Exhibit 10.1


 


 








AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


 





THIS EMPLOYMENT
AGREEMENT (this “Agreement”), dated September 21, 2015 (the “Effective Date”), is entered
into by and between Shore Bancshares, Inc., a corporation organized under the laws of Maryland (the “Employer”),
and Lloyd L. Beatty, Jr. (the “Employee”).


 


WHEREAS, the
Employee and the Employer have previously entered into an employment agreement dated June 16, 2011 and the Employee and Employer
desire to amend and restate such agreement to reflect, among other things, certain changes in laws and regulations relating to
executive compensation;


 


WHEREAS, the
Employee is employed by the Employer as President and Chief Executive Officer; and


 


WHEREAS, the
parties hereto desire to set forth in writing the continued employment relationship of the Employer and the Employee;


 


NOW THEREFORE,
in consideration of the mutual covenants and agreements of the parties contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Employee and the Employer agree as follows:


 


1.Employment
and Duties. The Employee is employed by the Employer as President and Chief Executive Officer. The Employee shall render administrative
and management services to the Employer such as are customarily performed by persons situated in a similar executive capacity.
The Employee shall also promote, by entertainment or otherwise, and to the extent permitted by law, the business of the Employer.
The Employee’s other duties shall be such as the Board of Directors of the Employer (the “Board”) may from time
to time reasonably direct, including normal duties of an officer of the Employer. The Employee shall devote his full time and best
efforts to the performance of his duties under this Agreement.


 


2.Compensation;
Employee Benefits.


 


(a)Base Salary.
The Employer agrees to pay the Employee during the term of this Agreement a base salary at the rate of Three Hundred Fifty-Five
Thousand, Three Hundred and Fifty Dollars ($355,350) per annum, which shall be paid in cash in accordance with the Employer’s
normal payroll practices for its salaried employees from time to time in effect. Such rate of salary may be periodically increased
by, and at the sole discretion of, the Board or its Compensation Committee.


 


(b)Bonus Plans.
The Employee shall be entitled to participate in such bonus programs and plans as the Employer makes available from time to time
to similarly situated executive officers of the Employer to the extent the provisions, rules, and regulations of such plans make
the Employee eligible for participation therein.


 



    	1 | Page




     


    




 


(c)Employee Benefits.
The Employee shall be entitled to employee benefits comparable to those provided from time to time by the Employer and/or its Affiliates
(collectively, the “Employer Group”) to similarly situated executive officers of the Employer to the extent
the provisions, rules, and regulations of such plans make the Employee eligible for participation therein, including, without limitation,
any plan of the Employer Group relating to pension, profit sharing, or other retirement benefits and medical coverage or reimbursement
plans that the Employer Group may adopt for the benefit of the employees of the Employer. The Employer may also, at its discretion,
enter into other agreements with the Employee to provide supplemental retirement benefits, additional death benefits, or the like.
For purposes of this Agreement, the term “Affiliate” means any “parent corporation” and any “subsidiary
corporation” of the Employer, as such terms are defined in Section 424 of the Internal Revenue Code, as amended (the “Code”).


 


(d)Fringe Benefits.
During the term of this Agreement, the Employee shall be eligible to participate in any fringe benefits which may be or become
applicable to the Employer’s executive officers, including, without limitation, participation in any equity compensation
plans and similar incentive plans adopted by the Board or its Compensation Committee, and any other benefits which are commensurate
with the responsibilities and functions to be performed by the Employee under this Agreement to the extent the provisions, rules,
and regulations of such plans or arrangements make the Employee eligible for participation therein or for receipt of such benefits.


 


(e)Reimbursement
of Expenses. The Employer shall reimburse the Employee for all out of pocket expenses which the Employee shall incur in connection
with his services for the Employer in accordance with the Employer’s reimbursement policies. With respect to any reimbursement
of expenses of, or any provision of in-kind benefits to, the Employee, as specified under this Agreement, such reimbursement of
expenses or provision of in-kind benefits shall be subject to the following conditions: (i) the expenses eligible for reimbursement
or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the
amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the
reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made
no later than the end of the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit.


 


(f)Vacation and
Leave.


