Exhibit 10.1

SHORE BANCSHARES, INC.

Executive Deferred Compensation Plan

Effective October 1, 2006

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TABLE OF CONTENTS

I.
Introduction
3
     
II.
Definitions
3
     
III.
Eligibility & Participation
8
     
IV.
Elections, Deferrals & Contributions
9
     
V.
Accounts & Account Crediting
10
     
VI.
Vesting
12
     
VII.
Distributions
13
     
VIII.
Administration & Claims Procedure
16
     
IX.
Amendment, Termination & Reorganization
19
     
X.
General Provisions
20

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PREAMBLE

Shore Bancshares, Inc. (the Employer) desires to adopt the Executive Deferred
Compensation Plan (the Plan), effective October 1, 2006, for the benefit of its
selected key executives. The Plan is intended to comply with the requirements of
Section 409A of the Internal Revenue Code, as enacted by the American Jobs
Creation Act of 2004, in both form and operation.

ARTICLE I--INTRODUCTION

1.1  Name.

The name of this Plan is the Shore Bancshares, Inc. Executive Deferred
Compensation Plan (the Plan).

1.2  Purpose.

The purpose of the Plan is to offer Participants the opportunity to defer
voluntarily current Compensation for retirement income and other significant
future financial needs for themselves, their families and other dependents, and
to provide the Employer, if appropriate, a vehicle for crediting matching,
discretionary or other amounts for the benefit of Participants. This Plan is
intended to be a nonqualified “top-hat” plan; that is, an unfunded plan of
deferred compensation maintained for a select group of management or highly
compensated employees pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of
ERISA, and an unfunded plan of deferred compensation under the Code.

1.3  Interpretation.

Throughout the Plan, certain words and phrases have meanings, which are
specifically defined for purposes of the Plan. These words and phrases can be
identified in that the first letter of the word or words in the phrase is
capitalized. The definitions of these words and phrases are set forth in Article
II and elsewhere in the Plan document. Wherever appropriate, pronouns of any
gender shall be deemed synonymous, as shall singular and plural pronouns.
Headings of Articles and Sections are for convenience or reference only, and are
not to be considered in the construction or interpretation of the Plan. The Plan
shall be interpreted and administered to give effect to its purpose in Section
1.3 and to qualify as a nonqualified, unfunded plan of deferred compensation.

ARTICLE II--DEFINITIONS

2.1  Generally.

Certain words and phrases are defined when first used in later paragraphs of
this Agreement. Unless the context clearly indicates otherwise, the following
words and phrases when used in this Agreement shall have the following
respective meanings:

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2.2  Account.

“Account” shall mean the interest of a Participant in the Plan as represented by
the hypothetical bookkeeping entries kept by the Employer for each Participant.
Each Participant’s interest may be divided into two separate accounts or
sub-accounts, the Participant Deferral Account, and the Employer Funded Account,
which reflect not only the deemed Contributions into the Plan, but also gains
and losses, and income and expenses allocated thereto, as well as distributions
or any other withdrawals. The value of these accounts or sub-accounts shall be
determined as of the Valuation Date. The existence of an account or bookkeeping
entries for a Participant (or his Designated Beneficiary) does not create,
suggest or imply that a Participant, Designated Beneficiary, or other person
claiming through them under this Plan, has a beneficial interest in any asset of
the Employer.

2.3  Administrator. 

“Administrator” shall mean one or more persons appointed by the Employer to
administer the terms of the Plan, as provided in Article VIII.

2.4  Balance.

“Balance” shall mean the total of Contributions and Deemed Earnings credited to
a Participant’s Account under Article V, as adjusted for distributions or other
withdrawals in accordance with the terms of this Plan and the standard
bookkeeping rules established by the Employer.

2.5  Board Committee.

“Board Committee” or “Committee” shall mean the Compensation Committee of the
Employer’s Board of Directors, or such other Committee of the Board as may be
delegated with the duty of determining Participant eligibility under the Plan.

2.6  Board of Directors.

“Board of Directors” or “Board” shall mean the Board of Directors of the
Employer.

2.7  Change of Control.

 “Change of Control” shall mean a change in the ownership or effective control
of the Employer,
or in the ownership of a substantial portion of the assets of the Employer, as
provided in Treasury
regulations issued pursuant to Code Section 409A.

2.8  Code.

“Code” shall mean the Internal Revenue Code of 1986 and the Regulations thereto,
as amended from time to time.

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2.9  Compensation.

“Compensation” shall mean the base or regular cash salary payable to an Employee
by the
Employer, as well as incentives or bonuses payable to an Employee by the
Employer,
commissions payable to an Employee by the Employer, including any such amounts
which are not
includible in the Participant’s gross income under Sections 125, 401(k), 402(h)
or 403(b) of the
Internal Revenue Code of 1986, as amended.

2.10  Contributions. 

“Contributions” shall mean the total of Participant Deferrals, Matching
Contributions, Discretionary Contributions, and Mandatory Contributions which
represent each Participant’s credits to his Account.

2.11  Deemed Earnings.

“Deemed Earnings” shall mean the gains and losses (realized and unrealized), and
income and expenses credited or debited to Contributions based upon the Deemed
Crediting Options in a Participant’s Account as of any Valuation Date.

2.12  Deemed Crediting Options.

“Deemed Crediting Options” shall mean the hypothetical options made available to
Plan Participants by the Employer for the purposes of determining the proper
crediting of gains and losses, and income and expenses to each Participant’s
Account, subject to procedures and requirements established by the Board
Committee. A Participant may reallocate his Account among such Deemed Crediting
Options periodically at such frequency and upon such terms as the Board
Committee may determine from time to time.

2.13  Deferral Election Form.

“Deferral Election Form” or “Annual Deferral Election Form” shall mean that
written agreement of a Participant. The Deferral Election Form shall be in such
form or forms as may be prescribed by the Administrator, filed annually with the
Employer, according to procedures and at such times as established by the
Administrator. Among other information the Administrator may require of the
Participant for proper administration of the Plan, such agreement shall
establish the Participant’s election to defer Compensation for a Plan Year under
the Plan; the amount of the deferral into the Plan for the Plan Year; the
Participant’s elections as to distribution of his Account, and the allocation of
his Accounts among the Deemed Crediting Options provided under the Plan; and the
Designated Beneficiary.

