this Agreement will be duly and validly authorized by all necessary
      corporate action on the part of Westamerica and WAB.

                  (ii) This Agreement has been duly executed and delivered by
      Westamerica and WAB and (assuming due execution and delivery by Redwood
      Empire and NBR) constitutes a legal and binding obligation of Westamerica
      and WAB (subject to applicable bankruptcy, insolvency and civil laws
      affecting creditors' rights generally, and subject, as to enforceability,
      to equitable principles of general applicability).

                  (iii) The execution and delivery by Westamerica and WAB of
      this Agreement and the consummation of the transactions herein
      contemplated (A) do not and will not violate any provision of the Articles
      of Incorporation or Bylaws of Westamerica or WAB, any provision of federal
      or state law or any governmental rule or regulation (assuming (1) receipt
      of the Government Approvals, (2) due registration of the Westamerica
      Shares under the 1933 Act, (3) receipt of appropriate permits or approvals
      under state securities or "blue sky" laws, and (4) accuracy of the
      representations of Redwood Empire set forth herein), and (B) do not
      require any consent of any person under, conflict with or result in a
      breach of, or accelerate the performance required by any of the terms of,
      any material debt instrument, lease, license, covenant, agreement or
      understanding to which Westamerica or WAB is a party or by which it is
      bound or any order, ruling, decree, judgment, arbitration award or
      stipulation to which Westamerica or WAB is subject, or constitute a
      default thereunder or result in the creation of any lien, claim, security
      interest, encumbrance, charge, restriction or right of any third party of
      any kind whatsoever upon any of the properties or assets of Westamerica
      and WAB.

            (f) SECURITIES LAW FILINGS. Since December 31, 1998,
Westamerica has filed and will file all documents required to be filed by it
under the 1933 Act, the 1934 Act, the Investment Company Act of 1940, the
Investment Advisors Act of 1940 and the Trust Indenture Act of 1939, all as
amended, and that as of their respective dates, none of these documents
contained as of the date of the Agreement or will contain any untrue statement
of material fact or omitted or will omit to state material any fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made or will be made not misleading.

            (g) FINANCIAL STATEMENTS, REGULATORY REPORTS. No financial statement
or other document provided or to be provided to Redwood Empire as required by
Section 3.1(e) hereof, as of the date of such document, contained, or as to
documents delivered after the date hereof, will contain, any untrue statement of
a material fact, or, at the date thereof, omitted or will omit to state a
material fact necessary in order to make the statements contained therein, in

                                       44

light of the circumstances under which such statements were or will be made, not
misleading; provided, however, that information as of a later date shall be
deemed to modify information as of any earlier date. Since 2001, Westamerica has
filed all material documents and reports relating to Westamerica or its
subsidiaries required to be filed by it with the FDIC, the FRB, the DFI or any
other governmental authority having jurisdiction over its business or any of its
assets or properties. All such reports conform in all material respects with the
requirements promulgated by such regulatory agencies. All compliance or
corrective action relating to Westamerica or its subsidiaries required by
governmental authorities and regulatory agencies having jurisdiction over
Westamerica or its subsidiaries has been taken. Westamerica and its subsidiaries
have received no notification, formally or informally, from any agency or
department of any federal, state or local government or any regulatory agency or
the staff thereof (A) asserting that Westamerica or any of its subsidiaries are
not in material compliance with any of the statutes, regulations or ordinances
which such governmental or regulatory authority enforces, or (B) threatening to
revoke any license, franchise, permit or governmental authorization of
Westamerica or any of its subsidiaries. Neither Westamerica nor any of its
subsidiaries is subject to any order, agreement, or written directive with any
regulatory authority with respect to its assets or business except for matters
of general application. Westamerica and its subsidiaries have paid all
assessments made or imposed by any governmental agency. The financial records of
Westamerica have been, and are being and shall be, maintained in all material
respects in accordance with all applicable legal and accounting requirements
sufficient to insure that all transactions reflected therein are, in all
material respects, executed in accordance with management's general or specific
authorization and recorded in conformity with GAAP at the time in effect.

            (h) COMMUNITY REINVESTMENT ACT. Westamerica has received a rating of
"satisfactory" in its most recent examination or interim review with respect to
the Community Reinvestment Act. Westamerica has not been advised of any material
supervisory concerns regarding its compliance with the Community Reinvestment
Act.

            (i) MATERIAL ADVERSE CHANGE. Since December 31, 2003, there has been
no material adverse change with respect to Westamerica.

            (j) INFORMATION IN WESTAMERICA REGISTRATION STATEMENT. The
information pertaining to Westamerica and each of its subsidiaries which will
appear in the Westamerica Registration Statement, the Prospectus or the Proxy
Statement, in the form filed with the Commission, or in the Applications, will
contain no untrue statement of any material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they are made, not misleading;
provided, however, that the information as of a later date shall be deemed to
modify information as of an earlier date. All financial statements of
Westamerica included in the Prospectus or the Proxy Statement will present
fairly the consolidated financial condition and results of operations of
Westamerica and its consolidated subsidiaries at the dates and for the periods
covered by such statements in accordance with GAAP consistently applied
throughout the periods covered by such statements. Westamerica shall promptly
(and in any event within two Business Days) advise Redwood Empire in writing if
prior to the Effective Time Westamerica shall obtain knowledge of any facts that
would make it necessary to amend the Westamerica Registration Statement, the
Proxy

                                       45



Statement or any Application, or to supplement the Prospectus, in order to make
the statements therein not misleading or to comply with applicable law.

            (k) ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by Westamerica or WAB and no statement by Westamerica or WAB in any
certificate, agreement, schedule or other document furnished in connection with
the transactions contemplated by this Agreement or the Merger Agreement contains
or will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary to make such representation, warranty or
statement not misleading to Redwood Empire; provided, however, that information
as of a later date shall be deemed to modify information as of an earlier date.

            (l) EMPLOYEE BENEFITS.

                  (i)   Westamerica shall deliver upon request to Redwood Empire
      an accurate list setting forth all profit sharing, pension, retirement,
      stock purchase, stock option, deferred compensation, severance,
      hospitalization, group insurance, death benefits, disability and other
      fringe benefit plans, trust agreements, arrangements and commitments of
      Westamerica, if any, together with copies of plans that are documented.

                  (ii)  Each employee benefit plan (as defined in Sections 3(3)
      of ERISA) which is required to be provided in response to this Section
      5(l) is in material compliance with the requirements of ERISA.

            (m) COMPLIANCE WITH ERISA. Neither Westamerica nor any of its
subsidiaries has, since its inception, either maintained or contributed to an
employee pension benefit plan, as defined in Section 3(2) of ERISA, including
multi-employer plans, other than the Westamerica Bancorporation Tax Deferred
Savings/Retirement Plan (ESOP) and Deferred Profit Sharing Plan (the
"Westamerica Plan"). With respect to the Westamerica Plan, as of the Effective
Time (i) the form of the Westamerica Plan, to the best of Westamerica's
knowledge, has in all material respects been (and currently is) in compliance
with all the requirements of Section 401 or Section 408 of the IRC, as
applicable; (ii) Westamerica shall not have amended the Westamerica Plan or
administered the Westamerica Plan in a manner inconsistent with such
requirements; (iii) no contributions have exceeded the limitations set forth in
Section 415 of the IRC; (iv) all required and necessary filings with the IRS,
Department of Labor and any other governmental agencies with respect to the
Westamerica Plan for all periods ending at or prior to the Effective Time will
have been made on a timely basis by Westamerica and the plan administrator; (v)
there shall have been no material violation of Parts 1 and 4 of Subtitle B of
Title I of ERISA or of Section 4975 of the IRC; and (vi) there shall have been
no action, claim or demand of any kind known to Westamerica brought or
threatened by any potential claimant or representative of such claimant under
the Westamerica Plan or Trust where Westamerica may be either (A) liable
directly on such action, claim or demand, or (B) obligated to indemnify any
person, group of persons or entity with respect to such action, claim or demand,
unless such action, claim or demand is covered by adequate reserves reflected in
Westamerica's December 31, 2003, financial statements or an insurer of
Westamerica has agreed to defend against and pay the amount of any resulting
liability without reservation.

