<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
REDWOOD EMPIRE BANCORP
----------------------
(Name of Registrant as Specified In Its Charter)
_______________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
___________________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________________
5) Total fee paid:
___________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
________________________
2) Form, Schedule or Registration Statement No.:
<PAGE>
REDWOOD EMPIRE BANCORP
111 SANTA ROSA AVENUE
SANTA ROSA, CALIFORNIA 95404
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
TO THE SHAREHOLDERS OF REDWOOD EMPIRE BANCORP:
The 1998 Annual Meeting of Shareholders of Redwood Empire Bancorp
("Redwood") will be held in the Sonoma Room of the Sonoma County Hilton, 3555
Round Barn Boulevard, Santa Rosa, California, at 4:00 p.m. on May 19, 1998,
for the following purposes:
1. ELECTION OF DIRECTORS. To elect a Board of seven Directors to
serve for the ensuing year.
2. RATIFICATION OF INDEPENDENT AUDITORS. To ratify the appointment of
Deloitte & Touche, LLP as independent certified accountants to
audit Redwood's financial statements for the fiscal year ending
December 31, 1998.
3. AMENDMENT OF BYLAWS. To approve an amendment to Redwood's Bylaws
reducing the minimum number of authorized directors from seven to
five.
4. OTHER BUSINESS. To consider and act upon such other business as may
properly come before the meeting or any adjournment thereof.
Only holders of Common Stock of record as of the close of business on
April 10, 1998 will be entitled to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
Marta J. Idica
Corporate Secretary
April 14, 1998
YOU ARE URGED TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSALS BY SIGNING AND
RETURNING THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING IN PERSON. THE ENCLOSED PROXY IS SOLICITED BY
REDWOOD'S BOARD OF DIRECTORS. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT
PRIOR TO THE TIME IT IS VOTED BY NOTIFYING THE SECRETARY OF REDWOOD IN
WRITING OF SUCH REVOCATION, BY FILING A DULY-EXECUTED PROXY BEARING A LATER
DATE, OR BY ATTENDING THE ANNUAL MEETING IN PERSON AND VOTING BY BALLOT.
<PAGE>
REDWOOD EMPIRE BANCORP
111 SANTA ROSA AVENUE
SANTA ROSA, CALIFORNIA 95404
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for use at the 1998 Annual Meeting of Shareholders (the "Annual
Meeting") of Redwood Empire Bancorp ("Redwood," and with its subsidiaries the
"Company") to be held on Tuesday, May 19, 1998 at 4:00 p.m., in the Sonoma
Room of the Sonoma County Hilton, 3555 Round Barn Boulevard, Santa Rosa,
California, and at any and all adjournments thereof.
It is anticipated that this Proxy Statement and the accompanying Notice
and form of Proxy will be mailed to shareholders eligible to receive notice
of and vote at the Annual Meeting on or about April 14, 1998.
REVOCABILITY OF PROXIES.
A form of Proxy for voting your shares at the Annual Meeting is
enclosed. Any shareholder who executes and delivers such Proxy has the right
to, and may, revoke it at any time before it is exercised, by filing with the
Secretary of Redwood an instrument revoking it or a duly executed Proxy
bearing a later date. In addition, if the person executing a Proxy is present
at the Annual Meeting, and elects to vote in person, the powers of the Proxy
holders will be superseded as to those Proposals on which the shareholder
actually votes at the Annual Meeting.
PERSONS MAKING THE SOLICITATION
THIS SOLICITATION OF PROXIES IS BEING MADE BY REDWOOD'S BOARD OF DIRECTORS.
The expenses of preparing, assembling, printing, and mailing this Proxy
Statement and the materials used in the solicitation of Proxies for the
Annual Meeting will be borne by the Company. It is contemplated that Proxies
will be solicited principally through the use of the mails, but officers,
directors, and employees of the Company and its subsidiary, National Bank of
the Redwoods ("NBR"), may solicit Proxies personally or by telephone, without
receiving special compensation therefor. The Company will reimburse banks,
brokerage houses and other custodians, nominees,
<PAGE>
and fiduciaries for their reasonable expenses in forwarding these Proxy
materials to shareholders whose stock in Redwood is held of record by such
entities. In addition, the Company may use the services of individuals or
companies it does not regularly employ in connection with this solicitation
of Proxies if management determines it to be advisable.
VOTING SECURITIES
There were issued and outstanding 2,785,261 shares of Redwood's common
stock (the "Common Stock") on April 10, 1998, which date has been fixed as
the record date for the purpose of determining shareholders entitled to
notice of, and to vote at, the Annual Meeting (the "Record Date"). As of
the Record Date, there were also issued and outstanding 575,000 shares of
Redwood's 7.80% Noncumulative Convertible Perpetual Preferred Stock, Series A
(the "Preferred Stock"). The Preferred Stock is not entitled to vote on any
of the matters expected to be submitted for a vote at the Annual Meeting. A
majority of the shares of Common Stock entitled to vote, present in person or
by proxy, constitutes a quorum.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of directors, shareholders may vote
in favor of all nominees, or withhold their votes as to all nominees, or
withhold their votes as to specific nominees, by following the instructions
on the enclosed proxy card. With respect to the appointment of Deloitte &
Touche, LLP to serve as the Company's independent auditors for the 1998
fiscal year (Proposal 2) and the proposal to amend the Bylaws (Proposal 3),
shareholders may vote in favor of or against the proposal, or may abstain
from voting, by specifying their choice as indicated on the enclosed proxy
card. If no specific instructions are given with respect to any matter to be
voted on, the shares represented by a signed proxy will be voted FOR the
election of the Board's nominees, FOR the appointment of Deloitte & Touche,
LLP as independent auditors, and FOR the proposal to amend the Bylaws.