 


(i)At
such reasonable times as the Employer’s Board shall in its discretion permit, the Employee shall be entitled, without loss
of pay, to absent himself voluntarily from the performance of his employment under this Agreement, all such voluntary absences
to count as vacation time; provided that:


 






    	2 | Page




     


    

 


A.The
Employee shall be entitled to an annual vacation in accordance with the policies as periodically established by the Board for executive
officers of the Employer, which shall in no event be less than four weeks per year. The Employee shall not be entitled to receive
any additional compensation from the Employer on account of his failure to take a vacation, nor shall he be entitled to accumulate
unused vacation from one year to the next except to the extent authorized by the Board for executive officers of the Employer.


 


B.In
addition to the aforesaid paid vacations, the Employee shall be entitled without loss of pay, to absent himself voluntarily from
the performance of his employment with the Employer for such additional periods of time and for such valid and legitimate reasons
as the Board in its discretion may determine.


 


C.The
Employee shall be entitled to an annual sick leave as established by the Board for executive officers of the Employer. In the event
any sick leave shall not have been used during any year, such leave shall not accrue to subsequent years unless authorized by the
Board. Upon termination of his employment hereunder, the Employee shall not be entitled to receive any additional compensation
from the Employer for unused sick leave.


 


3.Term.
The initial term of employment under this Agreement shall be for 12 months commencing on the Effective Date (the “Initial
Term”). Upon the expiration of the Initial Term, this Agreement shall automatically renew for successive terms of 12
months each (each such renewal term, together with the Initial Term, a “Term”) without further action by the
parties, unless either party shall have served written notice on the other party at least 60 days prior to the commencement of
a new Term of such party’s decision not to renew this Agreement. At least 120 days prior to the commencement of a new Term,
the Board or a committee thereof will conduct a comprehensive performance evaluation and review of Employee to determine whether
to give notice of non-renewal as provided herein. The evaluation and review shall be documented in the minutes of the Board or
the committee thereof.


 


4.Termination.


 


(a)General.
The Employee’s employment under this Agreement may be terminated prior to the expiration of the then-current Term upon the
occurrence of any of the following events:


 


(i)death
of the Employee;


 


(ii)written
notice by the Employer to the Employee of the termination of his employment for “Cause” (as hereinafter defined), specifying
in reasonable detail the reason constituting such cause;


 






    	3 | Page




     


    

 


(iii)written
notice by the Employer to the Employee of its termination of the Employee’s employment without Cause;


 


(iv)30
days after the date the Employee delivers written notice to the Employer of his intention to terminate his employment, provided
that the Employer shall have the option to pay the Employee 30 days’ salary in lieu of his working during the notice period.


 


(b)Cause.
For purposes of Section 4(a)(ii), the term “Cause” means: (i) the Employee’s “Disability”
(as hereinafter defined); (ii) an action or failure to act by the Employee constituting fraud, misappropriation or damage to the
property or business of the Employer; (iii) conduct by Employee that amounts to fraud, personal dishonesty or breach of fiduciary
duty; (iv) Employee’s conviction (from which no appeal may be, or is, timely taken) of a felony or willful violation of any
law, rule or regulation (other than traffic violations or similar offenses); (v) the Employee’s breach of any of his obligations
hereunder; (vi) the unauthorized use, misappropriation or disclosure by the Employee of any Confidential Information of the Employer
or of any confidential information of any other party to whom the Employee owes an obligation of nondisclosure as a result of his
relationship with the Employer; (vii) the willful violation of any final cease and desist or consent order; (viii) a knowing violation
by Employee of federal and state banking laws or regulations which is likely to have a material adverse effect on Employer, as
determined by the Board; (ix) the determination by the Board, in the exercise of its reasonable judgment and in good faith, that
Employee’s job performance is substantially unsatisfactory and that he has failed to cure such performance within a reasonable
period (but in no event more than thirty (30) days) after written notice specifying in reasonable detail the nature of the unsatisfactory
performance; (x) Employee’s material breach of any of Employer’s written policies; or (xi) the issuance of any order
by the Maryland Commissioner of Financial Regulation, the Federal Deposit Insurance Corporation, the Board of Governors of the
Federal Reserve System, or any other supervisory agency with jurisdiction over the Employer permanently prohibiting the continued
service of the Employee with the Employer. No act or failure to act on the part of the Employee shall be considered “willful”
unless it is done, or omitted to be done, by the Employee in bad faith or without reasonable belief that the Employee’s action
or omission was in the best interests of the Employer. Any act or failure to act that is based upon authority given pursuant to
a resolution duly adopted by the Board, or upon the advice of legal counsel for the Employer, shall be conclusively presumed to
be done, or omitted to be done, by the Employee in good faith and in the best interest of the Employer.


