Item 1.01. Entry Into a Material Definitive Agreement

As previously reported, Shore Bancshares, Inc. (the "Company") sold 25,000 shares of its preferred stock and issued a common stock purchase warrant (the "Original Warrant") to the United States Department of the Treasury (the "Treasury") on January 9, 2009 pursuant to the Troubled Asset Relief Program Capital Purchase Program. On April 15, 2009, the Company redeemed all 25,000 shares of its preferred stock and entered into a letter agreement with the Treasury which, among other things, eliminated certain limitations on the Treasury's ability to transfer and/or exercise the Original Warrant.

On June 3, 2009, pursuant to that letter agreement, the Company issued a substitute warrant to the Treasury that is identical in all respects to the Original Warrant, except that the aforementioned limitations (contained in
Section 13(H) of the Original Warrant) were deleted. A copy of the Substitute Warrant is filed herewith as Exhibit 4.1.

Item 3.03. Material Modification to Rights of Security Holders.

The information set forth in Item 1.01 of this report is incorporated into this Item 3.03 by reference.

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.