<SEC-DOCUMENT>0001144204-16-085594.txt : 20160302
<SEC-HEADER>0001144204-16-085594.hdr.sgml : 20160302
<ACCEPTANCE-DATETIME>20160302172844
ACCESSION NUMBER:		0001144204-16-085594
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20160302
FILED AS OF DATE:		20160302
DATE AS OF CHANGE:		20160302

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SHORE BANCSHARES INC
		CENTRAL INDEX KEY:			0001035092
		STANDARD INDUSTRIAL CLASSIFICATION:	NATIONAL COMMERCIAL BANKS [6021]
		IRS NUMBER:				521974638
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-22345
		FILM NUMBER:		161478463

	BUSINESS ADDRESS:	
		STREET 1:		18 EAST DOVER STREET
		CITY:			EASTON
		STATE:			MD
		ZIP:			21601-3013
		BUSINESS PHONE:		4108221400

	MAIL ADDRESS:	
		STREET 1:		18 EAST DOVER STREET
		CITY:			EASTON
		STATE:			MD
		ZIP:			21601-3013
</SEC-HEADER>
<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>v433174_pre14a.htm
<DESCRIPTION>PRE 14A
<TEXT>
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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>

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

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

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>SCHEDULE 14A</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Proxy Statement Pursuant to Section&nbsp;14(a)
of the </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Securities Exchange Act of 1934 </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Filed by the Registrant&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">&thorn;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filed
by a Party other than the Registrant&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

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

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    <TD STYLE="width: 5%"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&thorn;</FONT></TD>
    <TD STYLE="width: 95%"><FONT STYLE="font-size: 10pt">Preliminary Proxy Statement </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt"><B>Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</B> </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Definitive Proxy Statement </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Definitive Additional Materials </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Soliciting Material Pursuant to &sect;240.14a-12 </FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 24pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Shore Bancshares, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(Name of Registrant as Specified in its Charter)
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant) </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Payment of Filing Fee (Check the appropriate box):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-indent: -24.5pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&thorn;</FONT></TD>
    <TD STYLE="width: 95%"><FONT STYLE="font-size: 10pt">No fee required. </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. </FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 48.95pt; text-indent: -24.5pt">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="width: 90%"><FONT STYLE="font-size: 10pt">Title of each class of securities to which transaction applies: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(2)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Aggregate number of securities to which transaction applies: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(3)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(4)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Proposed maximum aggregate value of transaction: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(5)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Total fee paid: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD STYLE="width: 95%"><FONT STYLE="font-size: 10pt">Fee paid previously with preliminary materials. </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. </FONT></TD></TR>
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    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="width: 90%"><FONT STYLE="font-size: 10pt">Amount Previously Paid: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(2)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Form, Schedule or Registration Statement No.: </FONT></TD></TR>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(3)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Filing Party: </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">(4)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Date Filed: </FONT></TD></TR>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><IMG SRC="tpg2.jpg" ALT=""></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">28969 Information Lane</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">It is my pleasure to invite you to join us
at the Annual Meeting of Shareholders (our &ldquo;Annual Meeting&rdquo;) of Shore Bancshares, Inc. (the &ldquo;Company&rdquo;)
to be held at<B> The Tidewater Inn, 101 East Dover Street, Easton, Maryland 21601</B> at 11:00 a.m., local time, on Wednesday,
April 27, 2016.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In order to simply and effectively explain
the matters to be addressed at our Annual Meeting, we have included a Proxy Statement Summary starting on page 1 that highlights
the detailed information included in the Proxy Statement. We have also included a Compensation Discussion and Analysis that begins
on page 22, which discusses how our executives&rsquo; pay is linked to our performance and clearly explains our executive compensation
philosophy and practices. We, together with our Board of Directors (the &ldquo;Board&rdquo;), feel that it is important to provide
you with the information you are looking for in a way that is easy to understand.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At this year&rsquo;s meeting, we will vote
on the election of four Class I directors to serve for a three-year term ending at the 2019 annual meeting of shareholders, the
election of two Class II directors to serve for a one-year term ending at the 2017 annual meeting of shareholders, the election
of one Class III director to serve for a two-year term ending at the 2018 annual meeting of shareholders, the ratification of the
appointment of Stegman &amp; Company as the Company&rsquo;s independent registered public accounting firm, the adoption of a non-binding
advisory resolution approving the compensation of the Company&rsquo;s named executive officers and the approval of the Shore Bancshares,
Inc. 2016 Stock and Incentive Compensation Plan. In addition, we will transact any other business that may properly come before
the Annual Meeting and at any adjournments or postponements thereof. The Board is not aware of any other business that will be
presented for consideration at the Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are distributing our proxy materials to
shareholders via the internet under the &ldquo;Notice and Access&rdquo; rules of the U.S. Securities and Exchange Commission. We
believe this expedites shareholders&rsquo; receipt of proxy materials, lowers the annual meeting costs and conserves natural resources.
As a result, we are mailing to many shareholders a Notice of Internet Availability of Proxy Materials (&ldquo;Notice&rdquo;), rather
than a paper copy of the Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The Notice
contains instructions on how to access the proxy materials online, vote online and obtain, if desired, a paper copy of our proxy
materials.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Your vote is very important. I encourage you
to sign and return your proxy card, or use telephone or Internet voting prior to the meeting, so that your shares of common stock
will be represented and voted at the Annual Meeting even if you cannot attend.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">March &nbsp;&nbsp;&nbsp;, 2016</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 50%">Sincerely,</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>Lloyd L. &ldquo;Scott&rdquo; Beatty, Jr.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>President and Chief Executive Officer</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-top: Black 1pt solid; border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Important Notice Regarding the Availability of Proxy Materials for the 2016 Annual Meeting of </B></FONT>Shareholders<FONT STYLE="font-size: 10pt"><B> to be Held on April 27, 2016:</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Our
    Proxy Statement, form of Proxy, the 2015 Annual Report, and our Annual Report on Form 10-K for the year ended December 31,
    2015, are available on the Internet at <U>www.proxyvote.com</U> and on our corporate website at <U>www.shorebancshares.com</U>&nbsp;&nbsp;under
    the &ldquo;Governance Documents&rdquo; link.</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Information on this website, other than the Proxy Statement, is not a part of the enclosed Proxy Statement</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><IMG SRC="tpg2.jpg" ALT=""></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>28969 Information Lane, Easton, Maryland
21601</B></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Notice is hereby given that the Annual Meeting of Shareholders (our
&ldquo;Annual Meeting&rdquo;) of Shore Bancshares, Inc. (the &ldquo;Company&rdquo;) will be held at<B>&nbsp;The Tidewater Inn,
101 East Dover Street, Easton, Maryland 21601</B>&nbsp;at 11:00 a.m., local time, on Wednesday, April 27, 2016, for the following
purposes:</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="width: 6%"><FONT STYLE="font-size: 10pt">1.</FONT></TD>
    <TD STYLE="width: 88%; text-align: justify"><FONT STYLE="font-size: 10pt">To elect four Class I directors to serve for a three-year term ending at the 2019 annual meeting of shareholders, two Class II directors to serve for a one-year term ending at the 2017 annual meeting of shareholders and one Class III director to serve for a two-year term ending at the 2018 annual meeting of shareholders.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">2.</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To ratify the appointment of Stegman &amp; Company as the Company&rsquo;s independent registered public accounting firm for the fiscal year ending December 31, 2016.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">3.</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To adopt a non-binding advisory resolution approving the compensation of the Company&rsquo;s named executive officers.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">4.</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">To approve the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Board of Directors (the &ldquo;Board&rdquo;)
is not aware of any other business that will be presented for consideration at the Annual Meeting. If any other matters should
be properly presented at the Annual Meeting or any adjournments or postponements of the Annual Meeting for action by shareholders,
the persons named in the form of proxy will vote the proxy in accordance with their best judgment on that matter.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Board recommends that you vote &ldquo;FOR&rdquo;
each of the director nominees and &ldquo;FOR&rdquo; each of the other proposals.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Only shareholders of record as of the close
of business on March 7, 2016 are entitled to receive notice of, to attend and to vote at the Annual Meeting. If you are a beneficial
owner as of that date, you will receive communications from your broker, bank or other nominee about the Annual Meeting and how
to direct the vote of your shares, and you are welcome to attend the Annual Meeting, all as described in more detail in the Proxy
Statement Summary section of the attached Proxy Statement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting to Be Held on April&nbsp;27, 2016.</B>&nbsp;The Proxy Statement, form of Proxy, the 2015
Annual Report, and our Annual Report on Form 10-K for the year ended December 31, 2015, are available on the Internet at <U>www.proxyvote.com</U>
and on our corporate website at <U>www.shorebancshares.com</U> under the &ldquo;Governance Documents&rdquo; link.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">By Order of the Board of Directors,</P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">March , 2016</P>

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


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center">TABLE OF CONTENTS</P>

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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 90%; text-align: left; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right; font-weight: bold; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif">Page</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_001">PROXY STATEMENT SUMMARY</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_002">2016 ANNUAL MEETING OF SHAREHOLDERS</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_003">VOTING MATTERS AND BOARD RECOMMENDATIONS</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_004">2015 BUSINESS PERFORMANCE HIGHLIGHTS</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_005">CORPORATE GOVERNANCE HIGHLIGHTS</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">2</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_006">DIRECTOR NOMINEE HIGHLIGHTS</A></TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">2</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_007">FREQUENTLY ASKED QUESTIONS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_008">PROPOSAL 1:&nbsp;&nbsp;ELECTION OF DIRECTORS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_009">Classification of the Company&rsquo;s Directors</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_010">Election Procedures; Term of Office</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_011">Nominees for Election</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_012">QUALIFICATIONS OF 2016 DIRECTOR NOMINEES AND CONTINUING DIRECTORS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">8</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_013">EXECUTIVE OFFICERS WHO ARE NOT SERVING AS DIRECTORS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">13</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_014">CORPORATE GOVERNANCE</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">14</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_015">COMMITTEES OF THE BOARD OF DIRECTORS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">16</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_016">BENEFICIAL OWNERSHIP OF COMMON STOCK</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">19</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_017">COMPENSATION OF NON-EMPLOYEE DIRECTORS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">21</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_018">COMPENSATION DISCUSSION AND ANALYSIS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">23</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_019">Executive Summary</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_020">Compensation Philosophy</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_021">Say on Pay Results</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_023">Compensation Elements at Shore Bancshares</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">26</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_024">Summary Compensation Table</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">29</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_025">Benefits Upon Termination of Employment</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">38</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_027">Accounting and Tax Considerations</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">38</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_028">Compensation Committee Report</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_029">Compensation Committee Interlocks and Insider Participation</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_030">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_031">SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">40</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; padding-left: 0.125in; text-indent: -0.125in"><A HREF="#a_032">PROPOSAL 2:&nbsp;&nbsp;RATIFICATION OF THE APPOINTMENT OF STEGMAN &amp; COMPANY AS THE COMPANY&rsquo;S INDEPENDENT REGISTERED ACCOUNTING FIRM FOR FISCAL YEAR 2016</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">41</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_033">Audit Fees and Services</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">41</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_034">Audit Committee Pre-Approval Policies and Procedures</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">41</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_035">PROPOSAL 3:&nbsp;&nbsp;ADVISORY VOTE ON EXECUTIVE COMPENSATION</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">42</TD></TR>
</TABLE>


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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; width: 90%; padding-left: 0.125in; text-indent: -0.125in"><A HREF="#a_036">PROPOSAL 4:&nbsp;&nbsp;APPROVAL OF THE SHORE BANCSHARES, INC. 2016 STOCK AND INCENTIVE COMPENSATION PLAN</A></TD>
    <TD STYLE="width: 10%; text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">43</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_037">REPORT OF THE AUDIT COMMITTEE</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">55</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_038">ANNUAL REPORT TO SHAREHOLDERS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">55</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_039">SHAREHOLDER PROPOSALS FOR THE 2017 ANNUAL MEETING</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">55</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_040">OTHER BUSINESS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">56</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_041">SHAREHOLDERS SHARING THE SAME ADDRESS</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">56</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#newA">APPENDIX A SHORE BANCSHARES, INC. 2016 STOCK AND INCENTIVE COMPENSATION PLAN</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">57</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_042">APPENDIX B  Form of Proxy</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold; vertical-align: bottom">80</TD></TR>
</TABLE>