 


(c)Disability.
For purposes of Section 4(b)(i), the term “Disability” shall have the meaning given to such term in the long-term
disability policy available to employees of the Employer, as amended or replaced from time to time. 


 


5.Payments Upon
Termination. 


 


(a)Payment
of Unpaid Salary and Bonus. If the Employee’s employment is terminated hereunder for any reason, the Employee shall be
entitled to receive (i) all base salary that has accrued through, but remains unpaid as of, the date of termination, (ii) all bonus
awards (pro rated through the last day of the calendar month in which termination occurs) that the Employee would have been eligible
to receive had he remained employed when bonuses are next declared or paid on a pro rata basis provided any applicable performance
goals are satisfied, and (iii) reimbursement of all unreimbursed expenses, all as provided in Section 2. All such amounts shall
be paid as soon as reasonably practicable following the date of the Employee’s termination, but in no event later than the
last day of the calendar quarter of the quarter in which the Employee’s employment was terminated. In addition, all unexercised
or unvested equity awards, or portions thereof, held by the Employee as of the date of termination shall vest or terminate and
be exercisable in accordance with their terms. The termination of the Employee’s employment hereunder shall not impair any
rights of the Employee under any employee benefit or fringe benefit plans that have vested as of the date of termination, which
rights shall be administered after the termination of employment in accordance with the terms of such plans.


 






    	4 | Page




     


    

 


(b)Payment
of Severance. Except when Section 5(c) applies, in addition to the amounts and benefits to be paid or provided under Section
5(a), if the Employee’s employment is terminated without Cause pursuant to Section 4(a)(iii), then the Employer will continue
to make salary payments to the Employee at his then-current base salary level for 24 months following the date of termination (the
“Severance Period”). Subject to Section 5(g), payments under this Section 5(b) will be made pursuant to the Employer’s
normal payroll schedule with the first payment to be made on the first, regular payroll date on or after the 60th day
following the date of termination, provided that the Employee has executed and submitted a release of claims and the statutory
period during which the Employee is entitled to revoke such release has expired on or before that 60th day. 


 


(c)Payments
Following a Change in Control. If the Employee’s employment is terminated by the Employer without Cause pursuant to Section
4(a)(iii) in connection with or within 12 months after any “Change in Control” (as hereinafter defined) of the Employer,
then, in addition to the to the amounts and benefits to be paid or provided under Section 5(a), the Employee shall be paid an amount
equal to the difference between (i) the product of 2.99 times the Employee’s “base amount” as defined in Section
280G(b)(3) of the Code and regulations promulgated thereunder, and (ii) the sum of any other parachute payments (as defined under
Section 280G(b)(2) of the Code) that the Employee receives on account of the Change in Control. Subject to Section 5(g), said sum
shall be paid to the Employee in one lump sum on the 60th day following the Employee’s termination, provided that
the Employee has executed and submitted a release of claims and the statutory period during which Employee is entitled to revoke
the release of claims has expired on or before that 60th day.


 


(d)Change
in Control. For purposes of Section 5(c), a “Change in Control” shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been satisfied:


 






    	5 | Page




     


    

 


(i)any
one person, or more than one person acting as a group, acquires ownership of securities of the Employer or of its ultimate parent
company (the “Parent”) that, together with securities held by such person or group, constitutes more than 50
percent (50%) of the total fair market value or total voting power of the securities of the Employer or of the Parent, as the case
may be;


 


(ii)either
(A) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) ownership of securities of the Employer or of the Parent possessing
35 percent (35%) or more of the total voting power of the securities of the Employer or of the Parent, as the case may be; or (B)
a majority of members of the Board of Directors of the Employer or of the Parent is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of the Board of the Employer or of the Board of Directors
of the Parent, as the case may be, prior to the date of the appointment or election; or


 


(iii)any
one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from the Employer or from the Parent that have a total gross fair
market value equal to or more than 40 percent (40%) of the total gross fair market value of all of the assets of the Employer or
of the Parent, as the case may be, immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of the assets of the Employer or of its parent company, as the case may be, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.


