If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer R |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered | Amount to be registered (1) | Proposed maximum offering price per share (2) | Proposed maximum aggregate offering price | Amount of registration fee (3) | ||||||||||||
| Common Stock, par value $.01 per share | ||||||||||||||||
| Preferred Stock, par value $.01 per share | ||||||||||||||||
| Debt Securities | ||||||||||||||||
| Warrants | ||||||||||||||||
| Units | ||||||||||||||||
| Total | $ | 75,000,000 | $ | 75,000,000 | $ | 5,347.50 | ||||||||||
Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per share | Proposed maximum aggregate offering price | Amount of registration fee | ||||||||||||
| Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $.01 per share | 25,000 | $ | 1,000 | (1) | $ | 25,000,000 | $ | 982.50 | ||||||||
| Warrant to Purchase Common Stock, par value $.01 per share, and underlying shares of Common Stock (2) | 172,970 | $ | 21.68 | (3) | $ | 3,749,990 | $ | 147.37 | ||||||||
| TOTAL | $ | 28,749,990 | $ | 1,129.87 | ||||||||||||
| (1) |
| (2) |
| (3) |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
The information contained in this Prospectus is not complete and may be changed. Our selling security holders may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to completion, dated February 6, 2009June 25, 2010
Prospectus
$75,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
Our common stock is listed on the NASDAQ Global Select Market under the symbol “SHBI”. On February 5, 2009,June 23, 2010, the closing price of our common stock on the NASDAQ Global Select Market was $21.58$13.59 per share. You are urged to obtain current market quotations of our common stock.
Investing in our securities involves certain risks. See “RISK FACTORS” beginning on page 53 of this prospectus.
________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSIT OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF SHORE BANCSHARES, INC., AND THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.
________________
Our principal executive offices areoffice is located at 18 East Dover Street, Easton, Maryland 21601 and our telephone number is (410) 822-1400.
This prospectus may not be used to sell securities unless it is accompanied by a prospectus supplement.
The date of this Prospectus is ____________, 2009______________, 2010
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We may provide information to you about the securities we are offering in three separate documents that progressively provide more detail:
| · | this prospectus, which provides general information, some of which may not apply to your securities; |
| · | the accompanying prospectus supplement, which describes the terms of the securities, some of which may not apply to your securities; and |
| · | if necessary, a pricing supplement, which describes the specific terms of your securities. |
If the terms of your securities vary among the pricing supplement, the prospectus supplement and the accompanying prospectus, you should rely on the information in the following order of priority:
| · | the pricing supplement, if any; |
| · | the prospectus supplement; and |
| · | the prospectus. |
We include cross-references in this prospectus and the accompanying prospectus supplement to captions in these materials where you can find further related discussions. The following Table of Contents and the Table of Contents included in the accompanying prospectus supplement provide the pages on which these captions are located.
___________
Unless indicated in the applicable prospectus supplement, we have not taken any action that would permit us to publicly sell these securities in any jurisdiction outside the United States. If you are an investor outside the United States, you should inform yourself about, and comply with, any restrictions as to the offering of the securities and the distribution of this prospectus.
-i-
TABLE OF CONTENTS
| ABOUT THIS PROSPECTUS | |
| INCORPORATION OF CERTAIN INFORMATION BY REFERENCE | |
| WHERE YOU CAN FIND MORE INFORMATION | 2 |
| A WARNING ABOUT FORWARD-LOOKING STATEMENTS | |
| RISK FACTORS | |
| ABOUT SHORE BANCSHARES, INC. | |
| SUPERVISION AND REGULATION | |
| USE OF PROCEEDS | |
| DESCRIPTION OF OUR SECURITIES AND THE SECURITIES TO BE REGISTERED | |
| Capital Stock | 5 |
| Common Stock | 6 |
| Preferred Stock | 9 |
| Debt Securities | 10 |
| Warrants | 17 |
| Units | 19 |
| Treasury Warrant | 19 |
| PLAN OF DISTRIBUTION | |
| INDEMNIFICATION OF OUR DIRECTORS AND OFFICERS | |
| LEGAL MATTERS | |
| EXPERTS | |
-ii-
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, using a “shelf” registration process. Under this shelf registration process, the selling security holderswe may from time to time offer and sell any combination of the securities described in the registration statement in one or more offerings,offerings. This prospectus provides you with a general description of the securities described inwe may offer and sell. Each time we offer securities under this prospectus.
You should carefully read both this entire prospectus, especially the section entitled “RISK FACTORS” beginning on page 5,3, and any prospectus supplement before making a decision to invest in any of the securities. You should also carefully read the additional information described below under the headings “INCORPORATION OF CERTAIN INFORMATION BY REFERENCE” and “WHERE YOU CAN FIND MORE INFORMATION” before buyingmaking a decision to invest in any of the securities.
We have not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained or incorporated by reference in this prospectus. You must not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this prospectus and in any prospectus supplement is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any prospectus supplement or any sale of a security.
Unless otherwise mentioned or unless the context requires otherwise, all references in this prospectus to “Shore Bancshares”, “the Company”, “we”, “us”, “our” and similar terms refer to Shore Bancshares, Inc.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC’s rules allow us to incorporate by reference information into this prospectus. This means that we can disclose important information to you by referring you to another document. Any information referred to in this way is considered part of this prospectus from the date we file the document. Any reports filed by us with the SEC after the date of this prospectus and before the date that the offering of the securities by means of this prospectus is terminated will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus.
We incorporate by reference into this prospectus the following documents and information filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):
| · | Annual Report on Form 10-K for the year ended December 31, 2009; |
| · | Quarterly Report on Form 10-Q for the three-month period ended March 31, 2010; |
| · | Current Reports on Form 8-K filed on January 4, 2010, March 3, 2010, March 30, 2010, April 21, 2010 and May 3, 2010; and |
| · | Description of our common stock which appears in our Registration Statement on Form 10/A filed on May 30, 1997, or any description of the common stock that appears in any prospectus forming a part of any subsequent registration statement of the Company or in any registration statement filed pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including any amendments or reports filed for the purpose of updating such description. |
In addition, all documents that we file pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of the registration statement to which this prospectus relates and prior to the termination of the offering of the securities to which this prospectus relates will automatically be deemed to be incorporated by reference into this prospectus. In no event, however, will any of the information that we “furnish” to the SEC in any Current Report on Form 8-K from time to time be incorporated by reference into, or otherwise be included in, this prospectus. Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed to be modified or superseded to the extent that a statement contained in this prospectus or in a document subsequently filed modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We will promptly provide without charge to each person to whom this prospectus is delivered a copy of any or all information that has been incorporated herein by reference (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into such information) upon the written or oral request of such person. Written requests should be directed to: Shore Bancshares, Inc. Corporate Secretary, 18 East Dover Street, Easton, Maryland 21601. Telephone requests should be directed to the Corporate Secretary at (410) 822-1400.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC covering the securities that may be offered and sold under this prospectus and any prospectus supplement. This prospectus and any prospectus supplement are only a part of that registration statement and do not contain all the information in the registration statement. Because this prospectus and any prospectus supplement may not contain all the information that you may find important, and because references to contracts and other documents of Shore Bancshares made in this prospectus or in any prospectus supplement are only summaries of those contracts and other documents, you should review the full text of the registration statement and the exhibits that are a part of the registration statement. We have included copies of these contracts and other documents as exhibits to the registration statement that contains this prospectus.
We are subject to the information requirements of the Exchange Act, which means we are required to file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the SEC’s public reference room in Washington, D.C., located at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC’s Internet site at http://www.sec.gov and from our Internet site at http://www.shbi.net. However, information found on, or otherwise accessible through, these Internet sites is not incorporated into, and does not constitute a part of, this prospectus or any other document we file with or furnish to the SEC. You should not rely on any of this information in deciding whether to purchase the securities.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements contained, or incorporated by reference, in this prospectus and in any prospectus supplement may include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Such statements constitute “forward-looking information” within the meaning of Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking statements are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of those words and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results could differ materially from past results and from those anticipated, estimatedthat we anticipate, estimate or projected.project. You should bear this in mind in reading this prospectus.prospectus and any prospectus supplement. Factors that might cause such differences include, but are not limited to:
-2-
| · |
| · | changes in market rates and prices, which may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet; |
| · |
| · |
| · | competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals; |
| · |
| · |
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our periodic and current reports that we file with the SEC. Also note that we provide cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses in our periodic and current reports to the SEC incorporated by reference hereinin this prospectus and in prospectus supplements and other offering materials. These are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results.