2.14  Designated Beneficiary.

“Designated Beneficiary” or "Beneficiary" shall mean the person, persons or
trust specifically named to be a direct or contingent recipient of all or a
portion of a Participant’s benefits under the Plan in the event of the
Participant’s death prior to the distribution of his full Account Balance. Such
designation of a recipient or recipients may be made and amended, at the
Participant’s discretion, on the Deferral Election Form and according to
procedures established by the Administrator. No beneficiary designation or
change of Beneficiary shall become effective until received and acknowledged by
the Employer. In the event a Participant does not have a beneficiary properly
designated, the beneficiary under this Plan shall be the Participant’s estate.

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2.15  Disability.

“Disability” shall mean that a Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Participant’s employer, or as provided by Treasury Regulations
issued pursuant to Code Section 409A.

2.16  Discretionary Contribution.

“Discretionary Contribution” shall mean an amount, determined in the sole
discretion of the Committee, to be credited to the Account of a Participant.
Participants may or may not receive any such Discretionary Contribution, and
amounts of such Contributions may vary among Participants.

2.17  Effective Date.

“Effective Date” of the Plan shall mean October 1, 2006.

2.18  Eligible Employee.

“Eligible Employee” shall mean a person who (for any Plan Year or portion
thereof) is: (1) an Employee of the Employer; (2) a member of a select group of
management or highly compensated employees of the Employer; and (3) selected by
the Board Committee to participate in the Plan.

2.19  Employee.

“Employee” shall mean a full time common law employee of the Employer.

2.20  Employer.

“Employer” shall mean Shore Bancshares, Inc., designated subsidiaries and any
corporate successors and assigns, unless otherwise provided herein.

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2.21  ERISA.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

2.23  Leave of Absence.

“Leave of Absence” shall mean a period of time, not to exceed twelve (12)
consecutive calendar months during which time a Participant shall not be an
active Employee of the Employer, but shall be treated for purposes of this Plan
as in continuous service with the Employer. A Leave of Absence may be either
paid or unpaid, but must be agreed to in writing by both the Employer and the
Participant. A Leave Of Absence that continues beyond the twelve (12)
consecutive months shall be treated as a Termination of Service as of the first
business day of the thirteenth month for purposes of the Plan.

2.24  Mandatory Contribution.

“Mandatory Contribution” shall mean such amount indicated in Schedule A to be
credited to a Participant’s Account each Plan Year for which the Participant was
an employee of the Employer.

2.25  Matching Contribution.

“Matching Contribution” shall mean such amount to be credited to a Participant’s
Account as a match for Participant Deferrals. The amount of any such Matching
Contribution shall be announced by the Committee prior to each Plan Year and
shall remain in effect thereafter until modified prior to the beginning of a
Plan Year for which such change shall be effective.

2.26  Participant.

“Participant” shall mean an Eligible Employee who participates in the Plan under
Article III; a former Eligible Employee who has participated in the Plan and
continues to be entitled to a benefit (in the form of an undistributed Account
Balance) under the Plan, and any former Eligible Employee who has participated
in the Plan under Article III and has not yet exceeded any Leave of Absence.

2.27  Participant Deferral.

“Participant Deferral” shall mean voluntary Participant deferral amounts, which
could have been received currently but for the election to defer and are
credited to his Account for later distribution, subject to the terms of the
Plan.

2.28  Performance Based Compensation.

“Performance-based compensation” shall mean compensation that is (i) variable
and contingent on the satisfaction of pre-established organizational or
individual performance criteria; (ii) not readily ascertainable at the time; and
(iii) based on services performed over a period of at least twelve months, as
provided by Treasury Regulations issued pursuant to Code Section 409A.

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2.29  Plan Year.

“Plan Year” shall mean the twelve (12) consecutive month period constituting a
calendar year, beginning on January 1 and ending on December 31. However, in any
partial year of the Plan that does not begin on January 1, “Plan Year” shall
also mean the remaining partial year ending on December 31. For purposes of
vesting as provided in Section 6.3, Plan Years shall mean years of participation
in the Plan.

2.30  Separation from Service.

“Separation from Service” shall mean a Participant’s separation from service as
an Employee with the Employer, other than for death, Disability, or Leave of
Absence. A transfer of employment within and among the Employer and any member
of a controlled group, as provided in Code Section 409A (d)(6), shall not be
deemed a Separation from Service.

2.31  Specified Employee.

“Specified Employee” shall mean any Participant who is (i) one of the top-fifty
most highly compensated officers with annual compensation in excess of $130,000
(as adjusted from time to time by Treasury regulations); (ii) a five percent
owner of the Employer; or (iii) a one percent owner of the Employer with annual
compensation in excess of $150,000 (as adjusted from time to time by Treasury
regulations) of a publicly traded corporation, as provided by Treasury
Regulations issued pursuant to Code Section 409A.

2.32  Unforeseeable Emergency.

“Unforeseeable emergency” shall mean a severe financial hardship to the
Participant, the Participant’s spouse, or a dependent (as defined in Section
152(a) of the Code) of the participant, loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, as provided
by Treasury Regulations issued pursuant to Code Section 409A..

2.33  Valuation Date.

“Valuation Date” shall mean the close of each business day, as established and
amended from time to time by guidelines and procedures of the Administrator in
its sole and exclusive discretion.

ARTICLE III--ELIGIBILITY & PARTICIPATION

3.1  Eligibility Requirements.

Only an Eligible Employee selected by the Board Committee may become a
Participant in this Plan. Moreover, a Participant shall not be permitted to make
new Participant Deferrals to the Plan, if he ceases to be an Eligible Employee
because he is no longer a member a select group of management or highly
compensated employees, or otherwise. The Board Committee shall notify an
Eligible Employee of his eligibility for a Plan Year in such form as it may
determine most appropriate. Current Participants remain eligible until notified
otherwise.

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3.2  Participation.

An Eligible Employee shall become a Participant in the Plan by the completion
and timely filing with, and subsequent acceptance by, the Employer of the
Deferral Election Form, according to the terms and conditions established by the
Administrator. A Participant (or any Designated Beneficiary who becomes
entitled) remains a Participant until his Account Balance is fully distributed
under the terms of the Plan.

ARTICLE IV—ELECTIONS, DEFERRALS & CONTRIBUTIONS

4.1            Participant Election to Defer Compensation.

A.
Prior to December 31 or an earlier date set by the Administrator, a Participant
may elect to defer Compensation for services to be performed in the next
following Plan Year by the execution and timely filing, and Employer’s
acceptance of, a Deferral Election Form in such form and according to such
procedures as the Administrator may prescribe from time to time. Each such
Deferral Election Form shall be effective for the Plan Year to which the
Deferral Election Form pertains.