                                       46



            (n) LEGAL ACTIONS AND PROCEEDINGS. Except as disclosed to Redwood
Empire in writing, neither Westamerica nor any of its subsidiaries is a party
to, or so far as Westamerica is aware, threatened with, and to its knowledge,
there is no reasonable basis for, any legal action or other proceeding or
investigation before any court, any arbitrator of any kind or any government
agency; and neither Westamerica nor any of its subsidiaries is subject to any
potential adverse claim, the outcome of which could involve the payment or
receipt by Westamerica or any of its subsidiaries of any amount in excess of
$5,000,000, unless an insurer of Westamerica has agreed to defend against and
pay the amount of any resulting liability without reservation, or, if any such
legal action, proceeding, investigation or claim will not involve the payment by
Westamerica or any of its subsidiaries of a monetary amount, which could
materially adversely affect Westamerica or any of its subsidiaries or its
business or property or the transactions contemplated hereby except as disclosed
in writing to Redwood Empire. Westamerica has no knowledge of any pending or
threatened claims or charges under the Community Reinvestment Act, before the
Equal Employment Opportunity Commission, the California Department of Fair
Housing & Economic Development, the California Unemployment Appeals Board
(except claims or charges in the ordinary course of business that are not
expected to have a material adverse effect), or any human relations commission.
There is no labor dispute, strike, slow-down or stoppage pending or, to the best
of the knowledge of Westamerica, threatened against Westamerica or any of its
subsidiaries.

            (o) FACTS AFFECTING GOVERNMENT APPROVALS. To the best knowledge of
Westamerica, there is no fact, event or condition applicable to Westamerica or
any of its subsidiaries that will, or reasonably could be expected to, adversely
affect the likelihood of securing the Government Approvals required to complete
the Merger and the other transactions contemplated by this Agreement.

            (p) TAXES. Westamerica has timely filed all federal, state, county,
local and foreign tax returns required to be filed by it, and each such return,
report or other information was, when filed, complete and accurate in all
material respects. Westamerica has paid all taxes, fees and other governmental
charges, including any interest and penalties thereon, when they have become
due, except those that are being contested in good faith. Westamerica has not
been requested to give and has not given any currently effective waivers
extending the statutory period of limitation applicable to any tax return
required to be filed by it for any period. There are no claims pending against
Westamerica for any alleged deficiency in the payment of any taxes, and
Westamerica does not know of any pending or threatened audits, investigations or
claims for unpaid taxes or relating to any liability in respect of any taxes.

            (q) CAPITALIZATION. All outstanding shares of Westamerica capital
stock have been duly issued and are validly outstanding, fully paid and
nonassessable. None of the shares of Westamerica's capital stock has been issued
in violation of the preemptive rights of any person. The shares of Westamerica
common stock to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid, nonassessable and free and clear of any
preemptive rights.

            (r) INTERNAL CONTROLS. Westamerica has (a) designed disclosure
controls and procedures (as defined in Rule 13a-15(e) under the 1934 Act) to
ensure that information relating to it that is required to be disclosed in its
reports under the 1934 Act is recorded, processed,

                                       47



summarized and reported, within the time periods specified in the Commission's
rules and forms; (b) evaluated the effectiveness of its disclosure controls and
procedures and presented in its periodic reports most recently filed with the
Commission the conclusions of its senior officers about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by such
report based on that evaluation; and (c) disclosed in such report any change in
its internal control over financial reporting that occurred during its most
recent reporting period that has materially affected, or is reasonably likely to
materially affect, its internal control over financial reporting. Westamerica
has disclosed, based on its most recent evaluation of internal control over
financial reporting, to its auditors and the audit committee of its board of
directors: (i) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect its ability to record, process, summarize
and report financial information; and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in
Westamerica's internal control over financial reporting.

6.          SECURITIES ACT OF 1933.

            (a) PREPARATION AND FILING OF REGISTRATION STATEMENT. Westamerica
shall as promptly as reasonably practicable after the date of this Agreement
prepare and file with the Commission (i) a registration statement on the
appropriate form (the "Westamerica Registration Statement") under and pursuant
to the provisions of the 1933 Act for the purpose of registering the Westamerica
Shares and, (ii) shall prepare and file, as soon as practicable, one or more
registration statements or amendments to existing registration statements under
the 1933 Act for the purpose of registering the maximum number of shares of
common stock of Westamerica to which the option holders of Redwood Empire may be
entitled pursuant to Section 2.6 above at or after the Effective Date.
Westamerica and Redwood Empire shall promptly prepare the Proxy Statement for
the purpose of submitting this Agreement and the Merger to the shareholders of
Redwood Empire for approval. Redwood Empire shall cooperate in all reasonable
respects with regard to the preparation of the Proxy Statement. The Proxy
Statement in definitive form shall serve as the prospectus (the "Prospectus") to
be included in the Westamerica Registration Statement. Westamerica and Redwood
Empire shall each provide promptly to the other such information concerning its
business and financial condition and affairs as may be required or appropriate
for inclusion in the Westamerica Registration Statement, the Prospectus or the
Proxy Statement, and shall cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Westamerica Registration
Statement, the Prospectus and the Proxy Statement.

            (b) EFFECTIVENESS OF REGISTRATION STATEMENT. Westamerica and Redwood
Empire shall use their commercially reasonable best efforts to have the
Westamerica Registration Statement and any amendments or supplements thereto
declared effective by the Commission under the 1933 Act as soon as practicable,
and thereafter Redwood Empire shall distribute at its cost the Proxy Statement
to holders of its common stock in accordance with applicable laws and its
Articles of Incorporation and Bylaws.

            (c) SALES AND RESALES OF COMMON STOCK. Westamerica shall not be
required to maintain the effectiveness of the Westamerica Registration Statement
for the purpose of sale or resale of the Westamerica Shares by any person.

                                       48



            (d) RULE 145. Securities representing Westamerica Shares issued to
affiliates of Redwood Empire (as determined by counsel to Westamerica) under
Rule 145 of the rules and regulations under the 1933 Act pursuant to the Merger
Agreement may be subject to stop transfer orders and may bear a restrictive
legend in substantially the following form:

            The security represented by this instrument has been issued or
            transferred to the registered holder as the result of a transaction
            to which Rule 145 under the 1933 Act applies. The security
            represented by this instrument may not be sold, hypothecated,
            transferred or assigned, and the issuer shall not be required to
            give effect to any attempted sale, hypothecation, transfer or
            assignment, except (i) pursuant to a then current effective
            registration under the 1933 Act, or (ii) in a transaction which, in
            the opinion of counsel satisfactory to the issuer, is not required
            to be registered under the 1933 Act.

Should any opinion of counsel described in clause (ii) of the foregoing legend
indicate that the legend and any stop transfer order then in effect with respect
to the shares may be removed, Westamerica will upon request substitute
unlegended securities and remove any stop transfer orders.

            (e) BLUE SKY COMPLIANCE. Westamerica agrees to use its commercially
reasonable efforts to have the shares of Westamerica common stock to be issued
in connection with the Merger qualified or registered for offer and sale, to the
extent required if any, under the securities laws of each jurisdiction in which
shareholders of Redwood Empire reside.

7.    CONDITIONS TO THE OBLIGATIONS OF WESTAMERICA.

      The obligations of Westamerica under this Agreement are, at its option,
subject to fulfillment at or prior to the Effective Date of each of the
following conditions; provided, however, that any one or more of such
conditions, other than those set forth in subsection (d), (g), (h) or (i) below,
may be waived by the Board of Directors of Westamerica at any time at or prior
to the Effective Time:

            (a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Redwood Empire in Section 4 hereof shall be true and correct in
all material respects on the date hereof and as of the Effective Date, with the
same effect as though such representations and warranties had been made on and
as of such date (except to the extent that any representation or warranty speaks
as of a specified date and except for changes expressly contemplated by this
Agreement) and not contain any material inaccuracies or omissions, the
circumstances as to which, either individually or in the aggregate have, or
reasonably could be expected to have, a material adverse effect on Redwood
Empire.

            (b) COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. Redwood Empire shall
have performed and complied in all material respects with all terms of this
Agreement required to be performed or complied with by it at or prior to the
Effective Date. Each of the

                                       49



directors of Redwood Empire also shall have performed and complied in all
material respects with all of the terms and conditions of the undertaking
referred to in Section 3.2(a) above.