Directors will be elected by a plurality of the votes cast by the
holders of Redwood's Common Stock, voting in person or by proxy at the Annual
Meetings. Ratification of the appointment of Deloitte & Touche, LLP as
independent auditors will require the affirmative vote of the holders of a
majority of the shares of Common Stock voting on such appointment in person
or by proxy at the Annual Meeting. The affirmation vote of the holders of a
majority of the shares of Common Stock outstanding as of the Record Date,
voting in person or by proxy at the Annual Meeting, will be required to
approve Proposal 3. Abstentions, although they will be counted in
determining whether a quorum is present for the vote on both matters, will
have the same effect as negative votes. Similarly, broker non-votes are also
counted towards a quorum but are not counted for any purpose in determining
whether a matter has been approved, and thus will have the same effect as
negative votes.
On any matter submitted to the vote of the shareholders other than the
election of directors, each holder of Common Stock will be entitled to one
vote, in person or by Proxy, for each share of Common Stock held of record on
Redwood's books as of the Record Date. In connection with the election of
directors, shares may be voted cumulatively, but only for persons
2
<PAGE>
whose names have been placed in nomination prior to the voting for election
of directors and only if a shareholder present at the Annual Meeting gives
notice at the Annual Meeting, prior to such voting, of his or her intention
to vote cumulatively. (Notice of intention to vote cumulatively may not be
given by simply marking and returning a proxy.) If any Company shareholder
gives such notice, then all shareholders eligible to vote will be entitled to
cumulate their votes in voting for election of directors. Cumulative voting
allows a shareholder to cast a number of votes equal to the number of shares
held in his or her name as of the Record Date, multiplied by the number of
directors to be elected. All of these votes may be cast for any one nominee,
or they may be distributed among as many nominees as the shareholder sees
fit. The nominees receiving the highest number of votes, up to the number of
directors to be elected, shall be elected.
If one of Redwood's shareholders gives notice of intention to vote
cumulatively, the persons holding the proxies solicited by the Board of
Directors will exercise their cumulative voting rights, at their discretion,
to vote the shares they hold in such a way as to ensure the election of as
many of the Board's nominees as they deem possible. This discretion and
authority of the proxyholders may be withheld by checking the box on the
proxy card marked "withhold from all nominees." Such an instruction,
however, will also deny the proxyholders the authority to vote for any or all
of the nominees of the Board of Directors, even if cumulative voting is not
called for at the Annual Meeting, although it will not prevent the
proxyholders from voting, at their discretion, for any other person whose
name may be properly placed in nomination at the Annual Meeting.
A shareholder may choose to withhold from the proxyholders the authority
to vote for any of the individual candidates nominated by the Board of
Directors, by marking the appropriate box on the proxy card and striking out
the names of the disfavored candidates as they appear on the proxy card. In
that event the proxyholders will not cast any of the shareholder's votes for
candidates whose names have been crossed out, whether or not cumulative
voting is called for at the Annual Meeting, but they will retain the
authority to vote for the candidates nominated by the Board of Directors
whose names have not been struck out, and for any other candidates who may be
properly nominated at the Annual Meeting. If a shareholder wishes to specify
the manner in which his or her votes are allocated in the event of cumulative
voting, he or she must appear and vote in person at the Annual Meeting.
Ballots will be available at the Annual Meeting for persons desiring to vote
in person.
All votes will be tabulated by ChaseMellon Shareholder Services, the
Company's tabulating agent. Representatives of ChaseMellon will be in
attendance at the Annual Meeting in order to receive any votes cast at that
time.
3
<PAGE>
SHAREHOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Management of the Company knows of no person who owns, beneficially or
of record, either individually or together with associates, more than five
percent of the outstanding shares of Redwood's Common Stock, except as set
forth in the following table. Unless otherwise indicated, the persons listed
have sole voting and investment power over the shares beneficially owned.
Such information is presented as of March 1, 1998.
<TABLE>
<CAPTION>
Name and Address of Percent
Beneficial Owner Amount Owned of Class
---------------- ------------ --------
<S> <C> <C>
Mr. B. John Barry 527,531 shares (1) 18.94%
1128 Red Mountain Road
Aspen, CO 81612
Orlando J. Antonini 145,748 shares (2) 5.23%
1325 Columbus Avenue, 2nd Floor
San Francisco, CA 94133-1315
</TABLE>
- -------------------------------
(1) Based on information reported by Mr. Barry in a Schedule 13D filed with
the Securities and Exchange Commission on or about February 5, 1998,
reflecting ownership data as of February 5, 1998. The amount includes
52,130 shares of common stock issuable upon conversion of 60,100 shares
of preferred stock. Such preferred stock is convertible into common
stock within 60 days of March 1, 1998.
(2) Based on Form 4 filings with the Securities and Exchange Commission. The
amount includes 51,502 shares available by the exercise of stock options
exercisable within 60 days of March 1, 1998 and 94,246 shares held with
sole voting power but shared investment power.
4
<PAGE>
Management of the Company knows of no person who owns, beneficially or
of record, either individually or together with associates, more than five
percent of the outstanding shares of Redwood's Preferred Stock, except as set
forth in the following table.
<TABLE>
<CAPTION>
Name and Address of Percent
Beneficial Owner Amount Owned of Class
- ------------------- ------------ --------
<S> <C> <C>
Mr. B. John Barry 60,100 shares (1) 10.45%
1128 Red Mountain Road
Aspen, CO 81612
</TABLE>
- -------------------------------
(1) Based on information reported by Mr. Barry in a Schedule 13D filed with
the Securities and Exchange Commission on or about February 5, 1998,
reflecting ownership data as of February 5, 1998. Each share of
preferred is convertible into .8674 shares of common stock at the option
of the holder.
SECURITIES OWNERSHIP OF MANAGEMENT.