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

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

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

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_001"></A>PROXY STATEMENT SUMMARY</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">This summary highlights information about Shore
Bancshares, Inc. (the &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;our&rdquo; or &ldquo;us&rdquo;) and certain information contained
elsewhere in this proxy statement (&ldquo;Proxy Statement&rdquo;) for the Shore Bancshares, Inc. 2016 Annual Meeting of Shareholders
(the &ldquo;2016 Annual Meeting&rdquo; or the &ldquo;Meeting&rdquo;). This summary does not contain all of the information that
you should consider in voting your shares, and you should read the entire Proxy Statement carefully before voting.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_002"></A>2016 ANNUAL MEETING OF SHAREHOLDERS</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 70%"><FONT STYLE="font-size: 10pt"><B><I>Time and Date</I></B></FONT></TD>
    <TD NOWRAP STYLE="width: 30%"><FONT STYLE="font-size: 10pt"><B><I>Record Date</I></B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt">11:00 a. m., April 27, 2016</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 10pt">March 7, 2016</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B><I>Place</I></B></FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B><I>Number of Common Shares</I> </B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt">The Tidewater Inn</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B><I>Eligible to Vote at the Meeting as</I> </B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt">101 East Dover Street</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B><I>of the Record Date</I></B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt">Easton, Maryland 21601</FONT></TD>
    <TD NOWRAP>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_003"></A>VOTING MATTERS AND BOARD RECOMMENDATIONS</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 11%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 53%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 18%; text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>Board Vote</B></FONT></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>Page</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><B>Proposal</B></FONT></TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><B>&nbsp;&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>Recommendation</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>Reference</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B>Proposal 1 &ndash;</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt"><B>Election Directors</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>FOR each nominee</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><B>7</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B>Proposal 2 &ndash;</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt"><B>Ratification of the Appointment of the Independent Registered Public Accounting Firm</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>FOR</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>41</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B>Proposal 3 &ndash;</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt"><B>Advisory Vote on the Compensation of our Named Executive Officers</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>FOR</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>42</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><FONT STYLE="font-size: 10pt"><B>Proposal 4 &ndash;</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt"><B>Approval of the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>FOR</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>43</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_004"></A>2015 BUSINESS PERFORMANCE HIGHLIGHTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The Company reported net income of $7.11 million or $0.56 per diluted common share for fiscal year
2015, compared to a net income of $5.05 million or $0.46 per diluted common share for fiscal year 2014.</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Total assets were $1.135 billion at December 31, 2015, a $34.7 million, or 3.2%, increase when
compared to the $1.100 billion at December 31, 2014. The increase in total assets was mainly the result of significant loan growth.</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On May 7, 2015, The Talbot Bank of Easton, Maryland (&ldquo;Talbot Bank&rdquo;), the Company&rsquo;s
wholly-owned bank subsidiary, announced that the Federal Deposit Insurance Corporation (the &ldquo;FDIC&rdquo;) and the Maryland
Commissioner of Financial Regulation (the &ldquo;Commissioner&rdquo;) had terminated the Consent Order (the &ldquo;Order&rdquo;)
that Talbot Bank entered into on May 24, 2013.</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Effective as of July 1, 2015, the Company appointed Donna J. Stevens as the Company&rsquo;s Chief
Operating Officer. Ms. Stevens has been employed by the Company in various officer capacities since 1997.</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On August 5, 2015, the Company announced that its Board of Directors (the &ldquo;Board&rdquo;)
declared the first quarterly common stock dividend to shareholders since February 2, 2012.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_005"></A>CORPORATE GOVERNANCE HIGHLIGHTS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are committed to maintaining good corporate
governance as a critical component of our success in driving sustained shareholder value. Our Board continually monitors emerging
best practices in governance to best serve the interest of our shareholders, including:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Active shareholder engagement</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Transparent public policy engagement</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Long-standing commitment to sustainability</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Independent Board</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Independent Lead Director</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Independent Board Committees</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Executive sessions of independent directors held at each regularly scheduled Board meeting</B></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Stock ownership guidelines for directors and executive officers</B></TD></TR></TABLE>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase"><A NAME="a_006"></A>DIRECTOR NOMINEE HIGHLIGHTS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Class I Directors (three year term ending 2019):</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Christopher F. Spurry &ndash; see profile on pg. 8</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Frank E. Mason, III &ndash; see profile on pg. 8</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Jeffery E. Thompson &ndash; see profile on pg. 9</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">John H. Wilson &ndash; see profile on pg. 9</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Class II Director (one year term ending 2017):</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Clyde V. Kelly, III &ndash; see profile on pg. 9</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">David A. Fike &ndash; see profile on pg. 10</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Class III Directors (two year term ending 2018):</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">R. Michael Clemmer, Jr. &ndash; see profile on pg. 10</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_007"></A>FREQUENTLY ASKED
QUESTIONS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>1. What is the Notice of Internet Availability
of Proxy Materials that I received in the mail and why am I receiving it?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In accordance with rules
adopted by the Securities and Exchange Commission (the &ldquo;SEC&rdquo;), except for shareholders who have requested otherwise,
we have generally mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the &ldquo;Notice of Internet
Availability&rdquo;). The Notice of Internet Availability provides instructions either for accessing our proxy materials, including
this Proxy Statement and the 2015 Annual Report, which includes our annual report on Form 10-K for the year ended December 31,
2015 (the &ldquo;2015 Annual Report&rdquo;), at the website address referred to in the Notice of Internet Availability, or for
requesting printed copies of the proxy materials by mail or electronically by e-mail. If you would like to receive a paper or e-mail
copy of our proxy materials either for this 2016 Annual Meeting or for all future meetings, you should follow the instructions
for requesting such materials included in the Notice of Internet Availability we mailed to you.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Board provided the
Notice of Internet Availability and is making the proxy materials available to you in connection with our 2016 Annual Meeting,
which will take place on April 27, 2016. As a shareholder, you are invited to attend the 2016 Annual Meeting and are entitled to,
and requested to, vote on the proposals described in this Proxy Statement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>2. What information is contained in the
Proxy Statement?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">This Proxy Statement describes
the proposals to be voted on at the 2016 Annual Meeting, the voting process, compensation of our directors and executive officers,
and certain other required information.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>3.<I> </I>How can I access the Company&rsquo;s
proxy materials electronically?<I> </I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Proxy Statement, form
of proxy and 2015 Annual Report are available at <U>www.proxyvote.com</U> and on our corporate website at <U>www.shorebancshares.com</U>
under the &ldquo;Governance Documents&rdquo; link.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>4. What does it mean if I receive more than
one Notice of Internet Availability or set of the proxy materials?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">It means your shares are
registered differently or are in more than one account. Please provide voting instructions for each account for which you have
received a Notice of Internet Availability or set of proxy materials.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>5. Who is soliciting my vote pursuant to
this Proxy Statement?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Board is soliciting
your vote at the 2016 Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>6. Who is entitled to vote?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Only shareholders of record
at the close of business on March 7, 2016 (the &ldquo;Record Date&rdquo;) are entitled to notice of and to vote at the 2016 Annual
Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>7. How many shares are eligible to be voted?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of the
Record Date, we had _______ shares of common stock, par value $.01 per share (&ldquo;Common Stock&rdquo;) outstanding. Each
outstanding share of our Common Stock will entitle its holder to one vote on each of the director nominees to be elected and
one vote on each other matter to be voted on at the 2016 Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>8. What am I voting on?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">You are voting on the following
matters:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">election of four Class I directors to serve for a three-year term ending at the 2019 annual meeting
of shareholders, two Class II directors to serve for a one-year term ending at the 2017 annual meeting of shareholders and one
Class III director to serve for a two-year term ending at the 2018 annual meeting of shareholders (Proposal 1);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">ratification of the appointment of Stegman &amp; Company as the Company&rsquo;s independent registered
public accounting firm for the fiscal year ending December 31, 2016 (Proposal 2);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">advisory approval of the compensation of our named executive officers (Proposal 3); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">approval of the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan (Proposal 4).</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>9. How does our Board recommend
that I vote?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Board recommends that
shareholders vote their shares as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>&ldquo;FOR&rdquo;</B> each director nominee;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>&ldquo;FOR&rdquo;</B> the ratification of the appointment of Stegman &amp; Company as the Company&rsquo;s
independent registered public accounting firm for the fiscal year ending December 31, 2016;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>&ldquo;FOR&rdquo; </B>the approval of the compensation of our named executive officers; and<B>
</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>&ldquo;FOR&rdquo; </B>the approval of the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation
Plan.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>10. How can I cast my vote? Must I attend
the Annual Meeting to do so?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If you are a shareholder
of record, you may vote at the 2016 Annual Meeting on April 27, 2016, <B><U>or</U></B> you may direct how your shares are voted
without attending the 2016 Annual Meeting in one of the other following ways:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Internet</B><I>.</I> You can submit a proxy over the Internet to vote your shares at the 2016
Annual Meeting by following the instructions provided either in the Notice of Internet Availability or on the proxy card or voting
instruction form you received if you requested and received a printed set of the proxy materials.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Telephone</B><I>.</I> If you requested and received a printed set of the proxy materials, you
can submit a proxy over the telephone to vote your shares at the 2016 Annual Meeting by following the instructions provided on
the proxy card or voting instruction form enclosed with the proxy materials you received. If you received a Notice of Internet
Availability only, you can submit a proxy over the telephone to vote your shares by following the instructions at the Internet
website address referred to in the Notice of Internet Availability.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Mail</B><I>.</I> If you requested and received a printed set of the proxy materials, you can
submit a proxy by mail to vote your shares at the Annual Meeting by completing, signing and returning the proxy card or voting
instruction form enclosed with the proxy materials you received.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Whichever method of voting
you use, the proxies identified on the proxy card will vote the shares of which you are the shareholder of record in accordance
with your instructions. If you submit a proxy card properly voted and returned through available channels without giving specific
voting instructions, the proxies will vote the shares as recommended by our Board.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>11. How may a shareholder nominate someone
at the Annual Meeting to be a director or bring any other business before the Annual Meeting?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;s Amended
and Restated By-Laws, as amended (the &ldquo;Bylaws&rdquo;) require advance notice to the Company if a shareholder intends to nominate
someone for election as a director or to bring other business before the Meeting. Such a notice may be made only by a shareholder
of record within the time period established in the Bylaws. See &ldquo;Shareholder Proposals for the 2017 Annual Meeting&rdquo;
beginning on page 43.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>12. How do I request electronic or printed
copies of this and future proxy materials?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">You may request and consent
to delivery of electronic or printed copies of future proxy statements, annual reports and other shareholder communications by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">visiting<B> <U>www.proxyvote.com</U></B>, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">calling<B> 1-800-579-1639</B>, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">sending an email to<B> <U>sendmaterial@proxyvote.com</U></B>.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">When requesting copies
of proxy materials and other shareholder communications, you should have available the control number located on the Notice of
Internet Availability or proxy card or, if shares are held in the name of a broker, bank or other nominee, the voting instruction
form.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>13. What happens if my shares are held in
street name?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If you have selected a
broker, bank, or other intermediary to hold your shares of Common Stock, rather than having the shares directly registered in your
name with our transfer agent, you will receive separate instructions directly from your broker, bank, or other intermediary in
order to vote your shares. If you, as the beneficial owner of the shares of Common Stock, do not submit voting instructions to
the organization that holds your shares, that organization may still be permitted to vote your shares. In general, under The Nasdaq
Stock Market Rules (the &ldquo;Nasdaq Rules&rdquo;), the organization that holds your shares of Common Stock may generally vote
on routine matters. Proposal 2, the approval and appointment of the Company&rsquo;s independent auditor, Stegman &amp; Company,
is a routine matter. However, absent specific instructions from beneficial owners, brokers may not vote for non-routine matters.
Proposal 1, the election of directors, Proposal 3, the advisory approval of the compensation of our named executive officers, and
Proposal 4, the approval of the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan are non-routine matters. Therefore,
there may be broker non-votes with respect to Proposals 1, 3 and 4. Accordingly, we urge you to vote by following the instructions
provided by your broker, bank, or other intermediary.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Please note that if your
shares are held in street name and you wish to attend and vote your shares at the Annual Meeting, you must first obtain a legal
proxy from your broker, bank, or other intermediary that is the holder of record of your shares and bring it with you to the Annual
Meeting. Otherwise you will not be permitted to vote in person at the Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>14. What steps can I take if I want to revoke
my proxy?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Any shareholder giving
a proxy may revoke it at any time by submission of a later dated proxy, subsequent Internet or telephonic proxy, or by written
notice delivered to Lloyd L. Beatty, Jr., President and Chief Executive Officer (&ldquo;CEO&rdquo;) of the Company, at the Company&rsquo;s
address listed above or at the meeting. Shareholders entitled to vote at the Annual Meeting who attend may revoke any proxy previously
granted and vote in person at the Annual Meeting by written ballot. Unless so revoked, the shares represented by such proxies will
be voted at the Annual Meeting and all adjournments or postponements of the Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">All properly executed proxies
received pursuant to this solicitation will be voted as directed by the shareholder on the proxy. If no direction is given, the
proxy will be voted FOR ALL NOMINEES named in Proposal 1, FOR the ratification of the appointment of Stegman &amp; Company as the
Company&rsquo;s independent registered public accounting firm, as described in Proposal 2, FOR the adoption of the resolution approving
the compensation of the named executive officers, as described in Proposal 3 and FOR the approval of the Shore Bancshares, Inc.
2016 Stock and Incentive Compensation Plan, as described in Proposal 4.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>15. How are the votes tabulated?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Broadridge will tabulate
all votes which are received prior to the date of the Annual Meeting. We have appointed Camille Pecorak as Inspector of Election
of the Annual Meeting and to receive Broadridge&rsquo;s tabulation, to tabulate all other votes, and to certify the voting results.
We intend to publish the final voting results in a Current Report on Form&nbsp;8-K to be filed with the SEC within four business
days of the Annual Meeting.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>16. Who pays the cost of this solicitation?</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We will pay the cost of
this solicitation. In addition, arrangements may be made with brokerage houses and other custodians, nominees, and fiduciaries
to send proxies and proxy material to their principals. Solicitation of proxies may be made by mail, telephone, personal interviews
or by other means by our officers and employees who will not be additionally compensated therefor.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_008"></A>PROPOSAL 1:
ELECTION OF DIRECTORS</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><A NAME="a_009"></A>Classification of the Company&rsquo;s Directors</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The number of directors constituting our Board
is currently set at 9. In accordance with the terms of the Company&rsquo;s Amended and Restated Articles of Incorporation, as supplemented
(the &ldquo;Charter&rdquo;), our Board is divided into three classes, Class I, Class II and Class III, with each class serving
staggered three-year terms as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -27pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.5pt"></TD><TD STYLE="width: 27pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Class I directors are Frank E. Mason, III, Christopher F. Spurry and John H. Wilson, and their terms will expire at the
2016 Annual Meeting;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -27pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.5pt"></TD><TD STYLE="width: 27pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Class II directors are Blenda W. Armistead, David W. Moore and W. Moorhead Vermilye, and their terms will expire at the
annual meeting of shareholders to be held in 2017; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 49.5pt; text-indent: -27pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.5pt"></TD><TD STYLE="width: 27pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Class III directors are David J. Bates, Lloyd L. Beatty, Jr. and James A. Judge, and their terms will expire at the annual
meeting of shareholders to be held in 2018.</TD></TR></TABLE>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><A NAME="a_010"></A>Election Procedures; Term of Office</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At each annual meeting of shareholders, or
special meeting in lieu thereof, upon the expiration of the term of a class of directors, the successors to such directors will
be elected to serve from the time of election and qualification until the third annual meeting following his or her election and
the election and qualification of his or her successor. Any change in the Board resulting from an increase or decrease in the number
of directors will be distributed by the Board  among the three classes so that, as nearly as possible, each class will
consist of one-third of the directors.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0"><A NAME="a_011"></A>Nominees for Election</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Board  has approved the nomination
of Frank E. Mason, III, Christopher F. Spurry and John H. Wilson for re-election as Class I directors. In addition, our Board has
determined to increase the size of the Board to 13 members. In order that the three classes of directors are as equal in number
as possible,&nbsp;the four new nominees have been distributed among the director classes as follows: Jeffery E. Thompson has been
nominated as a Class I director to serve for a three-year term ending at the 2019 annual meeting of shareholders, David A. Fike
and Clyde V. Kelly, III have been nominated as Class II directors to serve for a one-year term ending at the 2017 annual meeting
of shareholders, and R. Michael Clemmer, Jr. has been nominated as a Class III director to serve for a two-year term ending at
the 2018 annual meeting of shareholders.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Information about the principal occupations,
business experience and qualifications of these nominees is provided below under the heading &ldquo;Qualifications of 2016 Director
Nominees and Continuing Directors.&rdquo;</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_012"></A>QUALIFICATIONS
OF 2016 DIRECTOR NOMINEES AND CONTINUING DIRECTORS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Class I Director Nominees:</B></P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: Black 1pt solid"><B>Christopher F. Spurry</B></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Age: </B>68</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Since: </B>2004</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Committees: </B>Compensation; Executive</P></TD>
    <TD STYLE="width: 60%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Spurry has been Chairman of the Board since
        2006. He has served as a director of the Talbot Bank since 1995, and he served as a director of The Felton Bank, our wholly-owned
        bank subsidiary that merged into CNB on January 1, 2011 (&ldquo;Felton Bank&rdquo;), between September 2009 and December 31, 2010.
        He currently serves on both the Compensation Committee and the Executive Committee. Mr. Spurry is the founder and former owner
        of Spurry &amp; Associates, Inc., a manufacturer&rsquo;s representative firm that has represented manufacturing companies in the
        commercial/institutional foodservice and refrigeration equipment industry in the Mid-Atlantic region for over 32 years. The firm
        provides sales, marketing, applications engineering, and project management services. In September of 2015, Mr. Spurry sold Spurry
        &amp; Associates, Inc. He currently serves as Executive Vice President of Spurry-Curren and Associates, Inc. In 1985, Mr. Spurry
        founded Charter Distributing, Inc., which he sold in 1996 after 11 profitable years. Over the past 15 years, Mr. Spurry successfully
        completed seven real estate investment, redevelopment, or subdivision projects as managing member, investor and owner of Spurry-Morgan,
        LLC and Spurry-Commercial, LLC. In nominating Mr. Spurry, the Nominating Committee considered as important factors his executive
        and business experience, his real estate experience, and his extensive experience on bank boards, which the Nominating Committee
        believes combine to yield valuable insight in the areas of management, communications, best practices,<FONT STYLE="font-size: 10pt">
        </FONT>appreciation of risk, governance, and strategic planning.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><B>Frank E. Mason, III</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Age: 53</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Since: </B>2011</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Committees:</B> Executive (Chair); Audit;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Governance &amp; Planning</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD>
    <TD STYLE="text-align: justify">Mr. Mason is the President and Chief Executive Officer of JASCO Incorporated, a manufacturer and distributor of analytical instrumentation for the scientific research community, a position he has held since 2004.&nbsp;&nbsp;JASCO Incorporated, which is a subsidiary of JASCO Corporation located in Tokyo, Japan, operates throughout North and South America.&nbsp;&nbsp;Prior to becoming President and Chief Executive Officer, Mr. Mason served as JASCO Incorporated&rsquo;s Chief Operations Officer from 1996 to 2004 and as its Sales Director for North America from 1987 to 1995.&nbsp;&nbsp;Mr. Mason has a Bachelor of Arts degree from the University of Maryland, College Park, and a MBA from Johns Hopkins University.&nbsp;&nbsp;In nominating Mr. Mason, the Nominating Committee considered as important factors Mr. Mason&rsquo;s experience in leading a large corporation, his financial and operational knowledge.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%; border-bottom: Black 1pt solid; text-align: justify"><B>Jeffrey E. Thompson</B></TD>
    <TD STYLE="width: 60%; border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age: </B>60</FONT>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Director of CNB Since: </B>2005</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Thompson has been a director of CNB, a
        wholly-owned bank subsidiary of the Company, since 2005 and has served as legal counsel for CNB since 1986. Mr. Thompson is currently
        serving as Vice-Chair of the CNB Board of Directors and Chairman of the Executive and Governance Committee. Mr. Thompson is a managing
        partner for the law firm of Thompson &amp; Richard, LLP, located in Centreville, Maryland. The law firm has a concentration in
        all matters pertaining to commercial and residential real estate, estates and trust. The law firm owns and operates a title insurance
        agency, Chesapeake Title Group. In nominating Mr. Thompson, the Nominating Committee considered as important factors Mr. Thompson&rsquo;s
        qualifications as legal counsel, his expertise in real estate law, and his extensive service on CNB&rsquo;s board.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><B>John H. Wilson</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Age: </B>70</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Director Since: </B>2009</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Committees: </B>Governance &amp; Planning;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Compensation (Chair)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Wilson serves as a director of
The Avon-Dixon Agency, LLC, our wholly-owned insurance producer subsidiary (&ldquo;Avon-Dixon&rdquo;). Since 2006, Mr. Wilson
has served as the President and Chief Executive Officer of Coastal South of Maryland, Inc., a land development and real estate
consulting company. Mr. Wilson is also the owner/operator of the Chesapeake Bay Beach Club, a private events facility, and managing
member of the Tidewater Inn, LLC, and the Inn at the Chesapeake Bay Beach Club. In nominating Mr. Wilson, the Nominating Committee
considered as important factors Mr. Wilson&rsquo;s experience in the insurance industry, his experience in real estate development
and operating businesses similar to our typical customers, and his familiarity with and involvement in one of our key market areas.&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Class II Director Nominees:</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Clyde V. Kelly, III </B></P></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Age: </B>62</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director of CNB Since: </B>2005</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD>
    <TD STYLE="text-align: justify">Mr. Kelly has been a director of CNB since 2005 and is currently serving as Chairman of the CNB Board of Directors.&nbsp;&nbsp;Mr. Kelly has been the President and General Manager of Kelly Distributors since 1987, a company that distributes Anheuser-Busch and craft brewery brands in Talbot, Queen Anne&rsquo;s, Caroline, Dorchester and Kent counties of Maryland.&nbsp;&nbsp;In nominating Mr.&nbsp;Kelly, the Nominating Committee considers as important factors his leadership of a large company, familiarity with an important market area in which we compete, and his 11-year experience on CNB&rsquo;s board which the Nominating Committee believes offers valuable management and operational knowledge.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>David
    A. Fike</B></FONT></TD>
    <TD STYLE="width: 60%; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age: </B>49</FONT>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Director
        of Talbot Bank Since: </B>2012</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Mr.
        Fike has been a director of Talbot Bank since 2012 and is currently the President and Publisher APG Media of Chesapeake
        responsible for eleven newspapers, three magazines, six websites, and five mobile apps covering nine counties in Maryland
        &amp; Delaware. The print publications include a six-day daily, a three-day daily, and nine weekly newspapers, plus two
        monthly magazines and one semi-annual magazine. He has been with Chesapeake Publishing &amp; Printing since 1992. During
        his career with the company, he held the positions of Retail Advertising Manager, Advertising Director, and Director of
        Advertising &amp; Marketing, General Manager, Publisher, and Regional Vice President. Mr. Fike is the past President of
        the Maryland Delaware D.C. Press Association and Press Services, past Chairman of the Talbot County Chamber of Commerce
        and has served previously on the board of directors for Talbot Mentors, The United Fund of Talbot County, Cecil County
        Chamber of Commerce, and the Maryland Delaware D.C. Press Foundation.&nbsp; He currently serves as the President for Brighter
        Christmas Fund. Mr. Fike has a degree in Business Management from the University of Maryland, College Park. In nominating
        Mr. Fike, the Nominating and Governance Committee considered Mr. Fike&rsquo;s experience in communications, business management,
        and his community involvement in our key market area.</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Class
        III Director Nominee:</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>R.
        Michael Clemmer, Jr.</B></FONT></P></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age: </B>48</FONT>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Director
        of Talbot Bank Since: </B>2012</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Mr.
        Clemmer has been a director of Talbot Bank since 2012. Mr.&nbsp;Clemmer is President of Salisbury, Inc., a company that
        designs and manufactures pewter, sterling silver and other metal giftware, a position he has held since 1991. In 1995,
        Mr. Clemmer founded Executive Decision, Inc. a corporate recognition company. Since 1992, Mr.&nbsp;Clemmer has been involved
        in the development, acquisition and renovation of industrial and commercial property. He is founder of Waterside Properties
        LLC, a property development and management company. Mr. Clemmer is a graduate of the University of Richmond and has been
        a resident of Talbot County since 1982. In nominating Mr.&nbsp;Clemmer, the Nominating Committee considered as important
        factors Mr. Clemmer&rsquo;s leadership capabilities, real estate development in our key market area, and his civic participation.</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>CONTINUING
        DIRECTORS:</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Brenda
        W. Armistead</B></FONT></P></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;<B>Age:
            </B>64</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Director
        since: </B>2002</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Committees:
        </B>Governance &amp; Planning(Chair);</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">Audit;
        Executive</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Ms. Armistead is a self-employed
    investor. Ms. Armistead has been a director of the Talbot Bank since 1992. Ms. Armistead served as the County Manager and
    Finance Officer of Talbot County, Maryland from 1982 to 1999 and has served on the boards of numerous community-based organizations
    within Talbot County and the Mid-Shore.&nbsp;&nbsp;Ms. &nbsp;Amistead received her MBA from the University of North Carolina
    in 1974.&nbsp;&nbsp;Ms. Armistead&rsquo;s qualifications to serve on our Board include her banking experience, her managerial,
    governance and financial expertise relating to her career in local government, and her familiarity with and involvement in
    one of our key market areas.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%; border-bottom: Black 1pt solid; text-align: justify"><B>David W. Bates</B></TD>
    <TD STYLE="width: 60%; border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age:
            </B>69</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Since:</B> 2012</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Committees: </B>Executive; Governance &amp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Planning; Risk Management (Chair)</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Since September 2014, Mr. Bates serves as Chairman
        &amp; CEO of Xtone, Inc., a small privately held technology company located in Northern Virginia. He has a Master&rsquo;s Degree
        in economics and an MBA in finance and was employed by the World Bank Group headquartered in Washington, DC for 20 years. During
        that time he served 10 years as a specialist in project loan finance at International Finance Corporation, World Bank Group&rsquo;s
        private sector affiliate. Mr. Bates qualifications to serve on the Board include his experience in banking and finance as well
        as his experience in corporate governance matters gained through service on a number of private corporate and nonprofit boards.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><B>David W. Moore</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age:
</B>51</FONT><BR>
&nbsp;&nbsp;&nbsp;<BR>
<B>Director Since: </B>2014<BR>
&nbsp;&nbsp;&nbsp;<BR>
<B>Committees: </B>Compensation; <BR>
Risk Management</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Moore was a director of Felton Bank since
        2001 and subsequently became a director of CNB after the merger of Felton Bank and CNB in 2010. Currently, Mr. Moore is the Chairman
        of the CNB Asset Liability Committee and is a member of CNB&rsquo;s Executive Committee. Mr. Moore has served as President and
        CEO of Milford Housing Development Corporation (MHDC) since 2004 and from 2000 to 2003 served as Deputy Director of MHDC. Mr. Moore
        received a Bachelor of Science degree in Business Management from California Coast University in 1998 and has been a licensed Home
        Inspector since 1994. He received his Associate&rsquo;s Degree in Construction Management from Delaware Technical and Community
        College in 1984. Mr. Moore&rsquo;s qualifications to serve on our Board include his experience in banking in both Delaware and
        Maryland as well as his expertise in the housing industry in our key market areas.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><B>James A. Judge</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age:
            </B>57</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Since: </B>2009</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Committees: </B>Audit (Chair); Risk</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD>
    <TD STYLE="text-align: justify">Mr. Judge has been a director of CNB, a wholly-owned bank subsidiary of the Company, since 2005.&nbsp;&nbsp;Mr. Judge has been a certified public accountant for over 30 years and partner since 1985 with Anthony, Judge &amp; Ware, LLC, an accounting and tax services company located in Chestertown, Maryland.&nbsp;&nbsp;In nominating Mr. Judge, the Nominating Committee considered as important factors Mr. Judge&rsquo;s qualifications as a certified public accountant, his expertise in the preparation and examination of financial statements, his familiarity with the banking business, and his experience in owning and operating his own business. </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 40%; border-bottom: Black 1pt solid"><B>Lloyd <FONT STYLE="font-family: Times New Roman, Times, Serif">L.
    Beatty, Jr.</FONT></B></TD>
    <TD STYLE="width: 60%; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age: </B>63</FONT>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Director
        Since:</B> 2000</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Committees:</B> Executive</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Beatty has been a director of the Talbot
        Bank since 1992. He was elected to CNB&rsquo;s Board on April 30, 2015. On June 1 2013, Mr. Beatty was promoted to our Chief Executive
        Officer (&ldquo;CEO&rdquo;) as well as continuing to serve as President. Since January 2011, Mr. Beatty has served as our President
        and Chief Operating Officer (&ldquo;COO&rdquo;) and previously served as our Executive Vice President and COO since August 2007.
        Prior to that and since October 2004, Mr. Beatty has been employed by us in various executive level operating officer capacities.
        Prior to joining the Company, Mr. Beatty was the Chief Operating Officer of Darby Overseas Investments, LP, a global private equity
        firm, and President of Darby Advisors, Inc., a privately held family investment business, from 1998 to 2005. Mr. Beatty was also
        a practicing certified public accountant for 25 years and a principal in the accounting firm Beatty, Satchell &amp; Company from
        1977 to 1998. Mr. Beatty&rsquo;s qualifications to serve on our Board include his extensive financial knowledge and operational
        experience, as well as his familiarity with an important market area in which we compete, his experience with Talbot Bank, whose
        operations comprise a significant portion of our operations, and his experience in advising companies on financial and tax matters,
        merger and acquisition transactions, and insurance operations.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid"><B>W. Moorhead Vermilye</B></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Age: </B>75</FONT>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Since: </B>2000</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Committees: </B>Risk Management</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Vermilye has been a director of Talbot
        Bank since 1977, and he served as a director of Felton Bank between April 2004 and December 31, 2010. On June 1, 2013, Mr. Vermilye
        resigned as our CEO and became the Senior Business Development Officer of Talbot Bank. Mr. Vermilye served as our CEO from December
        2000 until May 2013 and as our President from December 2000 until January 2011. From 1988 until July 2006, Mr. Vermilye served
        as the President and Chief Executive Officer of Talbot Bank. From 1970 to 1988, Mr. Vermilye was a Principal in Bartlett, Griffin
        &amp; Vermilye Insurance Agency located in Easton, Maryland. Mr. Vermilye has served on the boards of numerous community-based
        organizations within Talbot County and the Mid-Shore during his career. Mr. Vermilye&rsquo; s qualifications to serve on our Board
        include his experience in banking and insurance, his familiarity with and involvement in one of our key market areas, and his understanding
        of and experience with the business and financial needs of our typical customer.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_013"></A>EXECUTIVE OFFICERS
WHO ARE NOT SERVING AS DIRECTORS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Below is information regarding each of our
executive officers who are not directors of the Company, including their title, age and brief biography describing each executive
officer&rsquo;s business experience.</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 26%; border-bottom: Black 1pt solid; padding-left: 0; text-indent: 0"><B>Name</B>&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: center; padding-left: 0; text-indent: 0"><B>Age</B></TD>
    <TD STYLE="width: 1%; text-indent: 0; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 60%; border-bottom: Black 1pt solid; text-indent: 0; padding-left: 0"><B>Position</B>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-indent: 0; padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-indent: 0; padding-left: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">George S. Rapp</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">63</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">Vice President and Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">Donna J. Stevens</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">52</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">Chief Operating Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">Patrick M. Bilbrough</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">50</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">President and Chief Executive Officer of Talbot Bank</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">Edward C. Allen</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">68</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">President and Chief Executive Officer of CNB</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">Richard C. Trippe</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">53</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">President and Chief Executive Officer of Avon Dixon</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0; text-indent: 0">W. David Morse</TD>
    <TD STYLE="text-align: center; padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-left: 0; text-indent: 0">54</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0; text-indent: 0">Secretary and General Counsel</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">George S. Rapp is our Vice President and Chief
Financial Officer (&ldquo;CFO&rdquo;), positions he has held since February 20, 2013. Prior to joining the Company, from 2010 to
2012, Mr. Rapp served as the Chief Financial Officer and one of the four executive founders of World Currency USA in Marlton, NJ,
a provider of foreign currency exchange services to financial institutions, where he was responsible for the financial operations,
including raising capital to fund the start-up operation. Between 2005 and 2010, he served as the Chief Financial Officer of Harleysville
National Corporation, a regional banking corporation in Harleysville, PA, where he managed all financial functions including controller,
treasury and shareholder relations. Between 1980 and 2005, Mr. Rapp held a variety of roles with various financial institutions,
including as Chief Financial Officer, Senior Vice President &amp; Chief Accounting Officer, Chief Operations Officer and Controller.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Donna J. Stevens was appointed Chief Operating
Officer (&ldquo;COO&rdquo;) of the Company in July 2015. She severed as the Company&rsquo;s Chief Operations Officer from July
2013 to July 2015. She has been employed by the Company in various officer capacities since 1997, including Senior Vice President,
Senior Operations and Compliance Officer and Corporate Secretary for CNB, the Company&rsquo;s wholly-owned commercial bank subsidiary
from February 2010 to June 2013. Her banking career began in 1980 as a Teller and progressed with four financial institutions in
functions including retail branch and bank operations. Management responsibilities have included retail branch banking, loan operations
and documentation, credit administration, bank operations, and compliance. Education includes and Associates Degree in Business
Management, Maryland Banking School, ABA Compliance School and Stonier Graduate School of Banking. Professional affiliations include
Maryland Banker&rsquo;s Association Regulatory Affairs Committee and Mid-Atlantic Regional Compliance group. Previous affiliations
include past Chairman of the Maryland Banker&rsquo;s Leadership and Development Committee and member of the Government Relations
Council.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Patrick M. Bilbrough was appointed President
and CEO of the Talbot Bank on December 31, 2012. Mr. Bilbrough was previously Talbot Bank&rsquo;s Executive Vice President from
May, 2011 when he started with the Company. Prior to his employment with Talbot Bank and since 2007, Mr. Bilbrough served as the
Market Executive of PNC Bank, N.A., of Pittsburgh where he was responsible for the 11-county Delmarva Region. He was concurrently
serving as a commercial banking team leader for a 5-county area. In 2004, he was named Executive Vice President of Mercantile Eastern
Shore Bank and following six months as its Chief Financial Officer, he then served as Senior Lender and Senior Credit Officer prior
to the acquisition of Mercantile by PNC in 2007. From 1995 to 2004, Mr. Bilbrough was with the Peoples Bank of Maryland, of Denton,
where he had most recently been President and CEO after beginning as its CFO and Comptroller. Mr. Bilbrough graduated from Salisbury
University. He is a Certified Public Accountant, a graduate of the RMA Advanced Commercial Lending School, and the Executive Challenge
Course sponsored by GAP International, a leadership program for Fortune 500 executives. He serves on the Boards of Directors of
the Benedictine School and Choptank Community Health Services. In addition, Mr. Bilbrough is a director of Choptank Transport,
Inc., a nationwide 3<SUP>rd</SUP> party logistics provider.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Edward&nbsp;C. Allen was appointed CNB&rsquo;s
President and Chief Executive Officer on September 30, 2014. Mr. Allen was previously CNB&rsquo;s Chief Financial Officer from
October 25, 2011 when he started with the Company. Mr. Allen is a career banker with 40 years&rsquo; experience in community banks.
He has been CFO or COO of banks ranging in asset size from $400mm to $2.5 billion. He has a Bachelor of Science degree in accounting
and an MBA in finance. Most of his career has been on the finance side of the business, although he was COO of a $500mm bank for
12 years, focusing on IT, Branch Administration, HR, Compliance, and Facilities Management. He has extensive experience in budgeting,
investment portfolio management and board presentations. He has been active in the past in civic affairs and is a member of the
board of directors of Compass Regional Hospice (formerly Queen Anne&rsquo;s County Hospice).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Richard&nbsp;C. Trippe joined Avon-Dixon in
2011 as the President and CEO after a long career in the insurance industry. Mr. Trippe brought with him an extensive twenty-five
year background having managed every aspect of the insurance business including sales, customer service, underwriting and training.
After graduating from St. Mary&rsquo;s College of Maryland with a Bachelor of Arts in Economics in 1985, Mr. Trippe joined The
Hartford Insurance Group, where he stayed for seventeen years. Upon leaving Hartford, Mr. Trippe worked for an independent agency
in Baltimore County and afterwards ran a branch office for a national insurance wholesaler.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">W.&nbsp;David Morse has served as Secretary
and General Counsel for the Company since 2008. He began employment with the Talbot Bank in 1991. He received his Juris Doctorate
from the University of Baltimore and his Bachelor of Arts degree from High Point College, NC.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_014"></A>CORPORATE GOVERNANCE</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to Rule 5605(b)(1) of the Nasdaq Rules,
a majority of the members of the Board must be &ldquo;independent directors&rdquo; as that term is defined by Nasdaq Rule 5605(a)(2).
In accordance with Nasdaq Rules, the Board considered transactions and relationships between each director or any member of his
or her immediate family and the Company and its subsidiaries and affiliates. Our Board has determined that currently serving directors,
Blenda W. Armistead, David J. Bates, James A Judge, Frank E. Mason, III, Christopher F. Spurry, David W. Moore, and John H. Wilson
are &ldquo;independent directors&rdquo; under the Nasdaq Rules and these independent directors constitute a majority of our Board.
In addition, each of the new director nominees, Jeffrey&nbsp;E. Thompson, David&nbsp;A. Fike, Clyde&nbsp;V. Kelly, III and R.&nbsp;Michael
Clemmer, Jr., are &ldquo;independent&rdquo; under Nasdaq Rules.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Board Leadership Structure and Executive Sessions</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Board currently separates the role of Chairman
of the Board from the role of Chief Executive Officer. The Board&rsquo;s philosophy is and has been to fill the position of Chairman
with an independent director. The foregoing structure is not mandated by any provision of law or our Charter or By-Laws, but the
Board believes that this governance structure provides the best balance between the Board&rsquo;s independent authority to oversee
our business and the Chief Executive Officer&rsquo;s management of our business on a day-to-day basis.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The duties of the Chairman include: (i) acting
as a liaison and channel for communication between the independent directors and the Chief Executive Officer; (ii) providing leadership
to ensure the Board works cohesively and independently and during times of crisis; (iii) advising the Chief Executive Officer as
to the quality, quantity and timeliness of information from executive management to the independent directors; (iv) being available
to consult with the Chief Executive Officer and other directors on corporate governance practices and policies; (v) coordinating
the assessment of Board committee structure, organization and charters and evaluating the need for change, as well as committee
membership; (vi) together with the Chair of the Nominating and Governance Committee, interviewing all Board candidates and making
recommendations concerning such candidates; (vii) coordinating, developing the agenda and leading executive sessions of the independent
directors and communicating the results thereof to the Chief Executive Officer; (viii) ensuring appropriate segregation of duties
between Board members and management; (ix) suggesting agenda items for Board meetings; and (x) together with the Chair of the Compensation
Committee, communicating the Board&rsquo;s evaluation of the performance of the Chief Executive Officer.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To further strengthen the oversight of the
full Board, the Board&rsquo;s independent directors hold executive sessions at which only non-management directors are present.
The executive sessions are scheduled in connection with regularly scheduled Board meetings. Additional executive sessions may be
called by any of the independent directors as often as necessary. During fiscal 2015, the independent directors met six times in
executive session without the presence of management.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For these reasons, the Board believes that
our corporate governance structure is in the best interests of the Company and our shareholders at this time. The Board retains
authority to modify this structure as it deems appropriate.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Board and Committee Oversight of Risk</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Board is actively involved in overseeing
our risk management through the work of its various committees and through the work of the boards of directors and committees of
our subsidiaries, a number of which have Company directors as members. Each committee of the Board is responsible for evaluating
certain risks and overseeing the management of such risks. The Compensation Committee is responsible for overseeing the management
of risks relating to the Company&rsquo;s executive compensation plans and arrangements. The Audit Committee oversees the process
by which senior management and the relevant departments assess and manage our exposure to, and management of, financial and operational
risks. The Nominating and Governance Committee manages risks by setting criteria for nomination of director candidates, nominating
qualified candidates, and establishing and periodically reviewing our governance policies. In addition, the Board implemented a
comprehensive Enterprise Risk Management (&ldquo;ERM&rdquo;) program during 2014. The entire Board is regularly informed about
these risks and oversees the management of these risks and regularly reviews information regarding our operations and finances
as well as its strategic direction. Pursuant to the Board&rsquo;s instruction, management regularly reports on applicable risks
to the relevant committee or the full Board, as appropriate, with additional review or reporting on risks conducted as needed or
as requested by the Board and its committees.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Business Conduct and Code of Ethics</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have adopted a Code of Ethics, as amended,
that applies to all of our directors, officers, and employees, including our principal executive officer, principal financial officer,
principal accounting officer, or controller, or persons performing similar functions. The Code of Ethics provides fundamental ethical
principles to which these individuals are expected to adhere. The Code of Ethics operates as a tool to help directors, officers,
and employees understand and adhere to the high ethical standards required for employment by, or association with, the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Code of Ethics is available on our website
at <U>www.shorebancshares.com</U> under the &quot;Governance Documents&quot; link. Shareholders can also obtain a written copy
of the Code of Ethics, free of charge, upon request to: W. David Morse, Secretary, Shore Bancshares, Inc., 18 E. Dover Street,
Easton, Maryland 21601 or (410) 763-7800. Any future changes or amendments to the Code of Ethics and any waiver that applies to
one of our senior financial officers or a member of the Board will be posted to our website.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Shareholder Communications and Annual Meeting
Attendance</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Shareholders may communicate with our Board
by contacting W. David Morse, Secretary, Shore Bancshares, Inc., 18 East Dover Street, Easton, Maryland 21601 or (410)
763-7800. All communications will be forwarded directly to the Chairman of the Board for consideration.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Board members are not required to attend
our annual meetings of shareholders. However, all directors are encouraged to attend every annual meeting of shareholders as we
believe that the annual meeting is an opportunity for shareholders to communicate directly with directors. If you would like an
opportunity to discuss issues directly with the members of the Board, please consider attending this year&rsquo;s Annual Meeting.
At the 2015 annual meeting of shareholders, all directors (who were serving as such) were in attendance.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The term includes most financial transactions
and arrangements, such as loans, guarantees and sales of property, and remuneration for services rendered (as an employee, consultant
or otherwise) to the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company and its subsidiaries have adopted
policies and procedures to ensure compliance with the foregoing requirements.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_015"></A>COMMITTEES OF
THE BOARD OF DIRECTORS</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 85%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 26%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><B>Executive</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><B>Audit</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><B>Compensation</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><B>Nominating<BR>
&amp;<BR>
Governance </B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><B>Risk<BR>
Management</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Blenda W. Armstead</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>Chair</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>David J. Bates</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>Chair</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Lloyd L. Beatty, Jr.</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>James A. Judge</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>Chair</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>&nbsp;X</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Frank E. Mason, III</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>Chair</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>David W. Moore</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Christopher F. Spurry</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Moorhead W. Vermilye</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>John H Wilson</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>Chair</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>X</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP><B>Number of Meetings in 2015</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>&nbsp;2</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>&nbsp;4</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>&nbsp;2</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>&nbsp;3</B></TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center"><B>4&nbsp;</B></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Executive Committee consists of Frank E.
Mason, <I>Chair,</I> Blenda W. Armstead, David J. Bates, Lloyd L. Beatty, Jr., and Christopher F. Spurry. The Executive Committee
has the authority to exercise the powers of our Board in the management of the business and affairs of the Company, subject to
any restrictions imposed by law and to subsequent revision or alteration of any such action by the Board. The Executive Committee
met two times during fiscal year 2015.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The current members of the Audit Committee
are James A. Judge, <I>Chair</I>, Blenda W. Armistead and Frank E. Mason,&nbsp;III. Our Board has determined that each current
member of the Audit Committee is &ldquo;independent&rdquo; and financially literate as required in the Audit Committee charter
and as required by the rules and regulations promulgated by the SEC and The Nasdaq Stock Market. Our Audit Committee has adopted
a charter, which is posted on our website at <U>www.shorebancshares.com</U> under the &ldquo;Governance Documents&rdquo; link.&nbsp;
The Audit Committee met four times during fiscal 2015.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The principal functions of the Audit Committee
are to review the financial information to be provided to our shareholders and others, our financial reporting process, our system
of internal controls, our independent auditors&rsquo; independence, our audit process and the process for monitoring compliance
with laws and regulations. Under our Audit Committee charter, the Audit Committee is solely responsible for hiring and firing the
independent auditors and approving their fees and engagement terms; resolving any disagreement between the independent auditors
and our management; and pre-approving all audit and non-audit services performed by the independent auditors, subject to a de minimis
exception.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Board has determined that James A. Judge,
Chairman of the Audit Committee, qualifies as an audit committee financial expert within the meaning of applicable SEC rules because
he has the following attributes: (i)&nbsp;an understanding of generally accepted accounting principles and financial statements;
(ii)&nbsp;the ability to assess the general application of such principles in connection with accounting for estimates, accruals
and reserves; (iii)&nbsp;experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and
level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably
be expected to be raised by our financial statements, and experience actively supervising one or more persons engaged in such activities;
(iv)&nbsp;an understanding of internal control and procedures for financial reporting; and (v)&nbsp;an understanding of audit committee
functions. Mr.&nbsp;Judge has acquired these attributes by means of having held various positions that provided relevant experience,
as described in his biography above.</P>