            (c) MATERIAL ADVERSE CHANGE; LITIGATION. No material adverse change
shall have occurred since December 31, 2003, with respect to Redwood Empire
(whether or not in the Ordinary Course of Business) and neither Redwood Empire
nor any of its subsidiaries shall be a party to or, so far as Redwood Empire is
aware, threatened with, and to Redwood Empire's knowledge there is no reasonable
basis for, any legal action or other proceeding before any court, any arbitrator
of any kind or any government agency that, in the reasonable judgment of
Westamerica, is reasonably likely to result in a material adverse effect on
Redwood Empire.

            (d) APPROVAL OF AGREEMENT. This Agreement and the Mergers shall have
been duly approved by the affirmative vote of the holders of a majority of the
outstanding shares of Redwood Empire common stock at the meeting of shareholders
duly called and held after distributing the Proxy Statement to all shareholders
entitled to vote at such meeting as required by Section 6 hereof.

            (e) OFFICER'S CERTIFICATE. Westamerica shall have received a
certificate, dated the Effective Date, signed on behalf of Redwood Empire by its
President and Chief Executive Officer, and Chief Financial Officer to the effect
that the conditions in Sections 7(a)-(d) have been satisfied.

            (f) OPINION OF COUNSEL. Redwood Empire shall have delivered to
Westamerica an opinion of its counsel in substantially the form attached hereto
as Exhibit E.

            (g) ABSENCE OF LEGAL IMPEDIMENT. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any governmental authority of competent
jurisdiction which makes the consummation of the Merger or the Bank Merger
illegal.

            (h) EFFECTIVENESS OF REGISTRATION STATEMENT. The Westamerica
Registration Statement and any amendments or supplements thereto shall have
become effective under the 1933 Act, no stop order suspending the effectiveness
of such Registration Statement shall be in effect and no proceedings for such
purpose shall have been initiated or threatened by or before the Commission.

            (i) GOVERNMENT APPROVALS. All Government Approvals shall be in
effect, and all conditions or requirements prescribed by law or by any
Government Approval shall have been satisfied; provided, however, that no
Government Approval shall be deemed to have been received if it, or any other
action taken after the date of this Agreement, or any statute, rule, regulation,
order or decree enacted, entered, enforced or deemed applicable to the Merger,
the Bank Merger or other related agreements by any federal or state governmental
entity arising after the date of this Agreement, shall impose any condition or
requirement that Westamerica, in its reasonable and good faith judgment, deems
to be materially burdensome (in which case Westamerica shall promptly notify
Redwood Empire); provided that Westamerica shall be

                                       50



required to use commercially reasonable efforts to remove such materially
burdensome condition. For purposes of this Agreement, no condition shall be
deemed to be "materially burdensome" if such condition does not materially
differ from conditions generally imposed by the FRB or the DFI in orders
approving transactions of the type contemplated by this Agreement and it does
not (A) require the divestiture or cessation of any of the present businesses or
operations conducted by Westamerica or Redwood Empire, (B) require the taking of
any action inconsistent with the manner in which Westamerica or Redwood Empire
has conducted its business previously, (C) have or is not reasonably likely to
have a material adverse effect on Westamerica or Redwood Empire, (D) preclude
satisfaction of any of the conditions to consummation of the transactions
contemplated by this Agreement or (E) prevent Westamerica or WAB from realizing
any substantial portion of the economic benefits of the transactions
contemplated by this Agreement; provided, a requirement to divest deposits of
either NBR or WAB in Lake County, California (a "Lake County Divestiture"),
shall result in the adjustment of the Merger Consideration as provided in
Section 2.1(c) and shall not be deemed "materially burdensome" for purposes of
this section.

            (j) TAX OPINION. Westamerica shall have received an opinion of its
counsel, subject to assumptions and exceptions normally included, in form and
substance reasonably satisfactory to Westamerica, substantially to the effect
that under federal income tax law and California income and franchise tax law:

                  (i) The Merger will be treated for federal income tax purposes
      as a reorganization within the meaning of Section 368(a) of the IRC;

                  (ii) Westamerica and Redwood Empire will each be a party to
      such reorganization within the meaning of Section 368(b) of the IRC;

                  (iii) The Merger will not result in any recognized gain or
      loss to Westamerica or Redwood Empire;

                  (iv) Except for the Cash Portion of the Merger Consideration
      and any cash received in lieu of any fractional share, no gain or loss
      will be recognized by holders of Redwood Empire Shares who receive
      Westamerica Shares in exchange for the Redwood Empire Shares which they
      hold;

                  (v) The holding period of Westamerica Shares exchanged for
      Redwood Empire Shares will include the holding period of the Redwood
      Empire Shares for which the Westamerica Shares are exchanged, assuming the
      Redwood Empire Shares are capital assets in the hands of the holder
      thereof at the Effective Date; and

                  (vi) The basis of the Westamerica Shares received in the
      exchange will be the same as the basis of the Redwood Empire Shares for
      which the Westamerica Shares are exchanged, decreased by the amount of any
      cash received and increased by the amount of any gain recognized on the
      exchange.

The issuance of such opinion shall be conditioned on the receipt of tax
representation letters from Westamerica and Redwood Empire, which letters shall
be in such form and substance as may reasonably be required by the recipient's
counsel. Each such tax representation letter shall

                                       51




be dated on or before the date of such opinion and shall not have been withdrawn
or modified in any material respect as of the date of such opinion.

            (k) ACCOUNTANT'S ASSURANCE. Westamerica shall have received the
written assurance from Crowe Chizek and Company LLC prepared pursuant to the
provisions of Section 3.2(f)(v).

            (l) DISSENTING SHARES. The aggregate number of shares of Redwood
Empire common stock held by persons who have taken all of the steps required at
or prior to the intended closing to perfect their right (if any) to be paid the
value of such shares under the GCL shall not exceed 9% of the outstanding shares
of Redwood Empire common stock.

            (m) UNAUDITED FINANCIALS. Not later than five Business Days prior to
the Effective Date (and, if applicable, by the earlier date specified in clause
(ii) of the final paragraph of Article 7), Redwood Empire shall have furnished
Westamerica a copy of its most recently prepared unaudited year-to-date
consolidated financial statements, including a balance sheet and year-to-date
statement of income, each prepared in accordance with GAAP and the requirements
of this Agreement; provided, that such financial statements shall not be
required to include the footnotes that would be required for such financial
statements to comply fully with GAAP. At least seven Business Days prior to the
Effective Date, all attorneys, accountants, investment bankers and other
advisors and agents for Redwood Empire shall have submitted to Redwood Empire
(with a copy to Westamerica) estimates of their fees and expenses for all
services rendered or to be rendered in any respect in connection with the
transactions contemplated hereby to the extent not already paid, and based on
such estimates, Redwood Empire shall have prepared and submitted to Westamerica
a summary of such fees and expenses for the transaction which shall be reflected
in the foregoing financial statement. At the Effective Time, (i) such advisors
shall have submitted their final bills for such fees and expenses to Redwood
Empire for services rendered, with a copy to be delivered to Westamerica, and
based on such summary, Redwood Empire shall have prepared and submitted to
Westamerica a final calculation of such fees and expenses, (ii) Redwood Empire
shall have accrued and paid the amount of such fees and expenses as calculated
above after Westamerica has been given an opportunity to review all such bills
and calculation of such fees and expenses, and (iii) such advisors shall have
released Westamerica from liability for any fees and expenses.

            (n) AFFILIATES' LETTER. No later than 30 calendar days after the
date of execution of this Agreement (and at the date of mailing of the Proxy
Statement to the shareholders of Redwood Empire for persons not previously
deemed an affiliate for this purpose), Westamerica shall have received from each
person who, in the opinion of Westamerica's counsel, might be deemed to be an
affiliate of Redwood Empire or Westamerica under Rule 144 or 145, a signed
undertaking substantially in the form attached hereto as Exhibit C.

            (o) SHAREHOLDERS' EQUITY. The Shareholders' Equity of Redwood Empire
as of the SAS 100 Date or, if applicable, the earlier date specified in clause
(ii) of the final paragraph of Article 7 shall be not less than the sum of: (i)
$23,531,400 (after deduction of actual and estimated Merger-related expenses,
net of the related tax benefit, including Merger-related expenses that are
assumed by Westamerica and not actually paid by Redwood Empire, all as disclosed
in Section 7(o) of the Redwood Empire Disclosure Schedule) and (ii) $515,000 for

                                       52



each complete calendar month (prorated for a final partial month) from May 31,
2004, through the Effective Date, but reduced in any month by the amount of cash
dividends permitted by this Agreement ("Minimum Shareholders' Equity").
"Shareholders' Equity" for purposes of this Section 7(o) means shareholders'
equity determined in accordance with GAAP and as required by this Agreement, but
excluding any revaluation at any time of securities available for sale and
reduced by an amount equal to all of Redwood Empire's actual and anticipated
Merger-related expenses to the extent not previously paid or accrued as
contemplated by subsection (m) above and any cash shortfall identified by the
cash reconciliation described in Section 3.2(v), in each case after adjustment
for any related tax benefit. In addition, it is agreed that amounts payable to
employees of Redwood Empire or its subsidiaries who are terminated at or after
the Effective Time, under the Redwood Empire Change of Control Compensation
Policy, shall be disregarded in determining "Shareholders' Equity" for purposes
of this Section 7(o).

