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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">UNITED
        STATES</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">SECURITIES
        AND EXCHANGE COMMISSION</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">Washington,
        D.C. 20549</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold">FORM
        8-K</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">CURRENT
        REPORT</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">PURSUANT
        TO SECTION 13 OR 15(d)</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">OF
        THE SECURITIES EXCHANGE ACT OF 1934</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;&#160;November
                    12, 2008</div>
                </td>
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                <td colspan="3" width="100%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;&#160;Date
                    of Report (Date of earliest event
                    reported)</div>
                </td>
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        </div>
        <div>&#160;</div>
        <div><img src="logo.jpg" alt="logo"></div>
        <div>&#160;</div>
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          <table bgcolor="white" cellpadding="0" cellspacing="0" width="70%">

              <tr bgcolor="white">
                <td colspan="3" width="100%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;VINEYARD
                    NATIONAL
                    BANCORP</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td colspan="3" width="100%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;&#160;(Exact
                    name of registrant as specified in
                    its charter)</div>
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        <div>&#160;</div>
        <div>&#160;</div>
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                <td width="30%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;California</div>
                </td>
                <td width="40%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">000-20862</div>
                </td>
                <td width="30%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;33-0309110</div>
                </td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;(State
                  or other jurisdiction of incorporation)</div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;(Commission
                  File Number)</div>
              </td>
              <td width="30%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;(IRS
                  Employer Identification
                  No.)</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB1" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB1" style="LETTER-SPACING: 9pt">&#160;&#160;</font></div>
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              <td width="70%" style="BORDER-BOTTOM: black 2px solid">1260 Corona
                Pointe
                Court, Corona, California<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</td>
              <td width="30%" style="BORDER-BOTTOM: black 2px solid">92879</td>
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                <td width="70%">&#160;(Address of principal executive offices)<font id="TAB1" style="LETTER-SPACING: 9pt">&#160;</font></td>
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        <div>&#160;</div>
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                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;(951)
                      271-4232</div>
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                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;(Registrant&#8217;s
                      telephone number, including area
                      code)</div>
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          <div>&#160;</div>
          <div>&#160;</div>
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                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;Not
                      Applicable</div>
                  </td>
                </tr>
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                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;(Former
                      name, former address and former fiscal
                      year, if changed since last
                      report)</div>
                  </td>
                </tr>

            </table>
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        </div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="center">
        <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">Check
          the appropriate box below if the Form 8-K filing is intended
          to simultaneously satisfy the filing obligation of the registrant under
          any of
          the following provisions (see General Instruction A.2. below):</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>
          Written communications
          pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline;" face="Wingdings">x</font>
          Soliciting material
          pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>
          Pre-commencement
          communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
          240.14d-2(b))</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>
          Pre-commencement
          communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
          240.13e-4(c))</div>
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    <div>&#160;</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="justify"><br><font style="FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;<br></font>
        <div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Item
            1.01.&#160;&#160;Entry into a Material Definitive Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman, serif">Stock
              Purchase Agreement</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">On
              November 12, 2008,&#160;Vineyard National Bancorp (the &#8220;Company&#8221;)&#160;announced
              that it had entered into a stock purchase agreement (the &#8220;Purchase Agreement&#8221;)
              with Vineyard Bancshares, Inc., a newly formed Minnesota corporation
              (the
&#8220;Buyer&#8221;), pursuant to which the Company agreed to sell to the Buyer all of
              the
