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Victory asserted in Vineyard fight


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01:59 PM PDT on Thursday, April 24, 2008

By JAHMAL PETERS
jpeters@thebizpress.com

Norm Morales may have successfully stormed the castle where he was once king and appears one step closer to retaking his throne.

Morales, the former president and chief executive officer of Vineyard National Bancorp (Nasdaq: VNBC), along with shareholder Jon Salmanson, announced that they have received consents in excess of the required majority for their proposed bylaw amendments. "There's an independent company that has been colleting the votes," Morales said. "Both parties have received the same vote tally that has been tabulating."

Following independent certification of the consents, the bylaw amendments for the Corona-based bank will be effective immediately and the duo will attempt to complete their coup by nominating a previously announced alternate slate to the bank's board of directors.

"Despite a highly negative campaign waged by the entrenched board of directors, the shareholders of Vineyard have spoken by a decisive margin," Salmanson said in a release.

"We need to have the director of the elections do a tabulation of the votes to validate whether or not there were sufficient votes in order to change the bylaws," said James LeSieur, Vineyard chairman and interim chief executive officer. "If the results come back and it was sufficient, the bylaws are deemed amended and we move into the next phase of the process."

The consents have yet to be tabulated but if Morales and Salmanson do in fact have the majority, the process will move on to the proxy solicitation phase.

The results of the proxy solicitation will be announced at the company's annual meeting and will ultimately determine who is the new board.

Vineyard has not yet announced the date of its annual meeting or file financial statements for the quarter and year ended Dec. 31, which resulted in Nasdaq and the American Stock Exchange threatening to delist the company's stock.

"Until the company files its annual report on form 10K, it can't have an annual meeting," said James Lucas, a spokesman for Vineyard.

Vineyard is awaiting the outcome to an investigation that pertains to internal violations of security policies, procedures and controls.

The investigation concerns the company's information technology function and any impact of the violations on the company's internal audit function known as an IT review.

"We're waiting for our outside auditors to finalize their work to be able to sign off on it," LeSieur said.

Vineyard plans to appeal the staff determination letter from Nasdaq and request a hearing with the exchange's regulators.

Under the company's current certification, the meeting is required to be held between May 21 and June 21.

The current tabulations may come as a surprise, as three proxy advisory firms made recommendations in favor of the current board.

Virginia-based Proxy Governance was the first proxy advisory to side with Vineyard's current board, citing its market strategy for the current economy on March 27.

San Francisco-based Glass Lewis & Co. recommended that shareholders vote against the changes to the company bylaws recently, citing that the amendments permit shareholders to nominate directors without any specific reason.

Institutional Shareholder Services in Rockville, Md., recommended that Vineyard shareholders vote against the changes on April 3 citing insufficient time andfor shareholders to consider the proposed slate of directors.

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