            (p) LOANS AND NONINTEREST-BEARING DEPOSITS. As of the SAS 100 Date
and as of the Effective Time or, if applicable, the earlier date specified in
clause (ii) of the final paragraph of Article 7, the outstanding principal
balance of all of Redwood Empire's Performing Loans shall equal or exceed
$400,000,000. For the 30-day period ending on the SAS 100 Date and the 30-day
period ending three days before the Effective Date or, if applicable, the
earlier date specified in clause (ii) of the final paragraph of Article 7, the
average total balance of all noninterest-bearing deposit accounts maintained
with Redwood Empire shall equal or exceed $100,000,000.

            (q) CONSENTS. Redwood Empire shall have received, or Westamerica
shall have satisfied itself that Redwood Empire will receive, all consents of
other parties to the transactions contemplated by this Agreement that are
required by material mortgages, notes, leases, franchises, agreements, licenses
and permits applicable to Redwood Empire or any of its subsidiaries, in each
case in form and substance reasonably satisfactory to Westamerica, and no such
consent or license or permit shall have been withdrawn or suspended; provided,
however, that Redwood Empire shall not be required to obtain any such consents
where the failure to obtain such consents would not or would not reasonably be
expected to have a material adverse effect on Redwood Empire or Westamerica or
that would not or would not reasonably be expected to prevent Westamerica from
realizing any substantial portion of the economic benefits of the transactions
contemplated by this Agreement.

            (r) SUPPORT UNDERTAKINGS. Westamerica shall have received the
undertakings in the form of Exhibits B and B-1 required from each Redwood Empire
director and each of the specified shareholders of Redwood Empire as required by
Section 3.2(a).

            (s) REGULATORY EXAMINATION. Prior to the Effective Date, Redwood
Empire shall be in material compliance with all requirements arising from its
most recent safety and soundness examination.

            (t) NONCOMPETITION/NONSOLICITATION AGREEMENTS. Within 30 calendar
days of the execution of this Agreement, Westamerica shall have received an
executed Confidentiality and Nonsolicitation Agreement substantially in the form
of Exhibit D or a Noncompetition Agreement in substantially the form of Exhibit
D-1 from each director of Redwood Empire.

                                       53



      Notwithstanding the foregoing, if

                  (i) Westamerica elects to defer the Effective Time until the
            first Business Day of February 2005 or later pursuant to Section
            9(a) of this Agreement, and

                  (ii) the requirements of Sections 7(o) and (p) have been
            satisfied as of a date that is at least five (5) days after the
            later of (A) receipt of the last Government Approval, and (B)
            expiration of the last waiting period related to any Government
            Approval, and

                  (iii) as of the date described in clause (ii) above,
            Westamerica has received either a Confidentiality and
            Nonsolicitation Agreement or a Noncompetition Agreement from each
            director of Redwood Empire; the conditions in Sections 7(c) (absence
            of material adverse change or litigation), 7(d) (receipt of
            shareholder approval), 7(k) (accountant's assurance, but as of the
            date described in clause (ii) above rather than two Business Days
            before the Closing Date as specified in Section 3.2(f)(v)) and 7(q)
            (third party consents) are also satisfied as of such date; and
            neither Redwood Empire nor NBR is in material default of any of its
            obligations under this Agreement or any related agreements as of
            such date,

then the requirements of Sections 7(o) and (p) shall be deemed satisfied
thereafter.

8.    CONDITIONS TO THE OBLIGATIONS OF REDWOOD EMPIRE AND NBR.

      The obligations of Redwood Empire and NBR under this Agreement are, at
their option, subject to the fulfillment at or prior to the Effective Time of
each of the following conditions provided, however, that any one or more of such
conditions, other than those set forth in subsection (e), (g), (h) or (i) below,
may be waived by the Board of Directors of Redwood Empire at any time at or
prior to the Effective Time:

            (a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Westamerica and WAB in Section 5 hereof shall be true and correct
in all material respects on the date hereof and as of the Effective Date with
the same effect as though such representations and warranties had been made on
and as of such date except as to any representation or warranty which
specifically related to an earlier date.

            (b) COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. Westamerica and WAB
shall have performed and complied in all material respects with all of the terms
of this Agreement required to be performed or complied with by them at or prior
to the Effective Time.

            (c) MATERIAL ADVERSE CHANGE; LITIGATION. No material adverse change
shall have occurred since December 31, 2003, with respect to Westamerica, and
Westamerica shall not be engaged in, or a party to or so far as Westamerica is
aware, threatened with, and to Westamerica's knowledge no grounds shall exist
for, any legal action or other proceeding before any court, any arbitrator of
any kind or any government agency that, in the reasonable judgment

                                       54


of Redwood Empire, such legal action or proceeding is reasonably likely to
result in a material adverse effect on Westamerica.

            (d) OFFICER'S CERTIFICATE. Redwood Empire shall have received a
certificate, dated the Effective Date, signed on behalf of Westamerica by its
Chief Financial Officer, certifying to the fulfillment of the conditions stated
in Sections 8(a)-(c) hereof.

            (e) APPROVAL OF AGREEMENT. This Agreement and the Merger shall have
been duly approved by the affirmative vote of a majority of the outstanding
shares of Redwood Empire common stock at a meeting of shareholders duly called
and held.

            (f) OPINION OF COUNSEL. Westamerica shall have delivered to Redwood
Empire an opinion of its counsel in substantially the form attached hereto as
Exhibit F.

            (g) EFFECTIVENESS OF REGISTRATION STATEMENT. The Westamerica
Registration Statement and any amendments or supplements thereto shall have
become effective under the 1933 Act. No stop order suspending the effectiveness
of the Westamerica Registration Statement shall be in effect and no proceedings
for such purpose shall have been initiated or threatened by or before the
Commission.

            (h) GOVERNMENT APPROVALS. The Government Approvals shall have been
received and shall be in effect, and all conditions or requirements prescribed
by law or by any such approval shall have been satisfied.

            (i) TAX OPINION. Redwood Empire shall have received an opinion of
its counsel, subject to assumptions and exceptions normally included, in form
and substance reasonably satisfactory to Redwood Empire, substantially to the
effect that under federal income tax law and California income and franchise tax
law:

                  (i) The Merger will be treated for federal income tax purposes
      as a reorganization within the meaning of Section 368(a) of the IRC;

                  (ii) Westamerica and Redwood Empire will each be a party to
      such reorganization within the meaning of Section 368(b) of the IRC;

                  (iii) The Merger will not result in any recognized gain or
      loss to Westamerica or Redwood Empire;

                  (iv) Except for the Cash Portion of the Merger Consideration
      and any cash received in lieu of any fractional share, no gain or loss
      will be recognized by holders of Redwood Empire Shares who receive
      Westamerica Shares in exchange for the Redwood Empire Shares which they
      hold;

                  (v) The holding period of Westamerica Shares exchanged for
      Redwood Empire Shares will include the holding period of the Redwood
      Empire Shares for which the Westamerica Shares are exchanged, assuming the
      Redwood Empire Shares are capital assets in the hands of the holder
      thereof at the Effective Date; and

                                       55


                  (vi) The basis of the Westamerica Shares received in the
      exchange will be the same as the basis of the Redwood Empire Shares for
      which the Westamerica Shares are exchanged, decreased by the amount of any
      cash received and increased by the amount of any gain recognized on the
      exchange.

            The issuance of such opinion shall be conditioned on the receipt of
tax representation letters from Westamerica and Redwood Empire, which letters
shall be in such form and substance as may reasonably be required by the
recipient's counsel. Each such tax representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect as of the date of such opinion.

            (j) ABSENCE OF LEGAL IMPEDIMENT. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any governmental authority of competent
jurisdiction which makes the consummation of the Merger illegal.