              outstanding shares of stock of the Company&#8217;s primary asset, Vineyard Bank,
              National Association (the &#8220;Bank&#8221;).&#160;&#160;The Buyer is a newly-formed
              corporation organized and controlled by the Company&#8217;s chairman of the board,
              Douglas M. Kratz, who serves as president and chief executive officer
              of the
              Buyer.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">A
              special committee of the Company&#8217;s board of directors composed of disinterested
              directors was formed to review strategic alternatives and for the purpose
              of
              considering and negotiating the terms of a potential transaction with
              the Buyer
              because certain directors of the Company would have a material financial
              interest in the transaction.&#160;&#160;The special committee reviewed and
              negotiated the proposed transaction with the Buyer and unanimously
              recommended
              to the board of directors of the Company the approval of the Purchase
              Agreement.&#160;&#160;The board of directors of the Company approved the
              transaction based on the unanimous recommendation of the special
              committee.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">Under
              the Purchase Agreement, the Buyer has agreed to purchase the Bank for
              up to $18
              million, of which $10 million is payable at the closing of the transaction
              (the
&#8220;Initial Purchase Price&#8221;).&#160;&#160;The balance of the purchase price is
              payable if the Bank&#8217;s loan losses for the period between October 1, 2008 and
              September 30, 2011 are less than $125 million (the &#8220;Additional Purchase
              Price&#8221;).&#160;&#160;Of the Initial Purchase Price, the Company&#8217;s senior lender,
              First Tennessee Bank National Association (the &#8220;Senior Lender&#8221;), would receive
              $9 million in full satisfaction of the Company&#8217;s outstanding indebtedness to the
              Senior Lender, and the remaining $1 million would be paid to the
              Company.&#160;&#160;The Senior Lender also has the right to receive the entire
              Additional Purchase Price if paid.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              transaction is structured as a sale of the Bank&#8217;s stock to the
              Buyer.&#160;&#160;The transaction would be effected pursuant to one of the
              following methods, as agreed between the Buyer and the Company: (a)
              a direct
              sale of the Bank shares to the Buyer subject to shareholders' approval
              (the
&#8220;Sale&#8221;), (b) foreclosure by the senior lender and subsequent transfer of
              the
              Bank shares to the Buyer (the &#8220;Foreclosure&#8221;), or (c) a sale of the Bank shares
              to the Buyer pursuant to Section 363 of the U.S. Bankruptcy Code (the
              &#8220;Bankruptcy&#8221;).</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              closing of this transaction is subject to the contingency that the
              Buyer receive
              subscriptions for at least $125 million from a private placement offering
              of its
              stock (the &#8220;Financing&#8221;).&#160;&#160;The Buyer has agreed to use its best efforts
              to complete the Financing.&#160;&#160;Under the terms of the Purchase Agreement,
              once this condition is satisfied, the parties will choose one of the
              three
              transaction structures described above.&#160;&#160;In addition to other
              customary conditions, the transaction is subject to certain regulatory
              approvals
              and, depending on which of the three transaction structures is ultimately
              chosen, consent by the Company&#8217;s shareholders in the case of the Sale, consent
              by the Company&#8217;s Senior Lender in the case of the Foreclosure or consent of a
              United States Bankruptcy Court in the case of the Bankruptcy.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              Purchase Agreement contains a &#8220;go-shop&#8221; provision under which the Company has
              the right to solicit competing bids for the sale of Bank, subject to
              the
              limitations described in the Purchase Agreement.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              Company or the Buyer may terminate the Purchase Agreement under certain
              specified circumstances, including if the Financing has not been completed
              within 105 days.&#160;&#160;The Company may terminate the Purchase Agreement if
              its board of directors has determined to accept a superior proposal,
              as defined
              in the Purchase Agreement.&#160;&#160;The Buyer may terminate the Purchase
              Agreement upon receiving the Company&#8217;s disclosure schedules if the Buyer
              determines in its reasonable discretion that the information disclosed
              or an
              issue raised would have a material adverse effect on the Bank.&#160;&#160;The
              Purchase Agreement requires the Company to deliver disclosure schedules
              to the
              Buyer on or before November 26, 2008.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">If
              the Company terminates the agreement to accept a superior proposal
              or if an
              alternative acquisition transaction is accepted in a Bankruptcy, the
              Company
              would be obligated to pay the Buyer a termination fee of $600,000 plus
              reimbursement of the Buyer&#8217;s reasonable out-of-pocket fees and
              expenses.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              foregoing summary of the Purchase Agreement is qualified in its entirety
              by the
              full terms and conditions of the Purchase Agreement, a copy of which
              has been
              filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated
              herein by reference.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman, serif">Seventh
              Modification Agreement</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">Effective&#160;November