 


Notwithstanding
the foregoing, the acquisition of ownership or control of voting stock of the Employer or of the Parent, individually or collectively,
by the Employer or one of its Affiliates or any benefit plan sponsored by the Employer or any of its Affiliates shall not constitute
a Change in Control.


 


(e)Full
Compensation. The payments made pursuant to this Section 5 shall be considered full compensation in payment for all claims
under this Agreement, and the Employee shall not be entitled to any other compensation. 


 


(f)Deduction
for Amounts Due Employer. Upon termination of the Employee’s employment with the Employer, subject to any restrictions
imposed by applicable law, the Employer shall have the right to deduct from the amount due the Employee any amounts which the Employee
owes the Employer. Such right shall apply only to debts that were incurred in the ordinary course of the employment relationship
and in no event shall the Employer have the right to deduct an amount in excess of $5,000 in any year from any payment that would
be considered deferred compensation under Section 409A of the Code. In no event shall the Employer have the discretion to deduct
any amount pursuant to this Section to the extent such deduction would be considered a prohibited acceleration under Section 409A
of the Code. Any offset under this Section 5(f) shall comply with Section 1.409A – 3(j)(4)(xiii) of the Treasury Regulations.


 






    	6 | Page




     


    

 


(g)Compliance
with Section 409A of the Code. This Agreement is intended to comply with Section 409A of the Code and its corresponding regulations,
or an exemption, and payments may only be made in a manner permitted by Section 409A of the Code, to the extent applicable. Severance
benefits under the Agreement are intended to be exempt from Section 409A to the maximum extent possible under the "separation
pay exception, the “short-term deferral exception,” or another exception under Section 409A of the Code. For purposes
of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to
a series of separate payments. In no event may the Employee, directly or indirectly, designate the calendar year of a payment.
If a payment obligation under this Agreement arises on account of the termination of Employee’s employment hereunder while
the Employee is a “specified employee” (as defined under Section 409A of the Code, and determined in good faith by
the Employer), any payment of “deferred compensation” (as defined in Treasury Regulation Section 1.409A-1(b)(1), after
giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within
six (6) months after such termination of employment shall be paid, with interest, in a lump sum, within 15 days after the end of
the six-month period beginning on the date of such termination or, if earlier, within 15 days after the appointment of the personal
representative or executor of the Employee’s estate following his death. 


 


6.Non-Competition
and Non-Solicitation.


 


(a)Restrictive
Covenants. During the Employee’s employment with the Employer and thereafter for the longer of but in no case to exceed
24 months, (i) the Severance Period (if severance is payable pursuant to Section 5(b)) or (ii) 12 months after the Employee ceases,
for any reason, to be an employee of the Employer, the Employee shall not, directly or indirectly, as owner, partner, director,
officer, employee, agent, consultant, advisor, contractor or otherwise, whether for consideration or without consideration, for
the benefit of any individual, group corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization of any other form of entity not specifically listed herein (a “Person”) other than
for a member of the Employer Group, take any of the following actions: 


 


(i)compete
with or otherwise engage in the sale of any products or the performance of any services which are comparable to, or which are intended
to substitute for, the products or services offered by the Employer and/or any of its Affiliates (the “Non-Compete Group”)
in any county of any jurisdiction in which any member of the Non-Compete Group maintains a branch or other office, or in any county
of any jurisdiction that is contiguous to such county; 


 


(ii)solicit
any Business Relation (as hereinafter defined) to purchase, or sell or otherwise provide to any Business Relation, any products
or services which are comparable to, or which are intended to substitute for, products or services offered by any member of the
Non-Compete Group during the Employee’s employment with the Employer; 


 






    	7 | Page




     


    

 


(iii)accept
employment with or provide services as an independent contractor to any Business Relation if the employment or services involve
the Employee rendering services which are the same as or substantially similar to, or which are intended to substitute for, services
provided by any member of the Non-Compete Group during the Employee’s employment with the Employer; 


 


(iv)employ,
engage or solicit for employment or for engagement as an independent contractor or consultant, any person who was employed by or
any Person who was engaged as an independent contractor by any member of the Non-Compete Group during the preceding 24 months;


 


(v)employ,
engage or solicit for employment any employee of the Employer, whether or not such employee is a full time employee or a temporary
employee of the Employer and whether or not such employment is pursuant to written agreement and whether or not such employment
is for a determined period or is at will; or


 


(vi)encourage
any Person to reduce its business with any member of the Non-Compete Group or to reduce its employment with or provision of services
to any member of the Non-Compete Group.