            (k) FAIRNESS OPINION. As of the date of this Agreement, Redwood
Empire shall have received a fairness opinion commissioned by Redwood Empire's
Board of Directors which shall provide that the terms of the Merger, from a
financial standpoint, are fair to the shareholders of Redwood Empire.

9. CLOSING.

            (a) CLOSING DATE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall occur on an agreed date no later than five
Business Days after satisfaction or waiver (subject to applicable law) of all
the conditions (other than conditions that, by their terms, cannot be satisfied
until the Closing) set forth in Articles 7 and 8; provided that a Closing that
would otherwise occur in December 2004 or January 2005 shall be deferred, if
Westamerica so elects by written notice to Redwood Empire given at least four
Business Days before the date on which the Closing would otherwise occur, until
the first Business Day of February 2005. The Closing shall, unless another date,
time or place is agreed to in writing by Westamerica and Redwood Empire, be held
at the offices of Bingham McCutchen LLP, Three Embarcadero Center, San
Francisco, California, on the Effective Date.

            (b) DELIVERY OF DOCUMENTS. At the Closing, the opinions,
certificates and other documents required to be delivered by this Agreement
shall be delivered.

            (c) FILINGS. At the Closing, Westamerica and Redwood Empire shall
instruct their respective representatives to make or confirm such filings as
shall be required in the opinion of counsel to Westamerica and Redwood Empire to
give effect to the Merger.

10. EXPENSES.

      Except as provided in Section 11, each party hereto agrees to pay, without
right of reimbursement from the other party and whether or not the transactions
contemplated by this Agreement or the Merger Agreement shall be consummated, the
costs incurred by such party

                                       56


incident to the performance of its obligations under this Agreement and the
Merger Agreement, including without limitation, costs incident to the
preparation of this Agreement, the Westamerica Registration Statement,
Prospectus and the Proxy Statement (including the audited financial statements
of the parties contained or incorporated by reference therein) and incident to
the consummation of the Merger and of the other transactions contemplated herein
and in the Merger Agreement, including the fees and disbursements of counsel,
accountants, consultants and financial advisers employed by such party in
connection therewith. Notwithstanding the foregoing, Westamerica shall be solely
responsible for all fees payable pursuant to state "blue-sky" securities laws
and the fee required to be paid to the Commission to register the Westamerica
Shares. Redwood Empire shall bear its own costs of distributing the Proxy
Statement and other information relating to these transactions to its
shareholders.

11. AMENDMENT; TERMINATION.

            (a) AMENDMENT. This Agreement and the Merger Agreement may be
amended by the parties at any time prior to the Effective Time without the
approval of the shareholders of Redwood Empire with respect to any of their
terms except the terms relating to the form or amount of consideration to be
delivered to the Redwood Empire shareholders in the Merger or any other
principal terms of this Agreement or the Merger Agreement as contemplated by
Section 1104 of the GCL.

            (b) TERMINATION. This Agreement and the Merger Agreement may be
terminated as follows:

                  (i) By the mutual consent of the Boards of Directors of both
      Westamerica and Redwood Empire at any time prior to the consummation of
      the Merger.

                  (ii) By the Board of Directors of Westamerica on or after nine
      months after the date of this Agreement, if (A) any of the conditions in
      Section 7 to which the obligations of Westamerica are subject have not
      been fulfilled, or (B) such conditions have been fulfilled or waived by
      Westamerica and Redwood Empire shall have failed to complete the Merger.

                  (iii) By Westamerica or Redwood Empire upon the failure of the
      shareholders of Redwood Empire to give the requisite approval of this
      Agreement at the duly convened Redwood Empire shareholders' meeting.

                  (iv) By Redwood Empire, upon written notice to Westamerica, if
      there shall have been a breach by Westamerica or WAB of any of the
      covenants or agreements or any of the representations or warranties set
      forth in this Agreement on the part of Westamerica or WAB, which breach,
      either individually or in the aggregate, would result in the failure of
      any of the conditions set forth in Sections 8(a) or 8(b) and which breach
      has not been cured within 60 days following written notice thereof to
      Westamerica or, by its nature, cannot be cured within such time period.

                  (v) By Westamerica, upon written notice to Redwood Empire, if
      there shall have been a breach by Redwood Empire or NBR of any of the
      covenants or agreements or any of the representations or warranties set
      forth in this Agreement on the

                                       57




      part of Redwood Empire or NBR, which breach, either individually or in the
      aggregate, would result in the failure of any of the conditions set forth
      in Sections 7(a) or 7(b) and which breach has not been cured within 60
      days following written notice thereof to Redwood Empire or, by its nature,
      cannot be cured within such time period.

                  (vi) By Redwood Empire or Westamerica if any Government
      Approval required for the Merger has been denied and such denial has
      become final and nonappealable or any governmental agency of competent
      jurisdiction shall have issued a final nonappealable order permanently
      enjoining or prohibiting the Merger.

                  (vii) By the Board of Directors of Redwood Empire on or after
      nine months after the date of this Agreement, if (A) any of the conditions
      contained in Section 8 to which the obligations of Redwood Empire are
      subject have not been fulfilled, or (B) such conditions have been
      fulfilled or waived but Westamerica shall have failed to complete the
      Merger.

                  (viii) By Westamerica if Redwood Empire shall have breached in
      any material respect any of its obligations contained in Section 3.2(j).

                  (ix) By Westamerica if the Board of Directors of Redwood
      Empire shall have failed to recommend adoption of this Agreement at the
      duly convened Redwood Empire shareholders' meeting, or withdrawn or
      modified or qualified (or proposed to withdraw, modify or qualify) in a
      manner adverse to Westamerica its favorable recommendation of this
      Agreement or recommended any Competing Transaction to the shareholders of
      Redwood Empire or taken any action or made any other statement in
      connection with such meeting or the Merger having such effect.

                  (x) By Redwood Empire if the Board of Directors of Redwood
      Empire shall, concurrently with such termination, authorize Redwood Empire
      to enter into an agreement with respect to a Competing Transaction;
      provided, however, that Redwood Empire may only exercise its right to
      terminate this Agreement pursuant to this Section 11(b)(x) if (w) Redwood
      Empire shall have complied in all material respects with Section
      3.2(j)(iii); (x) the Board of Directors of Redwood Empire, after
      consultation with a financial advisor of recognized reputation in similar
      transactions, has reasonably determined in good faith that such Competing
      Transaction is a Superior Proposal (taking into account any proposal or
      offer which shall have been made by Westamerica to modify the terms of
      this Agreement); (y) the Board of Directors of Redwood Empire has
      reasonably determined in good faith (after consultation with outside legal
      counsel) that the failure to exercise such right of termination would be
      inconsistent with its fiduciary duties under applicable law; and (z)
      simultaneously with such termination, Redwood Empire shall make a payment
      to Westamerica of the Termination Fee (as defined below); provided, that
      for purposes of this Section 11(b)(x) the term "Competing Transaction"
      shall have the meaning set forth in Section 3.2(j)(i), except that the
      reference to "15% or more" in the definition of Competing Transaction
      shall be deemed to be a reference to "a majority".

                                       58



                  (xi) By Redwood Empire if Westamerica shall fail to comply
      with its obligations under Section 3.1(g).

                  (xii) By Westamerica if Westamerica enters into an agreement
      for a Superior Proposal pursuant to clause (ii) of Section 3.1(g),
      provided that Westamerica shall, simultaneously with such termination,
      make payment to Redwood Empire of the Termination Fee.

                  (xiii) By the Board of Directors of Westamerica if the
      Westamerica Average Closing Price is greater than $60.66 or by the Board
      of Directors of Redwood Empire if the Westamerica Average Closing Price is
      less than $40.44.

Notwithstanding any of the foregoing provisions, no party shall be entitled to
terminate this Agreement if the basis for the termination is caused by or exists
because of such party's failure to perform its obligations under this Agreement.

            (c) NOTICE. The power of termination hereunder may be exercised by
Westamerica or Redwood Empire, as the case may be, only by giving written
notice, signed on behalf of such party by its Chairman of the Board or
President, to the other party.