              12, 2008, the Company and the Senior Lender entered into that
              certain&#160;Seventh Modification Agreement and Covenant Waiver (the
&#8220;Modification Agreement&#8221;) which, among other things, extended the maturity date
              of the Company&#8217;s loan (the &#8220;Loan&#8221;) from the Senior Lender from November 28, 2008
              to&#160;March 31, 2009, and granted and/or extended the waiver by the Senior
              Lender of certain financial and other covenant failures of the Company,
              including signing the consent&#160;order with the Office of the Comptroller of
              the Currency, signing the written agreement with the Federal Reserve
              Bank of San
              Francisco and entering into the Purchase Agreement with the Buyer,
              all of which
              constituted or could constitute events of default,&#160;through&#160;March 31,
              2009.&#160;&#160;&#160;The outstanding balance of the loan was $48,300,000
              at&#160;November 12, 2008.&#160;&#160;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              foregoing summary of the Modification Agreement is qualified in its
              entirety by
              reference thereto, a copy of which has been filed as Exhibit 10.1 to
              this
              Current Report on Form 8-K, and is incorporated herein by
              reference.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman, serif">Loan
              Payoff Letter</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">In
              connection with the execution of the Purchase Agreement, the Company
              and the
              Buyer entered into a Letter Agreement with the Senior Lender pursuant
              to which
              the Company agreed to pay to the Senior Lender, as described above,
              $9 million
              from the Initial Purchase Price paid by the Buyer (the &#8220;Initial Payoff&#8221;) and the
              Senior Lender&#8217;s right to receive, if paid, the Additional Purchase Price in full
              satisfaction of the Company&#8217;s indebtedness and obligations under the
              Loan.&#160;&#160;These terms are subject to the condition that the Initial
              Payoff be made on or before March 31, 2009.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">If
              the initial purchase price increases as a result of a competing bid
              or an
              increase in the amount payable by the Buyer, the Company will retain
              twenty-five
              percent (25%) of any increased initial purchase price (net of the termination
              fees and the Buyer&#8217;s expenses, if applicable) in excess of $9
              million.&#160;&#160;The initial purchase price for purposes of the preceding
              sentence means the greater of $10 million or the actual bid accepted
              for the
              sale of the shares of the Bank.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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                </div>
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              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                </div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right">
                </div>
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            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              foregoing summary of the Letter Agreement is qualified in its entirety
              by
              reference thereto, a copy of which has been filed as Exhibit 10.2 to
              this
              Current Report on Form 8-K, and is incorporated herein by
              reference.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">*&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;*&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
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            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">The
              Purchase Agreement has been included to provide investors and security
              holders
              with information regarding its terms. It is not intended to provide
              any other
              factual information about the Company, the Buyer or their respective
              subsidiaries and affiliates, including the Bank. The Purchase Agreement
              contains
              representations and warranties by the Company, on the one hand, and
              by the
              Buyer, on the other hand, made solely for the benefit of the other.
              The
              assertions embodied in those representations and warranties are qualified
              by
              information in the disclosure schedule referenced in the Purchase Agreement
              that
              we delivered in connection with the signing of the Purchase Agreement.
              The
              disclosure schedule contains information that has been included in
              our general
              prior public disclosures, as well as non-public information. While
              we do not
              believe that the disclosure schedule contains information required
              to be
              publicly disclosed under the securities laws other than information
              that has
              already been so disclosed, the disclosure schedule contains information
              that
              modifies, qualifies and creates exceptions to the representations and
              warranties
              set forth in the Purchase Agreement. Moreover, certain representations
              and
              warranties in the Purchase Agreement were made as of a specified date,
              may be
              subject to a contractual standard of materiality different from what
              might be
              viewed as material to shareholders, or may have been used for the purpose
              of
              allocating risk between the Company, on the one hand, and the Buyer
              on the other
              hand. Accordingly, the representations and warranties in the Purchase
              Agreement
              should not be relied on by any persons as characterizations of the
              actual state
              of facts about the Company or the Buyer at the time they were made
              or otherwise.