The following table sets forth, as of March 1, 1998, the number and
percentage of shares of Redwood's outstanding Common Stock and Preferred
Stock, respectively, which are beneficially owned, directly or indirectly, by
(a) each of Redwood's directors and nominees for director, (b) the Chief
Executive Officer of Redwood and each of the Company's three most highly
compensated executive officers other than the Chief Executive Officer (the
"named executive officers"), and (c) Redwood's directors and the named
executive officers as a group. The Company identifies as its executive
officers the Chief Executive Officer, President and Chief Financial Officer
of Redwood, and those key policy-making officers of Redwood's subsidiaries
who have a significant impact on the overall direction or financial reporting
of the Company. The shares "beneficially owned" are determined under
Securities and Exchange Commission Rules, and do not necessarily indicate
ownership for any other purpose. In general, beneficial ownership includes
shares over which the indicated person has sole or shared voting or
investment power and shares which he has the right to acquire within 60 days
of March 1, 1998. Unless otherwise indicated, the persons listed have sole
voting and investment power over the shares beneficially owned. Management
is not aware of any arrangements which may, at a subsequent date, result in a
change of control of the Company.
5
<PAGE>
<TABLE>
<CAPTION>
Shares of
Shares of Preferred
Common Percent of Stock
Stock Held Options (1) Total Class (2) Held
---------- ----------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Orlando J. Antonini (5) 94,246 51,502 145,748 5.14 ---
James E. Beckwith --- 10,000 10,000 * ---
Haskell E. Boyett (4) 10,129 40,246 50,375 1.78 ---
Richard I. Colombini 29,584 11,124 40,708 1.46 ---
Robert D. Cook 300 1,250 1,550 * ---
S. Deborah Kaufman --- --- --- --- ---
Dennis E. Kelley 18,961 15,000 33,961 1.21 3,500
Patrick W. Kilkenny 8,787 33,369 42,156 1.50 ---
William B. Stevenson 500 3,750 4,250 * ---
Tom D. Whitaker 2,206 12,650 14,856 * ---
Directors, Nominees and (3)
Executive Officers as a 94,355 178,891 343,604 11.59 3,500
Group (10 persons)
</TABLE>
- -------------------------------
* Represents less then one percent of the outstanding shares.
(1) Includes shares acquirable by the exercise of stock options exercisable
within 60 days of March 1, 1998.
(2) The percentage for each individual (and for the group) is calculated by
dividing (i) the number of Redwood shares beneficially owned (including
shares that could be obtained through the exercise of options within 60
days after March 1, 1998) by (ii) the number of Redwood shares
outstanding on March 1, 1998 plus, in each case, the number of shares
which the individual (or group) could obtain through the exercise of
such an option.
(3) Represents less than 1% of Preferred Stock.
(4) Mr. Boyett has shared voting and investment powers as to 10,129 shares.
(5) Mr. Antonini has 94,246 shares with sole voting power but shared
investment powers. Such shares are held in a partnership for which Mr.
Antonini is managing partner.
6
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
NOMINEES.
Redwood's directors are elected annually, to serve until the next Annual
Meeting of shareholders and until their respective successors have been
elected. All of the nominees listed below have served as directors since
Redwood's last Annual Meeting of Shareholders, which was held in May of 1997.
Redwood's Bylaws provide that the number of directors of Redwood may not
be less than seven (7) nor more than thirteen (13) until changed by an
amendment to the Bylaws adopted by Redwood's shareholders, with the exact
number of directors within that range to be set by vote of the Board. If
Proposal 3 is approved by the shareholders at the Annual Meeting, then such
minimum number of authorized directors will be lowered to five. At present,
Redwood's Bylaws provide for a Board consisting of seven (7) directors, and
consequently proxies may be voted for seven directors.
The persons named below will be nominated for election as directors at
the Annual Meeting to serve until the 1999 Annual Meeting of Shareholders and
until their successors are duly elected. Unless otherwise instructed, proxy
holders will vote the proxies received by them for the election of the
nominees below (or as many thereof as possible under the rules of cumulative
voting). In the event that any of the nominees should be unable to serve as
a director, it is intended that the Proxy will be voted for the election of
such substitute nominee, if any, as shall be designated by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees named below will be unable to serve if elected. Additional
nominations for director may only be made by complying with the nomination
procedures which are described under the heading "Shareholder Proposals and
Nominations" at the end of this Proxy Statement.
On February 3, 1997 Redwood received permission to merge its thrift
subsidiary, Allied Bank, F.S.B. (Allied), into NBR. The merger was effective
on March 24, 1997 and the Board of Allied was dissolved at that time.
The following table sets forth the names of, and certain information
concerning, the persons to be nominated by the Board of Directors for
election as directors of Redwood.
7
<PAGE>
<TABLE>
<CAPTION>
Year First
Appointed Principal Occupation
Name and Title Age Director During Past Five Years
-------------- --- -------- ----------------------
<S> <C> <C> <C>
Haskell E. Boyett 70 1991 Independent business consultant. Former
Director Division Manager, Pacific Gas and
Electric Company, a San Francisco-based
public utility. Director of the Company
since 1991. Director of NBR since 1989.
Director of Allied from 1995 to 1997.
Richard I. Colombini 66 1997 President of Colombini Construction.
Director Director of NBR since 1984. Director of
the Company since 1997.
Robert D. Cook 68 1996 President and CEO of R. D. Cook
Director Management Corporation, a financial and
business consulting firm. Director of
the Company since 1996. Director of NBR
since 1996. Director of Allied from
1996 to 1997.
Dennis E. Kelley 43 1986 Executive Vice President and Chief
Nominee Operations Officer of NBR since March
1997. Director of NBR since 1994.
President of NBR from 1994 to March
1997; Senior Vice President and Chief
Financial Officer of Redwood from 1988
to 1994; Senior Vice President and Chief
Financial Officer of NBR from 1986 to
1991.
Patrick W. Kilkenny 51 1995 Director, Chief Executive Officer and
Chief Executive President since 1995. Chairman of the
Officer and President Board of NBR from 1994 to 1997, CEO and
Director of NBR since 1984. Director of
the Company from 1988 to 1993 and
reappointed in 1995. Director of Allied
from 1995 to 1997.