            (d) TERMINATION AND EXPENSES. In the event of termination of this
Agreement by either Redwood Empire or Westamerica as provided in Section 11(b),
neither Redwood Empire nor Westamerica shall have any further obligation or
liability to the other party except with respect to this Section 11(d) and to
maintain the confidentiality of the other party's information pursuant to
Section 3.3; provided, however, that nothing herein shall relieve any party from
liability for any willful and material breach of the warranties and
representations made by it, or willful and material failure in performance of
any of its covenants, agreements or obligations hereunder. In the event of
termination of this Agreement, any agreement related to the Bank Merger will
also automatically terminate. If Westamerica shall terminate this Agreement
pursuant to Section 11(b)(viii) or 11(b)(ix) or if Redwood Empire shall
terminate this Agreement pursuant to Section 11(b)(x), Redwood Empire shall pay
to Westamerica (by Fed wire transfer of immediately available funds to such
account as may be designated by Westamerica in writing to Redwood Empire) the
sum of $4,500,000 (the "Termination Fee"). If Redwood Empire terminates this
Agreement pursuant to Section 11(b)(xi) or if Westamerica shall terminate this
Agreement pursuant to Section 11(b)(xii), then Westamerica shall pay to Redwood
Empire, on demand (by Fed wire transfer of immediately available funds to such
account as may be designated by Redwood Empire in writing to Westamerica), the
Termination Fee. If (A) either party shall terminate this Agreement pursuant to
Section 11(b)(iii) and (B) at any time after the date of this Agreement and at
or before the date of the Redwood Empire shareholders' meeting, a Competing
Transaction (or a proposal therefor) shall have been publicly announced or
otherwise publicly communicated to Redwood Empire's shareholders; and if (C)
within twelve (12) months of the date of such termination of this Agreement,
Redwood Empire or any of its subsidiaries executes any definitive agreement with
respect to, or consummates, any Competing Transaction, then Redwood Empire shall
pay to Westamerica the Termination Fee on the Business Day following such
execution or consummation; provided, that for purposes of this sentence, the
term "Competing Transaction" shall have the meaning set forth in Section
3.2(j)(i), except that the reference to "15% or more" in the definition of
Competing

                                       59




Transaction shall be deemed to be a reference to "a majority". In no event shall
more than one Termination Fee be payable by either party under this Section
11(d). Westamerica and Redwood Empire (for themselves and their respective
affiliates) hereby agree that, upon any termination of this Agreement under
circumstances where Westamerica or Redwood Empire is entitled to a Termination
Fee under this Section 11(d) and Westamerica or Redwood Empire receives such
Termination Fee, Westamerica and Redwood Empire and their respective affiliates
shall be precluded from any other remedy against Redwood Empire or Westamerica,
at law or in equity or otherwise, and neither Westamerica or Redwood Empire nor
any of their respective affiliates shall seek (and Westamerica and Redwood
Empire shall cause their respective affiliates not to seek) to obtain any
recovery, judgment, or damages of any kind, including consequential, indirect,
or punitive damages, against Westamerica or Redwood Empire or their respective
subsidiaries or any of their respective directors, officers, employees,
partners, managers, members or shareholders in connection with this Agreement or
the transactions contemplated hereby.

12. MISCELLANEOUS.

            (a) NOTICES. Any notice or other communication required or permitted
under this Agreement shall be effective only if it is in writing and delivered
personally, or by overnight express or by facsimile or sent by first class
United States mail, postage prepaid, registered or certified mail, addressed as
follows:

To Westamerica:                           To Redwood Empire:

David L. Payne, President &               Patrick W. Kilkenny
Chief Executive Officer                   President & Chief Executive Officer
Westamerica Bancorporation                Redwood Empire Bancorp
4550 Mangels Boulevard                    111 Santa Rosa Avenue
Fairfield, CA 94585-1200                  Santa Rosa, CA 95404-4905

With a copy to:                           With a copy to:
Bingham McCutchen LLP                     Pillsbury Winthrop LLP
Three Embarcadero Center                  50 Fremont Street
San Francisco, CA 94111                   San Francisco, CA  94105
Attention: Thomas G. Reddy                Attention: Rodney R. Peck
                                                     Patricia F. Young

or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.

            (b) BINDING AGREEMENT. This Agreement is binding upon and is for the
benefit of Westamerica, WAB, Redwood Empire and NBR and their respective
successors and permitted assigns. This Agreement is not made for the benefit of
any person, firm, corporation or association not a party hereto, and no other
person, firm, corporation or association shall acquire or have any right under
or by virtue of this Agreement except with respect to Section 3.1(h). No party
may assign this Agreement or any of its rights, privileges, duties or

                                       60



obligations hereunder, whether voluntarily or by operation of law or otherwise)
without the prior written consent of the other parties to this Agreement.

            (c) STANDARD. No representation or warranty of Redwood Empire or NBR
contained in Article 4 or of Westamerica or WAB contained in Article 5 shall be
deemed untrue or incorrect for any purpose under this Agreement, and no party
hereto shall be deemed to have breached a representation or warranty for any
purpose under this Agreement, in any case as a consequence of the existence or
absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with any representations or warranties contained in
Article 4, in the case of Redwood Empire or NBR, or Article 5, in the case of
Westamerica or WAB, has had or would be reasonably likely to have a material
adverse effect with respect to Redwood Empire or NBR or Westamerica or WAB,
respectively (disregarding for purposes of this Section 12(c) any materiality or
material adverse effect qualification contained in any representations or
warranties).

            The term "material adverse effect" or "material adverse change"
means, with respect to any party, a material adverse effect on or change in (i)
the business, results of operations, financial condition or prospects of such
party and its subsidiaries taken as a whole (provided, however, that, with
respect to this clause (i), material adverse effect shall not be deemed to
include effects to the extent resulting from (a) changes, after the date hereof,
in GAAP or RAP requirements applicable to banks and their holding companies
generally, (b) changes, after the date hereof, in laws, rules or regulations of
general applicability or interpretations thereof by courts or governmental
entities, (c) actions or omissions of a party taken with the prior written
consent of the other or required hereunder, (d) changes, after the date hereof,
in general economic or market conditions affecting banks or their holding
companies generally, (e) public disclosure of the transactions contemplated
hereby, or (f) any expenses not exceeding those disclosed in the Redwood Empire
Disclosure Schedule incurred in connection with this Agreement or the
transactions contemplated thereby, or (ii) with respect to any party, the
ability of such party to timely consummate the transactions contemplated by this
Agreement.

            The phrases "known" and "knowledge" mean, with respect to any party
hereto, the actual knowledge of such party's executive officers.

            (d) NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No investigation
by Westamerica or Redwood Empire made before or after the date of this Agreement
shall affect the representations and warranties which are contained in this
Agreement and such representations and warranties shall survive such
investigation, provided that, except with respect to covenants and agreements to
be performed in whole or in part subsequent to the Effective Date (as to which
the related representations and warranties shall survive until their
performance) which covenants and agreements shall survive the Closing, the
representations, warranties, covenants and agreements of Westamerica and Redwood
Empire contained in this Agreement shall not survive the Closing.

            (e) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
its choice of law principles.

                                       61



            (f) ATTORNEYS' FEES. In any action at law or suit in equity in
relation to this Agreement, the prevailing party in such action or suit shall be
entitled to receive a reasonable sum for its attorneys' fees and all other
reasonable costs and expenses incurred in such action or suit.

            (g) ENTIRE AGREEMENT; SEVERABILITY. This Agreement and the
documents, certificates, agreements, letters, schedules and exhibits attached or
required to be delivered pursuant hereto set forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby,
and supersede all prior agreements, arrangements and understandings relating to
the subject matter hereof. Each provision of this Agreement shall be interpreted
in a manner to be effective and valid under applicable law, but if any provision
hereof shall be prohibited or ruled invalid under applicable law, the validity,
legality and enforceability of the remaining provisions shall not, except as
otherwise required by law, be affected or impaired as a result of such
prohibition or ruling.

            (h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

            (i) SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all such actions as are necessary on
its part to cause the consummation of the Mergers, will cause irreparable injury
to the other for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereto hereby consent to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of the obligations hereunder and to the granting by any such court of the remedy
of the specific performance by the non-performing party of their obligations
hereunder.

            (j) WAIVERS. Prior to or at the Effective Time, each of Westamerica
and WAB on one hand and Redwood Empire and NBR on the other shall have the right
to waive any default in the performance of any term of this Agreement by the
other, to waive or extend the time for the compliance or fulfillment by the
other of any and all of the other's obligations under this Agreement and to
waive any or all of the conditions precedent to its obligations under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any law or applicable governmental regulation. No failure to
exercise and no delay in exercising any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy or power provided herein or by law or
in equity. The waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or condition itself.
Any requests for waivers or waivers granted pursuant to this Section 12(j) shall
be in accordance with the provisions of Section 12(a) hereof.