              In addition, information concerning the subject matter of the representations
              and warranties may change after the date of the Purchase Agreement,
              which
              subsequent information may or may not be reflected in our public
              disclosures.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Additional
              Information and
              Where to Find It</font></font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">In
              the event the parties elect to consummate the stock purchase through
              the Sale
              transaction described above, we will be required to file a proxy statement
              with
              the Securities and Exchange Commission, or &#8220;SEC.&#8221; IF WE FILE AND MAIL A PROXY
              STATEMENT, SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY
              IN ITS
              ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT WOULD CONTAIN IMPORTANT
              INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxy statement
              describing
              the Sale transaction would be mailed to Company shareholders. In addition,
              shareholders would be able to obtain the proxy statement and all other
              relevant
              documents filed by us with the SEC free of charge at the SEC&#8217;s website <font style="DISPLAY: inline; TEXT-DECORATION: underline">www.sec.gov</font>.
              Copies
              of our SEC filings are also be available on our website at <font style="DISPLAY: inline; TEXT-DECORATION: underline">www.vineyardbank.com</font></font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Interests
              of Participants in
              the Potential Solicitation</font></font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">If
              the parties elect to consummate the stock purchase through the Sale
              transaction
              described above, the Company and its directors and executive officers
              and
              certain other members of management and employees may be deemed to
              be
              participants in the solicitation of proxies from Company shareholders
              in favor
              of the Sale transaction. In that event, information regarding the interests
              of
              potential participants in such a proxy solicitation would be included
              in the
              definitive proxy statement that we would be obligated to file with
              the SEC in
              connection with the special meeting of shareholders that would be held
              to
              approve the Sale transaction.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Item&#160;9.01.&#160;&#160;Financial
            Statements and Exhibits.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)&#160;Exhibits.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" width="100%">

                  <tr>
                    <td valign="top" width="15%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Exhibit
                          Number</font></div>
                      </div>
                    </td>
                    <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Description</font></div>
                      </div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="15%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">2.1</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                    <td align="left" valign="top" width="75%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Stock
                        Purchase Agreement, dated as of November 12, 2008, by and
                        between Vineyard
                        National Bancorp and Vineyard Bancshares, Inc.</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="15%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">10.1</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                    <td align="left" valign="top" width="75%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Seventh&#160;Modification
                        Agreement and Covenant Waiver&#160;effective&#160;November 12, 2008
                        between Vineyard National Bancorp and First Tennessee Bank
                        National
                        Association.</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="15%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">10.2</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                    <td align="left" valign="top" width="75%">
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Letter
                        Agreement effective November 12, 2008 between Vineyard National
                        Bancorp
                        and First Tennessee Bank National Association.</font></div>
                      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                      </div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="15%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">99.1</font></div>
                    </td>
                    <td align="left" valign="top" width="75%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman, serif">Press
                        release dated November 12, 2008.</font></div>
                    </td>
                  </tr>

              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          </div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
              </div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Pursuant
            to the requirements of the Securities Exchange Act of 1934, as amended,
            the
            Registrant has duly caused this report to be signed on its behalf by
            the
            undersigned hereunto duly authorized.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" width="100%">

                <tr>
                  <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="middle" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td valign="middle" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                </tr>
                <tr>
                  <td align="left" colspan="3" valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" colspan="3" valign="top" width="36%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Vineyard
                      National Bancorp</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" colspan="3" valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" colspan="3" valign="top" width="36%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">(Registrant)</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="middle" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td colspan="2" valign="middle" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td colspan="2" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td colspan="2" valign="middle" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                </tr>
                <tr>
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                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Dated:&#160;November
                      13, 2008</font></div>
                  </td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="5%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">By:</font></div>
                  </td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="31%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;<font style="FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">/s/
                      </font><font style="FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Gordon
                      Fong</font></font></font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="top" width="5%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Name:</font></div>
                  </td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;
                    </font></td>
                  <td align="left" valign="bottom" width="31%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Gordon
                      Fong</font></div>
                  </td>
                </tr>
                <tr>
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                      Vice President and Chief Financial
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[{"type": "8-K", "sequence": "1", "filename": "form8-k.htm", "description": "FORM 8-K 11-13-08", "secsgml_size_bytes": 56396}]
{"company-data": {"conformed-name": "VINEYARD NATIONAL BANCORP", "cik": "0000840256", "assigned-sic": "6021", "irs-number": "330309110", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-31796", "film-number": "081186165"}, "business-address": {"street1": "1260 CORONA POINTE COURT", "city": "CORONA", "state": "CA", "zip": "92879", "phone": "951-271-4232"}, "mail-address": {"street1": "1260 CORONA POINTE COURT", "city": "CORONA", "state": "CA", "zip": "92879"}}
form8-k.htm
UNITED
        STATES
SECURITIES
        AND EXCHANGE COMMISSION
Washington,
        D.C. 20549
FORM
        8-K
CURRENT
        REPORT
PURSUANT
        TO SECTION 13 OR 15(d)
OF
        THE SECURITIES EXCHANGE ACT OF 1934
November
                    12, 2008
Date
                    of Report (Date of earliest event
                    reported)
VINEYARD
                    NATIONAL
                    BANCORP
(Exact
                    name of registrant as specified in
                    its charter)
California
000-20862
33-0309110
(State
                  or other jurisdiction of incorporation)
(Commission
                  File Number)
(IRS
                  Employer Identification
                  No.)