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


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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The members of the Compensation Committee,
all of whom are independent directors as that term is defined in the Nasdaq Rules, are John H. Wilson, <I>Chair</I>, David W. Moore
and Christopher F. Spurry. The Compensation Committee has adopted a charter, which is posted on our website at <U>www.shorebancshares.com</U>
under the &ldquo;Governance Documents&rdquo; link. The Compensation Committee met two times during fiscal 2015.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Compensation Committee is generally responsible
for overseeing and, as appropriate, determining our director and executive officer compensation, recommending executive promotions
to the full Board, providing assistance and recommendations with respect to our compensation policies and practices, and assisting
with the administration of our compensation plans. The Compensation Committee determines executive compensation pursuant to the
principles discussed in the section below entitled &ldquo;Overview of Compensation Philosophy and Objectives&rdquo; and determines
director compensation by periodically reviewing the compensation practice of peer group institutions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to its charter, the Compensation Committee
may retain or obtain the advice of a compensation consultant, legal counsel or other advisers as it deems necessary and appropriate
to carry out its duties and, in connection with such retention of consultants, the Compensation Committee will consider the independence
factors as required by the applicable rules of The Nasdaq Stock Market and the SEC. The Compensation Committee is directly responsible
for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other advisers retained
by them. During fiscal 2015, the Compensation Committee engaged ChaseCompGroup, LLC to perform executive and director compensation
market reviews.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Nominating and Governance Committee</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The members of the Nominating Committee, all
of whom are independent directors as that term is defined in the Nasdaq Rules, are Blenda W. Armistead, <I>Chair</I>, David J.
Bates, Frank E. Mason, III and John H. Wilson. The Nominating and Governance Committee has adopted a charter, which is posted on
our website at <U>www.shorebancshares.com</U> under the &ldquo;Governance Documents&rdquo; link. The Nominating and Governance
Committee met three times during fiscal 2015.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Nominating and Governance Committee is
responsible for overseeing and, as appropriate, determining or making recommendations to the Board regarding membership and constitution
of the Board and its role in overseeing our affairs. The Nominating and Governance Committee manages the process for evaluating
the performance of the Board and for nominating candidates (including current Board members) for election by our shareholders after
considering the appropriate skills and characteristics required for the Board, the current makeup of the Board, the results of
the evaluations and the wishes of the Board members to be re-nominated.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Nominating and Governance Committee is
responsible for assembling and maintaining a list of qualified candidates to fill vacancies on the Board, and it periodically reviews
this list and researches the talent, skills, expertise, and general background of these candidates. The Nominating Committee will
from time to time review and consider candidates recommended by shareholders.&nbsp; Shareholder recommendations should be submitted
in writing to:&nbsp; Shore Bancshares, Inc., 18 East Dover Street, Easton, Maryland 21601, Attn:&nbsp; W. David Morse, Secretary;
and must specify (i) the recommending shareholder&rsquo;s contact information, (ii) the class and number of shares of capital stock
beneficially owned by the recommending shareholder, (iii) the name, address and credentials of the candidate for nomination, and
(iv) the candidate&rsquo;s consent to be considered as a candidate.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Whether recommended by a shareholder or chosen
independently by the Nominating and Governance Committee, a candidate will be selected for nomination based on his or her talents
and the needs of the Board. The Nominating and Governance Committee does not have a formal policy pursuant to which it considers
specific diversity criteria when selecting nominees, such as education, professional experience, skills, race or gender. Rather,
the Nominating and Governance Committee&rsquo;s goal in selecting nominees is to identify persons who have business and other ties
to the communities and industries we serve, and who have skills, education and other attributes that will meet the needs of the
Board at that time and, generally, that are complimentary to the skills and attributes possessed by existing directors. When searching
for and appointing directors to fill a particular committee position, the Nominating and Governance Committee searches for persons
who will meet the independence standards required for those committees and who possess skills and attributes that will allow the
committee to be effective. The Nominating and Governance Committee also strives to select individuals who it believes will work
well with the other directors at the highest level of integrity and effectiveness.&nbsp;</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A candidate, whether recommended by a shareholder
or otherwise, will not be considered for nomination unless he or she is of good character and is willing to devote adequate time
to Board duties.&nbsp; In assessing the qualifications of potential candidates, the Nominating and Governance Committee will also
consider the candidate&rsquo;s experience, judgment, and civic and community relationships, and the diversity of backgrounds and
experience among existing directors.&nbsp; Certain Board positions, such as Audit Committee membership, may require other special
skills, expertise, or independence from the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">It should be noted that a shareholder recommendation
is not a nomination, and there is no guarantee that a candidate recommended by a shareholder will be approved by the Nominating
Committee or nominated by the Board. A shareholder who desires to nominate a candidate for election may do so only in accordance
with Article II, Section 4 of our By-Laws which provides that directors may be nominated by shareholders by written request to
the Secretary of the Company received not less than 120 days nor more than 180 days prior to the date fixed for the meeting.&nbsp;
Additional time constraints are applicable in the cases of a change in shareholder meeting date or a special meeting called for
the purpose of electing directors.&nbsp; As provided in the By-Laws, the notice of nomination must specify:&nbsp; (a) the name
and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of our capital
stock owned by each proposed nominee; (d) the name and residence address of the notifying shareholder; (e) the number of shares
of our capital stock owned by the notifying shareholder; (f) the consent in writing of the proposed nominee as to the proposed
nominee&rsquo;s name being placed in nomination for director; (g) a description of all arrangements or understandings between such
notifying shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s)
are to be made by such notifying shareholder; (h) a representation that such notifying shareholder intends to appear in person
or by proxy at the meeting to nominate the persons named in its notice; and (i) all information relating to such proposed nominee
that would be required to be disclosed by Regulation 14A under the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange
Act&rdquo;), assuming such provisions would be applicable to the solicitation of proxies for such proposed nominee.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The members of the ERM Oversight Committee
are David J. Bates, <I>Chair</I>, David W. Moore, James A. Judge and W. Moorhead Vermilye. &nbsp;To direct the ERM function, the
ERM Oversight Committee is responsible for establishing and monitoring the volume and mix of our assets and funding sources. The
ERM Oversight Committee&rsquo;s overall objective is to manage our liquidity, capital adequacy, growth, risk, and profitability
goals. ERM will be the primary forum for discussion and analysis of our investment plans, lending plans, liability structure, and
overall interest rate risk.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Board and Committee Meetings and Attendance</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Board held<B> </B>fifteen meetings during
fiscal 2015.&nbsp; During fiscal 2015, the Board had five separately designated standing committees: the Executive Committee, the
Audit Committee, the Nominating Committee, the Compensation Committee, and the ERM Oversight Committee.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In fiscal 2015, each incumbent director attended
at least 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which that person served
as a director) and (2) the total number of meetings held by all committees of the Board on which that person served (held during
the period served).</P>

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


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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_016"></A>BENEFICIAL OWNERSHIP
OF COMMON STOCK</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table sets forth information
as of the Record Date relating to the beneficial ownership of the Common Stock by (i) each person or group known by us to own beneficially
more than five (5%) of the outstanding shares of Common Stock; (ii) each of our directors and executive officers named in the Summary
Compensation Table (such executive officers are referred to herein as the &ldquo;Named Executive Officers&rdquo;); and (iii) all
of our directors and executive officers as a group; and includes all shares of Common Stock that may be acquired within 60 days
of the Record Date. The address of each of the persons named below is the address of the Company except as otherwise indicated.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of Shares<BR> Beneficially<BR> Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Percent of<BR> Class<BR> Beneficially<BR> Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Directors, Nominees and Named Executive Officers</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 78%; text-align: left">Edward C. Allen</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">3,726</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">*</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Blenda W. Armistead</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,579</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">David J. Bates</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,503</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Lloyd L. Beatty, Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">91,442</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Patrick M. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,613</TD><TD STYLE="text-align: left">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Michael R. Clemmer, Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,850</TD><TD STYLE="text-align: left">(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">David A. Fike</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">318</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">James A. Judge</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,083</TD><TD STYLE="text-align: left">(5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Clyde V. Kelly</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,627</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Frank E. Mason, III</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,380</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">David W. Moore</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,295</TD><TD STYLE="text-align: left">(6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">George S. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,716</TD><TD STYLE="text-align: left">(7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Christopher F. Spurry</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,066</TD><TD STYLE="text-align: left">(8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Jeffery E. Thompson</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,631</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Richard C. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,410</TD><TD STYLE="text-align: left">(9)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">W. Moorhead Vermilye</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,558</TD><TD STYLE="text-align: left">(10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">John H. Wilson</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,299</TD><TD STYLE="padding-bottom: 1pt; text-align: left">(11)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">*</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">All Directors, Nominees and Executive</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10.3pt">Officers as a Group (17 Persons)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254,096</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">5% Shareholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Wellington Management Group., LLP <BR>280 Congress Street <BR>Boston, Massachusetts 02210</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,163,834</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Maltese Capital Management, LLC</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt">150 East 52<SUP>nd</SUP> Street, 30<SUP>th</SUP> Floor</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt">New York, New York 10022</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">694,700</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.5</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.125in; text-indent: -0.125in">Basswood Capital Management, L.L.C. <BR>645 Madison Ave. #10 <BR>New York, NY 10022</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">640,477</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">All 5% Shareholders as a Group</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,499,011</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19.8</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,753,107</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">21.8</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">%</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 15pt"></TD><TD STYLE="width: 25pt"><B>*</B></TD><TD>Amount constitutes less than 1%.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 46.75pt; text-indent: -28.05pt">&nbsp;</P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.65in; text-indent: -28.1pt">Notes:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(1)</TD><TD STYLE="text-align: justify">Includes 1,305 shares held individually by Bruce C. Armistead; 2,532 shares held by Bruce C. Armistead
under an Individual Retirement Account arrangement; and 2,545 shares held by Bruce C. Armistead, as custodian for a minor child.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(2)</TD><TD STYLE="text-align: justify">Includes 15,026 shares held jointly with Nancy W. Beatty; 855 shares held individually by Nancy
W. Beatty; and exercisable options to acquire 35,180 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(3)</TD><TD STYLE="text-align: justify">Includes exercisable options to acquire 12,248 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(4)</TD><TD STYLE="text-align: justify">Includes 1,500 shares held jointly with Dina Clemmer and 350 shares held by Dina Clemmer, as custodian
for a minor child.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(5)</TD><TD STYLE="text-align: justify">Includes 5,740 shares held individually by Margaret B. Judge.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(6)</TD><TD STYLE="text-align: justify">Includes 96 shares held jointly with Evelyn W. Moore.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(7)</TD><TD STYLE="text-align: justify">Includes exercisable options to acquire 8,342 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(8)</TD><TD STYLE="text-align: justify">Includes 8,152 shares held jointly with Beverly B. Spurry; 300 shares held by Beverly B. Spurry
under a SEP arrangement; and 747 shares held by Beverly B. Spurry under an Individual Retirement Account arrangement.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(9)</TD><TD STYLE="text-align: justify">Includes exercisable options to acquire 7,260 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(10)</TD><TD STYLE="text-align: justify">Includes 2,958 shares held individually by Sarah W. Vermilye.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 28.05pt">(11)</TD><TD STYLE="text-align: justify">Includes 3,033 shares held jointly with Deidre K. Wilson.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 46.75pt; text-align: justify; text-indent: -28.05pt">&nbsp;</P>


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_017"></A>COMPENSATION
OF NON-EMPLOYEE DIRECTORS</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our directors who are not also our employees
or employees of our bank subsidiaries (<I>i.e.</I>, Talbot Bank or CNB), referred to as &ldquo;outside directors,&rdquo; receive
fees for attending regular, special and committee meetings of the Board, as well as annual retainers. Outside directors who also
serve on the boards of directors of Talbot Bank and CNB also receive fees for attending meetings of those boards and their committees,
as well as retainers. These fees and other compensatory arrangements are discussed in detail below. On August 5, 2015, the Board
approved a change in the form of annual retainers to permit outside directors to elect whether to receive their quarterly installments
of the annual retainer in either cash or stock issued pursuant to the Shore Bancshares, Inc. 2006 Stock and Incentive Compensation
Plan (the &ldquo;2006 Equity Plan&quot;).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table provides information about
the compensation paid to or earned by our outside directors during 2015. Information regarding compensation paid to or earned by
directors who are also Named Executive Officers is presented in the Summary Compensation Table that appears below in the section
entitled &ldquo;Compensation Discussion and Analysis.&rdquo;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Director Compensation Table</B></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fees<BR> earned<BR> or paid<BR> in cash<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fees<BR> earned or<BR> paid in<BR> restricted<BR> stock<BR> ($) (4)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Stock<BR> awards<BR> ($) (5)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option<BR> awards<BR> ($) (5)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-equity<BR> incentive plan<BR> compensation<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Change in<BR> pension value<BR> and<BR> nonqualified<BR> deferred<BR> compensation<BR> earnings<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">All other<BR> compens-<BR>
ation<BR> ($) (6)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 12%; text-align: left">Ms. Armistead</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">34,250</TD><TD STYLE="width: 1%; text-align: left">(1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">4,991</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">126</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">39,367</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mr. Bates</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,007</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,993</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,991</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Mr. Judge</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,000</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,991</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mr. Mason</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,015</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,985</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,991</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Mr. Moore</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,506</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,994</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,491</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mr. Spurry</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,050</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">45,182</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Mr. Wilson</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,500</TD><TD STYLE="text-align: left">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,991</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,491</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(1)</TD><TD STYLE="text-align: justify">Includes amounts earned for serving on the Boards of the Company and Talbot Bank.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(2)</TD><TD STYLE="text-align: justify">Includes amounts earned for serving on the Boards of the Company and CNB.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(3)</TD><TD STYLE="text-align: justify">Includes amounts earned for serving on the Boards of the Company and Avon-Dixon.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(4)</TD><TD STYLE="text-align: justify">Includes amounts earned for serving on the Board of the Company in which the director elected to
receive payment in the form of restricted stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(5)</TD><TD STYLE="text-align: justify">The amounts reflect the aggregate grant date fair value of stock and option awards computed in
accordance with FASB ASC Topic 718, &ldquo;Accounting for Stock Compensation&rdquo; (&ldquo;ASC 718&rdquo;). See Note 12 to the
consolidated audited financial statements contained in the Company&rsquo;s Annual Report on Form 10-K for the year ended December
31, 2014 regarding assumptions underlying valuation of equity awards. There were no outstanding awards at December 31, 2015.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 28.1pt">(6)</TD><TD STYLE="text-align: justify">For Mr. Spurry and Ms. Armistead, amounts include premiums of $141 and $126, respectively, paid
by Talbot Bank for life insurance coverage.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 28.1pt; text-align: justify; text-indent: -28.1pt">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During 2015, our outside directors received
an annual retainer fee of $20,000 per director and $25,000 for directors who serve as committee chairpersons. The annual retainer
is paid in four quarterly installments throughout the fiscal period in which the outside director serves. Effective for the third
quarterly installment paid on September 30, 2015, the Board approved an amendment to the annual retainer to provide directors the
option to elect to receive payment in the form of cash or restricted stock issued pursuant to the 2006 Equity Plan with immediate
vesting.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">All of our directors and the directors of our
subsidiaries are eligible to participate in the 2006 Equity Plan, which is discussed below under the heading &ldquo;Overview of
Compensation Philosophy and Objectives&rdquo; in the &ldquo;Compensation Discussion and Analysis&rdquo; section.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Minimum Stock Ownership Requirements</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 17, 2016, our Board approved and
established minimum stock ownership requirements for the CEO, Directors and Named Executive Officers as follows:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">CEO &ndash; minimum of 20,000 shares within
5 years of appointment;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Directors &ndash; minimum of 4,000 shares within
3 years of being elected; and</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Named Executive Officers &ndash; minimum of
4,000 shares within 5 years of appointment.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Talbot Bank Board Compensation</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During 2015, our outside directors who served
as directors of Talbot Bank (Mr. Spurry and Ms. Armistead) also received an annual retainer of $5,000, plus $200 per meeting attended.
Talbot Bank paid these fees. Directors are compensated once for attending joint meetings of the Board and the board of directors
of Talbot Bank.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>CNB Board Compensation</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During 2015, our outside directors who served
as directors of CNB (Mr. Judge and Mr. Moore) also received an annual retainer of $10,000, plus $100 for each meeting attended.
These fees were paid by CNB. Directors are compensated once for attending joint meetings of the Board and the board of directors
of CNB.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Avon-Dixon Agency Board Compensation</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During 2015, Mr. Wilson served as a director
of Avon-Dixon and received an additional $500 for attending meetings of its board of directors. These fees were paid by Avon-Dixon.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-transform: uppercase; text-align: center"><A NAME="a_018"></A>COMPENSATION
DISCUSSION AND ANALYSIS</P>