B.
Each Participant may elect annually to have his Compensation for the Plan Year
reduced by a whole percentage of up to (i) 100% of base salary and (ii) 100% of
any annual bonuses by timely filing, and the acceptance by the Employer of, his
Deferral Election Form detailing such deferral. The amount of this Participant
Deferral shall be deferred into the Plan and credited to the Participant’s
Account as provided in Article V

C.
An election to defer Performance-Based Compensation may be made at such time and
in such manner as the Administrator may specify, but in any event not later than
six months before the end of the period for which it is earned.

D.
Under such Deferral Election Form, a Participant shall indicate the amount of
such Participant Deferral; designate and allocate such Participant Deferral in
or among the elective distribution Account option(s); and, allocate such
Accounts among the Deemed Crediting Options. The Deferral Election Form may also
request other information, such as a Participant’s Designated Beneficiary, as
may be required or useful for the administration of the Plan.

4.2   New Participants and Partial Years.

The initial Deferral Election Form of a new Participant shall be filed with the
Employer on a date established by the Administrator, but in any event not later
than 30 days following the date the Participant becomes eligible to participate
in the Plan and shall be effective only with respect to services to be performed
and income earned subsequent to the election. Such first Deferral Election Form
shall be applicable to a Participant’s Compensation beginning with the first
payroll in the month after such Form is filed and accepted by the Employer.

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4.3  Irrevocable Elections.

An election in a Deferral Election Form to defer Compensation for a Plan Year,
once made by a Participant, shall be irrevocable. The Administrator, however,
shall reduce or eliminate Participant Deferrals upon granting a Participant’s
request for a distribution based upon an Unforeseeable Emergency.

4.4               Matching Contribution.

Prior to the beginning of a Plan Year, the Administrator shall announce the
amount, if any, that the Employer will credit to a Participant’s Account as a
match for Participant Deferrals. Such deemed matching amounts shall be credited
to the Participant’s Employer Funded Account of his Account.

4.5               Discretionary Contribution.

In its discretion, the Employer may credit an amount to the Account of a
Participant as of the end of a Plan Year. Such deemed discretionary amount, if
any, may vary among Participants, shall be in addition to any Matching
Contribution or Mandatory Contribution, and shall be credited to the
Participant’s Employer Funded Account of his Account.
 
4.6               Mandatory Contribution.

Certain Participants shall be entitled to a mandatory contribution each Plan
Year.  The Employer will credit an amount to the Account of each such
Participant on the last day of each Plan Year for which the Participant was an
employee of the Employer. Such deemed mandatory contribution shall be credited
to the Participant’s Employer Funded Account of his Account. The Participants
who shall be entitled to receive mandatory contributions and the amounts of such
contributions are detailed in Schedule A hereto.

For any partial Plan Year, or year in which a Participant has a Separation from
Service, a pro-rata reduction in the Mandatory Contribution will be made at the
discretion of the Board Committee.

ARTICLE V--ACCOUNTS & ACCOUNT CREDITING

5.1  Establishment of a Participant’s Account.

A.
Bookkeeping Account. The Administrator shall cause a deemed bookkeeping Account
and appropriate sub-accounts, based upon the primary elective distribution
option(s) to be established and maintained in the name of each Participant,
according to his annual Deferral Election Form for the Plan Year. This Account
shall reflect the amount of Participant Deferrals, Matching Contributions,
Discretionary Contributions, and Mandatory Contributions, as well as Deemed
Earnings credited on behalf of each Participant under this Plan.

 
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B.
Bookkeeping Activity. Participant Deferrals shall be credited to a Participant’s
Account on the business day they would otherwise have been made available as
cash to the Participant. Matching Contributions, Discretionary Contributions,
and Mandatory Contributions shall be credited to a Participant’s Account on the
Valuation Date the Employer designates. Deemed Earnings shall be credited or
debited to each Participant’s Account, as well as any distributions or any other
withdrawals under this Plan, as of a Valuation Date. Accounts shall continue to
be valued on each Valuation Date until the Participant’s Account is fully
distributed under the terms of the Plan.

5.2  Deemed Crediting Options.

A.  
General. The Board Committee shall establish a portfolio of one or more Deemed
Crediting Options, among which a Participant may allocate amounts credited to
his Account, which are subject to Participant direction under this Plan. The
Board Committee reserves the right, in its sole and exclusive discretion, to
substitute, eliminate and otherwise change this portfolio of Deemed Crediting
Options, as well as the right to establish rules and procedures for the
selection and offering of these Deemed Crediting Options.

B.  
Deemed Crediting Options. The initial Deemed Crediting Options under the Plan
shall include the following:

 
S&P 500 Index      
S&P 400 MidCap Index     
Lehman Bond Index      
Money Market
Employer Stock

The performance of such Deemed Crediting Options selected by the Participant
shall determine the amount of gain or loss to be credited to such Participant’s
account.

C. Employer Stock Option. Amounts credited to this Option shall be deemed to be
invested in shares of common stock of the Employer. A Participant’s Account will
be credited with deemed distributions if and when dividends are declared and
paid with respect to Employer common stock, and such deemed dividends will be
deemed to have been reinvested in Employer common stock as of the first business
day following the deemed payment. Fair market value of Employer common stock
means, as of any day, the average of the closing prices of sales of shares of
common stock on all national securities exchanges on which the common stock may
be listed. If there have been no sales on such day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day shall
be used. If such common stock is not listed on any national exchange, then the
average of the representative bid and asked prices quoted in the National
Association of Securities Dealers, Inc. Automated Quotation System for such date
or the next preceding date that the common stock was traded on such market shall
be used. If Employer common stock is not traded on a public market, then the
Board Committee shall determine the value of Employer common stock by reasonable
application of a reasonable valuation method, as provided by Treasury
Regulations issued pursuant to Code Section 409A.

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5.3  Allocation Of Account Among Deemed Crediting Options.

A.
Each Participant shall elect the manner in which his Account is divided among
the Deemed Crediting Options by giving allocation instructions in a Deferral
Election Form supplied by and filed with the Administrator, or by such other
procedure, including electronic communications, as the Administrator may
prescribe. A Participant’s election shall specify the percentage of his Account
(in any whole percentage) to be deemed to be invested in any Deemed Crediting
Option. Such election shall remain in effect until a new election is made.

B.
Amounts credited to a Participant’s Account shall be deemed to be invested in
accordance with the most recent effective Deemed Crediting Option election. As
of the effective date of any new Deemed Crediting Option election, all or a
portion of the Participant’s Account shall be reallocated among the designated
Deemed Crediting Options and according to the percentages specified in the new
instructions, until and unless subsequent instructions shall be filed and become
effective. If the Administrator receives a Deemed Crediting Option election,
which is unclear, incomplete or improper, the Deemed Crediting Option election
then in effect shall remain in effect.

