Item 1.01 Entry Into a Material Definitive Agreement

The information set forth in Item 8.01 of this report is incorporated into this Item 1.01 by reference.

Item 8.01 Other Events.

On April 15, 2009, Shore Bancshares, Inc. (the "Company") completed the repurchase of all 25,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Preferred Stock") that were sold to the U.S. Department of the Treasury (the "Treasury") on January 9, 2009 pursuant to the Troubled Asset Relief Program Capital Purchase Program.

In connection with this transaction, the Company and the Treasury entered into a letter agreement, in the form attached hereto as Exhibit 10.1 (the "Letter Agreement"). The Letter Agreement amends Section 4.4 of the Securities Purchase Agreement - Standard Terms, dated as of January 9, 2009 (the "Purchase Agreement"), that was executed in connection with the sale of the Preferred Stock to permit the Treasury, subject to applicable securities laws, to transfer all or a portion of the related warrant (covering 172,970 shares of the Company's common stock) and/or exercise all or a portion of such warrant at any time and without limitation. Prior to its amendment, Section 4.4 prohibited the Treasury from transferring a portion of the warrant with respect to, or exercising the warrant for, more than one-half of the warrant shares until the earlier of December 31, 2009 or the date on which the Company has received $25 million from one or more qualified equity offerings. In addition, the Letter Agreement requires the Company, no later than April 30, 2009, to either (i) provide the Treasury with notice of its intent to repurchase the warrant at its fair market value or (ii) issue and deliver a substitute warrant that omits
Section 13(H). Section 13(H) of the warrant provides for a 50% reduction in the number of shares of common stock subject to the warrant in the event the Company receives $25 million in one or more qualified equity offerings.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits. The exhibits filed with this report are listed in the Exhibit Index which follows the signatures hereto, which index is incorporated herein by reference.