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

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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 90%; font-weight: bold"><A HREF="#a_019">Executive Summary</A></TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: right">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Philosophy on Executive Compensation</TD>
    <TD STYLE="font-weight: bold; text-align: right">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_021">Say on Pay Results</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in; font-weight: bold"><A HREF="#a_050">Role of Compensation Consultants</A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold">25</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Elements of and Rationale for 2016 Compensation</TD>
    <TD STYLE="font-weight: bold; text-align: right">26</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; text-indent: 0in; font-weight: bold"><A HREF="#a_043"><FONT STYLE="font-weight: normal">Base Salary</FONT></A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold"><FONT STYLE="font-weight: normal">26</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in; text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; text-indent: 0in; font-weight: bold"><A HREF="#a_044"><FONT STYLE="font-weight: normal">Annual Incentive Program</FONT></A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold"><FONT STYLE="font-weight: normal">27</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in; text-indent: 0in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; text-indent: 0in; font-weight: bold"><A HREF="#a_045"><FONT STYLE="font-weight: normal">Long-Term Incentives</FONT></A></TD>
    <TD STYLE="text-align: right; text-indent: 0in; font-weight: bold"><FONT STYLE="font-weight: normal">27</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Performance Share Plan</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">401(k) Plan</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_046">Deferred Compensation</A></TD>
    <TD STYLE="text-align: right">33</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_047">Perquisites</A></TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in; font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_024">Summary Compensation Table</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">29</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_048">2006 Equity Plan</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">30</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_046">Deferred Compensation</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">33</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_049">Employment Agreements</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">35</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in"><A HREF="#a_025">Benefits Upon Termination of Employment</A></TD>
    <TD STYLE="text-align: right">38</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_027">Accounting and Tax Considerations</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">38</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_028">Compensation Committee Report</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><A HREF="#a_029">Compensation Committee Interlocks and Insider Participation</A></TD>
    <TD STYLE="font-weight: bold; text-align: right">39</TD></TR>
</TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_019"></A>Executive Summary</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our executive compensation program is designed
to reward our senior management team not just for delivering short-term results but also for driving consistent sustainable growth,
which is how we exceed customer expectations and produce positive returns for our shareholders. We believe that our compensation
decisions reflect a balanced and responsible pay approach by tying pay outcomes over the short and long-term, while also considering
the environment in which compensation decisions are made.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Shareholders have the opportunity, at the 2016
Annual Meeting, to vote to endorse or not endorse the compensation paid to the Company&rsquo;s Named Executive Officers, as disclosed
pursuant to the SEC&rsquo;s compensation disclosure rules. The Compensation Committee and the Board believe that this Compensation
Discussion and Analysis, and the compensation tables and narrative discussion that follow, support their recommendation to <B>approve</B>
the shareholder advisory resolution for the following Named Executive Officers in 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Lloyd L. Beatty, Jr. &ndash; President and Chief Executive Officer</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">George S. Rapp &ndash; Vice President and Chief Financial Officer</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Patrick M. Bilbrough &ndash; President and Chief Executive Officer of Talbot Bank</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Edward C. Allen &ndash; President and Chief Executive Officer of CNB</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Richard C. Trippe &ndash; President and Chief Executive Officer of Avon Dixon</TD></TR></TABLE>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_020"></A>Compensation Philosophy</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The primary objective of the Compensation Committee&rsquo;s
approach is to provide competitive levels of compensation so that we may attract, retain and reward outstanding executive officers.
In a highly competitive community banking marketplace, excellent leadership is essential. Our executive officers are expected to
manage the business of the Company and its subsidiaries in a manner that promotes growth and profitability for the benefit of shareholders,
while exceeding the requirements and service expectations of our customers. To that end, the Compensation Committee believes that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Key executives should have compensation opportunities at levels that are competitive with peer
institutions;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Total compensation should include &ldquo;at risk&rdquo; components that are linked to annual and
long-term performance results; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Stock-based compensation should form a key component of total compensation as a means of linking
senior management to the long-term performance of the Company and aligning their interests with those of shareholders.</TD></TR></TABLE>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_021"></A>Say on Pay Results</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At the 2015 annual meeting of shareholders,
the Company&rsquo;s shareholders overwhelmingly adopted a non-binding resolution approving the compensation paid to our executive
officers, as disclosed in the definitive proxy statement for that meeting pursuant to Item 402 of the SEC&rsquo;s Regulation S-K.
The measure was approved by approximately 97.9% of all votes cast. The Compensation Committee and the Board consider this vote
to be an endorsement of our compensation philosophy and practices, including our balance between cash and equity compensation.
Both the Compensation Committee and the Board intend to periodically re-evaluate our executive compensation philosophy and practices
in light of the Company&rsquo;s performance, needs and developments, including the outcome of future non-binding advisory votes
by the Company&rsquo;s shareholders.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B><A NAME="a_050"></A>Role of Compensation Consultants</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Compensation Committee&rsquo;s consultant
regularly attends committee meetings and attends executive sessions as requested by the Compensation Committee&rsquo;s chair, Mr.
Wilson. The Compensation Committee&rsquo;s consultant does not perform any services for the Company&rsquo;s management, without
express approval from the Compensation Committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In 2015, the Compensation Committee directly
engaged ChaseCompGroup, LLC to perform executive and director compensation market reviews. The Company paid fees totaling $32,516
to ChaseCompGroup in 2015.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Compensation Consultant Independence</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In furtherance of maintaining the independence
of the Compensation Committee&rsquo;s compensation consultant, the Compensation Committee has the sole authority to retain, terminate
and obtain the advice of ChaseCompGroup, LLC, at the Company&rsquo;s expense. Further, as discussed above, the Compensation Committee&rsquo;s
compensation consultant will not perform any services for Shore Bancshares management unless approved in advance by the Compensation
Committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with its engagement of ChaseCompGroup,
LLC, the Compensation Committee considered various factors bearing upon ChaseCompGroup, LLC&rsquo;s independence including, but
not limited to, the amount of fees received by ChaseCompGroup, LLC from the Company as a percentage of ChaseCompGroup&rsquo;s total
revenue, ChaseCompGroup&rsquo;s policies and procedures designed to prevent conflicts of interest, and the existence of any business
or personal relationship that could impact ChaseCompGroup&rsquo;s independence. After reviewing these and other factors, the Compensation
Committee determined that ChaseCompGroup, LLC is independent and that its engagement does not present any conflicts of interest.
ChaseCompGroup, LLC also determined that it was independent from management and confirmed this in a written statement delivered
to the Chair of the Compensation Committee as shown below.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&ldquo;ChaseCompGroup, LLC is independently
owned and managed by Diana Chase.&nbsp; ChaseCompGroup, LLC is an independent compensation consulting firm as defined in NASDAQ&rsquo;s
revised listing standards. Our firm does not market any other services or products to Shore Bancshares, nor do any of our consultants
own SHBI stock. Our consultants do not have any current or previous personal relationships with management or directors at SHBI&rdquo;.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Management&rsquo;s Role in the Executive
Compensation Process</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Beatty, our President and Chief Executive
Officer, as well as key members of our human resources function each help support the Compensation Committee&rsquo;s executive
compensation process and regularly attend portions of committee meetings. As part of the executive compensation process, Mr. Beatty
provides his perspective to the Compensation Committee regarding the performance of his Senior Leadership Team, which includes
all of our Named Executive Officers and certain other senior officers of the Company. In accordance with NASDAQ rules, Mr. Beatty
is not present when his compensation is being discussed or approved by the Compensation Committee and did not vote on executive
compensation matters, and neither he nor other members of management attended executive sessions of the Compensation Committee.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe that the design and objectives of
our executive compensation program provide an appropriate balance of incentives for executives and avoid inappropriate risks. In
this regard, our executive compensation program includes, among other things, the following design features:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Balanced mix of fixed versus variable compensation and cash-based versus equity-based compensation;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Variable compensation based on a variety of performance goals, including Company, business unit
and individual performance goals;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Compensation Committee discretion to lower annual incentive award amounts;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Balanced mix of short-term and long-term incentives;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Stock ownership requirements; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Clawback policy.</TD></TR></TABLE>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compensation Peer Group and Benchmarking</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee refers to executive
compensation studies prepared by its independent consultants when it reviews and approves executive compensation. The studies reflect
compensation levels and practices for executives holding comparable positions at peer group companies, which help the Compensation
Committee set compensation at competitive levels. The Compensation Committee&rsquo;s primary selection criteria are industry (commercially
focused banks), asset size, and geography. The Compensation Committee compares each executive officer&rsquo;s base salary, target
total cash and target long-term incentive compensation value to amounts paid for similar positions at peer group companies.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee believes that
the market median is a useful reference point in helping to achieve the executive compensation program objectives. However, the
Compensation Committee also considers other factors when setting compensation; and target total direct compensation for each executive
may vary from the market median based on the factors the Compensation Committee considers relevant each year, including particular
job responsibilities and scope, adjustments for individual skills and expertise, and internal pay equity.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The compensation peer group developed
for the Company by ChaseCompGroup in 2015 is listed below.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 67.6pt">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Company</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">City</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">State</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015 Assets</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left">NewBridge Bancorp</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%">NBBC</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%">Greensboro</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%">NC</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,808,894</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">CNB Financial Corporation</TD><TD>&nbsp;</TD>
    <TD>CCNE</TD><TD>&nbsp;</TD>
    <TD>Clearfield</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,285,136</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Summit Financial Group, Inc.</TD><TD>&nbsp;</TD>
    <TD>SMMF</TD><TD>&nbsp;</TD>
    <TD>Moorefield</TD><TD>&nbsp;</TD>
    <TD>WV</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,492,429</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">American National Bankshares Inc.</TD><TD>&nbsp;</TD>
    <TD>AMNB</TD><TD>&nbsp;</TD>
    <TD>Danville</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,546,889</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">C&amp;F Financial Corporation</TD><TD>&nbsp;</TD>
    <TD>CFFI</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">West Point</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,405,076</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">First United Corporation</TD><TD>&nbsp;</TD>
    <TD>FUNC</TD><TD>&nbsp;</TD>
    <TD>Oakland</TD><TD>&nbsp;</TD>
    <TD>MD</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,320,315</TD><TD STYLE="text-align: left">*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Citizens &amp; Northern Corporation</TD><TD>&nbsp;</TD>
    <TD>CZNC</TD><TD>&nbsp;</TD>
    <TD>Wellsboro</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,223,417</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Middleburg Financial Corporation</TD><TD>&nbsp;</TD>
    <TD>MBRG</TD><TD>&nbsp;</TD>
    <TD>Middleburg</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,294,863</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Orrstown Financial Services, Inc.</TD><TD>&nbsp;</TD>
    <TD>ORRF</TD><TD>&nbsp;</TD>
    <TD>Shippensburg</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,292,816</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Eastern Virginia Bankshares, Inc.</TD><TD>&nbsp;</TD>
    <TD>EVBS</TD><TD>&nbsp;</TD>
    <TD>Tappahannock</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,270,384</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Community Bankers Trust Corporation</TD><TD>&nbsp;</TD>
    <TD>ESXB</TD><TD>&nbsp;</TD>
    <TD>Richmond</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,179,346</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">National Bankshares, Inc.</TD><TD>&nbsp;</TD>
    <TD>NKSH</TD><TD>&nbsp;</TD>
    <TD>Blacksburg</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,199,739</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">ACNB Corporation</TD><TD>&nbsp;</TD>
    <TD>ACNB</TD><TD>&nbsp;</TD>
    <TD>Gettysburg</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,132,543</TD><TD STYLE="text-align: left">*</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">AmeriServ Financial, Inc.</TD><TD>&nbsp;</TD>
    <TD>ASRV</TD><TD>&nbsp;</TD>
    <TD>Johnstown</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,148,922</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Community Financial Corporation</TD><TD>&nbsp;</TD>
    <TD>TCFC</TD><TD>&nbsp;</TD>
    <TD>Waldorf</TD><TD>&nbsp;</TD>
    <TD>MD</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,143,332</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Monarch Financial Holdings, Inc.</TD><TD>&nbsp;</TD>
    <TD>MNRK</TD><TD>&nbsp;</TD>
    <TD>Chesapeake</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,161,454</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Peoples Bancorp of North Carolina, Inc.</TD><TD>&nbsp;</TD>
    <TD>PEBK</TD><TD>&nbsp;</TD>
    <TD>Newton</TD><TD>&nbsp;</TD>
    <TD>NC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,038,481</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Franklin Financial Services Corporation</TD><TD>&nbsp;</TD>
    <TD>FRAF</TD><TD>&nbsp;</TD>
    <TD>Chambersburg</TD><TD>&nbsp;</TD>
    <TD>PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,035,295</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Old Point Financial Corporation</TD><TD>&nbsp;</TD>
    <TD>OPOF</TD><TD>&nbsp;</TD>
    <TD>Hampton</TD><TD>&nbsp;</TD>
    <TD>VA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">896,787</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Severn Bancorp, Inc.</TD><TD>&nbsp;</TD>
    <TD>SVBI</TD><TD>&nbsp;</TD>
    <TD>Annapolis</TD><TD>&nbsp;</TD>
    <TD>MD</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">762,079</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 67.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 67.7pt">*Company still reporting financials as of
September 30, 2015 as of the time of this filing.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_023"></A>Compensation Elements at Shore Bancshares</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_043"></A>Base Salary </B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A competitive salary for senior management
is essential. Furthermore, flexibility to adapt to the particular skills of an individual or the Company&rsquo;s specific needs
is required. We establish base salaries and assess market competitiveness by comparing our executives&rsquo; qualifications, experience
and responsibilities as well as their individual performance and value, with similar positions among our peers. Additionally, we
consider special circumstances related to staffing needs and market situations and levels of compensation provided from other compensation
components.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee generally reviews
executive compensation in the fourth quarter. At that time, we review market studies on executive compensation and solicit input
from our President and CEO, Mr. Beatty, on the performance of each officer that directly reports to him and his recommended base
salary increases or decreases. Recommendations regarding adjustments to Mr. Beatty&rsquo;s salary are discussed and approved in
executive session of the Compensation Committee. Fiscal 2015 base salary increases were approved for all executives in 2015 based
on our market analysis and individual performance in fiscal 2014. Management declined salary increases in 2015 in favor of performance-based
compensation. Changes to the salaries of our Named Executive Officers were as follows:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Executive</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2014<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015&nbsp;%<BR> Increase</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016&nbsp;%<BR> Increase</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 24%; text-align: left">Lloyd L. Beatty, Jr.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; text-align: left">President &amp; CEO</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">355,350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">355,350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">369,564</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">4</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">George S. Rapp</TD><TD>&nbsp;</TD>
    <TD>CFO</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Patrick M. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">CEO Talbot Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">255,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">255,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">262,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Edward C. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">CEO CNB</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">180,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Richard C. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">CEO Avon Dixon</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_044"></A>Annual Incentive Program</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s incentive program,
the Management Incentive Plan (the &ldquo;MIP&rdquo;), was developed to provide additional compensation to key management personnel
when corporate and individual performance meet or exceed specific predetermined goals. Incentive award targets are assigned to
each executive based on the executive&rsquo;s position and responsibilities. We also consider the identified comparative compensation
targets and pay mix outlined in our executive compensation philosophy.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In fiscal 2015, each Named Executive Officer
participated in the MIP and was assigned Company and individual goals at the beginning of the year. Target award opportunities
under the MIP for 2015 were 30% of base salary for Mr. Beatty and 25% of base salary for the other Named Executive Officers. Once
earned, half of the incentive is paid in cash and the other half in equity, unless waived by the Compensation Committee. Half of
the equity award vests immediately and the other half vests at the one-year anniversary.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For fiscal 2015, annual incentive bonuses
were based on the achievement of the objective performance goals of return on average equity (&ldquo;ROAE&rdquo;) and non-performing
assets (&ldquo;NPA&rdquo;) which together accounted for a potential of 70% of Mr. Beatty&rsquo;s incentive award.&nbsp; The remaining
30% of his incentive opportunity was tied to personal goals which included factors for business development, reducing the Company&rsquo;s
risk profile, and improving regulatory ratings.&nbsp; The other Named Executive Officers had 80% of their incentives tied to Company
and subsidiary goals and 20% tied to personal goals relevant to their business units and roles.&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">While we performed just short of our
target ROAE and NPA goals for 2015, two of our Named Executive Officers earned awards that were slightly above their
target awards when results of their business unit and/or individual goals were factored into our payout
calculations.&nbsp;&nbsp; Based on our Company and individual performance, the Compensation Committee approved the following
incentive payouts for 2015.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Executive</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015&nbsp;MIP<BR> Award</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015&nbsp;MIP<BR> Award</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Portion<BR> Paid&nbsp;in<BR> Equity</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD NOWRAP STYLE="width: 20%; text-align: justify">Lloyd L. Beatty, Jr.</TD><TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 19%; text-align: justify">President &amp; CEO</TD><TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: left">$</TD><TD NOWRAP STYLE="width: 17%; text-align: right">127,044</TD><TD NOWRAP STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 17%; text-align: right">36</TD><TD NOWRAP STYLE="width: 1%; text-align: left">%(2)</TD><TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 17%; text-align: right">50</TD><TD NOWRAP STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">George S. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">CFO</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,180</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Patrick M. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">CEO Talbot Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,996</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Edward C. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">CEO CNB</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,227</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Richard C. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">CEO Avon Dixon</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">(1)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.45pt; text-align: justify; text-indent: -0.35in">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.45pt; text-align: justify; text-indent: -0.35in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">The requirement to take half of the incentive in equity was waived by the Compensation Committee.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Executive achieved individual incentives above target goals but less than maximum goals.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_045"></A>Long-Term Incentives</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 1, 2015, our Board approved
a performance equity incentive award program, which is based on a three-year performance cycle.&nbsp; The objective of
this program is to build further ownership for our executive team and link a portion of their compensation to
longer-term goals.&nbsp; Pursuant to a performance share/restricted stock unit (&ldquo;RSU&rdquo;) agreement, participating
officers may earn incentive awards if certain pre-determined targets are achieved at the end of the three-year performance
period, which, for the first performance cycle ends, on December 31, 2017. These pre-determined targets must be achieved at
threshold levels for the awards to vest. If the Company&rsquo;s level of attainment of specified performance goals falls
between threshold and target levels or between target and maximum levels, the Compensation Committee will use a proportional
approach to determine the number of shares earned by the individual. The following table presents the performance share plan
based on the attainment of specified personal performance goals.&nbsp; Performance metrics for the 2015-2017 performance
period include EPS growth, loan growth and deposit growth.&nbsp; Shares that will potentially vest are based on a percentage
of the executive officer&rsquo;s base salary in effect at time of the grant.&nbsp;</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Executive</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Threshold<BR> Award&nbsp;%<BR> of&nbsp;Base<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Target<BR> Award&nbsp;%<BR> of&nbsp;Base<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maximum<BR> Award&nbsp;%<BR> of&nbsp;Base<BR> Salary</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 30%; text-align: left; padding-left: 5.4pt">Lloyd L. Beatty, Jr.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 30%; text-align: left; padding-left: 5.4pt">President &amp; CEO</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">10.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">20.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">40.0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">George S. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="padding-left: 5.4pt">CFO</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.5</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Patrick M. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 5.4pt">CEO Talbot Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.5</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Edward C. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 5.4pt">CEO CNB</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.5</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Richard C. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 5.4pt">CEO Avon Dixon</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, a portion of our Long-Term
Incentive Awards are tied to our MIP described above.&nbsp; Executives receive half of their annual incentive awards in equity
and may choose a combination of stock options and restricted stock.&nbsp; Half of the equity award vests immediately and the other
half vests at the one-year anniversary.&nbsp; We plan to continue this practice in 2016.&nbsp; Please see our Grants of Plan Based
Awards table for additional detail.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>401(k) Profit Sharing Plan</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All employee contributions to the 401(k)
Profit Sharing Plan are immediately vested. Discretionary and matching contributions by the Company vest incrementally over a six-year
period. Discretionary, pre-tax and matching contributions may be withdrawn while a participant is employed by the Company if the
participant has reached age 59&frac12;, in circumstances of financial hardship or in certain other circumstances pursuant to plan
restrictions.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We maintain a modest deferred compensation
account for Mr. Beatty. The initial Company contribution was $25,000, which has grown in value to $66,993. No other deferred compensation
plans or supplemental executive retirement plans are in place for our Named Executive Officers. Please see the Nonqualified Deferred
Compensation Plan in this section.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_047"></A>Perquisites</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee believes that
certain perquisites and other personal benefits can be effective elements of a compensation package because they facilitate and
encourage better executive performance and business generation for the Company. Perquisites provided by the Company may include
vehicle allowances and country club dues.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_024"></A>Summary Compensation Table</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth for the
last three fiscal years the total remuneration for services in all capacities awarded to, earned by, or paid to our Named Executive
Officers (the Company&rsquo;s CEO, the Company&rsquo;s Chief Financial Officer (&ldquo;CFO&rdquo;), and the three most highly compensated
executive officers and other significant executive officers of the Company and its subsidiaries other than the CEO and CFO who
were serving as executive officers as of December 31, 2015 and whose total compensation (excluding changes in pension value and
non-qualified deferred compensation earnings) exceeded $100,000 during 2015).</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Name&nbsp;and&nbsp;principal<BR>
    position</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Year</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Salary&nbsp;<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Bonus<BR>
    ($)(1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Stock<BR>
    awards<BR> ($)(2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Option<BR>
    awards<BR> ($)(2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Non-equity<BR>
    incentive&nbsp;plan<BR> compensation<BR> ($)(3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Change&nbsp;in<BR>
    pension<BR> value&nbsp;and<BR> non-qualified<BR> deferred<BR> compen-<BR>
    sation<BR> earnings<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">All&nbsp;other<BR>
    compen-<BR> sation<BR> ($)&nbsp;(4)&ndash;<BR> (8)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Total<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 19%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Lloyd L.
    Beatty, Jr. </FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">355,350</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">63,517</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">63,522</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">563</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">23,703</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 6%; font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">506,655</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;President and CEO</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">355,350</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">43,306</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">43,310</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">86,616</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">7,676</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">20,741</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">556,999</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">345,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">89,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">21,345</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">455,595</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">George
                                 S. Rapp,</FONT></P>
                                 <P STYLE="margin-top: 0; margin-bottom: 0"></P></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">250,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">29,088</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">29,090</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">9,800</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">317,978</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;Vice President, CFO, and PAO</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">18,754</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">18,751</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">37,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">8,460</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">333,465</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">225,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">26,763</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">276,763</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Patrick M. Bilbrough,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">255,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">25,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">33,500</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">33,498</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">16,420</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">363,418</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;President/CEO of Talbot Bank</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">255,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">30,678</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">30,677</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">16,508</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">332,863</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">246,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">40,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">15,699</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">301,699</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Edward C. Allen,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">175,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">12,500</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">32,104</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">19,614</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">8,702</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">247,920</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;President/CEO of CNB</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">175,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">30,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">5,279</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">210,279</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Richard C. Trippe,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">185,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">25,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">8,400</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">218,400</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;President/CEO of Avon Dixon</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">185,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">24,975</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">24,975</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">8,200</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">243,150</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>