We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties.
RISK FACTORS
An investment in our securities involves certain risks. You should carefully consider the risks described belowand uncertainties and the risk factors set forth in the documents and reports filed with the SEC that are incorporated inby reference into this prospectus, by reference, as well as the other information included or incorporated by referenceany risks described in thisany applicable prospectus supplement, before making an investment decision. Certain risks related to us, our business and our common stock are described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008. Our business, financial condition and/or results of operations could be materially adversely affected by any of these risks. The trading price of our common stock and the market values of the Series A Preferred Stock and the warrantsecurities could decline due to any of these risks, and you may lose all or part of your investment. This prospectus also contains, and any prospectus supplement may also contain, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus and the documents incorporated by reference herein.in this prospectus and any prospectus supplement.
ABOUT SHORE BANCSHARES, INC.
Shore Bancshares is a Maryland corporation and the largest independent financial holding company located on the Eastern Shore of Maryland. We are the parent company of The Talbot Bank of Easton, Maryland, a Maryland-chartered commercial bank located in Easton, Maryland; The Centreville National Bank of Maryland, a national banking association located in Centreville, Maryland; and The Felton Bank, a Delaware-chartered commercial bank located in Felton, Delaware. These bank subsidiaries operate 18 full service branches in Kent, Queen Anne’s, Talbot, Caroline and Dorchester Counties in Maryland and Kent County, Delaware. We engage in the insurance business through three insurance producer subsidiaries, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin Associates, Inc.; a wholesale insurance company, TSGIA, Inc.; and two insurance premium finance subsidiaries, Mubell Finance, LLC and ESFS, Inc.; and the mortgage broker business through our subsidiary, Wye Mortgage Group, LLC. A detailed discussion of our business is contained in Item 1 of Part I of our Annual Report on Form 10-K for the year ended December 31, 2007,2009, and any subsequent reports that we file with the SEC, which are incorporated by reference in this prospectus. See “WHERE YOU CAN FIND MORE INFORMATION” belowabove for information on how to obtain a copy of our annual report and any subsequent reports.
Our principal executive offices areoffice is located at 18 East Dover Street, Easton, Maryland 21601 and our telephone number is (410) 822-1400. We maintain an Internet site at http://www.shbi.net on which we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC.
At September 30, 2008,March 31, 2010, we had consolidated total assets of approximately $1.04$1.15 billion, total loans (net of the allowance for credit losses) of approximately $856.82$892.40 million, total deposits of approximately $839.22$990.75 million, and stockholders’ equity of approximately $125.40$125.11 million.
SUPERVISION AND REGULATION
We are a financial holding company registered under the federal Bank Holding Company Act of 1956, as amended. We and our bank subsidiaries are extensively regulated under federal and state laws. The regulation of financial holding companies and banks is intended primarily for the protection of depositors and the deposit insurance fund and not for the benefit of security holders. For a discussion of the material elements of the extensive regulatory framework applicable to us and our bank subsidiaries, please refer to Item 1 of Part I of our Annual Report on Form 10-K for the year ended December 31, 20072009 under the heading “Supervision and Regulation” and any subsequent reports that we file with the SEC, which are incorporated by reference in this prospects. See “WHERE YOU CAN FINE MORE INFORMATION” belowabove for information on how to obtain a copy of our Form 10-K and any subsequent reports.
USE OF PROCEEDS
-4-
RATIOS WITH RESPECT TO EARNINGS
Nine Months Ended September 30, | Year Ended December 31, | Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||||
| Ratio of Earnings to Combined Fixed Charges | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ratio of Earnings to Fixed Charges | ||||||||||||||||||||||||||||||||||||||||||||||||
| Including interest on deposits | 1.88 | 1.89 | 2.14 | 2.74 | 2.78 | 2.52 | 0.22 | 1.67 | 1.86 | 1.89 | 2.14 | 2.74 | ||||||||||||||||||||||||||||||||||||
| Excluding interest on deposits | 10.99 | 9.89 | 12.16 | 27.06 | 35.27 | 35.33 | (54.44 | ) | 30.73 | 12.06 | 9.89 | 12.16 | 27.06 | |||||||||||||||||||||||||||||||||||
| Ratio of Earnings to Combined Fixed Charges and Preference Dividends | ||||||||||||||||||||||||||||||||||||||||||||||||
| Including interest on deposits | (1 | ) | 1.51 | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||||||||||
| Excluding interest on deposits | (1 | ) | 5.32 | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||||||||||
| (1) | We did not have any preferred stock authorized or outstanding during these periods, so the ratios are as set forth under “Ratio of Earnings to Fixed Charges”. |
DESCRIPTION OF CAPITAL STOCKOUR SECURITIES AND THE SECURITIES TO BE REGISTERED
This prospectus relates to the offer and sale of shares of our common stock, shares of our preferred stock, debt securities, and warrants to purchase shares of our common stock, shares of our preferred stock and/or debt securities, and units comprised of one or more shares of common stock, shares of preferred stock and warrants in any combination. The following is a summary of the general terms of our capital stock, and the securities being registered incovered by this prospectus, and an outstanding common stock purchase warrant issued to the registration statement that contains this prospectus.United States Department of the Treasury, or the Treasury. The full terms of our capital stock, the securities covered by this prospectus, and the securities being registeredwarrant issued to the Treasury are set forth in Exhibit 3.1(i) through Exhibit 4.34.11, inclusive, to the registration statement that contains this prospectus, andwhich are incorporated by reference herein. Thein this prospectus. Unless expressly stated otherwise, the following summary does not give effect to provisions of applicable statutory or common law.
Capital Stock
We are authorized by our Amended and Restated Articles of Incorporation, or Charter, to issue up to 35,000,000 shares of capital stock, par value $.01 per share. Of these shares, 25,000 sharesshare, all of which are classified as Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $.01 per share, and 34,975,000 arecurrently classified as shares of common stock, par value $.01 per share.
stock. Our Charter generally permits the Board of Directors of the Company to increase or decrease the number of authorized shares of capital stock of any class or series without the approval of our stockholders. Our Charter also generally permits the Board to classify and reclassify any unissued shares of capital stock of any class or series by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the shares of stock.
-5-
Common Stock
As of JanuaryMay 30, 2009,2010, we had 25,0008,443,436 shares of Series A Preferred Stockcommon stock issued and outstanding held by one ownerapproximately 1,672 owners of record. We anticipate that the shares of common stock covered by this prospectus will be listed on The NASDAQ Global Select Market under the symbol “SHBI”.
The following is a brief descriptionsection describes the material features and rights of the terms of the Series A Preferred Stock that may be resold by the selling security holders. Thisour common stock. The summary does not purport to be complete in all respects. This descriptionexhaustive and is subject to and qualified in its entirety by reference to our Charter, as supplemented, and the Articles Supplementary with respect to the Series A Preferred Stock, copies ofAmended and Restated Bylaws, as amended, which have been filed withas exhibits to the SECregistration statement of which this prospectus is a part, and are also available upon request from us.to applicable Maryland law, including the Maryland General Corporation Law, or the MGCL.