8
<PAGE>
William B. Stevenson 67 1995 Principal, Financial Institutions
Director Analysts & Consultants, a San Francisco
financial institution consultancy, since
1992; President and CEO, Pan American
Savings Bank, from 1984 to 1991.
Director of the Company since 1995.
Director of NBR since 1995. Director of
Allied from 1995 to 1997.
Tom D. Whitaker 60 1992 President and CEO of Motion Analysis
Director and Corporation, Inc., a Northern
Chairman of the California-based manufacturer of devices
Board that measure motion. Director of the
Company since 1992. Director of NBR
since 1995. Director of Allied from
1995 to 1997.
</TABLE>
None of the directors were selected pursuant to any arrangement or
understanding other than with the directors and officers of Redwood acting
within their capacities as such. There are no family relationships between
any of the directors and executive officers of Redwood. No director or
officer of Redwood serves as a director of any company which has a class of
securities registered under, or which is subject to the periodic reporting
requirements of, the Securities Exchange Act of 1934, or of any company
registered as an investment company under the Investment Company Act of 1940.
The Board of Directors recommends a vote FOR each of the nominees for
director described above.
9
<PAGE>
PROPOSAL NO. 2: RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of Redwood's Audit Committee, consisting of
Chairman Robert D. Cook, Richard I. Colombini, and William B. Stevenson, the
Board of Directors has appointed Deloitte & Touche, LLP as the Company's
independent accountants to audit the consolidated financial statements of
Redwood and its subsidiaries for the 1998 fiscal year. Deloitte & Touche, LLP
served as the Company's auditors for the fiscal year ended December 31, 1997,
and during the course of that fiscal year they were also engaged by the
Company to provide certain tax and consulting services.
The Board of Directors recommends a vote FOR Proposal No. 2, ratification of
the appointment of Deloitte & Touche, LLP as the Company's independent
auditors for the succeeding year. If the appointment is not ratified,
Redwood's Board of Directors will select other independent auditors.
Representatives of Deloitte & Touche, LLP will be present at the Annual
Meeting to respond to appropriate questions from the shareholders and will be
given the opportunity to make a statement should they desire to do so.
PROPOSAL NO. 3: AMENDMENT OF BYLAWS
Section 2 of Article III of the Company's Bylaws presently provides that
the authorized number of directors shall be a minimum of seven and a maximum
of thirteen with the exact number of directors to be fixed within those
limits by either the shareholders or the Board of Directors. The exact
number of directors is currently fixed at seven. The Board of Directors of
the Company has adopted, subject to shareholder approval, an amendment to the
Bylaws that would modify the specified limits of the authorized number of
directors to a minimum of five and a maximum of thirteen with the exact
number of directors to be fixed at seven until changed within the new limits
by the shareholders or the Board of Directors.
Accordingly, it is proposed that Section 2 of Article III of the Bylaws
of the Company be amended to read as follows:
"SECTION 2. NUMBER AND QUALIFICATION OF DIRECTORS. The
authorized number of Directors shall not be less than five (5) nor more
than thirteen (13) until changed by an amendment to this Bylaw adopted
by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote. The exact number of directors
shall be seven (7), until changed, within the limits specified above, by
a Bylaw amending this Section 2, duly adopted by the Board or by the
shareholders."
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting is required to
approve the amendment of Section 2 of Article III of the Bylaws. The Board
of Directors recommends a vote FOR approval of the foregoing amendment to the
Bylaws (Proposal No. 3).
10
<PAGE>
OTHER INFORMATION
PERFORMANCE GRAPH.
Set forth below is a performance graph comparing the yearly cumulative
total shareholder returns on Redwood's Common Stock with the yearly
cumulative total shareholder return on (a) stocks included in the S&P 500
composite index, (b) an index of peer group companies from SNL Securities,
L.P., and (c) an index of peer group companies (California independent banks)
derived from the Montgomery Securities WESTERN BANK MONITOR NORTHERN
CALIFORNIA PROXY. The peer group provided to the Company last year by
Montgomery Securities was not made available to the Company this year.
Accordingly, the Company endeavored to replicate such peer group for the
performance graph with reference to the WESTERN BANK MONITOR NORTHERN
CALIFORNIA PROXY. Such peer group consists of the following companies:
TriCo Bancshares, Exchange Bank, Redwood Empire Bancorp, Union Bank, Sumitomo
Bank of California, Westamerica, Civic BanCorp, Silicon Valley Bancshares,
Pacific Capital Bancorp, SJNB Financial, Pacific Bank and California
Bancshares.
The total cumulative return on investment for each of the periods
indicated for Redwood, the peer group, and the S&P 500 is based on the stock
price or composite index at the end of 1991.
11
<PAGE>
REDWOOD EMPIRE BANCORP
[GRAPHIC]
<TABLE>
<CAPTION>
Period Ending
--------------------------------------------------------------------
Index 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Redwood Empire Bancorp 100.00 146.24 84.41 94.78 136.24 216.21
S&P 500 100.00 110.08 111.53 153.44 188.52 251.44
SNL Western Bank Index 100.00 114.57 113.43 190.22 270.43 398.65
Northern California Proxy 100.00 124.19 121.55 184.29 199.58 396.48
</TABLE>
12
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS.
The Board of Directors of Redwood held 12 regular and 2 special meetings
in 1997. All directors attended 75% or more of the aggregate number of the
Board of Directors and committee meetings on which each director served.
The Board of Directors of Redwood has the following committees:
Compensation Committee, Audit Committee, and Nominating Committee.
COMPENSATION COMMITTEE. The present members of the Compensation
Committee are Haskell E. Boyett, Chairman, and Robert Cook. The functions of
the Compensation Committee are to recommend compensation actions for
executive officers, oversee the compensation plan for the entire Company, and
compensation for Directors. The Compensation Committee met 4 times in 1997.