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



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -25.25pt">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Amounts reflect bonuses paid for the removal of the consent order on Talbot Bank.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Amounts reflect the aggregate grant date fair value of stock options and restricted stock awards granted in February 2016.
See below under &ldquo;Grants of Plan-Based Awards&rdquo; regarding assumptions underlying valuation of equity awards.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Amounts reflect discretionary cash bonuses awarded to the named executive officers. These bonuses were earned in fiscal year
2015 and paid in February 2016. Incentive awards paid under the MIP are reported in the column entitled &ldquo;Non-Equity Incentive
Plan Compensation&rdquo;.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>For Mr. Beatty, the 2015 amount includes a $9,800 matching contribution under the 401(k) plan, $7,659 for use of an automobile
and $6,244 for club dues. The 2014 amount includes a $9,800 matching contribution under the 401(k) plan, $4,875 for use of an automobile
and $6,066 for club dues. The 2013 amount includes a $9,800 matching contribution under the 401(k) plan $5,687 for use of an automobile
and $5,858 for club dues.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>For Mr. Rapp, the 2015 amount includes a $9,800 matching contribution under the 401(k) plan. The 2014 amount includes a $8,460
matching contribution under the 401(k) plan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(6)</TD><TD>For Mr. Bilbrough, the 2015 amount includes a $9,800 matching contribution under the 401(k) plan, $1,001 opt out payment in
lieu of health insurance coverage provided by the Company and $5,619 for use of an automobile. The 2014 amount includes a $9,800
matching contribution under the 401(k) plan, $1,001 opt out payment in lieu of health insurance coverage provided by the Company
and $5,707 for use of an automobile. The 2013 amount includes a $8,893 matching contribution under the 401(k) plan, $1,039 opt
out payment in lieu of health insurance coverage provided by the Company and $5,767 for use of an automobile.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(7)</TD><TD>For Mr. Allen, the 2015 amount includes a $8,702 matching contribution under the 401(k) plan. The 2014 amount includes a $5,279
matching contribution under the 401(k) plan. Mr. Allen was not a named executive officer in 2013.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(8)</TD><TD>For Mr. Trippe, the 2015 amount includes an $8,400 matching contribution under the 401(k) plan. The 2014 amount includes an
$8,200 matching contribution under the 401(k) plan. Mr. Trippe was not a named executive officer in 2013.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><B><A NAME="a_048"></A>2006 Equity Plan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The 2006 Equity Plan reserves
631,972 shares of Common Stock, subject to adjustment for stock splits and other similar reclassification events, for issuance
pursuant to awards. Through December 31, 2015, both nonqualified stock options and restricted stock have been granted under the
2006 Equity Plan. During 2015, the Compensation Committee granted a total of 8,819 restricted shares of Common Stock and 12,799
in nonqualified stock options to the Named Executive Officers under the 2006 Equity Plan. Under the terms of outstanding awards,
all unvested shares will lapse and be forfeited upon the termination of the participant&rsquo;s employment with the Company. The
2006 Equity Plan will terminate on April 26, 2016 and no further awards may be granted under the 2006 Equity Plan after that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Grant of Plan Based Awards Table</B></P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">Estimated&nbsp;Future&nbsp;Payouts&nbsp;Under<BR>
    Non-Equity&nbsp;Incentive&nbsp;Plan&nbsp;Awards</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">Estimated&nbsp;Future&nbsp;Payouts&nbsp;Under&nbsp;Equity<BR>
    Incentive&nbsp;Plan&nbsp;Awards</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">All&nbsp;other<BR>
    Option<BR>
    Awards:<BR>
    Number&nbsp;of<BR>
    Securities<BR>
    Underlying<BR>
    Options (#)</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">Exercise&nbsp;or<BR>
    Base<BR>
    Price&nbsp;of<BR>
    Option<BR>
    Awards<BR>
    ($/sh)</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">Grant<BR>
    Date<BR>
    Fair<BR>
    Value<BR>
    of<BR>
    Stock<BR>
    and<BR>
    Option<BR>
    Awards&nbsp;($) (3)</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Name</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Type of Award</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Grant Date</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Threshold<BR>
    ($)</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Target<BR>
    ($)</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Maximum<BR>
    ($)</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Threshold<BR>
    ($)/Shares</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Target<BR>
    ($)/Shares</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Maximum<BR>
    ($)/Shares</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 6%; padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Lloyd L. </FONT>Beatty,
    Jr.</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 7%; padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Annual cash incentive</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 7%; padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/24/2016</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 2%; text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD>
    <TD STYLE="width: 2%"><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">26,651</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">53,303</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">106,605</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Restricted Stock</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/19/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(2</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,651</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">53,303</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">106,605</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,712</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">11.12</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">63,517</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">RSUs</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">7/1/2015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(4</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,744</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,488</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">14,977</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,488</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.43</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">70,612</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">George S. Rapp</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Annual cash incentive</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/24/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,625</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,250</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">62,500</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Stock Options</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/19/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(2</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,625</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,250</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">62,500</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,949</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">11.12</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">66,153</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">RSUs</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">7/1/2015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(4</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,975</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,951</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,903</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,951</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.43</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,258</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Patrick M. Bilbrough</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Annual cash incentive</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/24/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,938</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,875</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">63,750</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Stock Options</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/19/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(2</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,938</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31,875</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">63,750</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6,850</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">11.12</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">76,172</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">RSUs</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">7/1/2015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(4</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,030</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,061</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,030</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.43</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">38,003</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Edward C. Allen</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Annual cash incentive</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/24/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,938</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">21,875</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,750</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Restricted Stock</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/19/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(2</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,938</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">21,875</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,750</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,763</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">11.12</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19,605</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">RSUs</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">7/1/2015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(4</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,383</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,766</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,532</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,766</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.43</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26,083</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Richard C. Trippe</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">Annual cash incentive</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">2/24/2016</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT>(5)</TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23,125</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">46,250</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">92,500</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-left: 5.4pt; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">RSUs</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 5.4pt"><FONT STYLE="font-size: 8pt">7/1/2015</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(4</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">)</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">974</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,949</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.898</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.949</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.43</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,379</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>


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

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 0; margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>The equity awards noted in the table above were approved by the Compensation Committee pursuant to the MIP established at the
beginning of fiscal year 2015.&nbsp; The performance goals outlined in the MIP were evaluated by the Compensation Committee at
the end of fiscal year 2015 and the cash awards were granted on February 24, 2016.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Pursuant to the MIP, each participant is required to
take half of their annual incentive in the form of equity.&nbsp; The participant can choose between Restricted Stock or Stock
Options.&nbsp; The amounts reflected on this line reflect the participants election of either Restricted Stock or Stock Options,
which awards were granted on February 19, 2016.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>The amounts for stock options represent the grant date fair value as determined using a binominal option-pricing model and
are not indicative of whether the Named Executive Officer will realize the fair value of any financial benefit from the award.&nbsp;
For additional information on the valuation assumptions, see below under &ldquo;Assumptions underlying valuation of equity awards&rdquo;.&nbsp;
The amounts for performance restricted stock and options represent the grant date fair value as determined using the Black-Scholes
valuation model.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>The amounts indicate the number of RSUs granted in 2015 that could convert into shares of Common Stock at the end of the
                                                            three-year performance period (2015-2017) based on Company goals identical for all participants.&nbsp; Each operating goal
                                                            varies in weighting and is subject to threshold, target, and maximum goals linked to the participant&rsquo;s base
                                                            salary.&nbsp; These performance based RSUs will cliff vest on December 31, 2017 according to the level of achievement of
                                                            the specified goals.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>The Compensation Committee waived the requirement for Mr. Trippe to receive half of his annual incentive in the form of equity.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Assumptions underlying valuation of
equity awards</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The weighted average fair value of stock
options granted on February 19, 2016 was $4.89. The Company estimates the fair value of options using the Black-Scholes valuation
model with weighted average assumptions for dividend yield, expected volatility, risk-free interest rate and expected lives (in
years). The expected dividend yield is calculated by dividing the total expected annual dividend payout by the average stock price.
The expected volatility is based on historical volatility of the underlying securities. The risk-free interest rate is based on
the Federal Reserve Bank&rsquo;s constant maturities daily interest rate in effect at grant date. The expected contract life of
the options represents the period of time that the Company expects the awards to be outstanding based on historical experience
with similar awards. The following weighted average assumptions were used as inputs to the Black-Scholes valuation model for options
granted in 2016.</P>

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


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 77%; text-align: justify">Avg. Stock Price (2/18/16)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">11.12</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Exercise Price</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.12</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.60</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.75</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Expected contract life (in years)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table provides information
with respect to outstanding equity awards held by the Named Executive Officers at December 31, 2015.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="25" NOWRAP STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Outstanding&nbsp;Equity&nbsp;Awards&nbsp;At&nbsp;Fiscal&nbsp;Year-End</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="font-weight: bold; text-align: justify">Option&nbsp;Awards</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: justify">Stock&nbsp;Awards</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of<BR> securities<BR> underlying<BR> unexercised<BR> options(#)<BR> exercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of<BR> securities<BR> underlying<BR> unexercised<BR> options(#)<BR> unexercisable</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option<BR> exercise<BR> price($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option<BR> expiration&nbsp;date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of<BR> shares&nbsp;or<BR> units&nbsp;that<BR> have&nbsp;not<BR> vested&nbsp;(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Market<BR> value&nbsp;of<BR> shares&nbsp;or<BR> units&nbsp;of<BR> stock&nbsp;that<BR> have&nbsp;not<BR> vested($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 27%; text-align: justify">Mr. Beatty</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">22,590</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">6.64</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">March 15, 2022</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">3,334</TD><TD STYLE="width: 1%; text-align: left">(1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">36,074</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,295</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">March 15, 2025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,360</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,535</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,725</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,725</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">March 15, 2025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,965</TD><TD STYLE="text-align: left">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,261</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,021</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,459</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,459</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">March 15, 2025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD STYLE="text-align: justify">Mr. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,630</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,630</TD><TD STYLE="text-align: left">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">March 15, 2025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



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

<!-- Field: Rule-Page --><DIV STYLE="text-align: left; margin-left: 9.35pt; margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -25.25pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -25.25pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 9.35pt"></TD><TD STYLE="width: 18pt">(1)</TD><TD STYLE="text-align: justify">This award vested on January 1, 2016.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 9.35pt"></TD><TD STYLE="width: 18pt">(2)</TD><TD STYLE="text-align: justify">These awards vested or became exercisable, as applicable, on January 7, 2016.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 9.35pt"></TD><TD STYLE="width: 18pt">(3)</TD><TD STYLE="text-align: justify">Unless forfeited, 100% will vest on March 21, 2016.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.35pt; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the number
of restricted shares of Common Stock acquired by the Named Executive Officers pursuant to stock awards that vested during 2015
and the value realized upon vesting of stock awards.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="17" NOWRAP STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Option&nbsp;Exercises&nbsp;and&nbsp;Stock&nbsp;Vested</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: justify">Option&nbsp;Awards</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: justify">Stock&nbsp;Awards</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Number&nbsp;of<BR> Shares&nbsp;Acquired<BR> on&nbsp;Exercise&nbsp;(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Value&nbsp;Realized&nbsp;on<BR> Exercise&nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Number&nbsp;of<BR> Shares&nbsp;Acquired<BR> on&nbsp;Vesting&nbsp;(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Value&nbsp;Realized
    on&nbsp;<BR>
Vesting&nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: justify">Mr. Beatty</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">3,333</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">30,364</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,653</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,965</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,940</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,022</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,377</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD STYLE="text-align: justify">Mr. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,344</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,499</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><A NAME="a_046"></A>Deferred Compensation</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table provides information
regarding 2015 contributions, earnings, and other financial information in respect of the Company&rsquo;s Deferred Compensation
Plan:</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="25" STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Nonqualified Deferred Compensation</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Plan (1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Executive <BR> contributions<BR> in last FY<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Registrant <BR> contributions<BR> in last FY<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Aggregate<BR> earnings(loss)<BR> in last FY <BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Aggregate<BR> withdrawals/<BR> distributions<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Aggregate <BR> balance at <BR> last FYE<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 34%; text-align: justify">Mr. Beatty</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">CDCP</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">563</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">66,993</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD STYLE="text-align: justify">Mr. Rapp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Bilbrough</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: transparent">
    <TD STYLE="text-align: justify">Mr. Allen</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mr. Trippe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



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

<!-- Field: Rule-Page --><DIV STYLE="text-align: left; margin-left: 0.18in; margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.18in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">&ldquo;CDCP&rdquo; stands for the Company Deferred Compensation
Plan.</TD>
</TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Company&rsquo;s Deferred Compensation
Plan, amounts deferred at the election of the employee are credited to an account maintained on behalf of the participant and are
deemed to be invested in certain investment options established from time to time by the Compensation Committee. Mandatory, matching
and discretionary contributions will be credited to an Employer Funded Account (as defined in the plan) established by the Company
and will be deemed to be invested in the manner specified in the participant&rsquo;s election form for that Plan Year in respect
of his or her voluntary deferrals. An employee&rsquo;s account is credited with the gain or loss generated on the investments in
which the funds in those accounts are deemed to be invested. Mandatory contributions will be reduced on a pro-rata basis in the
event a participant has a Separation from Service (generally defined as a termination of employment other than because of death,
Disability (as defined in the plan) or the taking of leave of absence).</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A participant is fully vested at all times
in employee deferrals (and earnings thereon). Starting in the second year of participation, a participant vests in his or her Employer
Funded Account at the rate of 25% each year. If, however, (i) the participant reaches age 70 while employed, (ii) the participant&rsquo;s
service with the Company terminates because of death or Disability, or because of retirement at or after age 70, or (iii) the Company
experiences a Change in Control (as defined in the plan), then in each such case the participant&rsquo;s interest in his or her
Employer Funded Account will be automatically 100% vested regardless of years in the plan. If the participant separates from service
for any other reason, then any non-vested portion of his or her Employer Funded Account will be forfeited.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s Deferred Compensation
Plan contemplates automatic distributions upon the occurrence of certain events and elective distributions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If a participant dies or experiences a
Disability while employed by the Company or if the Company experiences a Change in Control (as defined in the plan), then the vested
portions of a participant&rsquo;s accounts will be distributed in a lump sum payment to the participant or, in the case of death,
to his or her designated beneficiaries. If a participant experiences a Separation from Service, then the vested portions of a participant&rsquo;s
accounts will be distributed in a lump sum or in installments, as specified in the most recent election form. Certain restrictions
on the commencement of automatic distributions apply to Key Employees (as defined in the plan).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A participant may elect in his or her annual
election form to receive elective distributions, or &ldquo;In-Service Distributions,&rdquo; of his or her employee deferrals (and
earnings thereon) for a given Plan Year as soon as three years after the end of that Plan Year. At the time of the election, the
participant must also elect whether to receive the elective distribution in a lump sum or in installments over a period of up to
10 years. If a participant fails to make a payment method election, then the distribution will be made in one lump sum. A participant
may change his or her election to postpone a distribution or change the form of payment, but such change must be made at least
12 months prior to the original distribution date, cannot be effective until at least 12 months following the subsequent election,
and must postpone the commencement of the payment for a period of at least five years from the original distribution date.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s Deferred Compensation
Plan also permits certain limited distributions upon the occurrence of an Unforeseen Emergency (as defined in the plan) and a lump
sum distribution, at the administrator&rsquo;s sole discretion, in the event the participant&rsquo;s accounts have a value of less
than $10,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For information about amounts that could
be payable to the Named Executive Officers under these deferred compensation plans upon a termination of employment, see the section
below entitled &ldquo;Benefits Upon Termination of Employment.&rdquo;</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_049"></A>Employment Agreements</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 21, 2015, the Company and
Mr. Beatty entered into an Amended and Restated Employment Agreement (the &ldquo;Employment Agreement&rdquo;) which provides that
he will serve as our CEO and President, and entitles him to receive an annual base salary of $355,350 subject to periodic review
and adjustment. In addition, Mr. Beatty is entitled to: (i) participate in our bonus plans; (ii) receive employee benefits of the
type offered by the Company and its affiliates to similarly-situated officers, including vacation, sick leave and disability leave;
(iii) receive fringe benefits of the type customarily made available by the Company to its officers; and (iv) be reimbursed for
employment-related expenses.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Employment Agreement has a twelve-month
term, which will automatically renew for successive twelve-month terms unless a party notifies the other party at least 60 days
prior to the end of the then-current term of its or his decision not to renew the Employment Agreement. At least 120 days prior
to the commencement of a new term, the Board or a committee thereof will conduct a comprehensive performance evaluation and review
of Mr. Beatty to determine whether to give notice of non-renewal. The term of Mr. Beatty&rsquo;s employment under his Employment
Agreement may be terminated at any time and for any reason by either the Company or Mr. Beatty (upon 30 days&rsquo; prior written
notice), and it will automatically terminate upon Mr. Beatty&rsquo;s death.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Generally, the Company&rsquo;s obligations
to Mr. Beatty under his Employment Agreement will be suspended if any regulatory agency with jurisdiction over the Company temporarily
prohibits the officer&rsquo;s continued employment. If such regulator&rsquo;s charges are later dismissed, then the Company must
reinstate the officer and pay him all compensation that was withheld during the suspension.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the termination of his employment,
Mr. Beatty is entitled to receive all unpaid base salary that has accrued through the date of termination, all bonus awards (prorated
through the last day of the month in which termination occurs) that he would have received had he remained employed when bonuses
are next declared or paid, and reimbursement of all unreimbursed expenses, all of which must be paid no later than the last day
of the calendar quarter of the quarter in which the termination occurs. In addition, all unexercised or unvested equity awards,
or portions thereof, held by the officer as of the date of termination shall vest or terminate and be exercisable in accordance
with their terms.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Mr. Beatty&rsquo;s employment is terminated
without &ldquo;Cause&rdquo; prior to the expiration of the term of his Employment Agreement, then, except in the case of termination
following a &ldquo;Change in Control&rdquo; of the Company, he will additionally be entitled to receive severance (&ldquo;Severance&rdquo;)
in the form of continued base salary (at the then-current level) for a period of 24 months following the date of termination (the
&ldquo;Severance Period&rdquo;). The Employment Agreement provides that the first Severance payment will be made on the first regular
payroll date that occurs on or after the 60th day following the termination of employment, provided that Mr. Beatty has executed
and delivered a release of claims and the statutory period during which he may revoke that release has expired on or before that
60th day.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In lieu of Severance, the Employment Agreement
provides for the payment of a Change in Control benefit (the &ldquo;CiC Benefit&rdquo;) should the Company terminate Mr. Beatty&rsquo;s
employment without Cause within 12 months of a Change in Control of the Company. In this case, Mr. Beatty will be entitled to receive
an amount equal to the difference between (i) the product of 2.99 times the officer&rsquo;s &ldquo;base amount&rdquo; as defined
in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the &ldquo;Code&rdquo;) and (ii) the sum of any other parachute
payments as defined under Section 280G(b)(2) of the Code that the officer receives on account of the Change in Control. The CiC
Benefit will be paid in one lump sum on the 60th day following termination of employment, provided that Mr. Beatty has executed
and delivered a release of claims and the statutory period during which he may revoke that release has expired on or before that
60th day.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Notwithstanding the payment terms discussed
above, any payment obligation that arises on account of a termination of employment while Mr. Beatty is a &ldquo;specified employee&rdquo;
as defined under Section 409A of the Code will be subject to a post-termination waiting period to the extent that the payment constitutes
&ldquo;deferred compensation&rdquo; under applicable Treasury regulations. Mr. Beatty&rsquo;s Employment Agreement provides that
such amounts will be paid, with interest, in a lump sum, within 15 days after the six-month period that follows his termination
date. If Mr. Beatty dies during the waiting period, then payment will be made in a lump sum within 15 days after the appointment
of a personal representative or executor of his estate.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Mr. Beatty is indebted to the Company
at the time his employment is terminated, then, subject to certain restrictions, the Employment Agreement allows the Company to
apply any post-termination amounts due to Mr. Beatty toward repayment of such debt.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Employment Agreement defines the term
&ldquo;Cause&rdquo; as: (i) the officer&rsquo;s &ldquo;Disability&rdquo; (as defined in the Employment Agreement); (ii) an action
or failure to act by the officer constituting fraud, misappropriation or damage to the property or business of the Company; (iii)
conduct by officer that amounts to fraud, personal dishonesty or breach of fiduciary duty; (iv) officer&rsquo;s conviction (from
which no appeal may be, or is, timely taken) of a felony or willful violation of any law, rule or regulation (other than traffic
violations or similar offenses); (v) the officer&rsquo;s breach of any of his obligations hereunder; (vi) the unauthorized use,
misappropriation or disclosure by the officer of any confidential information of the Company or of any confidential information
of any other party to whom the officer owes an obligation of nondisclosure as a result of his relationship with the Company; (vii)
the willful violation of any final cease and desist or consent order; (viii) a knowing violation by officer of federal and state
banking laws or regulations which is likely to have a material adverse effect on the Company, as determined by the Board; (ix)
the determination by the Board, in the exercise of its reasonable judgment and in good faith, that officer&rsquo;s job performance
is substantially unsatisfactory and that he has failed to cure such performance within a reasonable period (but in no event more
than thirty (30) days) after written notice specifying in reasonable detail the nature of the unsatisfactory performance; (x) officer&rsquo;s
material breach of any of the Company&rsquo;s written policies; or (xi) the issuance of any order by the Maryland Commissioner
of Financial Regulation, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, or any
other supervisory agency with jurisdiction over the Company permanently prohibiting the continued service of the officer with the
Company. No act or failure to act on the part of the officer shall be considered &ldquo;willful&rdquo; unless it is done, or omitted
to be done, by the officer in bad faith or without reasonable belief that the officer&rsquo;s action or omission was in the best
interests of the Company. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by
the Board, or upon the advice of legal counsel for the Company, shall be conclusively presumed to be done, or omitted to be done,
by the officer in good faith and in the best interest of the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The term &ldquo;Change in Control&rdquo;
is defined as the occurrence of any of the following events: (i) a person, or group of persons acting together, acquires ownership
of securities of the Company that, together with such person&rsquo;s or group&rsquo;s other securities, constitutes more than 50%
of the total fair market value or total voting power of the Company&rsquo;s securities; (ii) any person, or group of persons acting
together, acquires (or has acquired during the preceding 12-month period) ownership of securities of the Company possessing 35%
or more of the total voting power of the Company&rsquo;s securities, (iii) a majority of the Company&rsquo;s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members
of the Company&rsquo;s Board prior to the date of the appointment or election; or (iv) any person, or group of persons acting together,
acquires (or has acquired during the preceding 12-month period) assets from the Company that have a total gross fair market value
equal of at least 40% of the total gross fair market value of all of the Company&rsquo;s assets.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Employment Agreement contains non-competition
and non-solicitation provisions. Specifically, during the term of Mr. Beatty&rsquo;s employment and thereafter until the longer
of (i) his Severance Period and (ii) the date that is 12 months after the date of the Employment Agreement, but in no case longer
than 24 months following the termination of employment, Mr. Beatty may not, directly or indirectly, (a) compete with the Company
or any of its affiliates in any county of any jurisdiction in which the Company or any of its affiliates maintains a branch or
other office, or in any county of any jurisdiction that is contiguous to any such county, (b) solicit any existing Business Relation
(as defined in the Employment Agreement) of the Company or any of its affiliates, wherever located, to purchase, sell or otherwise
provide competing products and services, (c) accept employment with or act as an independent contractor to any such Business Relation
if the employment or service will require the officer to render services that are similar to those provided by the Company or any
of its affiliates, (d) employ, engage, or solicit for employment or engagement any person who was an employee or independent contractor
of the Company or any of its affiliates during the 24 months preceding Mr. Beatty&rsquo;s termination of employment, (e) employ,
engage or solicit for employment any employee of the Company, whether or not such employee is a full time employee or a temporary
employee of the Company and whether or not such employment is pursuant to written agreement and whether or not such employment
is for a determined period or is at will, or (f) encourage any person to reduce such person&rsquo;s business, employment or service
with the Company or any affiliate. In addition to the foregoing, the Employment Agreement contains other customary business protection
provisions, including an agreement to maintain the confidentiality of the Company&rsquo;s business information, an agreement to
return Company property following termination, and a 12-month non-disparagement agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Except for disputes relating to the enforcement
of the non-competition, non-solicitation and other business protection provisions of the Employment Agreement, the parties have
agreed that all disputes arising under the Employment Agreements will be settled by binding arbitration.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_025"></A>Benefits Upon Termination of Employment</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table shows the estimated
present value of benefits (as of December 31, 2015) that could be payable to the Named Executive Officers under employment agreements
and deferred compensation plans upon a termination of employment. Information is provided only for those Named Executive Officers
who are eligible to receive such benefits.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Reason&nbsp;for&nbsp;Termination</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Payment&nbsp;Under<BR> Employment<BR> Agreement&nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Payment&nbsp;Under</B><BR> <B>Deferred&nbsp;Compensation</B><BR> <BR> </P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Plans&nbsp;($)</B></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 25%; text-align: left">Mr. Beatty</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 24%; text-align: left">Death or disability</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">66,993</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">Change in control</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,062,497</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,993</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.1pt; padding-left: 8.1pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: -8.1pt; padding-left: 8.1pt">Involuntary termination without cause</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">710,700</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,993</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -8.1pt; padding-left: 8.1pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: -8.1pt; padding-left: 8.1pt">Termination for any other reason before age 70</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,993</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.1pt; padding-left: 8.1pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: -8.1pt; padding-left: 8.1pt">Termination for any other reason after age 70</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,993</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_027"></A>Accounting and Tax Considerations</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the extent required by law, the Compensation
Committee has structured the compensation program to comply with Section 162(m) and Section 409A of the Code. Under Section 162(m),
a limitation was placed on tax deductions of any publicly held corporation for individual compensation to certain executives of
such corporation exceeding $1,000,000 in any taxable year, unless the compensation is performance-based. If an executive is entitled
to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A,
then the benefits are taxable in the first year they are not subject to a substantial risk of forfeiture. In such case, the executive
is subject to regular federal income tax, interest, and an additional federal income tax of 20% of the benefit includible in income.
The Company has no individuals with non-performance based compensation paid in excess of the Section 162(m) tax deduction limit.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee&rsquo;s stock
option grant policies have been impacted by the implementation of Financial Accounting Standards Board ASC Topic 718 (&ldquo;ASC
718&rdquo;). Details related to the adoption of ASC 718 and the impact to the Company&rsquo;s financial statements are discussed
in the Notes to the Consolidated Financial Statements included in the accompanying Annual Report on Form 10-K under the heading
&ldquo;Stock Based Compensation&rdquo;.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee has structured
the change in control provision of Mr. Beatty&rsquo;s employment agreements to minimize income tax penalties that could be imposed
on the Company and/or Mr. Beatty under Section 280G of the Code. Under Section 280G, an excise tax is imposed on an executive officer
who receives payments that are deemed to be contingent on a change in the ownership or effective control of the Company to the
extent they exceed 2.99 times the executive&rsquo;s &ldquo;annualized includable compensation for the base period&rdquo; (<I>i.e.</I>,
the average annual compensation that was includable in his or her gross income for the last five taxable years ending before the
date on which the change in control occurs). In addition, the Company is not entitled to treat such excess as compensation expense
for federal income tax purposes.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_028"></A>Compensation Committee Report</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee has reviewed
and discussed with management the section of this Proxy Statement entitled &ldquo;COMPENSATION DISCUSSION AND ANALYSIS&rdquo;.
Based on this review and these discussions, the Compensation Committee recommended to the Board  that the section of
this Proxy Statement entitled &ldquo;COMPENSATION DISCUSSION AND ANALYSIS&rdquo; be included in this Proxy Statement and that it
be incorporated by reference into the Company&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2015.</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%">&nbsp;</TD>
    <TD STYLE="width: 5%">By:</TD>
    <TD STYLE="width: 50%">COMPENSATION COMMITTEE</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>John H. Wilson, <I>Chair</I></TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Christopher F. Spurry</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>David W. Moore</TD>
    </TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_029"></A>Compensation Committee Interlocks and
Insider Participation</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee oversees executive
compensation matters. John H. Wilson, <I>Chair</I>, Christopher F. Spurry, and David W. Moore served on the Compensation Committee
during 2015. None of the foregoing persons was, during 2015, an officer or employee of the Company, was formerly an officer of
the Company, had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K, or had any interlocking relationship
contemplated by Item 407(e)(4)(iii) of Regulation S-K.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_030"></A>CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">It is the policy of the Company that all
permissible transactions between the Company and its executive officers, directors, holders of 5% or more of the shares of its
Common Stock and affiliates thereof, contain terms no less favorable to the Company than could have been obtained by it in arm&rsquo;s-length
negotiations with unaffiliated persons and are required to be approved by a majority of independent outside directors of the Company
not having any interest in the transaction.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Talbot Bank and CNB have had banking transactions
in the ordinary course of their businesses with their directors and officers and with the associates of such persons on substantially
the same terms, including interest rates, collateral, and repayment terms on loans, as those prevailing at the time for comparable
transactions with persons not related to the Company and its subsidiaries. Extensions of credit by Talbot Bank and CNB to these
persons have not and do not currently involve more than the normal risk of collectability or present other unfavorable features.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Review, Approval and Ratification of Related Party Transactions</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Nasdaq Rule 5630 requires the Company to
conduct an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis
and further requires all such transactions to be approved by the Company&rsquo;s Audit Committee or another &ldquo;independent
body&rdquo; of the Board. The term &ldquo;related party transaction&rdquo; is generally defined as any transaction
(or series of related transactions) in which the Company is a participant and the amount involved exceeds $120,000, and in which
any director, director nominee, or executive officer of the Company, any holder of more than 5% of the outstanding voting securities
of the Company, or any immediate family member of the foregoing persons will have a direct or indirect interest.</P>