 


Provided, however,
that nothing in this Section 6(a) shall be deemed to prevent or limit the right of the Employee to own up to a five percent (5%)
interest in the securities of a Person that are registered under Section 12 of the Securities Exchange Act of 1934, as amended.


 


(b)Business
Relation Defined. For purposes of this Agreement, the term “Business Relation” means any Person who, at
any time during the Employee’s employment with the Employer, was a Person (i) that is or was a customer of any member of
the Non-Compete Group, (ii) that had entered into any contract or other arrangement with any member of the Non-Compete Group for
the provision of services or the sale of products, (iii) to whom any member of the Non-Compete Group furnished or planned to furnish
a proposal for the performance of services or the sale of products, or (iv) with whom any member of the Non-Compete Group entered
or agreed to enter into any other business relationship such as a joint venture, collaborative agreement, joint development agreement,
teaming arrangement or agreement, or similar arrangement or understanding for the provision of services or sale of products. 


 


(c)Acknowledgement.
The Employee hereby acknowledges and agrees that the restrictions contained in this Section 6 regarding geographical scope, length
of term and types of activities restricted, are reasonable and will not create a hardship to or burden for him and that the Employee
has no intention of competing with the Non-Compete Group within such limitations.


 






    	8 | Page




     


    

 


7.Confidential
Information.


 


(a)Covenant.
The Employee acknowledges that his relationship with the Employer shall of necessity provide him with specialized knowledge concerning
the Employer Group, which, if used for the benefit of others or disclosed to others, could cause serious harm to the Employer Group.
Accordingly, the Employee covenants that he shall not at any time, directly or indirectly, use, appropriate or disclose to others,
or permit the use of or appropriation by or disclosure to others of, any Confidential Information (as hereinafter defined) except
as expressly provided herein.


 


(b)Permitted Use.
While employed with the Employer, the Employee may use Confidential Information only for the purpose that is necessary to the carrying
out of the Employee’s duties as set forth herein or assigned to him by the Employer, and the Employee may not make use of
any Confidential Information after he is no longer an employee of the Employer.


 


(c)Confidential
Information Defined. For purposes of this Agreement, the term “Confidential Information” means all information
of any member of the Employer Group, whether oral, written, computerized, digitized or otherwise, regarding the business of the
Employer Group, including, without limitation, information regarding the Employer Group’s customers, referral sources, insurance
carriers, sales and marketing information, costs, prices, earnings, business plans, financial information and forecasts, contracts,
business arrangements, methods of operation, business strategies, prospects, and Intellectual Property (as hereinafter defined),
whether or not such information is deemed “trade secrets” under applicable law. Confidential Information does not include
information that (i) becomes generally available to the public other than as a result of disclosure by the Employee in violation
of this Agreement, (ii) was available to the public on a non-confidential basis from a source other than the Employer Group, (iii)
is made available to a third party on a non-confidential basis by the Employer Group, (iv) was already known to the Employee at
the time of disclosure by the Employer Group, or (v) is required to be disclosed by legal process or applicable law.


 


8.Intellectual
Property. The Employee agrees that any and all information, reports, other documents and other works (whether in an electronic
format or otherwise) created by the Employee for or on behalf of the Employer during the Employee’s service with the Employer,
whether or not developed on the Employer’s premises or equipment or during the Employer’s normal business hours (the
“Intellectual Property”), are and shall remain works made for hire and the sole and exclusive property of the
Employer. To the extent that such Intellectual Property is not considered work made for hire, the Employee hereby assigns to the
Employer (or its nominee) any and all interest that the Employee may now or in the future have in the Intellectual Property. Upon
request by the Employer, the Employee shall execute and deliver to the Employer any document or instrument that may be necessary
to secure or perfect the Employer’s title to or interest in any Intellectual Property so assigned.