                                       62



      IN WITNESS WHEREOF, Westamerica, WAB, Redwood Empire and NBR have each
caused this Agreement and Plan of Reorganization to be signed by its Chairman of
the Board or President and its corporate seal to be hereunto affixed and
attested by the signature of its Secretary all as of the day and year first
above written.

                                  WESTAMERICA BANCORPORATION

                                  By: /s/ David L. Payne
                                      ------------------------------------------
                                      Chairman, President and Chief Executive
                                      Officer

                                  WESTAMERICA BANK

                                  By: /s/ David L. Payne
                                      ------------------------------------------
                                      Chairman, President and Chief Executive
                                      Officer

                                  REDWOOD EMPIRE BANCORP

                                  By: /s/ Patrick W. Kilkenny
                                      ------------------------------------------
                                      President and Chief Executive Officer

                                  NATIONAL BANK OF THE REDWOODS

                                  By: /s/ Patrick W. Kilkenny
                                      ------------------------------------------
                                      Chairman of the Board

                                       63



                                TABLE OF CONTENTS


                                                                                                              Page
                                                                                                              ----
                                                                                                           
1.       THE MERGER AND BANK MERGER.........................................................................    1

         1.1      Effective Date............................................................................    1

                  (a)      Merger...........................................................................    1

                  (b)      Bank Merger......................................................................    2

         1.2      Effect of the Mergers.....................................................................    2

                  (a)      Merger...........................................................................    2

                  (b)      Bank Merger......................................................................    2

2.       CONVERSION AND CANCELLATION OF SHARES..............................................................    3

         2.1      Conversion of Common Stock of Redwood Empire..............................................    3

                  (a)      Cancellation of Shares held by Redwood Empire Subsidiaries.......................    3

                  (b)      Conversion.......................................................................    3

                  (c)      Conversion of Stock Portion......................................................    3

                  (d)      Cancellation and Exchange of Redwood Empire Shares...............................    5

                  (e)      Rights as Shareholders...........................................................    5

                  (f)      Redwood Empire Dissenting Shares.................................................    5

         2.2      Fractional Shares.........................................................................    5

         2.3      Surrender of Redwood Empire Shares........................................................    5

         2.4      No Further Transfers of Redwood Empire Shares.............................................    6

         2.5      Adjustments...............................................................................    7

         2.6      Treatment of Stock Options................................................................    7

         2.7      Effect on Westamerica Common Stock........................................................    8

         2.8      Directors of the Surviving Corporation....................................................    8

         2.9      Executive Officers of the Surviving Corporation...........................................    8

         2.10     Directors of the Surviving Bank...........................................................    8

3.       COVENANTS OF THE PARTIES...........................................................................    8

         3.1      Covenants of Westamerica..................................................................    8

                  (a)      Reservation, Issuance and Registration of Westamerica Common Stock...............    8

                  (b)      Nasdaq Listing...................................................................    9

                  (c)      Government Approvals.............................................................    9

                  (d)      Notification of Breach of Representations, Warranties and Covenants.............    10


                                       i

                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                Page
                                                                                                                ----
                                                                                                             
                  (e)     Financial Statements.............................................................      10

                  (f)      Press Releases..................................................................      10

                  (g)      Business Combinations...........................................................      11

                  (h)      Director and Officer Indemnification and Liability Insurance Coverage...........      12

                  (i)      Employee Benefits...............................................................      12

                  (j)      Dividends.......................................................................      13

                  (k)      Section 16......................................................................      13

                  (l)      Tax-Free Reorganization Treatment...............................................      13

         3.2      Covenants of Redwood Empire..............................................................      13

                  (a)      Approval by Redwood Empire Shareholders.........................................      13

                  (b)      Shareholder Lists and Other Information.........................................      14

                  (c)      Government Approvals............................................................      14

                  (d)      New Branches and Leases.........................................................      15

                  (e)      Notification of Breach of Representations, Warranties and Covenants.............      15

                  (f)      Financial Statements............................................................      15

                  (g)      Compensation....................................................................      16

                  (h)      Conduct of Business in the Ordinary Course......................................      17

                  (i)      Press Releases..................................................................      20

                  (j)      No Merger or Solicitation.......................................................      21

                  (k)      Employee Benefit Plans..........................................................      23

                  (l)      Changes in Capital Stock........................................................      23

                  (m)      Dividends.......................................................................      23

                  (n)      Accounting Methods..............................................................      23

                  (o)      Affiliates......................................................................      23

                  (p)      Additional Agreements...........................................................      23

                  (q)      Access to Properties, Books and Records; Confidentiality........................      24

                  (r)      Noncompetition/Nonsolicitation Agreements.......................................      24

                  (s)      Classifications and Litigation Developments.....................................      24

                  (t)      Accounting Adjustment before Closing............................................      25

                  (u)      Consents........................................................................      25


                                       ii


                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                Page
                                                                                                                ----
                                                                                                             
                  (v)      Cash Reconciliation.............................................................      25

                  (w)      Tax Returns.....................................................................      25

         3.3      Information and Confidentiality..........................................................      26

                  (a)      Information and Confidentiality.................................................      26

                  (b)      Asset Review....................................................................      26

         3.4      Cooperation..............................................................................      27

4.       REPRESENTATIONS AND WARRANTIES OF REDWOOD EMPIRE AND NBR..........................................      28

                  (a)      Corporate Status and Power to Enter Into Agreements.............................      28

                  (b)      Articles, Bylaws, Books and Records.............................................      28

                  (c)      Compliance With Laws, Regulations and Decrees...................................      29

                  (d)      Execution and Delivery of the Agreement.........................................      29

                  (e)      Capitalization..................................................................      30

                  (f)      Equity Interests................................................................      30

                  (g)      Securities Law Filings..........................................................      31

                  (h)      Financial Statements, Regulatory Reports........................................      31

                  (i)      Community Reinvestment Act......................................................      32

                  (j)      Tax Returns.....................................................................      32

                  (k)      Absence of Certain Changes......................................................      33

                  (l)      No Undisclosed Liabilities......................................................      33

                  (m)      Indemnification.................................................................      34

                  (n)      Properties and Leases...........................................................      34

                  (o)      Material Contracts..............................................................      35

                  (p)      Classified Loans................................................................      36

                  (q)      Restrictions on Investments.....................................................      36

                  (r)      Employment Contracts and Benefits...............................................      37

                  (s)      Compliance With ERISA...........................................................      39

                  (t)      Absence of Certain Matters or Arrangements......................................      40

                  (u)      Collective Bargaining and Employment Agreements.................................      40

                  (v)      Compensation of Officers and Employees..........................................      40

                  (w)      Legal Actions and Proceedings...................................................      41


                                      iii


                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                Page
                                                                                                                ----
                                                                                                             
                  (x)      Intellectual Property...........................................................      41

                  (y)      Derivative Transactions.........................................................      41

                  (z)      Facts Affecting Government Approvals............................................      42

                  (aa)     Retention of Broker or Consultant...............................................      42

                  (bb)     Insurance.......................................................................      42

                  (cc)     Loan Loss Allowance.............................................................      43

                  (dd)     Transactions With Affiliates....................................................      43

                  (ee)     Information in Westamerica Registration Statement...............................      43

                  (ff)     Accuracy of Representations and Warranties......................................      44

                  (gg)     No Brokered Deposits............................................................      44

                  (hh)     Internal Controls...............................................................      44

5.       REPRESENTATIONS AND WARRANTIES OF WESTAMERICA AND WAB.............................................      44

                  (a)      Corporate Status and Power to Enter Into Agreement..............................      44

                  (b)      Corporate Status and Power of Westamerica and WAB...............................      45

                  (c)      Articles, Bylaws, Books and Records.............................................      45

                  (d)      Compliance With Laws, Regulations and Decrees...................................      45

                  (e)      Execution and Delivery of the Agreement.........................................      46

                  (f)      Securities Law Filings..........................................................      46

                  (g)      Financial Statements, Regulatory Reports........................................      46

                  (h)      Community Reinvestment Act......................................................      47

                  (i)      Material Adverse Change.........................................................      47

                  (j)      Information in Westamerica Registration Statement...............................      47

                  (k)      Accuracy of Representations and Warranties......................................      48