AUDIT COMMITTEE. The present members of the Audit Committee are Robert
D. Cook, Chairman, Richard I. Colombini, and William B. Stevenson. The
functions of the Audit Committee are to recommend the appointment of a firm
of independent certified public accountants to audit the books and records of
the Company for the fiscal year for which it is appointed, to analyze the
results of internal audits and regulatory examinations, establish and monitor
the Company's financial and accounting organization and financial reporting,
monitor the Company's risk management program and internal control structure,
and supervise the Internal Auditor. The Audit Committee met 11 times during
1997.
NOMINATING COMMITTEE. The Nominating Committee is comprised of Tom D.
Whitaker, Chairman, Robert D. Cook, and Patrick W. Kilkenny. The function of
the Nominating Committee is to recommend candidates for nomination to the
Board of Directors of Redwood. The Nominating Committee did not meet in 1997.
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS.
The Compensation Committee of Redwood's Board of Directors determines
the annual salaries and bonuses of Redwood's executive officers, and the
Boards of Directors of each of Redwood's subsidiaries make similar
determinations concerning officers of the respective subsidiaries. During
1997, the members of Redwood's Compensation Committee were directors Haskell
E. Boyett and Robert D. Cook. All the members of the Compensation Committee
are also members of the Board of Directors of NBR which determine the
compensation of its respective officers and employees.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee of Redwood's Board of Directors provides
recommendations and oversight for Redwood's executive officers, subject to
review by the full Board of Directors. Compensation decisions relating to the
executive officers of Redwood's subsidiary, NBR, is made by the Board of
Directors of the subsidiary and neither the Compensation Committee nor
Redwood's Board of Directors participate in compensation awards to such
individuals except to the extent of stock option awards under Redwood's 1991
Stock Option Plan. Option awards are also determined for the executive
officers and directors of Redwood and its subsidiaries (including the
individuals named above under the caption "Compensation Committee") by
Redwood's full Board of Directors, except where such individuals are also
directors of Redwood, in which case their annual option grants are determined
under the terms of the 1991 Option Plan.
The following is a report submitted by the Compensation Committee,
addressing the compensation policies of the Company as they relate to
employees of Redwood.
EXECUTIVE COMPENSATION POLICY. The goal of the Compensation Committee
is to ensure that an appropriate relationship exists between executive
compensation and Redwood's overall performance, while at the same time
retaining key employees of Redwood and motivating them to perform at a
superior level for the benefit of the shareholders. To achieve this goal,
Redwood integrates annual base compensation with bonuses based on Redwood's
performance and the performance and initiative of its individual executive
officers. Redwood attempts to establish base salaries that are generally
within the range of salaries paid to people holding comparably responsible
positions at other peer group financial institutions in California, taking
into account the individual's past performance and potential future
contributions. Bonus compensation is based primarily on the performance of
Redwood and specific individual performance. Measurement of Company
performance is based primarily on that of peer group financial institutions
and Company goals, including primarily its return on equity. Except as
limited by the Company's Stock Option Plan, stock options are granted from
time to time to officers of Redwood and its subsidiaries on the basis of the
recipient's potential for contribution to the Company's future growth and
profitability.
14
<PAGE>
The Compensation Committee believes that linking executive compensation
to corporate performance results aligns executive compensation with Redwood's
goals and shareholder interests. As performance goals are met or exceeded,
resulting in increased shareholder value, Redwood's executives are
commensurably rewarded.
1997 COMPENSATION GOALS. The committee relies principally on data
gathered through independent sources in determining the salary ranges for
executive positions. In addition, in 1996 an independent consultant was
retained to review the salary structure for substantially all positions
within the Company. The results of the survey provided the Company with a
defined salary structure based upon job function and relevant market data.
EXECUTIVE BASE SALARY. The Committee reviews Mr. Kilkenny's salary on
an annual basis. Factors that are considered by the Committee include the
annual performance review performed by the Company's Executive Committee and
peer group compensation. Based on the Committee's review of these factors
Mr. Kilkenny's base salary has not changed significantly since October, 1995.
BONUS COMPENSATION. The Company has adopted a Performance Incentive
Bonus Plan (PIPB.) for its executive officers. The purpose of the PIPB is to
motivate each participant to perform in an outstanding manner and to
encourage teamwork at the executive level. The PIPB is based upon return on
equity. Currently, the Company must earn a return on equity which would
place the Company in the top 20% of its peer group in order for executive
officers to receive a bonus under the plan. The maximum amount an executive
may receive under the plan is limited to 52.5% of base salary. Payment of
the bonus shall be made in the form of 70% cash and 30% restricted stock.
However, the Board of Directors may elect to issue stock in lieu of some or
all of the cash portion of the bonus based on the Company's financial
condition.
The PIPB has been suspended until such time cash dividends have been
restored to the Company's Common Stockholders. No bonus amounts have been
made or earned under the PIPB in 1997.
In addition, executive officers below the rank of Chief Executive
Officer may also receive incentive compensation based upon achieving certain
milestones, or at the discretion of the Chief Executive Officer, in
recognition of their overall performance.
Haskell E. Boyett, Chairman
Robert D. Cook
15
<PAGE>
COMPENSATION OF DIRECTORS.
Directors of Redwood or its subsidiaries who are also employees of the
Company do not receive compensation for their service on such Boards of
Directors. For eleven months of 1997, non-employee directors of Redwood
received a fee of $1,500 per month for Board membership and $1,000 per Board
meeting attended. Effective January 1, 1998, the fees were changed to $1,000
per Board meeting for attendance and participation based upon 80% annual
attendance. Members of Board Committees received $250 per Committee meeting
attended. Also effective January 1, 1998, non-employee NBR subsidiary
directors receive $1,000 per Board meeting for attendance and participation
based upon 80% annual attendance. Additionally, effective March 17, 1998
each director will receive $250 per subsidiary Committee meeting attended.
