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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><B>Washington, D.C.
20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PURSUANT TO SECTION 13 OR 15(d) OF THE
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (Date of earliest event reported):
March 15, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><U>SHORE BANCSHARES, INC.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 25%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: center">Maryland</TD>
    <TD STYLE="width: 1%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 25%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: center">0-22345</TD>
    <TD STYLE="width: 1%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 25%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: center">52-1974638</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(State or other jurisdiction of</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Commission file number)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (IRS Employer</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">incorporation or organization)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Identification No.)</TD>
    </TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><U>18 East Dover Street, Easton, Maryland
21601</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address of principal executive offices)
(Zip Code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Registrant&rsquo;s telephone number, including
area code: <U>(410) 763-7800</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><U>N/A</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former Name or Former Address, if Changed
Since Last Report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0">Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT>&#9;Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT>&#9;Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT>&#9;Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR &#9;240.14d-2(b))</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT>&#9;Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR &#9;240.13e-4(c))</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 5.02</B></TD><TD STYLE="text-align: justify"><B>Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">(e)&#9;<U>Compensatory Arrangements</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 15, 2012, the Compensation Committee
of the Board of Directors of Shore Bancshares, Inc. (the &ldquo;Company&rdquo;) granted nonqualified stock options to Lloyd L.
Beatty, Jr., Susan E. Leaverton and F. Winfield Trice, Jr. under the Company&rsquo;s 2006 Stock and Incentive Compensation Plan
(the &ldquo;Plan&rdquo;) and entered into a Nonqualified Stock Option Agreement with each of them (each, an &ldquo;Option Agreement&rdquo;).
Mr. Beatty serves as a director and the President and Chief Operating Officer of the Company, Ms. Leaverton serves as the Company&rsquo;s
Treasurer and Principal Accounting Officer, and Mr. Trice serves as a director of the Company and as President of CNB, a bank subsidiary
of the Company. Mr. Beatty&rsquo;s option entitles him to purchase 22,590 shares of the common stock of the Company at an exercise
price of $6.64 per share, and the options granted to Ms. Leaverton and Mr. Trice entitle each of them to purchase 13,554 shares
at an exercise price of $6.64 per share. Each option has a 10-year term. Fifty percent of each option vests on March 15, 2014 and
the remaining 50% vests on March 15, 2015, although, subject to the terms of the Plan, the options will immediately vest and become
exercisable in full upon a Change in Control of the Company (as defined in the Plan). In addition, the Compensation Committee may
accelerate the vesting of the options, in whole or in part, at any time and for any reason.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The number of shares subject to the options
and the exercise price thereof are subject to adjustment as provided in the Plan in the event of certain events affecting the outstanding
shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If an optionee retires from employment with
the Company or its subsidiaries in accordance with the Company&rsquo;s retirement plan, then the unexercised portion of his or
her option that has vested will remain exercisable until the earlier of 90 days following the date of retirement or the stated
expiration date of the option. In the event the optionee&rsquo;s employment terminates due to death or disability, the unexercised
portion of his or her option that has vested will remain exercisable until the earlier of one year following the date of death
or disability or the stated expiration date of the option. The unexercised portion of an option (whether vested or not) will terminate,
lapse and be forfeited if the optionee&rsquo;s employment is terminated for &ldquo;Cause&rdquo; (as defined in the Option Agreement).
In the event of a termination of employment for any other reason, the unexercised portion of the option that has vested will remain
exercisable until the earlier of 90 days following the date of termination or the stated expiration date of the option. Notwithstanding
the foregoing, if an optionee dies following the termination of his or her employment but prior to exercising the vested portion
of his or her option within the above timeframes, then the period during which that portion of the option may be exercised will
be extended by 12 months, subject in all cases to the stated expiration date of the option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The optionees are generally prohibited from
assigning or pledging their options except by will or the laws of descent and distribution. If permitted by applicable securities
laws, however, an optionee may assign his or her option to his or her spouse, lineal ascendants, lineal descendants and to trusts
for the benefit of the foregoing persons.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The options are subject in all cases to
the terms and conditions of the Plan and, generally, may not be amended or terminated without the consent of the optionees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The foregoing is only a summary of the material
provisions of the Option Agreement and the Plan and is qualified in its entirety by the terms of the Option Agreement and the Plan.