                  (l)      Employee Benefits...............................................................      48

                  (m)      Compliance With ERISA...........................................................      48

                  (n)      Legal Actions and Proceedings...................................................      49

                  (o)      Facts Affecting Government Approvals............................................      49

                  (p)      Taxes...........................................................................      49

                  (q)      Capitalization..................................................................      49

                  (r)      Internal Controls...............................................................      50

6.       SECURITIES ACT OF 1933............................................................................      50


                                       iv

                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                Page
                                                                                                                ----
                                                                                                             
                  (a)      Preparation and Filing of Registration Statement................................      50

                  (b)      Effectiveness of Registration Statement.........................................      51

                  (c)      Sales and Resales of Common Stock...............................................      51

                  (d)      Rule 145........................................................................      51

                  (e)      Blue Sky Compliance.............................................................      51

7.       CONDITIONS TO THE OBLIGATIONS OF WESTAMERICA......................................................      51

                  (a)      Representations and Warranties..................................................      52

                  (b)      Compliance and Performance Under Agreement......................................      52

                  (c)      Material Adverse Change; Litigation.............................................      52

                  (d)      Approval of Agreement...........................................................      52

                  (e)      Officer's Certificate...........................................................      52

                  (f)      Opinion of Counsel..............................................................      52

                  (g)      Absence of Legal Impediment.....................................................      52

                  (h)      Effectiveness of Registration Statement.........................................      53

                  (i)      Government Approvals............................................................      53

                  (j)      Tax Opinion.....................................................................      53

                  (k)      Accountant's Assurance..........................................................      54

                  (l)      Dissenting Shares...............................................................      54

                  (m)      Unaudited Financials............................................................      54

                  (n)      Affiliates' Letter..............................................................      55

                  (o)      Shareholders' Equity............................................................      55

                  (p)      Loans and Noninterest-Bearing Deposits..........................................      55

                  (q)      Consents........................................................................      56

                  (r)      Support Undertakings............................................................      56

                  (s)      Regulatory Examination..........................................................      56

                  (t)      Noncompetition/Nonsolicitation Agreements.......................................      56

8.       CONDITIONS TO THE OBLIGATIONS OF REDWOOD EMPIRE AND NBR...........................................      57

                  (a)      Representations and Warranties..................................................      57

                  (b)      Compliance and Performance Under Agreement......................................      57

                  (c)      Material Adverse Change; Litigation.............................................      57

                  (d)      Officer's Certificate...........................................................      57


                                        v


                                TABLE OF CONTENTS
                                   (continued)



                                                                                                                Page
                                                                                                                ----
                                                                                                             
                  (e)      Approval of Agreement...........................................................      57

                  (f)      Opinion of Counsel..............................................................      57

                  (g)      Effectiveness of Registration Statement.........................................      58

                  (h)      Government Approvals............................................................      58

                  (i)      Tax Opinion.....................................................................      58

                  (j)      Absence of Legal Impediment.....................................................      59

                  (k)      Fairness Opinion................................................................      59

9.       CLOSING...........................................................................................      59

                  (a)      Closing Date....................................................................      59

                  (b)      Delivery of Documents...........................................................      59

                  (c)      Filings.........................................................................      59

10.      EXPENSES..........................................................................................      59

11.      AMENDMENT; TERMINATION............................................................................      60

                  (a)      Amendment.......................................................................      60

                  (b)      Termination.....................................................................      60

                  (c)      Notice..........................................................................      62

                  (d)      Termination and Expenses........................................................      62

12.      MISCELLANEOUS.....................................................................................      63

                  (a)      Notices.........................................................................      63

                  (b)      Binding Agreement...............................................................      63

                  (c)      Standard........................................................................      63

                  (d)      No Survival of Representations and Warranties...................................      64

                  (e)      Governing Law...................................................................      64

                  (f)      Attorneys' Fees.................................................................      64

                  (g)      Entire Agreement; Severability..................................................      65

                  (h)      Counterparts....................................................................      65

                  (i)      Specific Performance............................................................      65

                  (j)      Waivers.........................................................................      65


                                       vi


                                TABLE OF CONTENTS
                                  (continued)



                                                                            Page
                                                                            ----
                                                                         
Exhibits

Exhibit A         Agreement of Merger

Exhibit B         Director Support and Voting Agreement

Exhibit B-1       Voting Agreement

Exhibit C         Affiliate's Agreement

Exhibit D         Confidentiality and Nonsolicitation Agreement

Exhibit D-1       Noncompetition Agreement

Exhibit E         Form of Opinion of Redwood Empire's Counsel

Exhibit F         Form of Opinion of Westamerica's Counsel


                                      vii


                             INDEX OF DEFINED TERMS



                                                                     Section
                                                                     -------
                                                                 
1933 Act                                                              3.1(a)

1934 Act                                                            3.2(j)(iv)

Applications                                                           4(ee)

Bank Merger                                                          Recitals

Bank Merger Agreement                                                 1.1(b)

Benefit Plans                                                         4(r)(i)

BHCA                                                                  3.1(c)

Business Combination                                                  3.1(g)

Business Day                                                        2.1(c)(iv)

Cash Portion                                                          2.1(b)

Closing                                                                9(a)

Commission                                                            3.2(c)

Competing Transaction                                                3.2(j)(i)

Confidentiality Agreement                                           3.2(j)(iii)

Confidentiality and Nonsolicitation Agreement                         3.2(r)

Crowe Chizek                                                          3.2(f)

Derivative Transactions                                              4(y)(ii)

DFI                                                                   1.1(b)

Director Support and Voting Agreement                                 3.2(a)

dissenting shareholders                                               2.1(f)

Effective Date                                                        1.1(a)

Effective Time                                                        1.1(a)

Exchange Agent                                                        2.3(a)


                                        1



                                                                
FDI Act                                                              3.2(h)(i)

FDIC                                                                3.2(f)(iv)

FRB                                                                   3.1(c)

FRBSF                                                              3.2(h)(i)(H)

GAAP                                                                 3.1(e)(i)

GCL                                                                   1.1(a)

Government Approvals                                                  3.1(c)

Indemnified Persons                                                   3.1(h)

Independent Appraiser                                               3.3(b)(ii)

Independent Loan Reviewer                                           3.3(b)(ii)

Intellectual Property                                                  4(x)

IRC                                                                  Recitals

IRS                                                                    4(s)

KPMG                                                                 3.1(e)(i)

knowledge                                                              12(c)

known                                                                  12(c)

Liens                                                                  4(f)

material adverse change                                                12(c)

material adverse effect                                                12(c)

Merger                                                               Recitals

Merger Agreement                                                      1.1(a)

Merger Consideration                                                  2.1(b)

Mergers                                                              Recitals

Minimum Shareholders' Equity                                           7(o)

NBR                                                                  Preamble


                                        2


                                                                 
Noncompetition Agreement                                              3.2(r)

OCC                                                                 3.2(f)(iv)

Option Exchange Ratio                                               2.6(b)(ii)

Option Plan                                                             2.6

Ordinary Course of Business                                          3.2(h)(i)

OREO                                                                  3.2(s)

Prospectus                                                             6(a)

Proxy Statement                                                       3.2(a)

RAP                                                                 3.3(b)(iii)

Redwood Empire                                                       Preamble

Redwood Empire Disclosure Schedule                                       4

Redwood Empire Insiders                                               3.1(k)

Redwood Empire Shares                                                 2.1(a)

Redwood Options                                                         2.6

Redwood Plan                                                           4(s)

Representatives                                                      3.2(j)(i)

Rights                                                                2.3(a)

SAS 100 Date                                                         3.2(f)(v)

Section 16 Information                                                3.1(k)

Shareholders' Equity                                                   7(o)

Stock Portion                                                         2.1(b)

Stock Portion Exchange Ratio                                          2.1(c)

Superior Proposal                                                   3.2(j)(iv)

Surviving Bank                                                        1.2(b)

Surviving Corporation                                                 1.2(a)


                                        3



                                                                 
tax                                                                    4(j)

Termination Fee                                                        11(d)

Voting Agreement                                                      3.2(a)

WAB                                                                  Preamble

Westamerica                                                          Preamble

Westamerica Average Closing Price                                   2.1(c)(iv)

Westamerica common stock                                              2.1(b)

Westamerica Plan                                                       5(m)

Westamerica Registration Statement                                     6(a)

Westamerica Shares                                                    2.1(b)


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