1260 Corona
                Pointe
                Court, Corona, California
92879
(Address of principal executive offices)
(Zip Code)
(951)
                      271-4232
(Registrant's
                      telephone number, including area
                      code)
Not
                      Applicable
(Former
                      name, former address and former fiscal
                      year, if changed since last
                      report)
Check
          the appropriate box below if the Form 8-K filing is intended
          to simultaneously satisfy the filing obligation of the registrant under
          any of
          the following provisions (see General Instruction A.2. below):
o
Written communications
          pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x
Soliciting material
          pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
          communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
          240.14d-2(b))
o
Pre-commencement
          communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
          240.13e-4(c))
Item
            1.01.  Entry into a Material Definitive Agreement.
Stock
              Purchase Agreement
On
              November 12, 2008, Vineyard National Bancorp (the "Company") announced
              that it had entered into a stock purchase agreement (the "Purchase Agreement")
              with Vineyard Bancshares, Inc., a newly formed Minnesota corporation
              (the
"Buyer"), pursuant to which the Company agreed to sell to the Buyer all of
              the
              outstanding shares of stock of the Company's primary asset, Vineyard Bank,
              National Association (the "Bank").  The Buyer is a newly-formed
              corporation organized and controlled by the Company's chairman of the board,
              Douglas M. Kratz, who serves as president and chief executive officer
              of the
              Buyer.
A
              special committee of the Company's board of directors composed of disinterested
              directors was formed to review strategic alternatives and for the purpose
              of
              considering and negotiating the terms of a potential transaction with
              the Buyer
              because certain directors of the Company would have a material financial
              interest in the transaction.  The special committee reviewed and
              negotiated the proposed transaction with the Buyer and unanimously
              recommended
              to the board of directors of the Company the approval of the Purchase
              Agreement.  The board of directors of the Company approved the
              transaction based on the unanimous recommendation of the special
              committee.
Under
              the Purchase Agreement, the Buyer has agreed to purchase the Bank for
              up to $18
              million, of which $10 million is payable at the closing of the transaction
              (the
"Initial Purchase Price").  The balance of the purchase price is
              payable if the Bank's loan losses for the period between October 1, 2008 and
              September 30, 2011 are less than $125 million (the "Additional Purchase
              Price").  Of the Initial Purchase Price, the Company's senior lender,
              First Tennessee Bank National Association (the "Senior Lender"), would receive
              $9 million in full satisfaction of the Company's outstanding indebtedness to the
              Senior Lender, and the remaining $1 million would be paid to the
              Company.  The Senior Lender also has the right to receive the entire
              Additional Purchase Price if paid.
The
              transaction is structured as a sale of the Bank's stock to the
              Buyer.  The transaction would be effected pursuant to one of the
              following methods, as agreed between the Buyer and the Company: (a)
              a direct
              sale of the Bank shares to the Buyer subject to shareholders' approval
              (the
"Sale"), (b) foreclosure by the senior lender and subsequent transfer of
              the
              Bank shares to the Buyer (the "Foreclosure"), or (c) a sale of the Bank shares
              to the Buyer pursuant to Section 363 of the U.S. Bankruptcy Code (the
              "Bankruptcy").