General
stockholders. Holders of shares of Series A Preferred Stockcommon stock are not entitled to cumulative voting rights in the election of directors. Subject to preferences that may be applicable to any outstanding preferred stock, holders of common stock are entitled to receive if, as and whenratable dividends which are declared by our Board of Directors out of assetsfunds legally available for payment, cumulative cash dividends atsuch a rate per annum of 5% per share on a liquidation preference of $1,000 per share of Series A Preferred Stock with respect to each dividend period from January 9, 2009 to, but excluding, February 15, 2014. From and after February 15, 2014, holders of shares of Series A Preferred Stock are entitled to receive cumulative cash dividends at a rate per annum of 9% per share on a liquidation preference of $1,000 per share of Series A Preferred Stock with respect to each dividend period thereafter.purpose.
We are subject to various bank regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. Our ability to pay dividends to holders of the Series A Preferred Stockcommon stock is largely dependent upon our receipt of dividends from our bank subsidiaries. Both federal and state laws impose restrictions on the ability of banks to pay dividends. Federal law prohibits the payment of a dividend by an insured depository institution if the depository institution is considered “undercapitalized” or if the payment of the dividend would make the institution “undercapitalized”. Maryland state-chartered banks may pay dividends only out of undivided profits or, with the prior approval of the Maryland Commissioner, from surplus in excess of 100% of required capital stock. If, however, the surplus of a Maryland bank is less than 100% of its required capital stock, then cash dividends may not be paid in excess of 90% of net earnings. National banking associations are generally limited, subject to certain exceptions, to paying dividends out of undivided profits. Delaware state-chartered banks may pay dividends only out of net profits, and then only if its surplus fund is equal to or greater than 50% of its required capital stock. If a Delaware bank’s surplus is less than 100% of capital stock when it declares a dividend, then it must carry 25% of its net profits of the preceding period for which the dividend is paid to its surplus fund until the surplus amounts to 100% of its capital stock. In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit a proposed dividend by a financial institution that would otherwise be permitted under applicable law if the regulatory body determines that the payment of the dividend would constitute an unsafe or unsound banking practice.
As a general corporate law matter, the Maryland General Corporation Law, or the MGCL prohibits us from paying dividends on shares of the Series A Preferred Stockcommon stock unless, after giving effect to a proposed dividend, (i)(a) we will be able to pay our debts as they come due in the normal course of business and (ii)(b) our total assets will be greater than our total liabilities plus, unless our Charter permits otherwise, the amount that would be needed, if we were to be dissolved at the time of the dividend, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the dividend. Currently, we have no authorized class of capital stock with preferential rights upon dissolution that are superior to the Series A Preferred Stock.
-6-
The Transfer Agent for the common stock is Registrar & Transfer Company.
Anti-Takeover Provisions under Maryland Law, Our Charter and Our Bylaws
The provisions of Maryland law and our Charter and Bylaws we summarize below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the common stock.
Business Combinations under Maryland Law. The Maryland Business Combination Act generally prohibits corporations from being involved in any “business combination” (defined as a variety of transactions, including a merger, consolidation, share exchange, asset transfer or issuance or reclassification of equity securities) with any “interested stockholder” for a period of five years following the most recent date on which the interested stockholder became an interested stockholder. An interested stockholder is defined generally as a person who is the beneficial owner of 10% or more of the voting power of the outstanding voting stock of the corporation after the date on which the corporation had 100 or more beneficial owners of its stock or who is an affiliate or associate of the corporation and was the beneficial owner, directly or indirectly, of 10% percent or more of the voting power of the then outstanding stock of the corporation at any time within the two-year period immediately prior to the date in question and after the date on which the corporation had 100 or more beneficial owners of its stock.
A business combination that is not prohibited must be recommended by the board of directors and approved by the affirmative vote of at least 80% of the votes entitled to be cast by outstanding shares of voting stock of the corporation, voting together as a single voting group and two-thirds of the votes entitled to be cast by holders of voting stock other than voting stock held by the interested stockholder who will (or whose affiliate will) be a party to the business combination or by an affiliate or associate of the interested stockholder, voting together as a single voting group, unless, among other things, the corporation’s stockholders receive a minimum price, as defined in the Maryland Business Combination Act for their shares, in cash or in the same form as paid by the interested stockholder for its shares. These provisions will not apply if the board of directors has exempted the transaction in question or the interested stockholder prior to the time that the interested stockholder became an interested stockholder. In addition, the board of directors may adopt a resolution approving or exempting specific business combinations, business combinations generally, or generally by type, as to specifically identified or unidentified existing or future stockholders or their affiliates from the business combination provisions of the Maryland Business Combination Act.
Control Share Acquisitions. The Maryland Control Share Acquisition Act generally provides that “control shares” of a corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by the stockholders at a meeting by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. “Control shares” are shares of stock that, if aggregated with all other shares of stock of the corporation previously acquired by a person or in respect of which that person is entitled to exercise or direct the exercise of voting power, except solely by virtue of a revocable proxy, entitle that person, directly or indirectly, to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors within any of the following ranges of voting power: one-tenth or more, but less than one-third of all voting power; one-third or more, but less than a majority of all voting power or a majority or more of all voting power. “Control share acquisition” means the acquisition, directly or indirectly, of control shares, subject to certain exceptions. If voting rights or control shares acquired in a control share acquisition are not approved at a stockholders’ meeting, then, subject to certain conditions, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholders’ meeting and the acquiror becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights.
-7-
Our Bylaws contain a provision exempting any shareall shares of our capital stock from the Maryland Control Share Acquisition Act.
Preference Stock Authorization. As noted above under the heading “Capital Stock”, the Charter gives our Board of Directors the authority to, without stockholder approval, create and issue a class or series of capital stock with rights superior to the rights of the holders of our common stock. As a result, this “blank check” stock, while not intended as a defensive measure against takeovers, could be issued quickly and easily, could adversely affect the rights of holders of common stock and could be issued with terms calculated to delay or prevent a change of control of the Company or make removal of management more difficult.
Advance Notice Procedure for Stockholder Proposals. Our Charter and Bylaws allow stockholders to submit director nominations and stockholder proposals. For nominations and proposals to properly come before the meeting, however, the proposing stockholder must have given timely notice in writing to the Secretary of Shore Bancshares.
For an annual meeting, notice of intention to make a director nomination must be delivered or mailed to the Secretary at Shore Bancshares’ principal executive offices not less than 120 days nor more than 180 days prior to the meeting called for the election of directors. In the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, notice by the stockholder must be delivered not earlier than the 180th day prior to such annual meeting and no later than close of business on the later of the 120th day prior to such annual meeting of the 10th day following the day on which public announcement of the date of such annual meeting is first made. In the case of a special meeting called for the purpose of electing directors, a stockholder’s notice must be given not later than the close of business on the 10th day following the day on which notice of the date of the special meeting was mailed or public announcement of the meeting was made, which ever occurs first. Notice to the secretary shall set forth:
| · | the name and address of each proposed nominee; |
| · | the principal occupation of each proposed nominee; |
| · | the number of shares of capital stock of Shore Bancshares owned by each proposed nominee; |
| · | the name and residence address of the notifying stockholder; |
| · | the number of shares of capital stock of Shore Bancshares owned by the notifying stockholder; |
| · | the consent in writing of the proposed nominee as to the proposed nominee’s name being placed in nomination for director; |
| · | a description of all arrangements or understandings between the stockholder and nominee and any other person(s) (including their names) pursuant to which the nomination is made; |
| · | a representation that such stockholder intends to appear in person or by proxy at the meeting to make the nomination; and |
| · | any other information relating to the nominee required to be disclosed in a proxy statement in connection with solicitation of proxies for election of directors by Regulation 14A under the Exchange Act and Rule 14a-11 promulgated thereunder. |
-8-
A stockholder proposal will be timely if it is delivered or mailed and received by the Secretary at Shore Bancshares’ principal executive offices not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting. If, however, the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, then notice by the stockholder must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Notice to the Secretary shall set forth as to each proposal:
| · | a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the meeting; |
| · | the name and address of such stockholder as they appear on Shore Bancshares’ books and of the beneficial owner, if any, on whose behalf the proposal is made; |
| · | the class or series and number of shares of capital stock of Shore Bancshares owned beneficially or of record by such stockholder and such beneficial owner; |
| · | a description of all arrangements or understandings between the stockholder and any other person(s) (including their names) in connection with the proposal and any material interest of such stockholder in such business; and |
| · | a representation that such stockholder intends to appear in person or by proxy at the meeting to make the proposal. |
Classified Board; Removal of Directors. Our Charter provides that the members of our Board of Directors are divided into three classes as nearly equal as possible. Each class is elected for a three-year term. At each annual meeting of stockholders, approximately one-third of the members of the Board are elected for a three-year term and the other directors remain in office until their three-year terms expire. Our Bylaws provide that no director may be removed without cause, and that any removal for cause requires the affirmative vote of the holders of at least a majority of the entire Board of Directors or at least a majority of the voting power of the outstanding capital stock entitled to vote for the election of directors. Thus, control of the Board of Directors cannot be changed in one year without removing the directors for cause as described above; rather, at least two annual meetings must be held before a majority of the members of the Board could be changed. An amendment or repeal of these provisions requires the approval of at least 80% of the aggregate votes entitled to be cast on the matter.