5.4  Valuation and Risk of Decrease in Value.

The Participant’s Account will be valued on the Valuation Date at fair market
value. On such date, Deemed Earnings will be allocated to each Participant’s
Account. Each Participant and Designated Beneficiary assumes the risk in
connection with any decrease in the fair market value of his Account.

5.5  Limited Function of Administrator.

By deferring compensation pursuant to the Plan, each Participant hereby agrees
that the Employer and Administrator are in no way responsible for or guarantor
of the investment results of the Participant’s Account. The Administrator shall
have no duty to review, or to advise the Participant on, the investment of the
Participant’s Account; and in fact, shall not review or advise the Participant
thereon. Furthermore, the Administrator shall have no power to direct the
investment of the Participant’s Account other than promptly to carry out the
Participant’s deemed investment instructions when properly completed and
transmitted to the Administrator and accepted according to its rules and
procedures.
 
ARTICLE VI--VESTING

6.1   Vesting of Participant Deferrals.

A Participant shall be fully vested at all times in Participant Deferrals, as
well as Deemed Earnings upon Participant Deferrals, credited to his Participant
Deferral Account.
 
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6.2                Employer Funded Account.

A Participant shall vest (become non-forfeitable) with respect to Mandatory
Contributions, Matching Contributions, and Discretionary Contributions (Employer
Funded Account) upon death, Change of Control, and as follows:

Years in Plan
Vesting Percent
1
0%
2
25%
3
50%
4
75%
5
100%

6.3               Forfeitures.

If a Participant separates from service for any reason other than death,
Disability, Change of Control, or Retirement at or after age 65, any non-vested
portion of his Employer Funded Account shall be forfeited.

ARTICLE VII--DISTRIBUTIONS

7.1  Distributions Generally.

A Participant’s Account shall be distributed only in accordance with the
provisions of this Article
VII. All distributions from Accounts under the Plan shall be made in cash in
American currency.

7.2  Automatic Distributions.

A.
Participant’s Death. If the Participant dies while employed by the Employer in
the capacity, his Account shall be valued as of the Valuation Date next
following his date of death and shall be distributed in lump sum to his
Designated Beneficiary.

B.
Participant’s Disability. If a Participant becomes disabled while employed by
the Employer, his Account shall be valued as of the Valuation Date next
following his date of Disability and shall be distributed in lump sum to him.

C.
Separation from Service. If a Participant incurs a Separation from Service, his
vested Account shall be valued as of the Valuation Date next following his
official date of separation and shall be distributed to him in a lump sum or in
installments, as the Participant may have elected.

D.
Change of Control Distribution. If a Change of Control should occur during the
Plan Year, a Participant’s elective distribution election(s) shall be overridden
and his entire Account shall valued as of the Valuation Date next following the
Change of Control event and be distributed to him in a lump sum.

 
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E.
Time of Payment. Payment, or the commencement of payments, under the Plan shall
be made within sixty (60) days following the Valuation Date following the event
of distribution; provided, however, that the Account of a Key Employee shall not
be distributed or payments commenced until six months following Separation from
Service or the Change of Control event. Notwithstanding the foregoing provision,
no distribution shall be made to any Participant until the earliest date and
upon such conditions as may be set forth under Treasury regulations issued
pursuant to Code Section 409A (e).

7.3  Elective Distributions.

A Participant shall become entitled to receive a distribution from his Account
at such time or times and by such method of payment as elected and specified in
the Participant’s applicable annual Deferral Election Form, and/or as may be
mandated by the provisions of this Article VII based upon the following
distribution options:

A.
In-Service Distributions. If a Participant elects in his annual Deferral
Election Form, he can receive a distribution from the Participant Deferral
Account of his Account, as soon as three (3) years after the end of the deferral
Plan Year, all of his annual deferral amount, plus amounts credited/debited
based on the performance of the Participant’s Deemed Crediting Options. The
election is made on an annual basis, applies only to the Participant’s current
Plan Year deferrals, is irrevocable and is payable according to the method of
payment elected in the Participant’s applicable annual Deferral Election Form.
If the Participant dies while receiving In-Service installment payments, his
Designated Beneficiary shall be paid the balance of the Account in a lump sum.

 

B.  
Timing and Method of Payment for In-Service Distributions. At the election of a
Participant in the applicable Deferral Election Form, an In-Service Distribution
will be either in the form of a lump-sum, occurring no later than sixty (60)
days following the distribution date elected on the Deferral Election Form, or
in annual installment payments beginning with the first business day on or after
the commencement date as selected by the Participant in the annual Deferral
Election Form and for a duration as selected by the Participant in the annual
Deferral Election Form and to be paid thereafter within ten (10) days of the
anniversary of the Valuation Date next preceding the distribution date of each
calendar year until the In-Service Distribution amount has been fully
distributed.

7.4  Form of Payment 

A.  
Installment Payments. In any distribution in which a Participant has elected or
will receive distribution in annual installments of up to ten (10) years, the
amount of each annual installment shall be determined by applying a formula to
the Account in which the numerator is the number one and the denominator is the
number of remaining installments to be paid. For example, if a Participant
elects ten (10) annual installments for a distribution, the first payment will
be 1/10 of the Account, the second will be 1/9, the third will be 1/8; the
fourth will be 1/7 and so on until the Account is entirely distributed.

 
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B.  
Failure to Designate a Method of Payment. In any situation in which the
Administrator is unable to determine the method of payment because of
incomplete, unclear, or uncertain instructions in a Participant’s Deferral
Election Form, the Participant will be deemed to have elected a lump sum
distribution.

C.  
Subsequent Elections. A Participant who has made an In-Service distribution or a
Separation from Service distribution election may make one or more subsequent
elections to postpone the distribution date or to change the form of payment to
another form permitted by the Plan. Such Subsequent Election shall be made in
writing in such form as is acceptable to the Administrator and (i) is made at
least twelve months prior to the original distribution date; (ii) provides for
an effective date at least twelve months following the Subsequent Election; and
(iii) postpones the commencement of payment for a period of not less than five
years from the previous distribution date.

7.5  Distributions Resulting from Unforeseeable Emergency.

A Participant may request that all or a portion of his Account be distributed at
any time prior to
Separation from Service from the Employer by submitting a written request to the
Administrator,
provided that the Participant has incurred an Unforeseeable Emergency, and the
distribution is
necessary to alleviate such Unforeseeable Emergency.