 






    	9 | Page




     


    

 


9.Return of
Property. The Employee agrees that upon termination of his employment with the Employer, he will:


 


(a)promptly return
to the Employer all Confidential Information, all Intellectual Property, and all other property of the Employer, including but
not limited to all correspondence, manuals, notebooks, lists of customers and suppliers, computer programs, disks and any documents,
materials or property, whether written or stored on computerized medium, and all copies in his possession or control;


 


(b)not take any action
to preserve or regain access to such information through any means, including but not limited to access to the Employer’s
facilities or through a computer or other digital or electronic means; and


 


(c)promptly pay all
amounts due, owing or otherwise payable by him to the Employer.


 


The Employee expressly
authorizes the Employer to withhold any amounts payable to him, including for compensation, reimbursement and otherwise, until
he has complied with this Section 9, subject to the terms of Section 5(f).


 


10.No Disparaging
Statements. During the Employee’s employment with the Employer and for 12 months after the Employee ceases to be an employee
of the Employer, the Employee will not make any statements or comments of a disparaging nature to third parties regarding any member
of the Employer Group or its officers, directors, personnel or products.


 


11.Employee’s
Representations and Warranties.


 


(a)No Prior Agreements.
The Employee represents and warrants that he is not a party to or otherwise subject to or bound by the terms of any contract, agreement
or understanding which in any manner would limit or otherwise affect his ability to perform her obligations hereunder, including
without limitation any contract, agreement or understanding containing terms and provisions similar in any manner to those contained
in Sections 6, 7, 8 or 10 of this Agreement.


 


(b)Confidential
Information of Others. The Employee represents, warrants and covenants that he will not disclose to the Employer, or otherwise
use in the course of his service with the Employer, any confidential information which he is restricted from disclosing or using
pursuant to any other agreement or duty to any other person.


 


12.Remedies.


 


(a)Arbitration
of Disputes. If a dispute arises with respect to the enforcement or interpretation of any provision of this Agreement (other
than a dispute to be resolved under Section 12(b)), then the parties hereto agree to submit the dispute to non-appealable binding
arbitration. Such arbitration shall be conducted before a board of three arbitrators, with one member selected by the Employee,
one member selected by the Employer, and the third member selected by the first two arbitrators. The party responsible for the
payment of the costs of such arbitration (including any legal fees and expenses incurred by the Employee) shall be determined by
the board of arbitrators. The board of arbitrators shall be bound by the rules of the American Arbitration Association in making
its determination. The parties hereto agree that they and their heirs, personal representatives, successors, and assigns shall
be bound by the decision of such board of arbitrators with respect to any controversy properly submitted to it for determination.


 






    	10 | Page




     


    

 


(b)Disputes
Arising Under Sections 6 Through 10. The Employee recognizes that a violation by him of any provision of Sections 6 through
10, inclusive, of this Agreement may cause irreparable injury to the Employer, and that there may be no adequate remedy at law
for such violation. Therefore, the Employee agrees that, in addition to any other remedies for its violation hereof available to
the Employer, which shall include the recovery of all damages incurred, as well as reasonable attorney’s fees and other costs,
the Employer shall have the right, in the event of the breach or threatened breach of any provision hereof by the Employee to obtain
an injunction and/or temporary restraining order against such breach or threatened breach or specifically enforce this Agreement.
The Employer’s rights and remedies specified in this Section 12(b) are in addition to and not in lieu of any rights available
under applicable law and regulations, including, without limitation, those laws and regulations governing trade secrets and other
proprietary information.


 


13.Miscellaneous.


 


(a)Withholding
of Taxes. All compensation and benefits payable pursuant to this Agreement shall be subject to all applicable tax withholding
requirements.


 


(b)Compliance
with Banking Laws. Any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to, and conditioned
upon their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.


 


(c)Suspension
of Employment by Regulators. In the event the Employee is temporarily prohibited from participating in the conduct of the affairs
of the Employer pursuant to notice served by a regulatory agency having jurisdiction over the Employer, unless stayed by appropriate
proceedings, then Employer’s obligations under this Agreement shall be suspended and the Employee shall have no right to
any payment of compensation, as of the date such notice is served on Employer. If the charges specified in any such notice shall
be dismissed, then the Employer shall (i) pay the Employee any compensation withheld from the Employee pursuant to the suspension
of the Employer’ obligations as required by this Section 13(c) as soon as practicable following the completion of continued
employment for 30 days following such dismissal and (ii) reinstate the obligations so suspended.