All of our authorized capital stock is currently classified as common stock. As stated above, however, our Charter gives the Board of Directors the authority to, without stockholder approval, create a class or series of capital stock, such as preferred stock, with rights superior to the rights of the holders of our common stock. Prior to the issuance of any shares of preferred stock, our Board would authorize such preferred stock by classifying authorized but unissued shares of common stock as one or more classes or series of preferred stock and approve the rights, preferences, privileges and restrictions applicable to such class or series of preferred stock, including the dividend rate, the time of payment for dividends, whether such dividends shall be cumulative or non-cumulative, and the date or dates from which any cumulative dividends will begin to accrue, redemption terms (including sinking fund provisions), redemption price or prices, liquidation preferences, the extent of the voting powers, if any, and conversion rights. The selling security holdersterms of any class or series of preferred stock so created would be set forth in Articles Supplementary, which we would file with the State Department of Assessments and their successors, including their transferees, may sellTaxation of Maryland. The prospectus supplement will describe the securities directlyspecific terms of any preferred stock we offer. To the extent any preferred stock we offer has general voting rights, or voting rights with respect to purchasers or through underwriters, broker-dealers or agents, who may receive compensationthe election of directors, the anti-takeover provisions discussed above in the “Common Stock” section would apply to such preferred stock. All of the shares of preferred stock offered by us, when issued and paid for, will be fully paid and not subject to further call or assessment by us.
-9-
Debt Securities
If we issue any debt securities offered by this prospectus and any accompanying prospectus supplement, we will issue them under an indenture to be entered into by the Company and a trustee to be identified in the applicable prospectus supplement, as trustee. The terms of the debt securities will include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as in effect on the date of the indenture. We have filed a copy of the proposed form of discounts, concessions or commissions fromindenture as an exhibit to the selling security holders orregistration statement that contains this prospectus. Each indenture will be subject to and governed by the purchasersterms of the securities. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excessTrust Indenture Act of those customary1939. Unless otherwise specified in the typesapplicable prospectus supplement, the debt securities will represent direct, unsecured obligations of transactions involved.the Company and will rank equally with all of our other unsecured indebtedness, if any. The following statements relating to the debt securities and the indenture are summaries only. These summaries are subject in their entirety to the detailed provisions of the indenture. For complete information, we urge you to read the actual documents.
General
We may issue the debt securities in one or more series with the same or various maturities, at par, at a premium, or at a discount. We will describe the particular terms of each series of debt securities in a prospectus supplement relating to that series, which we will file with the SEC. To review the terms of a series of debt securities, you must refer to both the prospectus supplement for the particular series and to the description of debt securities in this prospectus.
The securities may be sold in one or more transactions at fixed prices, at prevailing market prices atprospectus supplement will set forth the time of sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions that may involve crosses or block transactions.
| · | the title; |
| · | the aggregate principal amount and whether there is any limit on |
| · | the issue price or |
| · | the date or dates on which principal is payable; |
| · | the |
| · | the date or dates from which the interest, if any, will accrue and the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable; |
| · | the place or places where principal (and premium, if any) and interest, if any, is payable or the |
| · | the period or periods within which, the price or prices at which and the terms and conditions upon which we may redeem the debt securities; |
| · | our obligation, if any, to redeem or purchase the debt securities pursuant to any sinking fund or analogous provisions or at the option of a holder of such debt security and the period or periods within which, the price or prices at which and the terms and conditions upon which such debt securities shall be redeemed or purchased, in whole or in part, pursuant to such obligation; |
-10-
| · | the dates, if any, on which and the price or prices at which we will repurchase the debt security at the option of the holders of such debt security and other terms and provisions of such repurchase obligations; |
| · | the denominations in which the debt securities may be |
| · | whether the debt securities are to be issuable in the form of certificated debt securities (as described below) or |
| · | the |
| · | the currency of denomination; |
| · | the designation of the currency, currencies or currency units in which payment of principal (and premium, if any) and interest, if any, will be made; |
| · | if payments of principal (and premium, if any) and interest, if any, on the debt securities are to be made in one or more currencies or currency units other than the currency of denomination, the manner in which the exchange rate with respect to these payments will be determined; |
| · | if amounts of principal (and premium, if any) and interest, if any, may be determined (a) by reference to an index based on a currency or currencies other than the currency of denomination or designation or (b) by reference to a commodity, commodity index, stock exchange index or financial index, then the manner in which these amounts will be determined; |
| · | the provisions, if any, relating to any security provided for the debt securities; |
| · | any addition to or change in the covenants in the indenture; |
| · | any addition to or change in the events of default and/or the acceleration provisions described in the indenture; |
| · | the terms and conditions for conversion into or exchange for shares of common stock or preferred stock; |
| · | any other terms, which may modify or delete any provision of the indenture insofar as it applies to that series; |
| · | any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents; |
| · | the terms and conditions, if any, upon which the debt securities and any guarantees thereof shall be subordinated in right of payment to our other indebtedness, if any, or other indebtedness of any guarantor; |
| · | any provisions relating to covenant defeasance and legal defeasance; and |
| · | the form and terms of any guarantee of the debt securities. |
-11-
We may issue discount debt securities that provide for an amount less than the stated principal amount to be due and payable upon acceleration of the maturity of the debt securities in accordance with the terms of the indenture. We may also issue debt securities in bearer form, with or without coupons. If we issue discount securities or debt securities in bearer form, we will describe United States federal income tax considerations and other special considerations that apply to the debt securities in the applicable prospectus supplement. We may issue debt securities denominated in or payable in a foreign currency or currencies or a foreign currency unit or units. If we do so, we will describe the restrictions, elections, general tax considerations, specific terms and other information with respect to the issue of debt securities and the foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
Exchange and/or Conversion Rights
If we issue debt securities that may be exchanged for or converted into shares of common stock or preferred stock, we will describe the terms of exchange or conversion in the prospectus supplement relating to those debt securities.
Transfer and Exchange
We may issue debt securities that will be represented by either:
| · | “book-entry securities”, which means that there will be one or more global securities registered in the name of The Depository Trust Company, as depository, or a nominee of the depository; or |
| · | “certificated securities”, which means that they will be represented by a certificate issued in definitive registered form. |
We will specify in the prospectus supplement applicable to a particular offering whether the debt securities offered will be book-entry or certificated securities.
Certificated Debt Securities
If you hold certificated debt securities that have been offered by this prospectus, you may transfer or exchange them at the trustee’s office or at the paying agency in accordance with the terms of the indenture. You will not be charged a service charge for any transfer or exchange of certificated debt securities, but may be required to pay an amount sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange.
You may effect the transfer of certificated debt securities and of the right to receive the principal of (and premium, if any) and interest, if any, on your certificated debt securities only by surrendering the certificate representing your certificated debt securities and having us or the trustee issue a new certificate to the new holder.