Such distribution shall be limited to an amount that does not exceed the amount
necessary to
satisfy such emergency, plus amounts necessary to pay taxes reasonably
anticipated as a result of
the distribution, after taking into account the extent to which such hardship is
or may be relieved
through reimbursement or compensation by insurance or otherwise or by
liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not
itself cause severe
financial hardship).

Such distribution shall be made within thirty (30) days after the Valuation.
Date immediately following the determination that such Unforeseeable Emergency
exists, or as soon as administratively practicable. The balance not distributed
from the Participant’s Account shall remain in the Plan.

7.6              Distribution of Small Accounts.

If at any time the value of the Participant’s Account is less than $10,000 (or
such other greater or lesser amount as may be specified as “minimal” under
Treasury regulations), the Administrator, in its sole and exclusive discretion,
may make a distribution in lump sum of the value of the entire Account. If the
value of a Participant’s Account is zero upon the Valuation Date of any
distribution, the Participant shall be deemed to have received a distribution of
such Account and his participation in the Plan terminates.

15

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ARTICLE VIII--ADMINISTRATION & CLAIMS PROCEDURE

8.1  
Duties of the Employer.

The Employer shall have overall responsibility for the establishment, amendment,
termination, administration, and operation of the Plan. The Employer shall
discharge this responsibility by the appointment and removal (with or without
cause) of the members of the Administrator, to which is delegated overall
responsibility for administering, managing and operating the Plan.

8.2  
The Administrator.

The Administrator shall consist of one or more members who shall be appointed
by, and may be removed by, the Employer, and one of whom (who must be an officer
of the Employer) shall be designated by the Employer as Chairman. In the absence
of such appointment, the Employer shall serve as the Administrator. The
Administrator shall consist of officers or other Employees of the Employer, or
any other persons who shall serve at the request of the Employer. Any member of
the Administrator may resign by delivering a written resignation to the Employer
and to the Administrator, and this resignation shall become effective upon the
date specified therein. The members of the Administrator shall serve at the will
of the Employer, and the Employer may from time to time remove any Administrator
member with or without cause and appoint their successors. In the event of a
vacancy in membership, the remaining members shall constitute the Administrator
with full order to act.

8.3  Administrator’s Powers and Duties to Enforce Plan.

The Administrator shall be the “Administrator” and “Named Fiduciary” only to the
extent required by ERISA for top-hat plans and shall have the complete control
and authority to enforce the Plan on behalf of any and all persons having or
claiming any interest in the Plan in accordance with its terms. The
Administrator, in its sole and absolute discretion, shall interpret the Plan and
shall determine all questions arising in the administration and application of
the Plan. Any such interpretation by the Administrator shall be final,
conclusive and binding on all persons.

8.4  Organization of the Administrator.

The Administrator shall act by a majority of its members at the time in office.
Administrator action may be taken either by a vote at a meeting or by written
consent without a meeting. The Administrator may authorize any one or more of
its members to execute any document or documents on behalf of the Administrator.
The Administrator shall notify the Employer, in writing, of such authorization
and the name or names of its member or members so designated in such cases. The
Employer thereafter shall accept and rely on any documents executed by said
member of the Administrator or members as representing action by the
Administrator until the Administrator shall file with the Employer a written
revocation of such designation. The Administrator may adopt such by-laws and
regulations, as it deems desirable for the proper conduct of the Plan and to
change or amend these by-laws and regulations from time to time. With the
permission of the Employer, the Administrator may employ and appropriately
compensate accountants, legal counsel, benefit specialists, actuaries, plan
administrators and record keepers and any other persons as it deems necessary or
desirable in connection with the administration and maintenance of the Plan.
Such professionals and advisors shall not be considered members of the
Administrator for any purpose.

16

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8.5  Limitation of Liability.

A.
No member of the Board of Directors, the Employer and no officer or Employee of
the Employer shall be liable to any Employee, Participant, Designated
Beneficiary or any other person for any action taken or act of omission in
connection with the administration or operation of this Plan unless attributable
to his own fraud or willful misconduct. Nor shall the Employer be liable to any
Employee, Participant, Designated Beneficiary or any other person for any such
action taken or act of omission unless attributable to fraud, gross negligence
or willful misconduct on the part of a Director, officer or Employee of the
Employer. Moreover, each Participant, Designated Beneficiary, and any other
person claiming a right to payment under the Plan shall only be entitled to look
to the Employer for payment, and shall not have the right, claim or demand
against the Administrator (or any member thereof), any Director, Officer or
Employee of the Employer.

B.
To the fullest extent permitted by the law and subject to the Employer’s
Certificate of Incorporation and By-laws, the Employer shall indemnify the
Administrator, each of its members, and the Employer’s officers and Directors
(and any Employee involved in carrying out the functions of the Employer under
the Plan) for part or all expenses, costs, or liabilities arising out of the
performance of duties required by the terms of the Plan agreement, except for
those expenses, costs, or liabilities arising out of a member’s fraud, willful
misconduct or gross negligence.

8.6  Administrator Reliance on Records and Reports.

The Administrator shall be entitled to rely upon certificates, reports, and
opinions provided by an accountant, tax or pension advisor, actuary or legal
counsel employed by the Employer or Administrator. The Administrator shall keep
a record of all its proceedings and acts, and shall keep all such books of
account, records, and other data as may be necessary for the proper
administration of the Plan. The regularly kept records of the Administrator and
the Employer shall be conclusive evidence of the service of a Participant,
Compensation, age, marital status, status as an Employee, and all other matters
contained therein and relevant to this Plan. The Administrator, in any of its
dealings with Participants hereunder, may conclusively rely on any Deferral
Election Form, written statement, representation, or documents made or provided
by such Participants.

8.7  Costs of the Plan.

All the costs and expenses for maintaining the administration and operation of
the Plan shall be borne by the Employer unless the Employer shall give notice
(that Plan Participants bear this expense, in whole or in part) to: (a) Eligible
Participants at the time they become a Participant by completion and filing of a
Deferral Election Form; or (b) to existing Participants during annual
re-enrollment. Such notice shall detail the administrative expense to be
assessed a Plan Participant, how that expense will be assessed and allocated to
the Participant Accounts, and any other important information concerning the
imposition of this administrative expense. This administration charge, if any,
shall operate as a reduction to the bookkeeping Account of a Participant or his
designated Beneficiary, and in the absence of specification otherwise shall
reduce the Account, and be charged annually during the month of January.