 






    	11 | Page




     


    

 


(d)Entire
Agreement; Amendment. This Agreement supersedes all prior agreements, written and oral, between the parties with respect to
its subject matter, is intended as a complete and exclusive statement of the terms of the agreement between the parties with respect
thereto, and may be amended only by a writing signed by both parties hereto. The Employer and the Employee agree to execute any
and all amendments to this Agreement permitted under applicable law that the Employer’s legal counsel determines to be necessary
to ensure compliance with the distribution provisions of Section 409A of the Code or to otherwise ensure that this Agreement complies
with Section 409A of the Code.


 


(e)Nonwaiver.
The failure of either party to insist upon strict adherence to any term of this Agreement on any occasion will not operate as a
waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
Any waiver must be in a writing signed by the party to be charged therewith.


 


(f)Assignment.
The Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns and their
representatives. This Agreement may not be assigned by either party without the consent of the other party, except that the Employer
may assign all of its rights and delegate performance of all of its obligations hereunder in connection with a Change in Control.



 


(g)Counterparts.
This Agreement may be executed in two or more counterparts, each of which will be an original, but all of which together will constitute
the same instrument.


 


(h)Headings.
The headings in this Agreement are for convenience of reference only and should not be given any effect in the interpretation of
this Agreement.


 


(i)Governing
Law. This Agreement shall be governed in all respects whether as to validity, construction, capacity, performance or otherwise,
by the laws of the State of Maryland, without regard to any provision that would result in the application of the laws of any other
state or jurisdiction, except to the extent that Federal law shall be deemed to apply. 


 


(j)Interpretation.
This Agreement is intended to comply with, or otherwise be exempt from, Section 409A of the Code and any regulations and Treasury
guidance promulgated thereunder. If the Company determines in good faith that any provision of this Agreement would cause the Employee
to incur an additional tax, penalty, or interest under Section 409A of the Code, then the Company and the Executive shall use reasonable
efforts to reform such provision, if possible, in a mutually agreeable fashion to maintain to the maximum extent practicable the
original intent of the applicable provision without violating the provisions of Section 409A of the Code or causing the imposition
of such additional tax, penalty, or interest under Section 409A of the Code. As used in this Agreement, the terms “termination
of employment”, “resignation” and words of similar import mean, for purposes of any payments under this Agreement
that are payments of deferred compensation subject to Section 409A of the Code, the Employee’s “separation from service”
as defined in Section 409A of the Code.


 






    	12 | Page




     


    

 


(k)Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity and enforceability of the other provisions hereof.


 


(l)Employer
Policies, Plans and Programs. Except as expressly provided otherwise in this Agreement, whenever any rights under this Agreement
depend on the terms of a policy, plan, or program established or maintained by the Employer Group, any determination of such rights
will be made on the basis of the policy, plan, or program in effect at the time as of which such determination is made. No reference
in this Agreement to any policy, plan, or program established or maintained by the Employer Group precludes any member of the Employer
Group from prospectively or retroactively changing or amending or terminating that policy, plan, or program or adopting a new policy,
plan, or program in lieu of the then existing policy, plan, or program.


 


(m)Survival
of Terms. The provisions of Sections 5 through 10, inclusive, and Sections 12 and 13 of this Agreement shall survive the termination
of the Employee’s employment hereunder.


 


IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date written above.


 


 


	ATTEST:	 	EMPLOYER:
	 	 	 
	 	 	Shore Bancshares, Inc.
	 	 	 
	 	 	 
	/s/ W. David Morse	 	By: /s/ Christopher F. Spurry
	W. David Morse, Secretary	 	Name: 	Christopher F. Spurry
	 	 	Title:   	Chairman
	 	 	 
	WITNESS:	 	EMPLOYEE:
	 	 	 
	 	 	 
	/s/ W. David Morse	 	/s/ Lloyd L. Beatty, Jr.
	W. David Morse, Secretary	 	Lloyd L. Beatty, Jr.
	 	 	 


 






    	13 | Page