Global Debt Securities and Book Entry System
If we decide to issue debt securities in the form of one or more global securities, then we will register the global securities in the name of the depositary for the global securities or the nominee of the depositary and the global securities will be delivered by the trustee to the depositary for credit to the accounts of the holders of beneficial interests in the debt securities.
-12-
The prospectus supplement or term sheet will describe the specific terms of the depositary arrangement for debt securities of a series that are issued in global form. None of our company, the trustee, any payment agent or the security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a global debt security or for maintaining, supervising or reviewing any records relating to these beneficial ownership interests.
No Protection in the Event of Change of Control
The indenture does not provide for a put or increased interest or otherwise that would give holders of debt securities additional protection in the event of a recapitalization transaction, a change of control or a highly leveraged transaction. If we offer this type of provision with respect to any debt securities in the future, we will describe it in the applicable prospectus supplement.
Covenants
Unless otherwise indicated in this prospectus or a prospectus supplement, the debt securities will not have the benefit of any covenants that limit or restrict our business or operations, the pledging of our assets or the incurrence by us of additional indebtedness.
Consolidation, Merger and Sale of Assets
We will agree in the indenture not to consolidate with or merge into any other person or convey, transfer, sell or lease all or substantially all of our properties and assets to any person, unless:
| · | either (a) in the case of a merger or consolidation, we are the surviving person, or (b) the person formed by the consolidation or into or with which we are merged or the person to which our properties and assets are conveyed, transferred, sold or leased, is a corporation organized and existing under the laws of the United States, any State thereof or the District of Columbia and such person has expressly assumed all of our obligations, including the payment of the principal of (and premium, if any) and interest, if any, on the debt securities and the performance of the other covenants under the indenture; and |
| · | immediately before and immediately after giving effect to the transaction, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, has occurred and is continuing under the indenture. |
Events of Default
Unless otherwise specified in the applicable prospectus supplement, the following events will be events of default under the indenture with respect to debt securities of any series:
| · | we fail to pay any principal or premium, if any, when it becomes due; |
| · | we fail to pay any interest within 30 days after it becomes due; |
| · | we fail to observe or perform any other covenant in the debt securities or the indenture for 90 days after written notice from the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding debt securities of that series; and |
| · | certain events occur involving bankruptcy, insolvency or reorganization. |
-13-
The trustee may withhold notice to the holders of the debt securities of any series of any default, except in payment of the principal of (and premium, if any) and interest, if any, on the debt securities of that series, if the trustee considers it to be in the interest of the holders of the debt securities of that series to do so. If an event of default (other than an event of default resulting from certain events of bankruptcy, insolvency or reorganization) occurs, and is continuing, then the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding debt securities of any series may accelerate the maturity of the debt securities.
If this happens, the entire principal amount of all the outstanding debt securities of that series plus accrued interest to the date of acceleration will be immediately due and payable. At any time after an acceleration, but before a judgment or decree based on the acceleration is obtained by the trustee, the holders of a majority in aggregate principal amount of outstanding debt securities of that series may rescind and annul the acceleration if (a) all events of default (other than nonpayment of accelerated principal, premium or interest) have been cured or waived, (b) all overdue interest and overdue principal has been paid and (c) the rescission would not conflict with any judgment or decree.
If an event of default resulting from certain events of bankruptcy, insolvency or reorganization occurs, the principal, premium and interest amount with respect to all of the debt securities of any series shall be due and payable immediately without any declaration or other act on the part of the trustee or the holders of the debt securities of that series. Subject to certain limitations specified in the indenture, the holders of a majority in principal amount of the outstanding debt securities of a series shall have the right to waive any existing default or compliance with any provision of the indenture or the debt securities of that series.
No holder of any debt security of a series will have any right to institute any proceeding or pursue any remedy with respect to the indenture or the debt securities of that series, unless:
| · | the holder gives to the trustee written notice of a continuing event of default; |
| · | the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series make a written request and offer reasonable indemnity to the trustee to pursue the remedy; |
| · | the trustee fails to comply with the request within 60 days of the receipt of the request and the offer of indemnity; and |
| · | the holders of a majority in aggregate principal amount of the outstanding debt securities of that series have not given the trustee a direction inconsistent with such written request during the 60-day period. |
However, these limitations do not apply to a suit instituted for payment on debt securities of any series on or after the due dates expressed in the debt securities.
Modification and Waiver
From time to time, we and the trustee may, without the consent of holders of the debt securities of one or more series, amend the indenture or the debt securities of one or more series, or supplement the indenture, for certain specified purposes, including:
| · | to provide that the surviving entity following a change of control permitted under the indenture shall assume all of our obligations under the indenture and debt securities; |
| · | to provide for uncertificated debt securities in addition to certificated debt securities; |
-14-
| · | to comply with any requirements of the SEC under the Trust Indenture Act of 1939; |
| · | to cure any ambiguity, defect or inconsistency, or make any other change that does not adversely affect the rights of any holder; |
| · | to issue and establish the form and terms and conditions of debt securities of any series as permitted by the indenture; and |
| · | to appoint a successor trustee under the indenture with respect to one or more series. |
From time to time, we and the trustee may, with the consent of holders of at least a majority in principal amount of the outstanding debt securities of any series, amend or supplement the indenture or the debt securities of such series, or waive compliance in a particular instance by us with any provision of the indenture or the debt securities of such series. However, without the consent of each holder affected by the action, we may not modify or supplement the indenture or the debt securities or waive compliance with any provision of the indenture or the debt securities to:
| · | reduce the amount of debt securities whose holders must consent to an amendment, supplement, or waiver to the indenture or the debt security; |
| · | reduce the rate of or change the time for payment of interest on any debt security; |
| · | reduce the principal or change the stated maturity of any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation; |
| · | make any debt security payable in money other than that stated in the debt security; |
| · | change the amount or time of any payment required by the debt security or reduce the premium payable upon any redemption of the debt security, or change the time before which no such redemption may be made; |
| · | waive a default or event of default in the payment of the principal of (and premium, if any) and interest, if any, on any debt security, except as specified in the indenture; |
| · | waive a redemption payment with respect to any debt security or change any of the provisions with respect to the redemption of any debt security; |
| · | make any changes in the sections of the indenture relating to waiver of past defaults, the rights of holders to receive payment of the principal of (and premium, if any) and interest, if any, on any debt security, or amendments of or supplements to the indenture or any debt security that require the consent of the holders, except as specified in the indenture; or |
| · | take any other action otherwise prohibited by the indenture to be taken without the consent of each holder affected by that action. |
-15-
Defeasance and Discharge of Debt Securities and Certain Covenants in Certain Circumstances
The indenture permits us, at any time, to elect to discharge our obligations with respect to one or more series of debt securities by following certain procedures described in the indenture. These procedures will allow us either:
| · | to defease and be discharged from any and all of our obligations with respect to any debt securities except for the following obligations (which discharge is referred to as “legal defeasance”): |
| (1) | to register the transfer or exchange of the debt securities; |
| (2) | to replace temporary or mutilated, destroyed, lost or stolen debt securities; |
| (3) | to compensate and indemnify the trustee; or |
| (4) | to maintain an office or agency in respect of the debt securities and to hold monies forpayment in trust; or |
| · | to be released from our obligations with respect to the debt securities under certain covenants contained in the indenture, as well as any additional covenants which may be contained in the applicable prospectus supplement (which release is referred to as “covenant defeasance”). |
To exercise either defeasance option, we must deposit with the trustee or other qualifying trustee, in trust for this purpose:
| · | money; |
| · | U.S. Government Obligations (as described below) or Foreign Government Obligations (as described below) which through the scheduled payment of principal and interest in accordance with their terms will provide money; or |
| · | a combination of money and/or U.S. Government Obligations and/or Foreign Government Obligations sufficient in the written opinion of a nationally-recognized firm of independent accountants to provide money; |
which, in each case, provides a sufficient amount to pay the principal of (and premium, if any) and interest, if any, on the debt securities of a series, on the scheduled due dates or on a selected date of redemption in accordance with the terms of the indenture.
