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v145925_ex10-9 -- Converted by SECPublisher 2.1.1.8, created by BCL Technologies Inc., for SEC Filing

   

    
      Exhibit
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      Exhibit
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      Exhibit
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      Exhibit
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      Exhibit
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      Exhibit
10.20Unassociated Document

    Exhibit
10.1

    

    
      UST No.
394

    

    
      

    

    
      UNITED
STATES DEPARTMENT OF THE TREASURY

    

    
      1500
Pennsylvania Avenue, NW

    

    
      Washington,
D.C. 20220

    

    
      

    

    
      

    

    
      April 15,
2009

       

       

      Ladies
and Gentlemen:

    

    

    
      Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement - Standard Terms (the "Securities Purchase Agreement"),
dated as of the date set forth on Schedule A hereto, between the United
States Department of the Treasury (the "Investor") and the company
set forth on Schedule A hereto (the "Company"), Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement, at
the Closing, the Company issued to the Investor the number of shares of the
series of its preferred stock set forth on Schedule A hereto (the "Preferred Shares") and a
warrant to purchase the number of shares of its common stock set forth on
Schedule A hereto (the "Warrant").

      

    

    
      In
connection with the consummation of the repurchase (the "Repurchase") by the Company
from the Investor, on the date hereof, of the number of Preferred Shares listed
on Schedule A hereto (the "Repurchased Preferred Shares"),
as permitted by the Emergency Economic Stabilization Act of 2008, as
amended by the American Recovery and Reinvestment Act of 2009:

      

    

    
      (a) The
Company hereby acknowledges receipt from the Investor of the share
certificate(s) set forth on Schedule A hereto representing the Preferred Shares;
and

       

      (b) The
Investor hereby acknowledges receipt from the Company of a wire transfer to the
account of the Investor set forth on Schedule A hereto in immediately available
funds of the aggregate purchase price set forth on Schedule A hereto,
representing payment in full for the Repurchased Preferred Shares at a price per
share equal to the Liquidation Amount per share, together with any accrued and
unpaid dividends to, but excluding, the date hereof.

    

    
 

    
      The
Investor and the Company hereby agree that, notwithstanding Section 4.4 of the
Securities Purchase Agreement, immediately following consummation of the
Repurchase, but subject to compliance with applicable securities laws, the
Investor shall be permitted to Transfer all or a portion of the Warrant or
Substitute Warrant (as defined below) with respect to, and/or exercise the
Warrant or Substitute Warrant for, all or a portion of the number of shares of
Common Stock issuable thereunder, at any time and without limitation, and
Section 4.4 of the Securities Purchase Agreement shall be deemed to be amended
in order to permit the foregoing. The Company shall take all steps as may be
reasonably requested by the Investor to facilitate any such
Transfer.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      In addition, the Company agrees that
within 15 calendar days of the date hereof the Company shall either (a) deliver
to the Investor a notice of intent to repurchase the Warrant in accordance
with Section 4.9(b) of the
Securities Purchase Agreement (the "Warrant Repurchase
Notice"), or (b) issue and
deliver to the Investor a new warrant, in substantially the form of the Warrant,
except with the deletion of Section 13(H) thereof, to purchase the number of
shares of Common Stock into which the Warrant is then exercisable (the
"Substitute
Warrant"), which
Substitute Warrant shall be deemed the "Warrant"
for all purposes under the
Securities Purchase Agreement.

      

    

    
      In the
event that the Company delivers a Warrant Repurchase Notice and the Company and
the Investor fail to agree on the Fair Market Value of the Warrant pursuant to
the procedures (including the Appraisal Procedure), and in accordance with the
time periods, set forth in Section 4.9(c) of the Securities Purchase Agreement
or the Company revokes the delivery of such Warrant Repurchase Notice, then the
Company shall deliver a Substitute Warrant to the Investor within 5 calendar
days of the earlier of the failure to agree on the Fair Market Value and the
revocation of the Warrant Repurchase Notice.

      

    

    
      Effective
as of the date of receipt of the Substitute Warrant, if applicable, the Investor
hereby provides notice, pursuant to Section 4.5(p) of the Securities Purchase
Agreement, of its intention to sell the Substitute Warrant.

      

    

    
      This
letter agreement will be governed by and construed in accordance with the
federal law of the United States if and to the extent such law is applicable,
and otherwise in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.

      

    

    
      This
letter agreement may be executed in any number of separate counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement. Executed signature
pages to this letter agreement may be delivered by facsimile and such facsimiles
will be deemed sufficient as if actual signature pages had been
delivered.

      
 

    

     

    

    
      [Remainder
of this page intentionally left blank]

    

    
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      In
witness whereof, the parties have duly executed this letter agreement as of the
date first written above.

       

       

    

    
      UNITED
STATES DEPARTMENT OF 

      THE
TREASURY

    

    
       

       

       

    

    
      By: /s/ Neal
Kashkari                   
Name:
Neal KashKari
Title:
Interim Assistant Secretary For Financial Stability

       

       

      COMPANY:
SHORE BANCSHARES, INC.

       

       

       

      By:  /s/ W. Moorhead
Vermilye           
Name: W.
Moorhead Vermilye
Title:
President & CEO

    

    
      

    

    
      

    

    
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      SCHEDULE
A

    

    
      UST
No. 394

    

    
      

    

    
      General
Information:

    

    
      

    

    
      Date of
Letter Agreement incorporating the Securities

    

    
      Purchase
Agreement: January 9, 2009

    

    
      

    

    
      Name of
the Company: Shore Bancshares, Inc.

    

    
      

    

    
      Corporate
or other organizational form of the

    

    
      Company:
Corporate

    

    
      

    

    
      Jurisdiction
of organization of the Company: Maryland

    

    
      

    

    
      Number
and series of preferred stock issued to the

    

    
      Investor
at the Closing: 25,000 Fixed Rate Cumulative Perpetual Preferred Stock, Series
A

    

    
      

    

    
      Number of
Initial Warrant Shares: 172,970

    

    
      

    

    
      

    

    
      Terms of the
Repurchase:

    

    
      

    

    
      Number of
Preferred Shares repurchased by the

    

    
      Company:
25,000

    

    
      

    

    
      Share
certificate number (representing the Preferred

    

    
      Shares
previously issued to the Investor at the

    

    
      Closing):
PA-1

    

    
      

    

    
      Per share
Liquidation Amount of Preferred Shares: $1,000

    

    
      

    

    
      Accrued
and unpaid dividends on Preferred Shares: $208,333.33

    

    
      

    

    
      Aggregate
purchase price for Repurchased Preferred

    

    
      Shares: $25,208,333.33

    

    
      

    

    
      

    

    
      	
              Investor
      wire information for payment of purchase

              price:

            	
              ABA
      Number:

            
	 
      	
              Bank:

            
	 
      	
              Account
      Name:

            
	 
      	
              Account

            
	 
      	
              Account
      Number:

            
	 
      	
              Beneficiary:
      Ref:

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