The form of Option Agreement is filed herewith as Exhibit 10.1, and a copy of the Plan was filed as Appendix A to the Company&rsquo;s
2006 definitive proxy statement filed with the Securities and Exchange Commission on March 24, 2006.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 9.01</B></TD><TD STYLE="text-align: justify"><B>Financial Statement and Exhibits.</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">(d)&#9;<U>Exhibits</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The exhibits filed with this Form 8-K are
listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated by reference into this item.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt">SHORE BANCSHARES, INC.</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; width: 46%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; width: 5%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; width: 33%">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Dated:&nbsp; March 20, 2012</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">By:</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline">/s/ W. Moorhead Vermilye</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">W. Moorhead Vermilye</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Chief Executive Officer</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">(Principal Executive Officer)</TD>
    </TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="letter-spacing: -0.15pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="letter-spacing: -0.15pt">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="letter-spacing: -0.15pt"><B>EXHIBIT
INDEX</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline">Exhibit</TD>
    <TD STYLE="width: 80%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">10.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Form of Nonqualified Stock Option Agreement entered into pursuant to the Shore Bancshares, Inc. 2006 Stock and Incentive Compensation Plan (filed herewith)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -1in">&nbsp;</P>

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{"company-data": {"conformed-name": "SHORE BANCSHARES INC", "cik": "0001035092", "assigned-sic": "6021", "irs-number": "521974638", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-22345", "film-number": "12703615"}, "business-address": {"street1": "18 EAST DOVER STREET", "city": "EASTON", "state": "MD", "zip": "21601-3013", "phone": "4108221400"}, "mail-address": {"street1": "18 EAST DOVER STREET", "city": "EASTON", "state": "MD", "zip": "21601-3013"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 15, 2012
SHORE BANCSHARES, INC.
(Exact name of registrant as specified in
its charter)
Maryland
0-22345
52-1974638
(State or other jurisdiction of
(Commission file number)
(IRS Employer
incorporation or organization)
Identification No.)
18 East Dover Street, Easton, Maryland
21601
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including
area code:
(410) 763-7800
N/A
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
£
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 	240.14d-2(b))
£
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 	240.13e-4(c))
Item 5.02
Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Compensatory Arrangements
.
On March 15, 2012, the Compensation Committee
of the Board of Directors of Shore Bancshares, Inc. (the "Company") granted nonqualified stock options to Lloyd L.
Beatty, Jr., Susan E. Leaverton and F. Winfield Trice, Jr. under the Company's 2006 Stock and Incentive Compensation Plan
(the "Plan") and entered into a Nonqualified Stock Option Agreement with each of them (each, an "Option Agreement").
Mr. Beatty serves as a director and the President and Chief Operating Officer of the Company, Ms. Leaverton serves as the Company's
Treasurer and Principal Accounting Officer, and Mr. Trice serves as a director of the Company and as President of CNB, a bank subsidiary
of the Company. Mr. Beatty's option entitles him to purchase 22,590 shares of the common stock of the Company at an exercise
price of $6.64 per share, and the options granted to Ms. Leaverton and Mr. Trice entitle each of them to purchase 13,554 shares
at an exercise price of $6.64 per share. Each option has a 10-year term. Fifty percent of each option vests on March 15, 2014 and
the remaining 50% vests on March 15, 2015, although, subject to the terms of the Plan, the options will immediately vest and become
exercisable in full upon a Change in Control of the Company (as defined in the Plan). In addition, the Compensation Committee may
accelerate the vesting of the options, in whole or in part, at any time and for any reason.
The number of shares subject to the options
and the exercise price thereof are subject to adjustment as provided in the Plan in the event of certain events affecting the outstanding
shares of common stock.
If an optionee retires from employment with
the Company or its subsidiaries in accordance with the Company's retirement plan, then the unexercised portion of his or
her option that has vested will remain exercisable until the earlier of 90 days following the date of retirement or the stated
expiration date of the option. In the event the optionee's employment terminates due to death or disability, the unexercised
portion of his or her option that has vested will remain exercisable until the earlier of one year following the date of death
or disability or the stated expiration date of the option. The unexercised portion of an option (whether vested or not) will terminate,
lapse and be forfeited if the optionee's employment is terminated for "Cause" (as defined in the Option Agreement).
In the event of a termination of employment for any other reason, the unexercised portion of the option that has vested will remain
exercisable until the earlier of 90 days following the date of termination or the stated expiration date of the option. Notwithstanding
the foregoing, if an optionee dies following the termination of his or her employment but prior to exercising the vested portion
of his or her option within the above timeframes, then the period during which that portion of the option may be exercised will
be extended by 12 months, subject in all cases to the stated expiration date of the option.
The optionees are generally prohibited from
assigning or pledging their options except by will or the laws of descent and distribution. If permitted by applicable securities
laws, however, an optionee may assign his or her option to his or her spouse, lineal ascendants, lineal descendants and to trusts
for the benefit of the foregoing persons.
The options are subject in all cases to
the terms and conditions of the Plan and, generally, may not be amended or terminated without the consent of the optionees.
The foregoing is only a summary of the material
provisions of the Option Agreement and the Plan and is qualified in its entirety by the terms of the Option Agreement and the Plan.
The form of Option Agreement is filed herewith as Exhibit 10.1, and a copy of the Plan was filed as Appendix A to the Company's
2006 definitive proxy statement filed with the Securities and Exchange Commission on March 24, 2006.
Item 9.01
Financial Statement and Exhibits.
(d)
Exhibits
.
The exhibits filed with this Form 8-K are
listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated by reference into this item.
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SHORE BANCSHARES, INC.
Dated:  March 20, 2012
By:
/s/ W. Moorhead Vermilye
W. Moorhead Vermilye
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT
INDEX
Exhibit
Description
10.1
Form of Nonqualified Stock Option Agreement entered into pursuant to the Shore Bancshares, Inc. 2006 Stock and Incentive Compensation Plan (filed herewith)