In addition, defeasance may be effected only if, among other things:
| · | in the case of either legal or covenant defeasance, we deliver to the trustee an opinion of counsel, as specified in the indenture, stating that as a result of the defeasance neither the trust nor the trustee will be required to register as an investment company under the Investment Company Act of 1940; |
| · | in the |
-16-
| · | in the case of covenant defeasance, we deliver to the trustee an opinion of counsel to the effect that the holders of the outstanding debt securities will not recognize income, gain or loss for United States federal income tax purposes as a result of the covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if a covenant defeasance had not occurred; and |
| · | certain other conditions described in the indenture are satisfied. |
If we fail to comply with our remaining obligations under the indenture and applicable supplemental indenture after a covenant defeasance of the indenture and applicable supplemental indenture, and the debt securities are declared due and payable because of the occurrence of any undefeased event of default, the amount of money and/or U.S. Government Obligations and/or Foreign Government Obligations on deposit with the trustee could be insufficient to pay amounts due under the debt securities of that series at the time of acceleration. We will, however, remain liable in respect of these payments.
The term “U.S. Government Obligations” as used in the above discussion means securities which are direct non-callable obligations of, or non-callable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. The term “Foreign Government Obligations” as used in the above discussion means, with respect to debt securities of any series that are denominated in a currency other than U.S. dollars (a) direct obligations of the government that issued or caused to be issued the currency for the payment of which obligations its full faith and credit is pledged or (b) obligations of a person controlled or supervised by or acting as an agent or instrumentality of that government the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by that government, which in either case under clauses (a) or (b) are not callable or redeemable at the option of the issuer.
The Trustee
We will identify the trustee with respect to any series of debt securities in the prospectus supplement relating to the debt securities. You should note that if the trustee becomes a creditor of ours, the indenture and the Trust Indenture Act of 1939 limit the rights of the trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of certain claims, as security or otherwise. The trustee and its affiliates may engage in, and will be permitted to continue to engage in, other transactions with us and our affiliates. If, however, the trustee acquires any “conflicting interest” within the meaning of the Trust Indenture Act of 1939, it must eliminate the conflict or resign.
Generally, the holders of a majority in principal amount of the debt securities then outstanding of any series may direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. If an event of default occurs and is continuing, the trustee, in the exercise of its rights and powers, must use the degree of care and skill of a prudent person in the conduct of his or her own affairs. Subject to this provision, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of the debt securities, unless they have offered to the trustee reasonable indemnity or security.
Warrants
We may issue warrants, including warrants to purchase debt securities, common stock or preferred stock or any combination of the foregoing. Warrants may be issued independently or together with any other securities offered by this prospectus and may be attached to or separate from the other securities. If warrants are issued, they will be issued under warrant agreements to be entered into between us and a bank or trust company, as warrant agent, all of which will be described in the prospectus supplement relating to warrants being offered.
-17-
A prospectus supplement relating to any warrants being offered will include specific terms relating to the offering, including a description of any other securities sold together with the warrants. Such terms will include:
| · | the title of the warrants; |
| · | the aggregate number of the warrants; |
| · | the price or prices at which the warrants will be issued; |
| · | the currencies in which the price or prices of the warrants may be payable; |
| · | the designation, amount, and terms of the debt securities, common stock or preferred stock purchasable upon exercise of the warrants and procedures by which those numbers may be adjusted; |
| · | the designation and terms of the other offered securities, if any, with which the warrants are issued and the number of the warrants issued with each security; |
| · | if applicable, the date on and after which the warrants and the offered securities purchasable upon exercise of the warrants will be separately transferable; |
| · | the price or prices at which the offered securities purchasable upon exercise of the warrants may be purchased; |
| · | the date on which the right to exercise the warrants shall commence and the date on which the right shall expire; |
| · | the minimum or maximum amount of the warrants that may be exercised at any one time; |
| · | any terms relating to the modification of the warrants, including adjustments in the exercise price; |
| · | information with respect to book-entry procedures, if any; |
| · | a discussion of any material federal income tax considerations; and |
| · | any other material terms of the warrants, including terms, procedures, and limitations relating to the transferability, exchange, exercise or redemption of the warrants. |
The descriptions of the warrant agreements in this prospectus and in any prospectus supplement are summaries of the applicable provisions of the applicable agreements. These descriptions do not restate those agreements in their entirety and do not contain all of the information that you may find useful. We urge you to read the applicable agreements because they, and not the summaries, define your rights as holders of the warrants. For more information, please review the form of the relevant agreements, which we will file with the SEC and will be available as described in the heading “WHERE YOU CAN FIND MORE INFORMATION” above.
-18-
Units
We may issue units comprised of one or more shares of common stock, shares of preferred stock, debt securities and warrants in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. If units are issued, they will be issued under unit agreements to be entered into between us and a unit agent, as detailed in the prospectus supplement relating to the units being offered. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately at any time or before a specified date. A prospectus supplement relating to any units being offered will include specific terms relating to the offering, including a description of any securities included in each unit. Such terms will include:
| · | the designation and terms of the units, and the terms of any of the debt securities, common stock, preferred stock and warrants comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
| · | a description of the terms of any unit agreement governing the units; |
| · | a description of the provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; |
| · | a discussion of material federal income tax considerations, if applicable; and |
| · | whether the units will be issued in fully registered or in global form. |
The descriptions of the units in this prospectus and in any prospectus supplement are summaries of the applicable provisions of the applicable agreements. These descriptions do not restate those agreements in their entirety and do not contain all of the information that you may find useful. We urge you to read the applicable agreements because they, and not the summaries, define your rights as holders of the units. For more information, please review the form of the relevant agreements, which we will file with the SEC and will be available as described in the heading “WHERE YOU CAN FIND MORE INFORMATION” above.
Treasury Warrant
On January 9, 2009, we participated in the Troubled Asset Relief Program Capital Purchase Program established by the Treasury. As part of our participation, we issued a warrant to purchase 172,970 shares of our common stock to the Treasury. This transaction was accomplished pursuant to a Securities Purchase Agreement – Standard Terms dated January 9, 2009. On June 3, 2009, pursuant to a Letter Agreement dated April 15, 2009, we issued a substitute warrant to the Treasury, which we refer to in this prospectus as the Treasury Warrant. The following is a brief description of the terms of the Treasury Warrant. This summary does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to the Treasury Warrant, a copy of which is filed as Exhibit 4.11 to the registration statement that contains this prospectus and incorporated by reference herein.
Shares of Common Stock Subject to the Treasury Warrant
The Treasury Warrant is initially exercisable for 172,970 shares of our common stock, subject to the adjustments described below under the heading “Adjustments to the Warrant”.
-19-
Exercise of the Treasury Warrant
The initial exercise price applicable to the Treasury Warrant is $21.68 per share of common stock for which the Treasury Warrant may be exercised. The Treasury Warrant may be exercised at any time on or before January 9, 2019 by surrender of the Treasury Warrant and a completed notice of exercise attached as an annex to the Treasury Warrant and the payment of the exercise price for the shares of common stock for which the Treasury Warrant is being exercised. The exercise price may be paid either by the withholding by Shore Bancshares of such number of shares of common stock issuable upon exercise of the Treasury Warrant equal to the value of the aggregate exercise price of the Treasury Warrant determined by reference to the market price of our common stock on the trading day on which the Treasury Warrant is exercised or, if agreed to by us and the holder of the Treasury Warrant, by the payment of cash equal to the aggregate exercise price. The exercise price applicable to the Treasury Warrant is subject to the further adjustments described below under the heading “Adjustments to the Treasury Warrant”.
Certificates for the shares of common stock issuable upon the exercise of the Treasury Warrant will be issued to the holder of the Treasury Warrant upon such exercise. We will not issue fractional shares upon any exercise of the Treasury Warrant. Instead, the holder of the Treasury Warrant will be entitled to a cash payment equal to the market price of our common stock on the last day preceding the exercise of the Treasury Warrant (less the pro-rated exercise price of the Treasury Warrant) for any fractional shares that would have otherwise been issuable upon exercise of the Treasury Warrant. We will at all times reserve the aggregate number of shares of our common stock for which the Treasury Warrant may be exercised.