In his position as Chairman Emeritus, it is the intent of the Board that
Mr. Downey will receive the current standard non-employee Director fee for
attending Board meetings, but will not receive a Chairman fee. Mr. Downey
receives benefits due him under his retirement agreement.
In his position as Chairman of Redwood, Mr. Whitaker receives an
additional $500 per month.
16
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the named
executive officers of the Company.
<TABLE>
<CAPTION>
Year First
Appointed
Executive Position & Offices with Company and Principal
Name Age Officer Occupation or Employment for Past Five Years
---- --- ---------- ----------------------------------------------
<S> <C> <C> <C>
Patrick W. Kilkenny 51 1985 Chief Executive Officer, President and Director
of Redwood since 1995. Chairman of the Board of
NBR from 1994 to March 1997; Chief Executive
Officer and Director of NBR since 1985; Director
of Redwood from 1988 to 1993. Director and Chief
Executive Officer of Allied from 1996 to
March 1997.
James E. Beckwith 40 1995 Executive Vice President and Chief Financial
Officer of Redwood since January 1997. Executive
Vice President and Chief Financial Officer of NBR
since March, 1997. Senior Vice President and
Chief Financial Officer of REB and NBR from
January 1995 to March 1997. Chief Financial
Officer of Allied from January 1995 to October
1996. Chief Financial Officer of Sunrise Bancorp
from 1991 to 1994. Senior Manager with Deloitte &
Touche from 1986 to 1991.
Dennis E. Kelley 43 1986 Executive Vice President and Chief Operations
Officer of NBR since March 1997. Director of NBR
since 1994. President of NBR from 1994 to March
1997; Senior Vice President and Chief Financial
Officer of Redwood from 1988 to 1994; Senior Vice
President and Chief Financial Officer of NBR from
1986 to 1991.
S. Deborah Kaufman 47 1996 Executive Vice President and Chief Credit Officer
of NBR since March 1997. Senior Vice President
and Senior Loan Officer of Redwood Empire Bancorp
since December 1996. Examiner with the
Comptroller of the Currency in the Western United
States from 1993 to 1996. Vice President with
Pacific Bank from 1992 to 1993. Vice President,
Private Banking with Bank America/Security
Pacific Bank from 1988 to 1992.
</TABLE>
17
<PAGE>
Every Company officer serves at the pleasure of the Board of Directors.
There are no understandings or arrangements between any of such officers and
any other person pursuant to which they were or are to be selected as
officers of Redwood.
EXECUTIVE COMPENSATION.
The following table sets forth all cash and non-cash compensation
(including bonuses and deferred compensation) paid or accrued to the named
executive officers as of December 31, 1997, for services rendered to the
Company during the periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
---------------------------------------------------
Other
Annual All Other
Name and Compensation Number of Compensation
Principal Position Year Salary Bonus (1) Options(2) (3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Kilkenny 1997 $206,683 --- $25,107 --- 2,000
CEO and President, Redwood, 1996 205,202 --- 17,720 20,000 ---
President and CEO of NBR 1995 193,556 --- 15,568 5,000 ---
James E. Beckwith 1997 131,648 15,000 6,620 --- 2,000
Executive Vice President and 1996 126,046 20,000 6,520 15,000 2,000
Chief Financial Officer of 1995 120,063 15,000 5,326 5,000 2,000
Redwood and NBR
Dennis E. Kelley 1997 159,000 7,000 12,473 --- 2,000
Executive Vice President and 1996 159,075 --- 8,107 15,000 2,000
Chief Operating Officer of 1995 150,110 --- 7,135 5,000 2,000
NBR
S. Deborah Kaufman (4) 1997 130,192 7,000 5,122 --- 2,000
Executive Vice President and
Chief Credit Officer of NBR
</TABLE>
- -------------------------------
18
<PAGE>
(1) Includes directors' fees, auto allowances, personal use of company-owned
automobiles, insurance, the value of options exercised during the year, and
changes in the amounts vested for individuals under the Company's salary
continuation plan.
(2) Includes stock options issued under Redwood's stock option plan.
(3) Includes matching contributions to 401(K) plans.
(4) Ms. Kaufman was appointed to her position during 1997.
19
<PAGE>
The following table sets forth information concerning the aggregate
value of all unexercised options held by each of the named executive officers
as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
Name Shares Number of Unexercised Value of Unexercised
---- Acquired Value Options at December 31, In-the-Money Options at
on Exercise Realized 1997 December 31, 1997 (1)
-----------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Kilkenny --- $ -- 33,369 18,750 $358,136 $156,406
CEO and President,
Redwood, CEO and
President of NBR
James E. Beckwith --- --- 6,250 13,750 56,172 118,516
Executive Vice President
and Chief Financial
Officer of Redwood and
NBR
Dennis E. Kelley --- --- 27,805 13,750 240,801 118,516
Executive Vice President
and Chief Operating
Officer of NBR
S. Deborah Kaufman --- --- --- --- --- ---
Executive Vice President
and Chief Credit Officer
of NBR
</TABLE>
- -------------------------------
(1) All options were issued at the then-current market price on the grant
date. Total value of unexercised options is based on the closing price
of the Company's Common Stock as reported by the American Stock Exchange
of $18.25 as of December 31, 1997, less exercise price.
During 1997, there were no stock options granted to executive officers.
20
<PAGE>
SUPPLEMENTAL BENEFIT PLAN.
Redwood has adopted an Executive Salary Continuation Policy which acts
as a supplemental benefit plan for senior management personnel. The Policy
authorizes Redwood and its subsidiaries to enter into individual agreements
with selected senior executive officers, providing them certain retirement
benefits. The Policy calls for Redwood's Board of Directors to approve all
individual agreements with executive officers, and to conduct a biennial
review of all scheduled benefits.