17

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8.8  Claims Procedure.

A.
Claim. Benefits shall be paid in accordance with the terms of this Plan. A
Participant, Designated Beneficiary or any person who believes that he is being
denied a benefit to which he is entitled under the Plan (hereinafter referred to
as a “Claimant”) may file a written request for such benefit with the Employer,
setting forth his claim. The request must be addressed to the Administrator care
of Secretary of the Employer at its then principal place of business.

B.
Claim Decision. Upon the receipt of a claim, the Administrator shall advise the
Claimant that a reply will be forthcoming within ninety (90) days and shall, in
fact, deliver such reply within such period. However, the Administrator may
extend the reply period for an additional ninety (90) days for reasonable cause.
Any claim not granted or denied within such time period shall be deemed to have
been denied. If the claim is denied in whole or in part, the Administrator shall
adopt a written opinion, using language calculated to be understood by the
Claimant, setting forth:

(1)  
The specific reason or reasons for such denial;

(2)  
The specific reference to pertinent provisions of this Agreement on which such
denial is based;

(3)  
A description of any additional material or information necessary for the
Claimant to perfect his claim and an explanation why such material or such
information is necessary;

 
 (4)
Appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and

 
 (5)
The time limits for requesting a review under Subsection C and for review under
Subsection D hereof.

 

C.
Request for Review. Within sixty (60) days after the receipt by the Claimant of
the written opinion described above, the Claimant may request in writing that
the Secretary of the Employer review the determination of the Administrator.
Such request must be addressed to the Secretary of the Employer, at its then
principal place of business. The Claimant or his duly authorized representative
may, but need not, review the pertinent documents and submit issues and comments
in writing for consideration by the Employer. If the Claimant does not request a
review of the Administrator’s determination by the Secretary of the Employer
within such sixty (60) day period, he shall be barred and estopped from
challenging the Administrator’s determination.

D.
Review of Decision. Within sixty (60) days after the Secretary’s receipt of a
request for review, he will review the Administrator’s determination. After
considering all materials presented by the Claimant, the Secretary will render a
written opinion, written in a manner calculated to be understood by the
Claimant, setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of this Agreement on which the
decision is based. If special circumstances require that the sixty (60) day time
period be extended, the Secretary will so notify the Claimant and will render
the decision as soon as possible, but no later than one hundred twenty (120)
days after receipt of the request for review. Any claim not granted or denied
within such time period shall be deemed to have been denied.

18

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8.9  
Litigation.

It shall only be necessary to join the Employer as a party in any action or
judicial proceeding affecting the Plan. No Participant or Designated Beneficiary
or any other person claiming under the Plan shall be entitled to service of
process or notice of such action or proceeding, except as may be expressly
required by law. Any final judgment in such action or proceeding shall be
binding on all Participants, Designated Beneficiaries or persons claiming under
the Plan.

ARTICLE IX--AMENDMENT, TERMINATION & REORGANIZATION

9.1  Amendment.

The Employer by action of its Board of Directors, or duly authorized
Administrator thereof, in accordance with its by-laws, reserves the right to
amend the Plan, by resolution of the Employer, to the extent permitted under the
Code and ERISA. However, no amendment to the Plan shall be effective to the
extent that it has the effect of decreasing a Participant’s (or Designated
Beneficiary’s) accrued benefit prior to the date of the amendment.

9.2  Amendment Required By Law.

Notwithstanding Section 9.1, the Plan may be amended at any time, if in the
opinion of the Employer, such amendment is necessary to ensure the Plan is
treated as a nonqualified plan of deferred compensation under the Code and
ERISA, or to bring it into conformance with Treasury or SEC regulations or
requirements for such plans. This includes the right to amend this Plan, so that
any Trust, if applicable, created in conjunction with this Plan, will be treated
as a grantor Trust under Sections 671 through 679 of the Code, and to otherwise
conform the Plan provisions and such Trust, if applicable, to the requirements
of any applicable law.

9.3  Termination.

The Employer intends to continue the Plan indefinitely. However, the Employer by
action of its Board of Directors or a duly authorized committee thereof, in
accordance with its by-laws, reserves the right to terminate the Plan at any
time. However, no such termination shall deprive any participant or Designated
Beneficiary of a right accrued under the Plan prior to the date of termination.

19

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9.4  Consolidation/Merger.

The Employer shall not enter into any consolidation or merger without the
guarantee and assurance of the successor or surviving company or companies to
the obligations contained under the Plan. Should such consolidation or merger
occur, the term “Employer” as defined and used in this Agreement shall refer to
the successor or surviving company.

ARTICLE X--GENERAL PROVISIONS

10.1  Applicable Law.

Except insofar as the law has been superseded by Federal law, Maryland law shall
govern the construction, validity and administration of this Plan as created by
this Agreement. The parties to this Agreement intend that this Plan shall be a
nonqualified unfunded plan of deferred compensation without plan assets and any
ambiguities in its construction shall be resolved in favor of an interpretation
which will effect this intention.

10.2  Benefits Not Transferable or Assignable.

A.
Benefits under the Plan shall not be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge such
benefits shall be void, nor shall any such benefits be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to them. However, a Participant may name a recipient for any benefits
payable or which would become payable to a Participant upon his death. This
Section shall also apply to the creation, assignment or recognition of a right
to any benefit payable with respect to a Participant pursuant to a domestic
relations order, including a qualified domestic relations order under Section
414(p) of the Code. In addition, the following actions shall not be treated or
construed as an assignment or alienation: (a) Plan Contribution or distribution
tax withholding; (b) recovery of distribution overpayments to a Participant or
Designated Beneficiary; (c) direct deposit of a distribution to a Participant’s
or Designated Beneficiary’s banking institution account; or (d) transfer of
Participant rights from one Plan to another Plan, if applicable.

B.
The Employer may bring an action for a declaratory judgment if a Participant’s,
Designated Beneficiary’s or any Beneficiary’s benefits hereunder are attached by
an order from any court. The Employer may seek such declaratory judgment in any
court of competent jurisdiction to:

(1)   
determine the proper recipient or recipients of the benefits to be paid under
the Plan;

(2)   
protect the operation and consequences of the Plan for the Employer and all
Participants; and

(3)   
request any other equitable relief the Employer in its sole and exclusive
judgment may feel appropriate.

20

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Benefits which may become payable during the pendency of such an action shall,
at the sole discretion of the Employer, either be:

(1) paid into the court as they become payable or

(2) held in the Participant’s or Designated Beneficiary’s Account subject to the
court’s final distribution order.