The
              closing of this transaction is subject to the contingency that the
              Buyer receive
              subscriptions for at least $125 million from a private placement offering
              of its
              stock (the "Financing").  The Buyer has agreed to use its best efforts
              to complete the Financing.  Under the terms of the Purchase Agreement,
              once this condition is satisfied, the parties will choose one of the
              three
              transaction structures described above.  In addition to other
              customary conditions, the transaction is subject to certain regulatory
              approvals
              and, depending on which of the three transaction structures is ultimately
              chosen, consent by the Company's shareholders in the case of the Sale, consent
              by the Company's Senior Lender in the case of the Foreclosure or consent of a
              United States Bankruptcy Court in the case of the Bankruptcy.
The
              Purchase Agreement contains a "go-shop" provision under which the Company has
              the right to solicit competing bids for the sale of Bank, subject to
              the
              limitations described in the Purchase Agreement.
The
              Company or the Buyer may terminate the Purchase Agreement under certain
              specified circumstances, including if the Financing has not been completed
              within 105 days.  The Company may terminate the Purchase Agreement if
              its board of directors has determined to accept a superior proposal,
              as defined
              in the Purchase Agreement.  The Buyer may terminate the Purchase
              Agreement upon receiving the Company's disclosure schedules if the Buyer
              determines in its reasonable discretion that the information disclosed
              or an
              issue raised would have a material adverse effect on the Bank.  The
              Purchase Agreement requires the Company to deliver disclosure schedules
              to the
              Buyer on or before November 26, 2008.
If
              the Company terminates the agreement to accept a superior proposal
              or if an
              alternative acquisition transaction is accepted in a Bankruptcy, the
              Company
              would be obligated to pay the Buyer a termination fee of $600,000 plus
              reimbursement of the Buyer's reasonable out-of-pocket fees and
              expenses.
The
              foregoing summary of the Purchase Agreement is qualified in its entirety
              by the
              full terms and conditions of the Purchase Agreement, a copy of which
              has been
              filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated
              herein by reference.
Seventh
              Modification Agreement
Effective November
              12, 2008, the Company and the Senior Lender entered into that
              certain Seventh Modification Agreement and Covenant Waiver (the
"Modification Agreement") which, among other things, extended the maturity date
              of the Company's loan (the "Loan") from the Senior Lender from November 28, 2008
              to March 31, 2009, and granted and/or extended the waiver by the Senior
              Lender of certain financial and other covenant failures of the Company,
              including signing the consent order with the Office of the Comptroller of
              the Currency, signing the written agreement with the Federal Reserve
              Bank of San
              Francisco and entering into the Purchase Agreement with the Buyer,
              all of which
              constituted or could constitute events of default, through March 31,
              2009.   The outstanding balance of the loan was $48,300,000
              at November 12, 2008.
The
              foregoing summary of the Modification Agreement is qualified in its
              entirety by
              reference thereto, a copy of which has been filed as Exhibit 10.1 to
              this
              Current Report on Form 8-K, and is incorporated herein by
              reference.
Loan
              Payoff Letter
In
              connection with the execution of the Purchase Agreement, the Company
              and the
              Buyer entered into a Letter Agreement with the Senior Lender pursuant
              to which
              the Company agreed to pay to the Senior Lender, as described above,
              $9 million
              from the Initial Purchase Price paid by the Buyer (the "Initial Payoff") and the
              Senior Lender's right to receive, if paid, the Additional Purchase Price in full
              satisfaction of the Company's indebtedness and obligations under the
              Loan.  These terms are subject to the condition that the Initial
              Payoff be made on or before March 31, 2009.
If
              the initial purchase price increases as a result of a competing bid
              or an
              increase in the amount payable by the Buyer, the Company will retain
              twenty-five
              percent (25%) of any increased initial purchase price (net of the termination
              fees and the Buyer's expenses, if applicable) in excess of $9
              million.  The initial purchase price for purposes of the preceding
              sentence means the greater of $10 million or the actual bid accepted
              for the
              sale of the shares of the Bank.
The
              foregoing summary of the Letter Agreement is qualified in its entirety
              by
              reference thereto, a copy of which has been filed as Exhibit 10.2 to
              this
              Current Report on Form 8-K, and is incorporated herein by
              reference.