As authorized under the Policy, the Company has entered into Executive
Salary Continuation Agreements with Messrs. Kelley and Kilkenny. These
agreements, which are similar in form, each provide that upon retirement at
age 65 the executive will receive, for a period of 15 years after the date of
his retirement, a specified annual retirement payment, payable in equal
monthly installments. The annual retirement benefit payments to which
Messrs. Kelley and Kilkenny would be entitled upon their normal retirement
age of 65 under their agreements are currently $107,433 and $134,058,
respectively. In the event that the executive dies after his retirement, but
before the end of the 15 year period, the Company will continue to make such
payments to the executive's designated beneficiary. If the executive should
die prior to his retirement as described above, however, his designated
beneficiary will receive, for a period of 15 years, the same yearly benefit,
payable in equal monthly installments. The executive may take early
retirement at age 55 (if by that time he has completed 15 years of service
with the Company), but his annual retirement benefits will then be only about
25% of the amount he would have received if he had retired at age 65. If he
takes retirement between 55 and 65, his retirement benefits will continue to
vest incrementally, pursuant to a specified schedule, as his years of service
increase. The agreements provide that if the executive retires or is
terminated before age 55 or before he has completed his 15 years of service,
he will be entitled to receive a specified one-time payment, the amount of
which increases each year on a predetermined schedule. As of January 1, 1998,
the amount of this one-time payment for Messrs. Kelley and Kilkenny would be
$18,246 and $60,350, respectively.
The agreements also provide that in the event of a change in control
which is defined by any person or company acquiring 25% or more of Redwood's
outstanding shares, through a tender offer, merger, or otherwise, and within
two years thereafter the executive's employment by the Company is terminated
or his salary or authority is materially reduced, the executive will be
entitled to receive an amount equal to one times his current annual salary.
In addition, in the event of a change in control, the executive, upon notice
of such change of control from the Company, may elect to terminate their
employment with the Company and receive an amount equal to one times annual
salary.
21
<PAGE>
The Company has also entered into a Salary Continuation Agreement with
Mr. Beckwith which provides that if any person or company acquires 25% or
more of Redwoods outstanding shares, through a tender offer, merger, or
otherwise, and within two years thereafter Mr. Beckwith's employment by the
Company is terminated or his salary or authority is materially reduced, he is
entitled to receive an amount equal to one times annual salary. In addition,
in the event of a change of control and upon notice of such change in control
from the Company, Mr. Beckwith may give notice to terminate employment and
receive an amount equal to one times annual salary.
The Company has executed a one year Compensation Agreement with Mr.
Kilkenny which establishes an annual base salary of $206,683. The Company
and Mr. Kilkenny have also executed a one year Executive Severance Agreement
which generally provides that should Mr. Kilkenny be terminated for any
reason other than failure to perform his job duties, habitual neglect,
illegal conduct, he would be entitled to one times his current salary.
22
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Redwood's
officers and directors, and persons who own more than 10% of a registered
class of Redwood's equity securities, to file reports of ownership on Form 3
and changes of ownership on Form 4 or Form 5 with the Securities and Exchange
Commission (the "SEC") and the American Stock Exchange. They are also
required by SEC rules to furnish Redwood with copies of all Section 16(a)
forms that they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5
were required for them, Redwood believes that during 1997 all Section 16(a)
filing requirements applicable to its officers, directors, and ten percent
stockholders were complied with, except for disclosure of five individual
trades amounting to 26,000 common stock purchases between May 5, 1997 and May
28, 1997 and two individual trades amounting to 2,600 shares of convertible
preferred stock purchased on May 15, 1997, and in case, made by Mr. B. John
Barry.
CERTAIN TRANSACTIONS
Some of the Company's directors and executive officers and their
immediate families, as well as, the companies with which they are associated
are customers of, or have had banking transactions with, Redwood's
subsidiaries in the ordinary course of the Company's business, and the
Company expects to have banking transactions with such persons in the future.
In management's opinion, all loans and commitments to lend included in such
transactions were made in compliance with applicable laws on substantially
the same terms, including interest rates and collateral, as those prevailing
for comparable transactions with other persons of similar creditworthiness
and, in the opinion of management, did not involve more than a normal risk of
collectibility or present other unfavorable features. The Company has a
strong policy regarding review of the adequacy and fairness to the Company of
loans to its directors and officers. There was no balance outstanding under
extensions of credit to directors and executive officers of the Company and
other companies with which such individuals are associated as of December 31,
1997.
23
<PAGE>
SHAREHOLDER PROPOSALS AND NOMINATIONS
Section 3 of Article III of the Bylaws of Redwood Empire Bancorp sets
forth the following procedures for shareholder nominations to the Board of
Directors:
Nominations for election of members of the Board may be made by the
Board or by any holder of any outstanding class of capital stock of the
Corporation entitled to vote for the election of Directors. Notice of
intention to make any nominations (other than for persons named in the
Notice of any meeting called for the election of Directors) are required
to be made in writing and to be delivered or mailed to the President of
the Corporation by the later of: (i) the close of business 21 days prior
to any meeting of shareholders called for the election of Directors or
(ii) 10 days after the date of mailing of notice of the meeting to
shareholders. Such notification must contain the following information
to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of capital stock of the
Corporation owned by each proposed nominee; (d) the name and residence
address of the notifying shareholder; (e) the number of shares of
capital stock of the Corporation owned by the notifying shareholder; (f)
the number of shares of capital stock of any bank, bank holding company,
savings and loan association or other depository institution owned
beneficially by the nominee or by the notifying shareholder and the
identities and locations of any such institutions; and (g) whether the
proposed nominee has ever been convicted of or pleaded nolo contendere
to any criminal offense involving dishonesty or breach of trust, filed a
petition in bankruptcy or been adjudged bankrupt. The notification shall
be signed by the nominating shareholder and by each nominee, and shall
be accompanied by a written consent to be named as a nominee for
election as a Director from each proposed nominee. Nominations not made
in accordance with these procedures shall be disregarded by the
chairperson of the meeting, and upon his instructions, the inspectors of
election shall disregard all votes cast for each such nominee. The
foregoing requirements do not apply to the nomination of a person to
replace a proposed nominee who has become unable to serve as a Director
between the last day for giving notice in accordance with this paragraph
and the date of election of Directors if the procedure called for in
this paragraph was followed with respect to the nomination of the
proposed nominee.