Rights as a Stockholder
The holder of the Treasury Warrant has no rights or privileges of the holders of our common stock, including any voting rights, until (and then only to the extent) the Treasury Warrant has been exercised.
Transferability
The Treasury Warrant, and all rights under the Treasury Warrant, are transferable without restriction. We filed a Registration Statement on Form S-3 (File No. 333-157141) with the SEC to register the Treasury Warrant and the shares subject to the Treasury Warrant for resale by the holder of the Treasury Warrant, which was declared effective on July 27, 2009. We have listed the shares of common stock issuable upon exercise of the Treasury Warrant with the NASDAQ Global Select Market under the symbol “SHBI”.
Adjustments to the Treasury Warrant
Adjustments in Connection with Stock Splits, Subdivisions, Reclassifications and Combinations. The number of shares for which the Treasury Warrant may be exercised and the exercise price applicable to the Treasury Warrant will be proportionately adjusted in the event we pay dividends of or otherwise make distributions of our common stock, or subdivide, combine or reclassify outstanding shares of our common stock.
Anti-dilution Adjustment. Until the earlier of January 9, 2012 and the date the Treasury no longer holds any portion of the Treasury Warrant (and other than in certain permitted transactions described below), if we issue any shares of common stock (or securities convertible or exercisable into common stock) for less than 90% of the market price of the common stock on the last trading day prior to pricing such shares, then the number of shares of common stock for which the Treasury Warrant is exercisable and the exercise price will be adjusted. Permitted transactions include issuances of common stock and/or securities convertible or exercisable into common stock:
| · | as consideration for or to fund the acquisition of businesses and/or related assets; |
-20-
| · | in connection with employee benefit plans and compensation related arrangements in the ordinary course and consistent with past practice approved by our Board of Directors; |
| · | in connection with public or broadly marketed offerings and sales of common stock or convertible securities for cash conducted by us or our affiliates pursuant to registration under the Securities Act of 1933, as amended, or the Securities Act, or Rule 144A thereunder on a basis consistent with capital-raising transactions |
| · |
Other Distributions. If we declare any dividends or distributions other than our historical, ordinary cash dividends, then the exercise price of the Treasury Warrant will be adjusted to reflect such distribution.
Certain Repurchases. If we effect a pro rata repurchase of common stock, then both the number of shares issuable upon exercise of the Treasury Warrant and the exercise price will be adjusted.
Business Combinations. In addition, any securitiesthe event of a merger, consolidation or similar transaction involving Shore Bancshares and requiring stockholder approval, the right of the holder of the Treasury Warrant to receive shares of our common stock upon exercise of the Treasury Warrant shall be converted into the right to exercise the Treasury Warrant for the consideration that qualifywould have been payable to that holder with respect to the shares of common stock for sale pursuant to Rule 144 underwhich the Securities ActTreasury Warrant may be sold under Rule 144 rather than pursuantexercised, as if the Treasury Warrant had been exercised prior to this prospectus.such merger, consolidation or similar transaction.
PLAN OF DISTRIBUTION
We may sell the securities to or through one or more underwriters or dealers, and also may sell the securities directly to other purchasers or through agents. These firms may also act as our agents in the sale of the securities. Only underwriters named in the prospectus supplement will be considered as underwriters of the securities offered by the prospectus supplement.
We may distribute the securities at different times in one or more transactions. We may sell the securities at fixed prices, which may change, at market prices prevailing at the time of sale, at prices related to the prevailing market prices or at negotiated prices.
In connection with the sale of the securities, underwriters may receive compensation from us or otherwise, the selling security holders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the common stock issuable upon exercise of the warrant in the course of hedging the positions they assume. The selling security holders may also sell short the common stock issuable upon exercise of the warrant and deliver common stock to close out short positions, or loan or pledge the Series A Preferred Stock or the common stock issuable upon exercise of the warrant to broker-dealers that in turn may sell these securities.
-21-
In connection with an offering of the securities, underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. Specifically, underwriters may over-allot in connection with the offering, includingcreating a syndicate short position in the namesecurities for their own account. In addition, underwriters may bid for, and purchase, securities in the open market to cover short positions or to stabilize the price of the securities. Finally, underwriters may reclaim selling concessions allowed for distributing the securities in the offering if the underwriters repurchase previously distributed securities in transactions to cover short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the securities above independent market levels. Underwriters are not required to engage in any underwriter, dealer or agent, the purchase price paid byof these activities and may end any underwriter,of these activities at any discount, commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public.time.
INDEMNIFICATION OF OUR DIRECTORS AND OFFICERS
Our Charter and Bylaws provide for the elimination of personal liability for directors and officers to the fullest extent permitted by the MGCL. Under the MGCL, a director or an officer of Shore Bancshares will have no personal liability for monetary damages except: (1)(a) to the extent that the person actually received an improper benefit or profit in money, property, or services; or (2)(b) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding that the person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. An amendment or repeal of these provisions requires the approval of at least 80% of the aggregate votes entitled to be cast on the matter.
These provisions may have the practical effect in certain cases of eliminating the ability of our stockholders to collect monetary damages from directors and executive officers. We believe that these provisions are necessary to attract and retain qualified persons as directors and executive officers.
Our Bylaws obligate us to indemnify and advance expenses to a director or an officer in connection with a proceeding to the fullest extent permitted by and in accordance with the indemnification section of the MGCL. However, we may not indemnify a director or an officer in connection with a proceeding commenced by such director or officer unless the Board authorized the proceeding. We may indemnify and advance expenses to employees and agents, other than directors and officers, as determined by and in the discretion of the Board, in connection with a proceeding to the extent permitted by and in accordance with the indemnification section of the MGCL.
MGCL Section 2-418 permits us to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person was a director, officer, employee or agent of Shore Bancshares if he or she (1)(a) acted in good faith, (2)(b) reasonably believed her actions to be in or not opposed to the best interests of Shore Bancshares, (3)(c) did not actually receive an improper personal benefit in money, property, or services, and (4)(d) in a criminal proceeding, had no reasonable cause to believe her conduct was unlawful.
Under MGCL Section 2-418, indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the director in connection with the proceeding. Indemnification may not be made unless authorized for a specific proceeding after a determination has been made that the director has met the applicable standard of conduct. This determination is required to be made: (1)(a) by the board of directors; (2)(b) by special legal counsel selected by the board of directors or a committee of the board by vote; or (3)(c) by the stockholders.
-22-
We may pay, before final disposition, the expenses, including attorneys’ fees, incurred by a director, officer, employee or agent in defending a proceeding when the director of officer gives and undertaking to Shore Bancshares to repay the amounts advanced if it is ultimately determined that he or she is not entitled to indemnification. Shore Bancshares is required to indemnify any director who has been successful on the merits or otherwise, in defense of a proceeding for reasonable expenses incurred in connection with the proceeding.
These indemnification and advancement of expenses provisions are not exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders, vote of directors or otherwise.
Notwithstanding the above, insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered pursuant to this prospectus has been passed upon for us by Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland. If legal matters in connection with offerings made pursuant to this prospectus are passed upon by counsel for the underwriters, dealers or agents, if any, such counsel will be named in the prospectus supplement relating to such offering.
EXPERTS
The consolidated financial statements incorporated in this prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 20072009 and the effectiveness of our internal control over financial reporting have been audited by Stegman & Company, an independent registered public accounting firm, as stated in their reports,report, which areis incorporated herein by reference. Such consolidated financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table itemizes the expenses incurred by Shore Bancshares, Inc. (the “Corporation”) in connection with the offering of the securities being registered hereby. All amounts shown are estimates.
| Registration Fee - Securities and Exchange Commission | $ | 1,130 | $ | 5,347.50 | ||||
| Accounting Fees and Expenses | 2,500 | * | ||||||
| Legal Fees and Expenses | 15,000 | * | ||||||
| Printing Fees and Expenses | 2,500 | * | ||||||
| Miscellaneous | 2,000 | * | ||||||
| Total | $ | 23,130 | $ | 5,347.50 | ||||
*These fees depend on the securities offered and the number of issuances and cannot be estimated at this time.