10.3  
Not an Employment Contract.

The Plan is not and shall not be deemed to constitute a contract between the
Employer and any Employee, or to be a consideration for, or an inducement to, or
a condition of, the employment of any Employee. Nothing contained in the Plan
shall give or be deemed to give an Employee the right to remain in the
employment of the Employer or to interfere with the right to be retained in the
employ of the Employer, any legal or equitable right against the Employer, or to
interfere with the right of the Employer to discharge any Employee at any time.
It is expressly understood by the parties hereto that this Agreement relates to
the payment of deferred compensation for the Employee’s services, generally
payable after separation from employment with the Employer, and is not intended
to be an employment contract.

10.4  
Notices.

A.   
Any notices required or permitted hereunder shall be in writing and shall be
deemed to be sufficiently given at the time when delivered personally or when
mailed by certified or registered first class mail, postage prepaid, addressed
to either party hereto as follows:

If to the Employer:

Shore Bancshares
18 East Dover Street
Easton, MD 21601

If to the Participant:

At his last known address, as indicated by the records of the Employer.

or to such changed address as such parties may have fixed by notice. However,
any notice of change of address shall be effective only upon receipt.

B.
Any communication, benefit payment, statement of notice addressed to a
Participant or Designated Beneficiary at the last post office address as shown
on the Employer’s records shall be binding on the Participant or Designated
Beneficiary for all purposes of the Plan. The Employer shall not be obligated to
search for any Participant or Designated Beneficiary beyond sending a registered
letter to such last known address.

 
21

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10.5  
Severability.

The Plan as contained in the provisions of this Agreement constitutes the entire
Agreement between the parties. If any provision or provisions of the Plan shall
for any reason be invalid or unenforceable, the remaining provisions of the Plan
shall be carried into effect, unless the effect thereof would be to materially
alter or defeat the purposes of the Plan. All terms of the plan and all
discretion granted hereunder shall be uniformly and consistently applied to all
the Employees, Participants and Designated Beneficiaries.

10.6  
Participant is General Creditor with No Rights to Assets.

A.
The payments to the Participant or his Designated Beneficiary or any other
beneficiary hereunder shall be made from assets which shall continue, for all
purposes, to be a part of the general, unrestricted assets of the Employer, no
person shall have any interest in any such assets b y virtue of the provisions
of this Agreement. The Employer’s obligation hereunder shall be an unfunded and
unsecured promise to pay money in the future. To the extent that any person
acquires a right to receive payments from the Employer under the provisions
hereof, such right shall be no greater than the right of any unsecured general
creditor of the Employer; no such person shall have nor require any legal or
equitable right, or claim in or to any property or assets of the Employer. The
Employer shall not be obligated under any circumstances to fund obligations
under this Agreement.

B.
The Employer at its sole discretion and exclusive option, may acquire and/or
set-aside assets or funds, in a trust or otherwise, to support its financial
obligations under this Plan. No such trust established for this purpose shall be
established in or transferred to a location that would cause it to be deemed to
be an “offshore trust” for purposes of Code Section 409A (b)(1). No such
acquisition or set-aside shall impair or derogate from the Employer’s direct
obligation to a Participant or Designated Beneficiary under this Plan. However,
no Participant or Designated Beneficiary shall be entitled to receive duplicate
payments of any Accounts provided under the Plan because of the existence of
such assets or funds.

C.
In the event that, in its discretion, the Employer purchases an asset(s) or
insurance policy or policies insuring the life of the Participant to allow the
Employer to recover the cost of providing benefits, in whole or in part
hereunder, neither the Participant, Designated Beneficiary nor any other
beneficiary shall have any rights whatsoever therein in such assets or in the
proceeds therefrom. The Employer shall be the sole owner and beneficiary of any
such assets or insurance policy and shall possess and may exercise all incidents
of ownership therein. No such asset or policy, policies or other property shall
be held in any trust for the Participant or any other person nor as collateral
security for any obligation of the Employer hereunder. Nor shall any
Participant’s participation in the acquisition of such assets or policy or
policies be a representation to the Participant, Designated Beneficiary or any
other beneficiary of any beneficial interest or ownership in such assets, policy
or policies. A Participant may be required to submit to medical examinations,
supply such information and to execute such documents as may be required by an
insurance carrier or carriers (to whom the Employer may apply from time to time)
as a precondition to participate in the Plan.

 
22

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10.7  
No Trust Relationship Created.

Nothing contained in this Agreement shall be deemed to create a trust of any
kind or create any fiduciary relationship between the Employer and the
Participant, Designated Beneficiary, other beneficiaries of the Participant, or
any other person claiming through the Participant. Funds allocated hereunder
shall continue for all purposes to be part of the general assets and funds of
the Employer and no person other than the Employer shall, by virtue of the
provisions of this Plan, have any beneficial interest in such assets and funds.
The creation of a grantor Trust (so called “Rabbi Trust”) under the Code (owned
by and for the benefit of the Employer) to hold such assets or funds for the
administrative convenience of the Employer shall not give nor be a
representation to a Participant, Designated Beneficiary, or any other person, of
a property or beneficial ownership interest in such Trust assets or funds even
though the incidental advantages or benefits of the Trust to Plan Participants
may be communicated to them.

10.8  
Limitations on Liability of the Employer.

Neither the establishment of the Plan nor any modification hereof nor the
creation of any Account under the Plan nor the payment of any benefits under the
Plan shall be construed as giving to any Participant or any other person any
legal or equitable right against the Employer or any Director, officer or
Employee thereof except as provided by law or by any Plan provision.
 

10.9  
Agreement Between Employer and Participant Only.

This Agreement is solely between the Employer and Participant. The Participant,
Designated Beneficiary, estate or any other person claiming through the
Participant, shall only have recourse against the Employer for enforcement of
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the Employer and its successors and assigns, and the Participant, successors,
heirs, executors, administrators and beneficiaries.

10.10
Independence of Benefits.

The benefits payable under this Agreement are for services already rendered and
shall be independent of, and in addition to, any other benefits or compensation,
whether by salary, bonus, fees or otherwise, payable to the Participant under
any compensation and/or benefit arrangements or plans, incentive cash
compensations and stock plans and other retirement or welfare benefit plans,
that now exist or may hereafter exist from time to time.