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


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_031"></A>SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section 16(a) of the Exchange Act requires
our directors and executive officers and persons who own more than 10% of the outstanding shares of Common Stock to file reports
with the SEC disclosing their ownership of Common Stock at the time they become subject to Section 16(a) and changes in such ownership
that occur during the year. Based solely on a review of copies of such reports furnished to us, or on written representations that
no reports were required, we believe that all directors, executive officers and holders of more than 10% of the Common Stock complied
in a timely manner with the filing requirements applicable to them with respect to transactions during the year ended December
31, 2015.</P>

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


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_032"></A>PROPOSAL
2: RATIFICATION OF THE APPOINTMENT OF STEGMAN &amp; COMPANY<BR>
AS THE COMPANY&rsquo;S INDEPENDENT REGISTERED ACCOUNTING FIRM FOR<BR>
FISCAL YEAR 2016</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Shareholders will also be asked to ratify
the Audit Committee&rsquo;s appointment of Stegman &amp; Company to audit the books and accounts of the Company for the fiscal
year ended December 31, 2016. Stegman &amp; Company served as our independent registered public accounting firm in 2015. Stegman
&amp; Company has advised the Company that neither the accounting firm nor any of its members or associates has any direct financial
interest in or any connection with the Company other than as independent auditors. A representative of Stegman &amp; Company is
expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so, and will
be available to respond to appropriate questions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because your vote is advisory, it will
not be binding upon the Audit Committee, overrule any decision made by the Audit Committee, or create or imply any additional fiduciary
duty by the Audit Committee. The Audit Committee may, however, take into account the outcome of the vote when considering future
auditor appointments.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><A NAME="a_033"></A>Audit Fees and Services</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table shows the fees paid
or accrued by the Company for the audit and other services provided by Stegman &amp; Company during fiscal years 2015 and 2014:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2014</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 54%; text-align: left">Audit Fees</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 20%; font-weight: bold; text-align: right">205,148</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">191,537</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Audit-Related Fees</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">11,542</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,854</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Tax Fees</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">17,750</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,265</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">All Other Fees</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: 9.2pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">234,440</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">261,656</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Audit Fees incurred in fiscal years 2015
and 2014 include charges for the examination of our consolidated financial statements, quarterly reviews of financial statements,
and the attestation of management&rsquo;s report on internal control over financial reporting. Audit-Related Fees incurred in fiscal
year 2015 and 2014 include charges mainly related to the audit of the 401(k) and profit sharing plan and comfort procedures related
to the registration statement. Tax Fees incurred in fiscal years 2015 and 2014 include charges primarily related to tax return
preparation. The Audit Committee has reviewed summaries of the services provided and the related fees and has determined that the
provision of non-audit services is compatible with maintaining the independence of Stegman &amp; Company.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><A NAME="a_034"></A>Audit Committee Pre-Approval Policies and Procedures</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Audit Committee&rsquo;s policy is to
pre-approve all audit and permitted non-audit services, except that <I>de minimis</I> non-audit services, as defined in Section
10A(i)(1) of the Exchange Act, may be approved prior to the completion of the independent auditor&rsquo;s audit. All of the 2015
and 2014 services described above were pre-approved by the Audit Committee.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_035"></A>PROPOSAL
3: ADVISORY VOTE ON EXECUTIVE COMPENSATION</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to Section 14A of the Exchange
Act and the rules promulgated thereunder, our shareholders are entitled to cast an advisory vote to approve the Named Executive
Officer&rsquo;s compensation at least once every three years. This proposal, commonly known as a &ldquo;Say-on-Pay&rdquo; vote,
gives our shareholders the opportunity to express their views on the Named Executive Officer&rsquo;s compensation.&nbsp; In a vote
held at the 2012 annual meeting of shareholders, our shareholders voted in favor of holding Say-on-Pay votes annually.&nbsp;&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our goal for the executive compensation
program is to attract, motivate and retain a talented team of executives who will provide leadership for the Company&rsquo;s success
in dynamic and competitive markets. The section of this Proxy Statement entitled &ldquo;COMPENSATION DISCUSSION AND ANALYSIS&rdquo;
contains the information required by Item 402 of Regulation S-K and discusses in detail our executive compensation program, the
decisions made by the Compensation Committee during 2015, and the compensation that was earned by, awarded to or paid to the Named
Executive Officers.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board and its Compensation Committee
believe that our compensation policies and procedures are reasonable in comparison both to our peer group and to our performance
during 2015. The Board and its Compensation Committee also believe that our compensation program strongly aligns executive
officers with the interests of shareholders in the long-term value of the Company as well as the components that drive long-term
value.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">At the Annual Meeting, shareholders
will be asked to adopt the following non-binding advisory resolution:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">RESOLVED, that the compensation
paid to the named executive officers of Shore Bancshares, Inc., as disclosed in its definitive proxy statement for the 2016 Annual
Meeting of Shareholders pursuant to Item 402 of Regulation S-K, including in the section entitled &ldquo;COMPENSATION DISCUSSION
AND ANALYSIS,&rdquo; is hereby approved.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because this advisory vote relates to,
and may impact, our executive compensation policies and practices, the Named Executive Officers have an interest in the outcome
of this vote. However, it should be noted that your vote is advisory, so it will not be binding on the Board  or its
Compensation Committee, overrule any decision made by the Board or its Compensation Committee, or create or imply any additional
fiduciary duty by the Board or its Compensation Committee. The Board and its Compensation Committee may, however, take into account
the outcome of the vote when considering future executive compensation arrangements.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_036"></A>PROPOSAL
4: APPROVAL OF THE SHORE BANCSHARES, INC. 2016 STOCK AND INCENTIVE COMPENSATION PLAN</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At the Annual Meeting, shareholders will
be asked to approve the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan (the &ldquo;2016 Plan&rdquo;), a copy
of which is attached to this Proxy Statement as Appendix A and incorporated herein by reference. The following summary of key provisions
of the 2016 Plan is qualified in its entirety by reference to the attached 2016 Plan document. Based upon the recommendation of
the Compensation Committee, our Board approved the form of the 2016 Plan on March __, 2016, and recommended that it
be submitted to the shareholders for approval at this year&rsquo;s Annual Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Equity Compensation is an Important Part of Our Compensation
Program</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee established
long-term equity-based compensation as an important element of our compensation program. The Compensation Committee emphasizes
long-term equity-based compensation in order to (i) align participants&rsquo; interests with the interests of the Company&rsquo;s
shareholders in the long-term success of the Company; (ii) provide management with an equity ownership in the Company tied to Company
performance; (iii) attract, motivate and retain key employees and non-employee directors; and (iv) provide incentive to management
for continuous employment with the Company. The 2016 Plan, like the 2006 Equity Plan, is designed to advance these interests of
the Company and its shareholders. Equity-based compensation under the 2016 Plan encourages executives to act as owners with an
equity stake in the Company, discourages inappropriate risk-taking and contributes to the continuity and stability within the Company&rsquo;s
leadership.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The 2006 Equity Plan Will Expire and Will No Longer Have
Shares Available</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The 2016 Plan is intended to serve as
a successor to the Company&rsquo;s existing 2006 Equity Plan, which terminates on April 26, 2016. As of [ ], 2016 there were
approximately [ ] shares of our Common Stock subject to outstanding awards and approximately [ ] shares of our Common Stock
available for future awards under the 2006 Equity Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because the 2006 Equity Plan will expire
on April 26, 2016, and only [ ] shares of Common Stock remain available for issuance under that plan, the Company&rsquo;s ability
to use long-term equity-based compensation as a significant component of its overall compensation would be quite limited if the
shareholders do not approve the 2016 Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In considering and approving the 2016 Plan,
our Board determined that the number of shares of Common Stock to be reserved for issuance under the 2016 Plan could be expected
to allow us to continue our historical equity compensation practices through 2020. If the 2016 Plan is approved by shareholders,
it will replace the expiring 2006 Equity Plan and no new awards will be made under the 2006 Equity Plan following the 2016 Annual
Meeting.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The 2016 Plan Reflects Compensation and Governance Best
Practices</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to replace the 2006 Equity Plan,
our Board has approved, subject to shareholder approval, the 2016 Plan in the form attached to this Proxy Statement as Appendix
A. The 2016 Plan is intended to replace the 2006 Equity Plan as the plan under which the Company will grant equity awards to attract,
motivate and retain highly qualified employees, officers, directors and consultants of the Company by providing them with meaningful
long-term financial incentives. The 2016 Plan contains provisions that are designed to protect our shareholders&rsquo; interests
and to reflect corporate governance best practices, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Shareholder approval is required for additional shares</I>. Neither the 2006 Equity Plan nor
the 2016 Plan contain an annual &ldquo;evergreen&rdquo; provision, pursuant to which the share pool would be automatically increased
each year based on a specified formula. Rather, the 2016 Plan reserves for issuance a total of [ ] shares of Common Stock for new
awards, plus any shares of Common Stock subject to outstanding awards under the 2006 Equity Plan which are forfeited, expire or
are canceled after April 26, 2016.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Flexible share plan</I>. Unlike the 2006 Equity Plan, the 2016 Plan contains a flexible share
plan design in which &ldquo;full value&rdquo; awards (i.e., awards with the value based on the full value of the shares issuable
pursuant to such award as compared to stock options or stock appreciation rights where the value of the award is based on the appreciation
in value of the underlying shares) will count against the share reserve as an issuance of two shares for every share actually issued,
and awards of stock options or stock appreciation rights will count against the share reserve on a one-to-one basis (in the event
an award is forfeited, expired or cancelled, shares subject to the award will be returned to the share reserve in the same ratio).
This feature will promote flexibility in our compensation practices and will reflect current best practices.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>No liberal share recycling</I>. Shares retained by or delivered to the Company to pay the exercise
price of stock options or stock appreciation rights or to satisfy withholding for taxes in connection with the exercise or settlement
of an award will not be added back to the pool of available shares under the 2016 Plan and will not be available for future awards.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Repricing is not allowed</I>. The 2016 Plan expressly prohibits the Company from repricing stock
options without first obtaining shareholder approval.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>No discount stock options</I>. All stock options will
have an exercise price equal to or greater than the fair market value of our Common Stock on the date the stock option or stock
appreciation right is granted.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>No Reload Options</I>. The 2006 Equity Plan authorized the Compensation Committee to grant reload
options. The 2016 Plan no longer provides reload options.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Fair Market Value</I>. The fair market value of a share of Common Stock will equal the closing
price of a share of Common Stock on the date of calculation (or the last preceding date if the Common Stock was not traded on such
date). Under the 2006 Equity Plan, the fair market value of a share of the Common Stock was based on the mean between the high
and low sales of a share of stock on the trading day immediately preceding the relevant calculation date.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Minimum Vesting Requirement</I>. Subject to certain limited exceptions, awards granted under
the 2016 Plan will be subject to a minimum vesting period of one year.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>No Single-Trigger Change in Control Vesting</I>. If awards granted under the 2016 Plan are assumed
by a successor entity in connection with a change in control, such awards will not automatically vest and pay out upon a change
in control.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Awards Subject to a Clawback Policy</I>. Awards under the 2016 Plan will be subject to any compensation
recoupment policy that the Company may adopt from time to time.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Other Administrative Changes</I>. The 2016 Plan made other administrative changes that
                                                                                                               clarified or expanded upon the terms of the 2006 Equity Plan.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Approval of the Plan is also Approval
of Performance Goals for Purposes of 162(m)</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Voting for the 2016 Plan will provide the
shareholder vote of approval necessary under the Code for grants under the 2016 Plan to qualify as performance-based executive
compensation exempt from the limitation on deduction imposed on compensation in excess of $1 million to named executive officers
of the Company in accordance with Section 162(m) of the Code (&ldquo;Section 162(m)&rdquo;). Section 162(m) generally limits the
annual deduction that the Company may take for compensation of its covered officers, which consist of its chief executive officer
and three other most highly compensated executive officers (other than its chief financial officer) who are serving at the end
of the year.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under Section 162(m), certain compensation,
including compensation based on the attainment of performance goals, will not be subject to this limitation if applicable requirements
are met. Section 162(m) requires that the Company disclose the material terms of the 2016 Plan and that shareholders approve the
applicable performance measures pursuant to which the performance-based compensation is to be paid be disclosed to and approved
by the shareholders. Accordingly, if the 2016 Plan is approved by shareholders and the other conditions of Section 162(m) relating
to performance-based compensation are satisfied, qualified performance-based compensation paid to covered officers pursuant to
the 2016 Plan will not fail to be deductible due to the operation of Section 162(m). As a result, shareholders may benefit from
a reduction in the Company&rsquo;s tax obligations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Description of the 2016 Plan</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Set forth below is a summary of the material
terms of the 2016 Plan. The summary does not purport to be complete, and is qualified in its entirety by the full text of the 2016
Plan attached to this Proxy Statement as Appendix A. Shareholders are encouraged to review the text of the 2016 Plan carefully.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Purpose</I>. The purpose of the 2016
Plan is to promote the growth and profitability of the Company by (a) encouraging outstanding individuals to accept or continue
employment with the Company or to serve as directors of the Company, (b) providing those persons with incentive compensation opportunities
in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, and or performance units, thereby
aligning their interests with those of the Company&rsquo;s shareholders, and (c) furthering the Company&rsquo;s risk mitigation
strategy by enabling the Company to provide incentive compensation that appropriately balances risk and reward.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Effective Date and Term</I>. The 2016
Plan will be effective on April 27, 2016, if approved by the Company&rsquo;s shareholders at the Annual Meeting. The 2016 Plan
will terminate on April 27, 2026.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Administration</I>. The Compensation
Committee will administer the 2016 Plan. Among other powers, the Compensation Committee will have full and exclusive power to:
(i) establish the terms and conditions upon which an award may be made and exercised under the 2016 Plan; (ii) interpret the terms
and the intent of the 2016 Plan and any award agreement; (iii) determine eligibility for awards; (iv) determine award recipients;
(v) grant awards; (vi) accelerate the exercisability of any award, the end of a performance period applicable to an award, or termination
of any restriction imposed on an award under the 2016 Plan; (vii) determine what leaves of absences do not constitute interruptions
of employment or service or continuous employment or service; (viii) determine the fair market value of the shares of Common Stock
of the Company; (ix) designate an award as performance-based compensation or as performance units, select the performance measures,
and (x) make all other determinations relating to the 2016 Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee may delegate
to one or more of its members, other directors, and officers of the Company such administrative duties or powers as it may deem
advisable. The Compensation Committee may authorize one or more of the Company&rsquo;s officers to designate employees to be recipients
of awards and/or determine the size of any such award; provided that (i) the Compensation Committee may not delegate such authority
with respect to awards to be granted to an officer or other directors of the Company or a person who beneficially owns more than
ten percent of Common Stock, (ii) the authorizing resolution of the Compensation Committee must state the total number of awards
that may be so granted; and (iii) the officer must report periodically to the Compensation Committee about the nature and scope
of the awards granted.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Eligibility for Participation</I>. The
2016 Plan is available to all directors of the Company and its subsidiaries and all officers, employees and consultants of the
Company and its subsidiaries who, in the opinion of the Compensation Committee, can contribute significantly to the growth and
profitability of, or perform services of major importance to, the Company and its subsidiaries. Subject to the provisions of the
2016 Plan, the Compensation Committee has the authority to select from all eligible individuals those to whom awards are granted
and to determine the nature and amount of each award. As of December 31, 2015, there were 9 directors (of whom 7 were non-employee
directors), 5 executive officers, and approximately 286 employees (including officers who are not executive officers) who would have
been eligible to participate in the 2016 Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Types of Awards</I>. The 2016 Plan permits
the Compensation Committee, in its sole discretion, to grant various forms of incentive awards. The Compensation Committee has
the power to grant stock options, stock appreciation rights (&ldquo;SARs&rdquo;), restricted stock, restricted stock units, and
performance units. Each award will be reflected in an agreement between the Company and the participant, will be subject to the
applicable terms and conditions of the 2016 Plan and may also be subject to other terms and conditions contained in the award agreement
consistent with the 2016 Plan that the Compensation Committee deems appropriate, including accelerated vesting or settlement in
the event of a participant&rsquo;s death, disability or termination of employment. The provisions of the various agreements entered
into under the 2016 Plan do not need to be identical.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock Options</I>. Stock options allow
the participant to buy a certain number of shares of Common Stock at an exercise price equal to at least the fair market value
(as determined by the Compensation Committee) on the date the option is granted. The Compensation Committee may grant stock options
intended to qualify as incentive stock options (&ldquo;ISOs&rdquo;) within the meaning of Section 422 of the Code, so-called &ldquo;nonqualified
stock options&rdquo; that are not intended to so qualify as incentive stock options (&ldquo;NQSOs&rdquo;), or any combination of
ISOs and NQSOs. All persons eligible to participate in the 2016 Plan may receive a grant of NQSOs. Only employees of the Company
and its subsidiaries may receive a grant of ISOs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee fixes the exercise
price per share for options on the date of grant, provided that the exercise price of any option granted under the 2016 Plan can
never be less than the fair market value of the underlying shares of Common Stock on the date of grant and provided further that,
if a participant who will be granted an ISO is a person who holds more than 10% of the total combined voting power of all classes
of outstanding voting securities of the Company, the exercise price per share of an ISO granted to such person must be at least
110% of the fair market value of a share of Common Stock on the date of grant. To the extent that the aggregate fair market value
of shares of Common Stock, determined on the date of grant, with respect to which ISOs (under all of the Company&rsquo;s equity
compensation plans) become exercisable for the first time by a participant during any calendar year exceeds $100,000, such ISOs
will be treated as NQSOs. The maximum number of shares available for awards of ISOs is [ ].</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee determines the
term of each option, provided that no option may have a term greater than 10 years from the date of grant and provided further
that, if the recipient of an ISO is a person who holds more than 10% of the combined voting power of all classes of outstanding
stock of the Company, the term of that person&rsquo;s ISO may not exceed five years from the date of grant. The vesting period
for options commences on the date of grant and ends on a date that is determined by the Compensation Committee, in its sole discretion,
which is specified in the award agreement. Options may be exercised at such times and be subject to such restrictions as the Compensation
Committee determines; provided that ISOs may be exercised only while the participant is employed by or providing service to the
Company or within a specified period of time after termination of such employment or service, as determined by the Compensation
Committee. A participant may exercise an option by delivering notice of exercise to the Company or its designated agent. Payment
of the exercise price and any withholding taxes for an option may be made (i) in cash, (ii) by delivering shares of Common Stock
already owned by the participant and having a fair market value on the date of exercise equal to the exercise price, (iii) by a
combination of the foregoing, or (iv) to the extent permitted by law and approved by the Compensation Committee, through a cashless
exercise of the option using a broker. The Compensation Committee may impose in an award agreement such restrictions on the shares
deliverable upon exercise of a stock option as it deems appropriate, including that such shares will constitute &ldquo;restricted
shares&rdquo; subject to restrictions on transfer.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock Appreciation Rights</I>. The Compensation
Committee may grant SARs to anyone eligible to participate in the 2016 Plan. Awards may involve freestanding SARs, SARs granted
with, but exercisable in lieu of, stock options (&ldquo;Tandem SARs&rdquo;), SARs granted with, and in addition to, stock options
(&ldquo;Additive SARs&rdquo;), or any combination of the foregoing. Any Tandem or Additive SAR that relates to an ISO must be granted
at the same time as the ISO. The Compensation Committee will determine the period when SARs vest and become exercisable, the fair
market value of the shares of Common Stock underlying the SARs on the date of grant, and whether SARs will be freestanding SARs,
Tandem SARs or Additive SARs. SARs may be exercised only while the participant is alive. The exercise of a SAR does not require
the payment of any money to the Company. Upon exercise of a freestanding SAR, the participant will receive an amount equal to the
excess of the fair market value of the Common Stock on the date of exercise over the fair market value on the date of grant. A
Tandem or Additive SAR shall have the same exercise price as the related option. Accordingly, upon exercise of a Tandem SAR or
an Additive SAR, the participant will receive an amount equal to the excess of the fair market value of the Common Stock on the
date of exercise over exercise price of the related stock option. The exercise of a Tandem SAR will reduce the number of shares
available under the related stock option by the amount of shares exercised, and vice versa. The exercise of an Additive SAR will
have no effect on the related stock option. The award agreement granting a SAR may provide, however, on an elective or non-elective
basis, for payment of the SAR value on a date after exercise, which amount will be adjusted (if provided in the award agreement)
from the date of exercise based on an interest, dividend equivalent, earnings or other basis (including the deemed investment of
the award amount in shares of Common Stock) determined by the Compensation Committee. Payment to the participant of the SAR value
(or adjusted value, if applicable) will be in cash, in shares of Common Stock or in a combination of cash and shares of Common
Stock, as determined by the Compensation Committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Restricted Stock</I>. The Compensation
Committee may grant restricted stock to anyone eligible to participate in the 2016 Plan. An award of restricted stock involves
the immediate transfer by the Company to the participant of a specific number of shares of Common Stock which are subject to a
risk of forfeiture and a restriction on transferability. This restriction will lapse following a stated period of time, upon attainment
of specified performance targets or some combination of the foregoing. The participant does not pay for the restricted stock and
has all of the rights of a holder of a share of Common Stock of the Company (except for the restriction on transferability), including
the right to vote and receive dividends unless otherwise determined by the Compensation Committee and set forth in the award agreement.
Except as provided otherwise in an award agreement, if a participant&rsquo;s employment with the Company or its subsidiaries is
terminated for any reason at any time during which any portion of an award of restricted stock remains subject to restrictions,
that portion will automatically be forfeited and returned to the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Restricted Stock Units</I>. The
Compensation Committee may grant restricted stock units to anyone eligible to participate in the 2016 Plan. An award of a
restricted stock unit is similar to a restricted stock award, except that no shares are issued at the time of grant. In
addition, holders of restricted stock units will have no voting rights, but they may be entitled, if so determined by the
Compensation Committee, to receive dividend equivalents, which entitle the holder to be credited with an amount equal to all
cash dividends and other distributions paid on the shares underlying restricted stock units while the units are outstanding
and which will be converted into additional restricted stock units. Upon the lapse of the restrictions related to a
restricted stock unit, the participant is entitled to receive, without any payment to the Company, an amount equal to the
fair market value of the shares of Common Stock represented by the restricted stock unit on the date of exercise. The award
agreement granting a SAR may provide, however, on an elective or non-elective basis, for payment of the restricted stock unit
value on a date after exercise, which amount will be adjusted (if provided in the award agreement) from the date of exercise
based on an interest, dividend equivalent, earnings or other basis (including the deemed investment of the award amount in
shares of Common Stock) determined by the Compensation Committee. Payment to the participant of the restricted stock unit
value (or adjusted value, if applicable) will be in cash, in shares of Common Stock or in a combination of cash and shares of
Common Stock, as determined by the Compensation Committee. Except as otherwise provided in an award agreement, if a
participant&rsquo;s employment with the Company or its subsidiaries terminates for any reason at any time during which any
portion of an award of a restricted stock unit remains subject to restrictions, that portion will automatically be forfeited
and returned to the Company.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Performance Units</I>. The Compensation
Committee may grant performance units to anyone eligible to participate in the 2016 Plan. Performance units are intended to constitute
performance-based compensation awards and will entitle the participant to receive, after the performance period for that unit has
ended, an amount based on the realization of certain performance goals and the satisfaction of certain other conditions. The terms
and conditions of each award, including the performance period, performance goals, any other terms and conditions of the award,
will be established by the Compensation Committee in the award agreement (or in a subplan of the 2016 Plan that may be incorporated
by reference into an award agreement). Payment to the participant of the performance unit value will be in cash, in shares of Common
Stock, or in a combination of cash and shares of Common Stock, as determined by the Compensation Committee. Holders of performance
units will have no voting rights or dividend rights associated with those awards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Performance Measures</I>. Options and
SARs granted under the 2016 Plan are designed to be exempt from the $1,000,000 deduction limit imposed by Section 162(m). The Compensation
Committee may designate any other award granted under the 2016 Plan as qualified performance-based compensation in order for the
award to be fully deductible under Section 162(m). If an award is so designated, the Compensation Committee must establish objectively
determinable performance goals for the award based on the following criteria, which may be specific to a participant, specific
to the performance of the Company generally or specific to the performance of a subsidiary of the Company, a division, a business