Item 15. Indemnification of Directors and Officers.
The Maryland General Corporation Law permits a corporation to indemnify its present and former directors, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their services in those capacities, unless it is established that:
| (1) | the act or omission of the director was material to the matter giving rise to such proceeding and |
| (2) | the director actually received an improper personal benefit in money, property, or services; or |
| (3) | in the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. |
Maryland law permits a corporation to indemnify a present and former officer to the same extent as a director.
In addition to the foregoing, a court of appropriate jurisdiction: (1) shall order indemnification of reasonable expenses incurred by a director who has been successful, on the merits or otherwise, in the defense of any proceeding identified above, or in the defense of any claim, issue or matter in the proceeding; and (2) may under certain circumstances order indemnification of a director or an officer who the court determines is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances, whether or not the director or officer has met the standards of conduct set forth in the preceding paragraph or has been declared liable on the basis that a personal benefit improperly received in a proceeding charging improper personal benefit to the director or the officer, provided, however, that if the proceeding was an action by or in the right of the corporation or involved a determination that the director or officer received an improper personal benefit, no indemnification may be made if the director or officer is adjudged liable to the corporation, except to the extent of expenses approved by a court of appropriate jurisdiction.
II-1
The Maryland General Corporation Law also permits a corporation to pay or reimburse, in advance of the final disposition of a proceeding, reasonable expenses incurred by a present or former director or officer made a party to the proceeding by reason of his or her service in that capacity, provided that the corporation shall have received:
| (1) | a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation; and |
| (2) | a written undertaking by or on behalf of the director to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was not met. |
The Corporation has provided for indemnification of directors, officers, employees and agents in Section (a)(5) of Article Seventh of its Amended and Restated Articles of Incorporation (the “Charter”). This provision of the Charter reads as follows:
(5) The Corporation shall indemnify (A) its directors and officers, whether serving the Corporation or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law and (B) other employees and agents to such extent as shall be authorized by the Board of Directors or the Corporation’s Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such by-laws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal.
The Maryland General Corporation Law authorizes a Maryland corporation to limit by provision in its Articles of Incorporation the liability of directors and officers to the corporation or to its stockholders for money damages except to the extent:
| (1) | the director or officer actually receives an improper benefit or profit in money, property, or services, for the amount of the benefit or profit actually received, or |
| (2) | a judgment or other final adjudication adverse to the director or officer is entered in a proceeding based on a finding in the proceeding that the director’s or officer’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. |
The Corporation has limited the liability of its directors and officers for money damages in Section (a)(6) of Article Seventh of the Charter. This provision reads as follows:
II-2
(6) To the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for money damages. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to directors and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.
As permitted under Section 2-418(k) of the Maryland General Corporation Law, the Corporation has purchased and maintains insurance on behalf of its directors and officers against any liability asserted against such directors and officers in their capacities as such, whether or not the Corporation would have the power to indemnify such persons under the provisions of Maryland law governing indemnification.
Section 8(k) of the Federal Deposit Insurance Act (the “FDI Act”) provides that the Federal Deposit Insurance Corporation (the “FDIC”) may prohibit or limit, by regulation or order, payments by any insured depository institution or its holding company for the benefit of directors and officers of the insured depository institution, or others who are or were “institution-affiliated parties,” as defined under the FDI Act, to pay or reimburse such person for any liability or legal expense sustained with regard to any administrative or civil enforcement action which results in a final order against the person. The FDIC has adopted regulations prohibiting, subject to certain exceptions, insured depository institutions, their subsidiaries and affiliated holding companies from indemnifying officers, directors or employees for any civil money penalty or judgment resulting from an administrative or civil enforcement action commenced by any federal banking agency, or for that portion of the costs sustained with regard to such an action that results in a final order or settlement that is adverse to the director, officer or employee.
Item 16. Exhibits.
The exhibits filed with this Registration Statement are listed in the Exhibit Index which immediately follows the signatures hereto and which is incorporated herein by reference.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
II-3
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4) N/A;
(5) That, for the purpose of determining liability under the Securities Act to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of this registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in this registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of this registration statement relating to the securities in this registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in this registration statement or prospectus that was part of this registration statement or made in any such document immediately prior to such effective date;
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
II-4
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
(c)–(g) N/A.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(i)-(l) N/A.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Easton, State of Maryland, on February 5, 2009.June 24, 2010.
| SHORE BANCSHARES, INC.: | ||
| By: | /s/ W. Moorhead Vermilye | |
| W. Moorhead Vermilye | ||
| President and CEO | ||
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints W. Moorhead Vermilye and W. David Morse,Susan E. Leaverton, and each of them (with full power to each of them to act alone), his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on February 5, 2009.June 24, 2010.
| /s/ Herbert L. Andrew, III | /s/ Blenda W. Armistead | ||
| Herbert L. Andrew, III, Director | Blenda W. Armistead, Director | ||
| /s/ | |||
| Lloyd L. Beatty, Jr., Director | |||
| /s/ Neil R. LeCompte | /s/ James A. Judge | ||
Neil R. LeCompte, Director | James A. Judge, Director | ||
| /s/ Christopher F. Spurry | /s/ Jerry F. Pierson | ||
Christopher F. Spurry, Director | Jerry F. Pierson, Director | ||
| /s/ | |||
| F. Winfield Trice, Jr., Director |
II-6
| /s/ W. Moorhead Vermilye | |||
| W. Moorhead Vermilye, Director, | |||
| John H. Wilson, Director | |||
| President and CEO | |||
| /s/ Susan E. Leaverton | |||
| Susan E. Leaverton, Treasurer and | |||
| Principal Accounting Officer |
II-7
EXHIBIT INDEX
| Exhibit No. | Description | |
| 3.1(i) | Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on December 14, 2000) | |
| 3.1(ii) | Articles Supplementary | |
| 3.1(iii) | Articles Supplementary filed for record on June 16, 2009 reclassifying all shares of authorized Fixed Rate Cumulative Perpetual Preferred Stock, Series A as shares of common stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on June 17, 2009) | |
| 3.2(i) | Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2(i) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007) | |
| 3.2(ii) | First Amendment to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2(ii) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007) | |
| 4.1 | Specimen Common Stock Certificate (filed herewith) | |
| 4.2 | Form of Articles Supplementary relating to Preferred Stock* | |
| 4.3 | Specimen Preferred Stock Certificate* | |
| 4.4 | Form of Indenture (filed herewith) | |
| 4.5 | Form of Note* | |
| 4.6 | Form of Warrant* | |
| 4.7 | Form of Warrant Agreement* | |
| 4.8 | Form of Unit Agreement* | |
| 4.9 | Letter Agreement, including the related Securities Purchase Agreement – Standard Terms, dated January 9, 2009 by and between the Company and the U.S. Department of Treasury (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on January 13, 2009) | |
| Letter Agreement dated as of April 15, 2009 between the Company and the U.S. Department of the Treasury (incorporated by reference to Exhibit 10.1 to the Company’s Form |
II-8
| 4.11 | ||
| Substitute Common Stock Purchase Warrant dated January 9, 2009 issued to the U.S. Department of Treasury (incorporated by reference to Exhibit | ||
| 5.1 | Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC (filed herewith) | |
| 12.1 | Computation of | |
| 23.1 | Consent of Stegman & Company, Independent Registered Public Accounting Firm (filed herewith) | |
| 23.2 | Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC (contained in Exhibit 5.1) | |
| 24.1 | Power of Attorney (included in the signature page hereto) | |
| 25.1 | Statement of Eligibility of Trustee under the Indenture on Form T-1 (to be filed separately pursuant to |
———————————————
* To be filed, if necessary, by amendment or as an exhibit to a Current Report on Form 8-K.