10.11
Unclaimed Property.

Except as may be required by law, the Employer may take any of the following
actions if it gives notice to a Participant or Designated Beneficiary of an
entitlement to benefits under the Plan, and the Participant or Designated
Beneficiary fails to claim such benefit or fails to provide their location to
the Employer within three (3) calendar years of such notice:

(1)
Direct distribution of such benefits, in such proportions as the Employer may
determine, to one or more or all, of a Participant’s next of kin, if their
location is known to the Employer;

 
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(2)
Deem this benefit to be forfeiture and paid to the Employer if the location of a
Participant’s next of kin is not known. However, the Employer shall pay the
benefit, unadjusted for gains or losses from the date of such forfeiture, to a
Participant or Designated Beneficiary who subsequently makes proper claim to the
benefit.

The Employer shall not be liable to any person for payment pursuant to
applicable state unclaimed property laws.

10.12  
Required Tax Withholding and Reporting.

The Employer shall withhold and report Federal, state and local income and
payroll tax amounts on all Contributions to and distributions and withdrawals
from a Participant’s Account as may be required by law from time to time.

SHORE BANCSHARES, INC.

BY: /s/ W. Moorhead Vermilye   

Title: President and Chief Executive Officer  

 
24

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Schedule A

Mandatory Contributions:

Mr. Duncan

Annual contribution of 21% of cash compensation over the IRS Section 415 limit,
plus the following:

Plan Year 1
$28,914
Plan Year 2
$30,649
Plan Year 3
$32,488
Plan Year 4
$34,437
Plan Year 5
$36,503

Mr. Vermilye

Annual contribution of $20,000.

2006 Discretionary Contributions:

Mr. Vermilye

$60,000 in 2006.

Mr. Beatty

$40,000 in 2006.

25

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Shore Bancshares Inc. Executive Deferred Compensation Plan
Deferral Election Form
Short Plan Year October 1, 2006 to December 31, 2006

 
 
Section 1 Employee
Information
 
 
_________________________________________       _______________________________
Name
                                                                                         
 Social Security Number
 
 
Section 2 Enrollment Election
 
oElection to Participate.  I hereby elect to defer 4th Quarter 2006 compensation
to the Shore Bancshares Inc. Executive
    Deferred Compensation Plan (the “Plan”). I understand that any election I
make regarding the amount I wish to defer
    is irrevocable during the Plan year and cannot be changed until the next
Plan year.
 
    Indicate below how much you would like to defer for both base salary and
bonus earnings:
 
    I elect to defer ______% (choose from 1% to 100% in whole percentages only)
per pay period or $_________ (fixed
    dollar amount) of my base salary for the quarter.
 
    I elect to defer ______% (choose from 1% to 100% in whole percentages only)
per pay period or $_________ (fixed
    dollar amount) of my bonus per annum. (Note: For 2006, amount deferred
cannot exceed 25% of the total annual
    bonus.)
 
 
oElection Not to Participate. I elect not to defer 2006 compensation to the
Plan.
 
 
Section 3 Distribution
Election
 
The Plan offers automatic distributions in the event of Death, Disability,
Change of Control, or Separation from Service. In addition, you may elect
In-Service Distributions. You must elect the timing and type of payment you want
to receive for each In-Service Distribution.
 
Note: In-Service Distributions are available only for Deferrals and related
deemed earnings, not for Employer Contributions.
 
Note: See Section 7.2E of the Plan relating to Time of Payment
 
I wish to make the following irrevocable In-Service Distribution election for
2006 deferrals and any related deemed earnings.
 
 
Elective Distributions
 
In-Service Distribution - I elect to receive an In-Service Distribution,
commencing on: (no sooner than three (3) years after the close of the 2006 Plan
Year):
 
Date: _________________________ In the form of (choose one):
 
o   Lump-Sum Payment                 o Annual Installments over ______ (up to
10) years
 
 
 
Section 4 Signature
 
 
_________________________________                             ____________     
Employee's
Signature                                                                   
Date

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

Shore Bancshares Inc. Executive Deferred Compensation Plan
Deemed Crediting Option Election Form
 

 
Section 1 Employee
Information
 
 
_________________________________________     _______________________________
Name                                                                                          
Social Security Number
 
Section 2 Enrollment Election
 
I elect as a Deemed Crediting Option(s) the following, which will determine my
rate of return as discussed in
Article V of the Plan.
 
Note: Selected Deemed Crediting Options must have at least a 5% allocation of
your Account.
 
Note: This election applies to your entire Account, including Deferrals,
Mandatory Contributions, and any Matching
or Discretionary Contributions.
 
Note: This election will remain valid until a subsequent election is made by
you, on forms provided by Shore
Bancshares, Inc.
 
 
Deemed Crediting Option Options                                   Participant
Allocation
 
S&P 500
Index                                                                                
_______ %
 
S&P 400 MidCap
Index                                                                  _______ %
 
Lehman Bond
Index                                                                       
_______ %
 
Money
Market                                                                                
_______ %
 
Shore Bancshares Inc.
Stock                                                         _______ %
 
TOTAL (must equal
100%)                                                            _______ %
 
 
I understand that Shore Bancshares, Inc. shall determine, in its sole
discretion, whether, and if so,
to what extent, the amount that I defer under the Plan shall be invested in the
options I have selected.
 
 
Section 3 Signature
 
 
 
_____________________________________                         ____________     
Employee's
Signature                                                                       
  Date

 
 

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

Shore Bancshares Inc. Executive Deferred Compensation Plan
Beneficiary Designation Form

 
 
Section 1 Employee
Information
 
 
_________________________________________     _______________________________
Name                                                                                          
Social Security Number
 
 
Section 2
Designation 
 
 
Use this Form to designate the person or persons who are to receive benefits
payable by the Plan upon your death.
Please note these other important points:

 

·    
You may designate one or more persons or one or more trusts as your beneficiary.

 

·    
If you fail to designate a beneficiary or all your beneficiaries predecease you,
the Plan will pay benefits to your estate.

 

·    
If we cannot after reasonable effort locate your beneficiary(ies), the Plan may
pay benefits to your estate.

 

·    
If you designate a spouse as your beneficiary and then become divorced or
legally separated from the spouse, your beneficiary designation
will remain in effect until you modify it on forms the Employer will provide
upon your request.

 

·    
If you designate multiple primary or contingent beneficiaries, indicate the
share payable to each.

 

·    
The benefit received under this Plan is subject to income taxation.

Primary Beneficiary(ies) :
 
Name
SSN / ID #
Address
Relationship
Share
                             

Contingent Beneficiary(ies) :
 
Name
SSN / ID #
Address
Relationship
Share
                             

                  
 
Section 3 Signature
 
 
 
_____________________________________                         ____________     
Employee's
Signature                                                                       
  Date