The effect of the foregoing provision is that any shareholder wishing
to nominate one or more candidates for election to the Board of Directors
must mail or deliver to the President of Redwood written notice of intention
to make such a nomination no later than the close of business on April 30,
1998, or such a nomination will not be considered at the Annual Meeting. To
be effective, such a notice must comply with all of the provisions of the
Bylaw provision set forth above. Any notice mailed or delivered to Redwood's
President after April 30, 1998, or which is not made in accordance with the
procedures specified in the foregoing Bylaw provision, will be disregarded by
the Chairman of the Annual Meeting, and upon his instructions the Inspector
of Elections for the Annual Meeting will disregard all votes cast for each
such nominee. The Chairman of the Annual Meeting will decide whether a
notice has been properly given and any nomination should be recognized, and
his or her determination will be final.
24
<PAGE>
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting other than those set forth above. However, if other matters come
before the Annual Meeting, it is the intention of the persons named in the
accompanying Proxy to vote the shares represented by the Proxy in accordance
with the judgment of the person or persons authorized to vote the Proxy, and
discretionary authority to do so is included in the Proxy.
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for Redwood's 1999 Annual Meeting of
Shareholders is December 16, 1998.
Marta J. Idica
Corporate Secretary
Dated: April 13, 1998
The Annual Report to Shareholders for the fiscal year ended December 31,
1997 is being mailed concurrently with this Proxy Statement to all
shareholders of record as of April 13, 1998.
A COPY OF REDWOOD'S MOST RECENT ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K WILL BE PROVIDED TO SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, REDWOOD EMPIRE BANCORP,
111 SANTA ROSA AVENUE, SANTA ROSA, CALIFORNIA 95404-4905.
25
<PAGE>
- -------------------------------------------------------------------------------
REDWOOD EMPIRE BANCORP
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoint(s) Tom D. Whitaker and William B. Stevenson, and
each of them, as proxies for the undersigned, with full power of substitution
and revocation, to represent and to vote, as designated below, all shares of
Common Stock of Redwood Empire Bancorp (the "Company") that the undersigned
would be entitled to vote if personally present, at the Annual Meeting of
Shareholders of the Company to be held in the Sonoma Room of the Sonoma
County Hilton, 3555 Round Barn Boulevard, Santa Rosa, California, on May 19,
1998 at 4:00 P.M., local time, upon the following items as set forth in the
Notice of Annual Meeting and Proxy Statement, and according to their
discretion upon all other matters that may be properly presented for action
at the Annual Meeting, or at any adjournment thereof. The undersigned may
revoke this Proxy at any time prior to its exercise.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR EACH OF THE
PROPOSALS LISTED ON THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY, WILL BE
VOTED IN THE MANNER DIRECTED ON THIS CARD. IN THE EVENT THAT NO SUCH
DIRECTION IS GIVEN HEREON AND THIS PROXY IS NOT SUBSEQUENTLY REVOKED OR
SUPERSEDED, THE PROXYHOLDERS NAMED ABOVE INTEND TO VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR LISTED BELOW AND FOR EACH OF THE OTHER
PROPOSALS LISTED BELOW.
(Continued and to be signed on the reverse side)
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
- -------------------------------------------------------------------------------
Please mark
your votes as /X/
indicated in
this example
1. Proposal to elect the following nominees to serve as directors, each to
hold office until the 1998 Annual Meeting of Shareholders or until his
successor has been duly elected and qualified:
FOR WITHHOLD FOR, except vote WITHHELD from those
ALL FROM ALL nominees whose names have been
NOMINEES NOMINEES struck out of the following list.
/ / / / / /
NOMINEES: HASKELL E. BOYETT, RICHARD I. COLOMBINI, ROBERT D. COOK, DENNIS E.
KELLEY, PATRICK W. KILKENNY, WILLIAM B. STEVENSON, AND TOM D. WHITAKER.
Instruction: To withhold authority to vote for any individual nominee, strike
a line through his name in the list on this side of this card.
2. Proposal to ratify the appointment of Deloitte and Touche, LLP as
independent auditors to audit Redwood's financial statements for the fiscal
year ended December 31, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve the amendment of Section 2 of Article III of the
Bylaws.
/ / / / / /
Please sign exactly as your name(s) appear(s). When signing as attorney,
executor, administrator, trustee, officer, partner, or guardian, please give
full title. If more than one trustee, all should sign. WHETHER OR NOT YOU
INTEND TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN THIS PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
I/we / / do / / do not expect to attend this meeting.
IF ANY SHAREHOLDER GIVES PROPER NOTICE AT THE ANNUAL MEETING OF HIS INTENTION
TO CUMULATE HIS VOTES IN THE ELECTION OF DIRECTORS, THE PROXY HOLDERS WILL
HAVE THE FULL DISCRETION AND AUTHORITY TO VOTE CUMULATIVELY AND TO ALLOCATE
VOTES AMONG ANY OR ALL OF THE NOMINEES OF THE BOARD OF DIRECTORS IN SUCH
ORDER AS THEY MAY DETERMINE UNLESS THE SHAREHOLDER HAS OTHERWISE INDICATED BY
MARKING THE BOXES ON THIS SIDE OF THE CARD. SEE THE "VOTING SECURITIES"
SECTION OF THE PROXY STATEMENT FOR MORE INFORMATION.
SHAREHOLDER(S)
Signature(s)_____________________________________________ Date_________,1998
TO ASSURE A QUORUM, YOU ARE URGED TO DATE, COMPLETE, AND SIGN THIS PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL
POSTAGE IF MAILED IN THE UNITED STATES.
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