*                *           
              *
The
              Purchase Agreement has been included to provide investors and security
              holders
              with information regarding its terms. It is not intended to provide
              any other
              factual information about the Company, the Buyer or their respective
              subsidiaries and affiliates, including the Bank. The Purchase Agreement
              contains
              representations and warranties by the Company, on the one hand, and
              by the
              Buyer, on the other hand, made solely for the benefit of the other.
              The
              assertions embodied in those representations and warranties are qualified
              by
              information in the disclosure schedule referenced in the Purchase Agreement
              that
              we delivered in connection with the signing of the Purchase Agreement.
              The
              disclosure schedule contains information that has been included in
              our general
              prior public disclosures, as well as non-public information. While
              we do not
              believe that the disclosure schedule contains information required
              to be
              publicly disclosed under the securities laws other than information
              that has
              already been so disclosed, the disclosure schedule contains information
              that
              modifies, qualifies and creates exceptions to the representations and
              warranties
              set forth in the Purchase Agreement. Moreover, certain representations
              and
              warranties in the Purchase Agreement were made as of a specified date,
              may be
              subject to a contractual standard of materiality different from what
              might be
              viewed as material to shareholders, or may have been used for the purpose
              of
              allocating risk between the Company, on the one hand, and the Buyer
              on the other
              hand. Accordingly, the representations and warranties in the Purchase
              Agreement
              should not be relied on by any persons as characterizations of the
              actual state
              of facts about the Company or the Buyer at the time they were made
              or otherwise.
              In addition, information concerning the subject matter of the representations
              and warranties may change after the date of the Purchase Agreement,
              which
              subsequent information may or may not be reflected in our public
              disclosures.
Additional
              Information and
              Where to Find It
In
              the event the parties elect to consummate the stock purchase through
              the Sale
              transaction described above, we will be required to file a proxy statement
              with
              the Securities and Exchange Commission, or "SEC." IF WE FILE AND MAIL A PROXY
              STATEMENT, SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY
              IN ITS
              ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT WOULD CONTAIN IMPORTANT
              INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxy statement
              describing
              the Sale transaction would be mailed to Company shareholders. In addition,
              shareholders would be able to obtain the proxy statement and all other
              relevant
              documents filed by us with the SEC free of charge at the SEC's website
www.sec.gov
.
              Copies
              of our SEC filings are also be available on our website at
www.vineyardbank.com
Interests
              of Participants in
              the Potential Solicitation
If
              the parties elect to consummate the stock purchase through the Sale
              transaction
              described above, the Company and its directors and executive officers
              and
              certain other members of management and employees may be deemed to
              be
              participants in the solicitation of proxies from Company shareholders
              in favor
              of the Sale transaction. In that event, information regarding the interests
              of
              potential participants in such a proxy solicitation would be included
              in the
              definitive proxy statement that we would be obligated to file with
              the SEC in
              connection with the special meeting of shareholders that would be held
              to
              approve the Sale transaction.
Item 9.01.  Financial
            Statements and Exhibits.
(d) Exhibits.
Exhibit
                          Number
Description
2.1
Stock
                        Purchase Agreement, dated as of November 12, 2008, by and
                        between Vineyard
                        National Bancorp and Vineyard Bancshares, Inc.
10.1
Seventh Modification
                        Agreement and Covenant Waiver effective November 12, 2008
                        between Vineyard National Bancorp and First Tennessee Bank
                        National
                        Association.
10.2
Letter
                        Agreement effective November 12, 2008 between Vineyard National
                        Bancorp
                        and First Tennessee Bank National Association.
99.1
Press
                        release dated November 12, 2008.
SIGNATURES
Pursuant
            to the requirements of the Securities Exchange Act of 1934, as amended,
            the
            Registrant has duly caused this report to be signed on its behalf by
            the
            undersigned hereunto duly authorized.
Vineyard
                      National Bancorp
(Registrant)
Dated: November
                      13, 2008
By:
/s/
Gordon
                      Fong
Name:
Gordon
                      Fong
Title:
Executive
                      Vice President and Chief Financial
                      Officer