unit or a line of business served by a participant:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>stock value (and/or increases therein),</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>earnings per share or growth in earnings per share,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>net income, earnings or earnings growth (before or after one more of taxes, interest, depreciation and/or amortization),</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>operating profit, operating cash flow, operating or other expenses,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>gross operating or other margins,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>operating efficiency,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>return on equity,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>assets, capital or investments,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>sales or revenues or growth thereof,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>deposits, loan and/or equity volume or growth,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>working capital targets or cost control measures,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the efficiency ratio (as generally recognized and used for bank financial reporting and analysis),</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>interest income, non-interest income, credit quality, net charge-offs and/or non-performing assets (excluding such loans or
classes of loans as may be designated for exclusion),</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>productivity, customer satisfaction, satisfactory internal or external audits,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>improvement of financial ratings, achievement of balance sheet or income statement objectives, quality measures, and any component
or components of the foregoing (including, without limitation, determination thereof with or without the effect of discontinued
operations and dispositions of business segments, non-recurring items, material extraordinary items that are both unusual and infrequent,
special charges, and/or accounting changes), or implementation, management or completion of critical projects or processes, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>regulatory compliance.</TD></TR></TABLE>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Shares Available for Awards; Maximum Awards</I>. Up to [
] shares of Common Stock will be available for issuance to participants (including individuals who may become participants as a
result of acquisitions) under the 2016 Plan, plus any shares related to stock options outstanding under the 2006 Equity Plan on
the date the 2016 Plan is approved and that thereafter terminate, expire or lapse for any reason. As of the date of this Proxy
Statement, there were [ ] shares subject to outstanding options under the 2006 Equity Plan. Shares of Common Stock related to any
unexercised or unvested award granted under the 2016 Plan that terminate, expire, lapse or are subsequently forfeited for any reason,
will become available for re-grant under the 2016 Plan. Shares of Common Stock issued pursuant to the exercise of an award or in
connection with the satisfaction of any tax withholding obligation shall not become available for re-grant under the 2016 Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The maximum number of shares for which
stock option grants and SARs may be granted to any one participant in any calendar year is [ ] in the aggregate; the maximum number
of shares for restricted stock and restricted stock units that may be granted to any participant in any calendar year is [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
in the aggregate; the maximum dollar value of performance units that may be granted to any one participant in any calendar year
is $1,000,000.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Adjustments for Changes in Capitalization
and Other Corporate Changes</I>. In the event that the outstanding shares of Common Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation,
without the receipt of consideration by the Company, through reorganization, merger or consolidation, recapitalization, reclassification,
stock split, reverse stock split, split-up, combination or exchange of shares or declaration of any dividends payable in shares
or other distributions to Common Shareholders other than regular cash dividends, the Compensation Committee shall make appropriate
and proportionate adjustments in the number and kind of shares that may be issued under the 2016 Plan, as well as other maximum
limitations under the 2016 Plan, and the number and kind of shares of Common Stock or other rights and prices under outstanding
awards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Registration of Shares</I>. As soon
as is practicable after the 2016 Plan is approved by shareholders, the Company intends to register the shares of its Common Stock
necessary to fund the 2016 Plan on a Registration Statement on Form S-8 under the Securities Act of 1933, as amended.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Tax Withholding</I>. To the extent that
a participant incurs any tax liability in connection with the exercise or receipt of an award under the 2016 Plan, the Compensation
Committee may permit the award recipient to elect to satisfy the minimum required tax obligation by payment in cash, withholding
from cash payments made under the 2016 Plan or other sums that are due or become due from the Company, or the transfer of shares
by the Company or withholding shares of Common Stock otherwise issuable in connection with the award having a fair market value
equal to the amount required to be withheld, or a combination thereof in each case, as set forth in the award agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Transferability</I>. Generally, awards
granted under the 2016 Plan may not be transferred other than by will or the laws of descent and distribution, provided that, subject
to compliance with applicable securities laws, a participant may transfer his or her nonqualified stock options to his or her spouse,
lineal ascendants and descendants or to a trust for the benefit of such persons. Unless otherwise provided in an award agreement,
awards granted under the 2016 Plan may be exercised only by the participant during the participant&rsquo;s lifetime.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Repricings and Substitutions of
Awards</I>. Without the prior consent of the shareholders, outstanding stock options and SARs cannot be repriced, directly or
indirectly, nor may stock options or SARs be cancelled or exchanged for stock options or SARs with an exercise price that is
less than the exercise price of the original stock option or SAR. In addition, the Company may not, without the prior
approval of shareholders, repurchase an option or SAR for value from a participant if the current market value of the
underlying stock is lower than the exercise price. Subject to applicable law and the terms of the 2016 Plan, the Compensation
Committee may: (i) modify, extend and renew awards to modify the terms of an award agreement, provided that no modification,
extension or renewal may have the effect of lowering the exercise price of any award except in connection with adjustments
related to capitalization and other corporate changes as described above; and/or (ii) accept the surrender of awards granted
under the 2016 Plan or under any other equity compensation plan of the Company and replace them with new awards pursuant to
the 2016 Plan, so long as the substituted awards do not specify a lower exercise price than the surrendered awards.
Substituted awards may be of a different type than the surrendered awards, may specify a longer term than the surrendered
awards, may provide for more rapid vesting and exercisability than the surrendered awards and may contain any other provision
authorized by the 2016 Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Amendment and Termination</I>. Our Board
 may, at any time and from time to time and in any respect, amend or modify the 2016 Plan, including to ensure that
the 2016 Plan and each award granted under the 2016 Plan comply with applicable law, regulations and stock exchange rules. Without
shareholder approval, however, the Board may not adopt any amendment that would require the vote of shareholders of the Company
under the Code or NASDAQ&rsquo;s approval rules or any amendment affecting &ldquo;covered employees&rdquo; that requires the vote
of the Company&rsquo;s shareholders under Section 162(m). The Company&rsquo;s President and CEO and its four most highly compensated
executive officers other than the CEO are &ldquo;covered employees.&rdquo; No amendment or modification of the 2016 Plan or any
award agreement may adversely affect any outstanding award without the written consent of the participant holding the award.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board may also terminate the 2016 Plan
at any time. The termination of the 2016 Plan will have no effect on awards that were outstanding at the time of termination.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Change in Control</I>. Unless the Compensation
Committee determines otherwise, if a change in control occurs in which the Company is not the surviving corporation (or the Company
survives only as a subsidiary of another corporation), all outstanding awards that are not exercised or paid at the time of the
change in control will be assumed by, or replaced with awards that have comparable terms by, the surviving corporation (or a parent
or subsidiary of the surviving corporation).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Compensation Committee will have the
discretion to provide for full or partial vesting of awards upon a Participant&rsquo;s involuntary termination of employment or
service that occurs in connection with a change in control, subject to the terms and conditions of a participant&rsquo;s employment
agreement, or if none, the award agreement. If the vesting of any such awards is based, in whole or in part, on performance, the
applicable employment agreement or award agreement will specify how the portion of the award that becomes vested upon termination
will be calculated.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the event of a change in control, if
all outstanding awards are not assumed by, or replaced with awards with comparable terms by, the surviving corporation (or a parent
or subsidiary of the surviving corporation), the Compensation Committee may take any of the following actions with respect to any
or all outstanding awards, without the consent of any participant: (i)&nbsp;the Compensation Committee may determine that outstanding
stock options and stock appreciation rights will automatically accelerate and become fully exercisable, and the restrictions and
conditions on outstanding stock awards, stock units, cash awards and dividend equivalents will immediately lapse; (ii)&nbsp;the
Compensation Committee may determine that participants will receive a payment in settlement of awards in such amount and form as
may be determined by the Compensation Committee; (iii)&nbsp;the Compensation Committee may require that participants surrender
their outstanding stock options and stock appreciation rights in exchange for a payment, in cash or stock as determined by the
Compensation Committee, equal to the amount (if any) by which the fair market value of the shares of Common Stock subject to the
unexercised stock option and stock appreciation right exceed the stock option exercise price or base price and (iv)&nbsp;the Compensation
Committee may terminate outstanding stock options and stock appreciation rights after giving participants an opportunity to exercise
the outstanding stock options and stock appreciation rights. Such surrender, termination or payment will take place as of the date
of the change in control or such other date as the Compensation Committee may specify. If the per share fair market value of our
stock does not exceed the per share exercise price or base price, as applicable, we will not be required to make any payment to
the participant upon surrender of the stock option or stock appreciation right.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the 2016 Plan, a &ldquo;Change in
Control&rdquo; will occur upon any of the following events: (i) any one person, or a group of persons, acquires ownership of securities
of the Company that, together with securities held by such person or group, constitutes more than 50% of the total fair market
value or total voting power of the securities of the Company; (ii) either (A) any one person, or a group of persons, acquires (or
has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of
securities of our possessing 35% or more of the total voting power of the securities of the Company, or (B) a majority of members
of our Board  is replaced during any 12-month period by directors whose appointment or election is not endorsed by
a majority of the members of the Board prior to the date of the appointment or election; or (iii) any one person, or a group of
persons, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person
or group) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market
value of all of the assets of the Company immediately prior to such acquisition or acquisitions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All obligations of the Company with respect
to awards granted under the 2016 Plan will be binding on any successor to the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Although the foregoing provisions are included
in the 2016 Plan primarily for the protection of a participant in the event of a Change in Control of the Company, they may also
be regarded as having an anti-takeover effect, which may reduce the Company&rsquo;s vulnerability to hostile takeover attempts
or other transactions which have not been negotiated with and approved by the Board.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Certain Federal Income Tax Consequences</I>.
The federal income tax consequences arising with respect to awards granted under the 2016 Plan will depend on the type of the award.
The following provides only a general description of the application of federal income tax laws to certain awards under the 2016
Plan, based on current federal income tax laws. This discussion is intended for the information of shareholders considering how
to vote at the meeting and not as tax guidance to participants in the Plan, as the consequences may vary with the types of awards
made, the identity of the recipients and the method of payment or settlement. This summary is not intended to be exhaustive and,
among other things, does not address the effects of other federal taxes (including possible &ldquo;golden parachute&rdquo; excise
taxes) or taxes imposed under state, local, or foreign tax laws. Participants should not rely on this discussion for individual
tax advice, as each participant&rsquo;s situation and the tax consequences of exercising awards and disposing of the underlying
shares of Common Stock will vary depending upon the specific facts and circumstances involved. Each participant is advised to consult
with his or her own tax advisor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Incentive Stock Options</I>. A participant will not recognize income upon the grant or exercise
of an award that qualifies as an ISO under the 2016 Plan. However, the difference between the fair market value of the stock on
the date of exercise and the exercise price is an item of tax preference which may cause the participant to be subject to the alternative
minimum tax in the year in which the ISO is exercised. If a participant exercises an ISO and does not dispose of the underlying
shares within (i) two years from the date of grant of the ISO, and (ii) one year from the date of exercise, the participant will
generally recognize capital gain or loss on a subsequent sale of the stock equal to the difference between the sales price and
the exercise price. If a participant disposes of Common Stock acquired upon exercise of an ISO before the expiration of either
the two-year or the one-year holding periods described in the preceding sentence (each a &ldquo;disqualifying disposition&rdquo;),
the participant will generally realize ordinary income in an amount equal to the lesser of (a) the excess of the fair market value
of the shares on the date of exercise over the exercise price, or (b) the excess of the fair market value of the shares on the
date of disposition over the exercise price. The remaining gain, if any, will be taxed to the participant as long-term or short-term
capital gain depending on the holding period for such shares. The Company will not be allowed any deduction for federal income
tax purposes at either the time of grant or the time of exercise of an ISO. Upon any disqualifying disposition by a participant,
the Company will generally be allowed a deduction to the extent the participant realizes ordinary income.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Nonqualified Stock Options</I>. A participant who is granted an option under the 2016 Plan which
does not qualify as an ISO shall be treated as having been granted a nonqualified stock option. Generally, the grant of an NQSO
does not result in a participant recognizing income. Upon the exercise of an NQSO, the participant will recognize ordinary income
in an amount equal to the excess of the fair market value of the shares of the Common Stock at the time of exercise over the exercise
price of the NQSO. The Company will generally be entitled to a deduction for federal income tax purposes in an amount equal to
the amount included in income by the participant, provided the Company satisfies its information reporting obligations with respect
to such income. On a subsequent sale of the shares of the Common Stock, the participant will recognize capital gain or loss equal
to the difference between the amount realized from the sale of stock and the participant&rsquo;s adjusted basis in those shares,
which will generally be the sum of the amount paid and the amount of income previously recognized by the participant in connection
with the exercise of the NQSO. Such capital gain will be long or short term depending upon the holding period for such shares.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Stock Appreciation Rights</I>. In general, a participant will not recognize ordinary income
for federal income tax purposes upon the grant of a SAR and the Company will not be entitled to a deduction at that time. Upon
the exercise of a SAR, the participant will recognize ordinary income equal to the amount by which the fair market value of a share
on the exercise date exceeds either (i) the fair market value of a share on the date of grant in the case of a freestanding SAR
or (ii) the exercise price of the related stock option in the case of a Tandem SAR or an Additive SAR, multiplied by the number
of shares with respect to which the participant exercises his or her SAR. If, however, a SAR agreement permits the participant
to defer the receipt of the award amount until some date after exercise, then the recipient will generally recognize ordinary income
at the expiration of the deferral period rather than on the date of exercise. In either case, the Company will be entitled to a
federal income tax deduction equal to the amount of ordinary income the recipient is required to recognize in connection with the
exercise. The participant&rsquo;s basis in any shares of Common Stock acquired upon the exercise of a SAR will equal their fair
market value on the date of their acquisition.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Restricted Stock</I>. In general, the grant of restricted stock has no tax effect on the Company
or the participant. When the shares become vested pursuant to the restricted stock award, the participant will recognize ordinary
income equal to the fair market value of the shares delivered to him or her under the restricted stock award and the Company will
generally be allowed a federal income tax deduction in an amount equal to the amount included in income by the participant, provided
such amount constitutes an ordinary and necessary business expense, and provided further that the Company satisfies its information
reporting obligations with respect to such income. Such deduction will be allowed in the tax year in which the participant recognizes
such income.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Within thirty (30) days after
the date restricted stock is transferred pursuant to an award, a participant may elect under Section 83(b) of the Code (&ldquo;Section
83(b)&rdquo;) to be taxed on the fair market value of the restricted stock at the time of the award, rather than at the time the
restricted stock is no longer subject to a substantial risk of forfeiture or becomes transferable. In such case, the Company would
be allowed a federal income tax deduction in the year of the award. If such an election is made, the participant will not recognize
any income at the time the restricted stock becomes unrestricted and the Company will not be entitled to an additional deduction
at such time. If the participant subsequently forfeits the restricted stock, the participant will not be allowed a deduction in
respect of such forfeiture, and no refund will be available to the participant for the taxes previously paid, nor shall the Company
have any obligation to reimburse the participant.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Regardless of whether a participant
makes a Section 83(b) election, upon a subsequent sale or exchange of the restricted stock, the participant will recognize capital
gain or loss based on the difference between the amount realized from the sale of stock and the participant&rsquo;s adjusted basis
in those shares, which will generally be the sum of the amount paid (if any) and the amount of income previously recognized by
the participant. The capital gain or loss will be long-term gain or loss if the shares are held by the participant for at least
one year after the restrictions lapse or the shares become transferable, whichever occurs first. If a Section 83(b) election is
made, the participant&rsquo;s holding period in the shares will begin to run from the date of the transfer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Restricted Stock Units and Performance Units</I>. A participant who is granted a restricted
stock unit or a performance unit under the 2016 Plan will not recognize taxable income at the time of grant so long as the award
is nontransferable and is subject to a substantial risk of forfeiture as a result of performance-based vesting targets, continued
services requirements or other conditions that must be satisfied before delivery of the cash and/or shares of Common Stock payable
pursuant to the award. The recipient will generally recognize ordinary income when the substantial risk of forfeiture expires or
is removed. If, however, an award agreement relating to a restricted stock unit permits the participant to defer the receipt of
the award amount until some date after the substantial risk of forfeiture expires or is removed, then the recipient will generally
recognize ordinary income at the expiration of the deferral period rather than on date the substantial risk of forfeiture expires
or is removed. In either case, the Company will generally be entitled to a corresponding deduction equal to the amount of income
the recipient recognizes. Upon a subsequent sale of shares of Common Stock received as payment of an award, the recipient will
recognize capital gain or loss equal to the difference between the sales price and the participant&rsquo;s adjusted basis in those
shares, which will generally be the amount of income previously recognized by the participant.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Limitation on Income Tax Deduction</I>.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the Code, which generally disallows a public company&rsquo;s
tax deduction for compensation to covered employees in excess of $1 million in any tax year beginning on or after January 1, 1994.
Compensation that qualifies as &ldquo;performance-based compensation&rdquo; is excluded from the $1 million deductibility cap,
and therefore remains fully deductible by the company that pays it. Even though we are seeking shareholder approval for purposes
of Section 162(m), awards may be granted under the 2016 Plan that do not qualify for the performance-based compensation exemption
under Section 162(m), and the Compensation Committee retains full discretion to determine whether or not a particular award is
intended to qualify as performance-based compensation under Section 162(m).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Miscellaneous Tax Issues</I>. Compensation
to a participant who is an employee which results from awards under the 2016 Plan will constitute wages for purposes of the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act and thus will result in additional tax liability to the Company,
generally with respect to each award at the time that such award is no longer subject to a substantial risk of forfeiture or becomes
transferable.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Compliance with Section 409A of the
Code</I>. Section 409A of the Code, enacted as part of the American Jobs Creation Act of 2004, imposes requirements applicable
to &ldquo;nonqualified deferred compensation plans,&rdquo; including rules relating to the timing of deferral elections and elections
with regard to the form and timing of benefit distributions, prohibitions against the acceleration of the timing of distributions,
and the times when distributions may be made, as well as rules that generally prohibit the funding of nonqualified deferred compensation
plans in offshore trusts or upon the occurrence of a change in the employer&rsquo;s financial health. These rules generally apply
with respect to deferred compensation that becomes earned and vested on or after January 1, 2005. If a nonqualified deferred compensation
plan subject to Section 409A fails to meet, or is not operated in accordance with, these requirements, then all compensation deferred
under the plan is or becomes immediately taxable to the extent that it is not subject to a substantial risk of forfeiture and was
not previously taxable. The tax imposed as a result of these rules would be increased by interest at a rate equal to the rate imposed
upon tax underpayments plus one percentage point, and an additional tax equal to 20% of the compensation required to be included
in income. Some of the awards to be granted under the 2016 Plan may constitute deferred compensation subject to the Section 409A
requirements, including, without limitation, deferred stock. It is intended that any award agreement that will govern awards subject
to Section 409A will comply with these rules.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Interest of Certain Persons in
the Adoption of the 2016 Plan; Future 2016 Plan Benefits</I></B>. The Company&rsquo;s current directors and executive
officers and the director nominees have an interest in the proposal to adopt the 2016 Plan, as each is eligible to receive
awards under the 2016 Plan. The benefits that will be received by or allocated to eligible persons under the 2016 Plan,
including each of the current directors, each of the director nominees (assuming election at the Annual Meeting), each of
the named executive officers, the current executive officers as a group, the current directors who are not executive officers
as a group, and all employees, including all current officers who are not executive officers, as a group, are discretionary
and are not presently determinable.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Consideration to be Received by the
Company for Awards</I></B>. The Company will receive no monetary consideration for the granting of awards under the 2016 Plan.
The Company will receive no monetary consideration other than the option price for shares of Common Stock delivered to participants
upon the exercise of stock options. The Company will receive no monetary consideration upon the exercise of SARs or the vesting
of restricted stock, restricted stock units or performance units.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Current Stock Price</I></B>. On March
__, 2016, the closing price of a share of Common Stock as reported on the NASDAQ Capital Market (NASDAQ: SHBI) was $[ ] per share.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Vote Required; Manner of Approval</I></B><I>.
If a quorum is present, the affirmative vote of a majority of the votes cast at the meeting is required to approve the</I> 2016
Plan. Brokers do not have discretion to vote on the 2016 Plan without your instruction. If you do not instruct your broker as to
how to vote on this proposal, then your broker will deliver a non-vote on this proposal. Broker non-votes and abstentions, if any,
will be counted for purposes of determining the presence of a quorum but will have no effect on the outcome of the vote on this
proposal.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Board Recommendation</I></B>. The
Board  believes that the 2016 Plan will provide a valuable benefit to the Company by enhancing its ability to attract
and retain key management employees, non-employee directors and other eligible participants. The Board believes that the approval
of the 2016 Plan is in the Company&rsquo;s and the shareholders&rsquo; best interests.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board  recommends a vote
FOR the approval of the 2016 Stock and Incentive Compensation Plan.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_037"></A>REPORT OF
THE AUDIT COMMITTEE</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Audit Committee has (i) reviewed and
discussed our consolidated audited financial statements for fiscal year ended December 31, 2015 with our management; (ii) discussed
with Stegman &amp; Company, our independent registered public accounting firm, all matters required to be discussed by the statement
on Auditing Standards No. 16, as amended (AICPA, <I>Professional Standards</I>, Vol. 1, AU &sect; 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T; and (iii) received the written disclosures and the letter from Stegman &amp;
Company required by applicable requirements of the Public Company Accounting Oversight Board regarding Stegman &amp; Company&rsquo;s
communications with the Audit Committee concerning independence, and discussed with Stegman &amp; Company its independence. Based
on the foregoing review and discussions, the Audit Committee recommended to the Board  that our consolidated audited
financial statements for the year ended December 31, 2015 be included in our Annual Report on Form 10-K for the year ended December
31, 2015.</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 50%">AUDIT COMMITTEE</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">By:</TD>
    <TD STYLE="text-align: justify">James A. Judge, <I>Chair</I></TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Blenda W. Armistead</TD>
    </TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Frank E. Mason, II</TD>
    </TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_038"></A>ANNUAL REPORT
TO SHAREHOLDERS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our 2015 Annual Report has been made available
to shareholders and is posted on our website at <U>www.shorebancshares.com</U> under the &ldquo;Governance Documents&rdquo; link.
<B>Additional copies of the 2015 Annual Report may be obtained without charge upon written request to W. David Morse, Secretary,
Shore Bancshares, Inc., 18 East Dover Street, Easton, Maryland 21601.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The 2015 Annual Report shall not be
deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, whether made before or after the date
hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate
this information by reference) and shall not otherwise be deemed &ldquo;soliciting material&rdquo; or &ldquo;filed&rdquo; with
the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section&nbsp;18 of the Exchange Act (except to the extent
that we specifically request that this information be treated as soliciting material or specifically incorporate this information
by reference).</I></P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_039"></A>SHAREHOLDER
PROPOSALS FOR THE 2017 ANNUAL MEETING</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any shareholder desiring to present a
proposal pursuant to Rule 14a-8 of the Exchange Act to be included in the definitive proxy statement and voted on by the shareholders
at the 2016 annual meeting of shareholders must submit a written proposal, including all supporting information, to the Company
at its principal executive offices no later than ________, 2016 (120 days before the date of mailing based on this year&rsquo;s
Proxy Statement date), and must meet all other requirements for inclusion in the proxy statement. As provided in the By-Laws,
if a shareholder intends to present a proposal for business to be considered at the 2017 annual meeting of shareholders but does
not seek inclusion of the proposal in the Company&rsquo;s proxy statement for that meeting, then such proposal, including all
supporting information, must be delivered to and received by the Company&rsquo;s Secretary at our principal executive offices
no earlier than January 27, 2017 and no later than February&nbsp;26, 2017 (not more than 90 days nor less than 60 days before
the first anniversary of the prior year&rsquo;s annual meeting). Additional time constraints are applicable where the date of
the Annual Meeting is changed. Proposals received by the Company outside of these timelines will be considered untimely. If a
shareholder proposal is not timely received, then the proxies will be authorized to exercise discretionary authority with respect
to the proposal.</P>

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


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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_040"></A>OTHER BUSINESS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of the date of this Proxy Statement,
management does not know of any other matters that will be brought before the Annual Meeting requiring action of the shareholders.
However, if any other matters requiring the vote of the shareholders properly come before the Annual Meeting, it is the intention
of the persons named in the enclosed form of proxy to vote the proxies in accordance with the discretion of management. The persons
designated as proxies will also have the right to approve any and all adjournments of the Annual Meeting for any reason.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center"><A NAME="a_041"></A>SHAREHOLDERS
SHARING THE SAME ADDRESS</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The SEC has adopted rules that permit companies
and intermediaries (such as brokers, banks and other nominees) to implement a delivery procedure called &ldquo;householding.&rdquo;
Under this procedure, multiple shareholders who reside at the same address may receive a single copy of the Proxy Statement, the
Annual Report and other proxy materials, unless the affected shareholder has provided contrary instructions. This procedure reduces
printing costs and postage fees.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under applicable law, if you consented
or were deemed to have consented, your broker, bank or other intermediary may send only one copy of the Proxy Statement, the 2015
Annual Report, and other proxy materials to your address for all residents that own shares of Company Common Stock in street name.&nbsp;
If you wish to revoke your consent to householding, you must contact your broker, bank or other intermediary.&nbsp; If you are
receiving multiple copies of the Proxy Statement, the 2015 Annual Report, and other proxy materials, you may be able to request
house holding by contacting your broker, bank or other intermediary.&nbsp; Upon written or oral request, we will promptly deliver
a separate set of the Proxy Statement, the 2015 Annual Report or other proxy materials to any beneficial owner at a shared address
to which a single copy of any of those documents was delivered.&nbsp; If you wish to request copies free of charge of the Proxy
Statement, the 2015 Annual Report or other proxy materials, please send your request to W. David Morse, Secretary, at Shore Bancshares,
Inc., 18 East Dover Street, Easton, Maryland 21601 or call the Company with your request at (410) 763-7800.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">By Order of the Board of Directors,</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">March , 2016</P>

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


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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="newA"></A>2016 STOCK AND INCENTIVE COMPENSATION
PLAN</B></P>

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
I</FONT><BR>
Establishment, Purpose and Duration</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">1.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT><I>Establishment of the Plan</I>. Shore Bancshares, Inc. (hereinafter referred to as the &ldquo;Company&rdquo;),
a Maryland corporation, hereby establishes an incentive compensation plan to be known as the &ldquo;2016 Stock and Incentive Compensation
Plan&rdquo; (hereinafter referred to as the &ldquo;Plan&rdquo;), as set forth in this document. Unless otherwise defined herein,
all capitalized terms shall have the meanings set forth in Section 2.1 herein. The Plan permits the grant of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and/or Performance Units to Key
Associates and Directors.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5in">The Plan was adopted by the Board of Directors
of the Company on _____ , 2016, to become effective (the &ldquo;Effective Date&rdquo;) as of April 27, 2016 if approved by the
Company&rsquo;s shareholders at the 2016 Annual Meeting of Shareholders in accordance with applicable laws and any applicable rules
of any national securities exchange or system on which the Shares are then listed or reported. Except for Performance Unit Awards
payable only in cash (with payment also contingent on shareholder approval of the 2016 Plan), Awards may not be granted under the
Plan prior to shareholder approval of the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">1.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT><I>Purpose of the Plan</I>. The purpose of the Plan is to promote the success of the Company and its Subsidiaries
by providing incentives to Key Associates and Directors that will promote the identification of their personal interest with the
long term financial success of the Company and with growth in shareholder value. The Plan is designed to provide flexibility to
the Company in its ability to motivate, attract, and retain the services of Key Associates and Directors upon whose judgment, interest
and special effort the successful conduct of its operation is largely dependent.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt; color: #010000">1.3<FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT><I>Duration
of the Plan</I>. The Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect,
subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article XIII herein, until April
27, 2026, at which time it shall terminate except with respect to Awards made prior to, and outstanding on, that date which shall
remain valid in accordance with their terms.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
II</FONT><BR>
Definitions</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">2.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT><I>Definitions</I>. Except as otherwise defined in the Plan, the following terms shall have the meanings set forth
below:</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(a)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Agreement&rdquo; means a written agreement implementing the grant of each Award signed by an authorized officer
of the Company and by the Participant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(b)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Award&rdquo; means, individually or collectively, a grant under the Plan of Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and/or Performance Units.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(c)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Award Date&rdquo; or &ldquo;Grant Date&rdquo; means the date the Committee adopts a resolution or takes other
appropriate action expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if
a later date is set forth in such resolution, then such later date as set forth in such resolution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(d)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Board&rdquo; or &ldquo;Board of Directors&rdquo; means the Board of Directors of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(e)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Change in Control&rdquo; shall be deemed to have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(i)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>any one person, or more than one person acting as a group, acquires ownership of securities of the Company that,
together with securities held by such person or group, constitutes more than 50 percent of the total fair market value or total
voting power of the securities of the Company;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(ii)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>either (a) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or persons) ownership of securities of the Company possessing
35 percent or more of the total voting power of the securities of the Company; or (b) a majority of members of the Board is replaced
during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board
prior to the date of the appointment or election; or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(iii)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market
value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or
the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0.5in">Notwithstanding the foregoing, ownership
or control of the Company&rsquo;s voting stock, individually or collectively, by the Company&rsquo;s bank subsidiaries (the &ldquo;Banks&rdquo;)
or any benefit plan sponsored by the Company or the Banks shall not constitute a Change in Control. For purposes of this paragraph
only, the term &ldquo;person&rdquo; refers to an individual or a corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization of any other form of entity not specifically listed herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(f)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Code&rdquo; means the Internal Revenue Code of 1986, as amended from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(g)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Committee&rdquo; means a committee of the Board consisting of not less than two Directors, which shall be
appointed to administer the Plan pursuant to Article III hereof, all of the members of which shall be &ldquo;non-employee directors&rdquo;
as defined in Rule 16b-3, as amended, under the Exchange Act, or any similar or successor rule, and &ldquo;outside directors&rdquo;
within the meaning of Section 162(m)(4)(C)(i) of the Code. Unless otherwise determined by the Board, the Compensation Committee
of the Board, or any successor committee responsible for executive compensation, shall constitute the Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(h)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Company&rdquo; means Shore Bancshares, Inc., or any successor thereto as provided in Article XV herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(i)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Director&rdquo; means a director of the Company or any of its Subsidiaries, which term shall not include an
advisory or honorary director.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(j)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Exchange Act&rdquo; means the Securities Exchange Act of 1934, as amended from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(k)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Fair Market Value&rdquo; of a Share as of any particular date shall be the closing price of such security
on the date of calculation (or on the last preceding trading date if such security was not traded on such date), or, if not so
reported, the fair market value as determined pursuant to a reasonable method adopted by the Committee in good faith for such purpose.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(l)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Incentive Stock Option&rdquo; or &ldquo;ISO&rdquo; means an option to purchase Shares, granted under Article
VI herein, which is designated as an incentive stock option and is intended to meet the requirements of Section 422 of the Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(m)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Key Associate&rdquo; means an officer, employee, or consultant of the Company or of its Subsidiaries (including
any corporation which becomes a Subsidiary after the adoption of the Plan by the Board) who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of, or perform services of major importance to, the Company and its Subsidiaries.
The term includes a Director who is also an officer or employee of the Company or its Subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(n)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Non-Qualified Stock Option&rdquo; or &ldquo;NQSO&rdquo; means an option to purchase Shares, granted under
Article VI herein, which is not intended to be an Incentive Stock Option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(o)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Option&rdquo; means an Incentive Stock Option or a Non-Qualified Stock Option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(p)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Option Price&rdquo; means the price at which each Share subject to an Option may be purchased from the Company
upon exercise of the Option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(q)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Participant&rdquo; means a Key Associate or a Director who has been granted an Award under the Plan and whose
Award remains outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(r)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Performance-Based Compensation Award&rdquo; means any Award for which exercise, full enjoyment or receipt
thereof by the Participant is contingent on satisfaction or achievement of the Performance Goal applicable thereto. If a Performance-Based
Compensation Award is intended to be &ldquo;performance-based compensation&rdquo; within the meaning of Section 162(m)(4)(C) of
the Code, the grant of the Award, the establishment of the Performance Goal, the making of any modifications or adjustments and
the determination of satisfaction or achievement of the Performance Goal shall be made during the period or periods required under
and in conformity with the requirements of Section 162(m) of the Code therefor. The terms and conditions of each Performance-Based
Compensation Award, including the Performance Goal and Performance Period, shall be set forth in an Agreement or in a subplan of
the Plan which is incorporated by reference into an Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(s)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Performance Goal&rdquo; means one or more performance measures or goals set by the Committee in its discretion
for each grant of a Performance-Based Compensation Award. The extent to which such performance measures or goals are met will determine
the amount or value of the Performance-Based Compensation Award to which a Participant is entitled to exercise, receive or retain.
Performance Goals may be particular to a Participant, may relate to the performance of the Subsidiary, division, strategic business
unit or line of business which employs him, or may be based on the performance of the Company generally. Performance Goals may
be based on Stock value or increases therein, earnings per share or earnings per share growth, net earnings, earnings or earnings
growth (before or after one or more of taxes, interest, depreciation and/or amortization), operating profit, operating cash flow,
operating or other expenses, operating efficiency, return on equity, assets, capital or investment, sales or revenues or growth
thereof, deposits, loan and/or equity levels or growth thereof, working capital targets or cost control measures, regulatory compliance,
gross, operating or other margins, efficiency ratio (as generally recognized and used for bank financial reporting and analysis),
interest income, non-interest income, credit quality, net charge-offs and/or non-performing assets (excluding such loans or classes
of loans as may be designated for exclusion), productivity, customer satisfaction, satisfactory internal or external audits, improvement
of financial ratings, achievement of balance sheet or income statement objectives, quality measures, and any component or components
of the foregoing (including, without limitation, determination thereof with or without the effect of discontinued operations and
dispositions of business segments, non-recurring items, material extraordinary items that are both unusual and infrequent, special
charges, and/or accounting changes), or implementation, management or completion of critical projects or processes. Performance
Goals may include a threshold level of performance below which no payment or vesting may occur, levels of performance at which
specified payments or specified vesting will occur, and a maximum level of performance above which no additional payment or vesting
will occur. Performance Goals may be absolute in their terms or measured against or in relationship to a market index, a group
of other companies comparably, similarly or otherwise situated, or a combination thereof. The Committee shall determine the Performance
Period during which the Performance Goal must be met; and attainment of Performance Goals shall be subject to certification by
the Committee. Each of the Performance Goals shall be determined, where applicable and except as provided above, in accordance
with generally accepted accounting principles.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(t)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Performance Period&rdquo; means the time period during which the Performance Goal must be met in connection
with a Performance-Based Compensation Award. Such time period shall be set by the Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(u)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Performance Unit&rdquo; means an Award, designated as a performance unit, granted to a Participant pursuant
to Article X herein and valued as a fixed dollar amount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(v)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Period of Restriction&rdquo; means the period during which the transfer of Shares of Restricted Stock is restricted,
pursuant to Article VIII herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(w)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Plan&rdquo; means the Shore Bancshares, Inc. 2016 Stock and Incentive Compensation Plan, as herein described
and as hereafter from time to time amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(x)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Related Option&rdquo; means an Option with respect to which a Stock Appreciation Right has been granted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(y)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Restricted Stock&rdquo; means an Award of Shares granted to a Participant pursuant to Article VIII herein
which is subject to restrictions and forfeiture until the designated conditions for the lapse of the restrictions are satisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(z)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Restricted Stock Unit&rdquo; or &ldquo;RSU&rdquo; means an Award, designated as a Restricted Stock Unit, granted
to a Participant pursuant to Article IX herein and valued by reference to Shares, which is subject to restrictions and forfeiture
until the designated condition for the lapse of the restrictions are satisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(aa)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Share&rdquo; means a share of Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(bb)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Stock&rdquo; means the common stock of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(cc)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Stock Appreciation Right&rdquo; or &ldquo;SAR&rdquo; means an Award, designated as a stock appreciation right,
granted to a Participant pursuant to Article VII herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(dd)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>&ldquo;Subsidiary&rdquo; means any subsidiary corporation of the Company within the meaning of Section 424(f)<I>&nbsp;</I>of
the Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
III</FONT><BR>
Administration</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">3.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Administration of the Plan by the Committee. </I>The Plan shall be administered by the Committee which shall have
all powers necessary or desirable for such administration. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. In addition to any other powers and, subject to the
provisions of the Plan, the Committee shall have the following specific powers:</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(a)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to determine the terms and conditions upon which the Awards may be made and exercised;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(b)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to determine all terms and conditions of each Agreement, which need not be identical;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(c)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to construe and interpret the Agreements and the Plan;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(d)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to establish, amend or waive rules or regulations for the Plan&rsquo;s administration;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(e)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to accelerate the exercisability of any Award, the end of a Performance Period or termination of any Period of Restriction
or other restrictions imposed under the Plan;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(f)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve &ldquo;covered
employees&rdquo; within the meaning of Section 162(m) of the Code or &ldquo;insiders&rdquo; within the meaning of Section 16 of
the Exchange Act;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(g)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to determine the target number of Performance Units to be granted pursuant to Article X, the performance measures
that will be used to establish the Performance Goals, the Performance Period(s) and the number of Performance Units earned by a
Participant;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(h)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to designate an Award (including a cash bonus) as a Performance-Based Compensation Award and to select the performance
measures that will be used to establish the Performance Goals;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(i)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term
of any outstanding Award; <I>provided, however</I>, that if any such amendment impairs a Participant's rights or increases a Participant's
obligations under his or her Award or creates or increases a Participant's federal income tax liability with respect to an Award,
such amendment shall also be subject to the Participant&rsquo;s consent;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(j)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting
termination of their employment or service for purposes of the Plan, which periods shall be no shorter than the periods generally
applicable to Employees under the Company&rsquo;s employment policies;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(k)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control
or an event that triggers anti-dilution adjustments;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(l)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the
Plan and any instrument or agreement relating to, or Award granted under, the Plan; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(m)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>to make all other determinations and take all other actions necessary or advisable for the administration of the
Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Chairman of the Committee and such other
Directors and officers of the Company as shall be designated by the Committee are hereby authorized to execute Agreements on behalf
of the Company and to cause them to be delivered to the recipients of Awards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Subject to limitations under applicable
law, the Committee is authorized in its discretion to issue Awards and/or accept notices, elections, consents and/or other forms
or communications by Participants by electronic or similar means, including, without limitation, transmissions through e-mail,
voice mail, recorded messages on electronic telephone systems, and other permissible methods, on such basis and for such purposes
as it determines from time to time.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members present at any meeting at which a quorum is present (in person
or as otherwise permitted by applicable law), or acts approved in writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Committee also may modify the purchase
price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, shareholder approval
shall be required before the repricing is effective.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">3.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Selection of Participants. </I>The Committee shall have the authority to grant Awards under the Plan, from time
to time, to such Key Associates and/or Directors as may be selected by it. Each Award shall be evidenced by an Agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">3.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Decisions Binding. </I>All determinations and decisions made by the Board or the Committee pursuant to the provisions
of the Plan shall be final, conclusive and binding on the Company and the Participants, unless such decisions are determined by
a court having jurisdiction to be arbitrary and capricious.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">3.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Requirements of Rule 16b-3 and Section 162(m) of the Code. </I>Notwithstanding any other provision of the Plan,
the Board or the Committee may impose such conditions on any Award, and amend the Plan in any such respects, as may be required
to satisfy the requirements of Rule 16b-3, as amended (or any successor or similar rule), under the Exchange Act.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any provision of the Plan to the contrary
notwithstanding, and except to the extent that the Committee determines otherwise: (a) transactions by and with respect to officers
and Directors of the Company who are subject to Section 16(b) of the Exchange Act (hereafter, &ldquo;Section 16 Persons&rdquo;)
shall comply with any applicable conditions of SEC Rule 16b-3; (b) transactions with respect to persons whose remuneration is subject
to the provisions of Section 162(m) of the Code shall conform to the requirements of Section 162(m)(4)(C) of the Code; and (c)
every provision of the Plan shall be administered, interpreted and construed to carry out the foregoing provisions of this sentence.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Notwithstanding any provision of the Plan
to the contrary, the Plan is intended to give the Committee the authority to grant Awards that qualify as performance-based compensation
under Section 162(m)(4)(C) of the Code as well as Awards that do not so qualify. Every provision of the Plan shall be administered,
interpreted, and construed to carry out such intention, and any provision that cannot be so administered, interpreted and construed
shall to that extent be disregarded; and any provision of the Plan that would prevent an Award that the Committee intends to qualify
as performance-based compensation under Section 162(m)(4)(C) of the Code from so qualifying shall be administered, interpreted
and construed to carry out such intention, and any provision that cannot be so administered, interpreted and construed shall to
that extent be disregarded.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-weight: normal; color: #010000; vertical-align: baseline">3.5<FONT STYLE="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Indemnification of Committee. </I>In addition to such other rights of indemnification as they may have as Directors
or as members of the Committee, and to the extent allowed by applicable law, the members of the Committee shall be indemnified
by the Company against reasonable expenses, including attorneys&rsquo; fees actually and reasonably incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted or made hereunder,
and against all amounts reasonably paid by them in settlement thereof (<I>provided, however</I>, that the settlement has been approved
by the Company, which approval shall not be unreasonably withheld) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best
interests of the Company and its Subsidiaries; <I>provided further, however</I>, that within 60 days after institution of any such
action, suit or proceeding, such Committee may, in writing, offer the Company the opportunity at its own expense to handle and
defend such action, suit or proceeding.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">3.6<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Compliance with Code Section 409A</I>. Notwithstanding any provision of this Plan or of an Agreement to the contrary,
to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered
to be in compliance therewith Section 409A of the Code and any related regulations or other guidance promulgated with respect to
such Section by the U.S. Department of the Treasury or the Internal Revenue Service (&ldquo;Section 409A&rdquo;), and the Board
and the Committee shall administer the Plan in accordance with such intention. Any payments described in the Plan that are due
within the &ldquo;short-term deferral period&rdquo; as defined in Section 409A shall not be treated as deferred compensation unless
applicable laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided
pursuant to the Plan during the six-month period immediately following the Participant&rsquo;s termination of employment or service
shall instead be paid on the first payroll date after the six-month anniversary of the Participant&rsquo;s separation from service
(or the Participant's death, if earlier). Any provision of this Plan or of an Agreement that would cause the Plan or an Award granted
hereunder to fail to satisfy any requirement of Section 409A shall have no force or effect until amended to comply with Section
409A, which amendment may be retroactive to the extent permitted by Section 409A. Notwithstanding the foregoing, neither the Company
nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant
under Section 409A and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.</P>

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

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

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
IV</FONT><BR>
Shares Subject to the Plan</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">4.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Number of Shares. </I>Subject to adjustment as provided in Section 4.4 herein, the maximum aggregate number of
Shares that may be issued pursuant to Awards made under the Plan shall not exceed the sum of ______ plus that number of Shares
represented by awards under the 2006 Stock Option Plan, which expires or is otherwise terminated or forfeited at any time after
the Effective Date of the Plan, provided that no more than ______ Shares are available for grants of Incentive Stock Options. Except
as provided in Sections 4.2 and 4.3 herein, the issuance of Shares in connection with the exercise of, or as other payment for
Awards, under the Plan shall reduce the number of Shares available for future Awards under the Plan and shall not again be available
for the grant of an Award. Any Shares granted in connection with Options and Stock Appreciation Rights shall be counted against
this limit as one Share for each Share subject to an Option or Stock Appreciation Right awarded. Any Shares of Stock granted in
connection with Awards other than Options and Stock Appreciation Rights shall be counted against this limit as two Shares for every
one Share granted in connection with such Award. During the terms of the Awards, the Company shall keep available at all times
the number of Shares of Stock required to satisfy such Awards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Shares that may be issued under the Plan
may either be authorized but unissued Shares or Shares held in a grantor trust created by the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company, during the term of the Plan
and thereafter during the term of any outstanding Award which may be settled in Shares, shall reserve and keep available a number
of Shares sufficient to satisfy the requirements of the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">4.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Lapsed Awards or Forfeited Shares. </I>If any Award granted under the Plan is forfeited, terminates, expires or
lapses prior to the exercise or realization of the Award, any Shares subject to such Award again shall be available for the grant
of an Award under the Plan, subject to Section 7.4. Any Shares that again become available for future grants pursuant to this Section
4.2 shall be added back as one Share if such Shares were subject to Options or Stock Appreciation Rights and as two Shares if such
Shares were subject to other Awards.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">4.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Delivery of Shares as Payment.</I> Notwithstanding anything to the contrary contained herein: Shares subject to
an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such Shares are (a) Shares
tendered in payment of an Option, (b) Shares delivered or withheld by the Company to satisfy any tax withholding obligation, or
(c) Shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the
Award.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">4.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Capital Adjustments. </I>In the event that the outstanding Shares shall be increased or decreased or changed into
or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, effected
without the receipt of consideration by the Company, through reorganization, merger or consolidation, recapitalization, reclassification,
stock split, reverse stock split, split-up, combination or exchange of Shares or declaration of any dividends payable in Shares,
or other distributions to common shareholders other than regular cash dividends, the number or kind of Shares or other securities
issued or reserved for issuance pursuant to the Plan and subject to outstanding Awards, as well as the exercise price, grant price
or purchase price relating to any Award shall be adjusted as may be deemed appropriate by the Committee under the Plan. The decision
of the Committee as to the amount and timing of any such adjustment shall be conclusive.</P>

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

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
V</FONT><BR>
Eligibility</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5in">The Committee shall determine and designate
from time to time those Key Associates and Directors who are eligible to participate in the Plan. Multiple grants of Awards under
the Plan may be made in any calendar year to a Participant, <I>provided, however</I>, that Awards of Options and SARs (disregarding
any Tandem SARs, as defined in Section 7.1) granted in any calendar year to any one Participant shall not provide for the issuance
of, and/or cash payment with respect to, more than 50,000 Shares in the aggregate, that Awards of Restricted Stock and Restricted
Stock Units granted in any calendar year to any one Participant shall not provide for the issuance of, and/or cash payment with
respect to, more than 30,000 Shares in the aggregate, and that Performance Units granted in any calendar year to any one Participant
shall not provide for the payment of more than $1,000,000 in the aggregate. Notwithstanding the foregoing, multiple grants of Awards
under the Plan may be made in any calendar year to a Director, <I>provided, however</I>, that any Awards granted in any calendar
year to any one Director shall not provide for the issuance of, and/or cash payment with respect to, more than $50,000 in cash
or the equivalent thereof, based on the Fair Market Value of a Share on the Grant Date, in Shares in the aggregate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
VI</FONT><BR>
Stock Options</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant of Options. </I>Subject to the terms and conditions of the Plan and the applicable Agreement, Options may
be granted to Key Associates and Directors at any time and from time to time as shall be determined by the Committee. The Committee
shall have complete discretion in determining the number of Shares subject to Options granted to each Participant, <I>provided,
however</I>, consultants and non-employee Directors may be granted Non-Qualified Stock Options only and the aggregate Fair Market
Value (determined at the time the Award is made) of Shares with respect to which any Participant may first exercise ISOs (granted
under the Plan and all other equity compensation plans of the Company) during any calendar year may not exceed $100,000 or such
amount as shall be specified in Section 422 of the Code and rules and regulations thereunder. For purposes of this Section, ISOs
shall be taken into account in the order in which they were granted.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Option Agreement. </I>Each Option grant shall be evidenced by an Agreement that shall specify: the type of Option
granted, the Option Price (as hereinafter defined), the duration of the Option, the number of Shares to which the Option pertains,
any vesting conditions or other conditions imposed upon the exercisability of Options in the event of retirement, death, disability
or other termination of employment or service, and such other provisions as the Committee shall determine. The Agreement shall
specify whether the Option is intended to be an Incentive Stock Option within the meaning of Section 422 of the Code, or<I> </I>a
Non-Qualified Stock Option not intended to be within the provisions of Section 422 of the Code, <I>provided, however</I>, that
if an Option is intended to be an Incentive Stock Option but fails to be such for<I> </I>any reason, it shall continue in full
force and effect as a Non-Qualified Stock Option.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Option Price. </I>The Option Price shall be determined by the Committee subject to the limitations stated in this
Section. The Option Price shall not be less than 100% of the Fair Market Value of a Share on the Grant Date. In addition, an ISO
granted to a Key Associate (including any Director who is a Key Associate) who, at the time of grant, owns (within the meaning
of Section 424(d) of the Code) securities possessing more than 10% of the total combined voting power of all classes of securities
of the Company, shall have an Option Price which is at least equal to 110% of the Fair Market Value of a Share on the Grant Date.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>Each Option shall expire at such time as the Committee shall determine, <I>provided, however</I>, that no Option
shall be exercisable after the expiration of ten years from its Award Date. In addition, an ISO granted to a Key Associate (including
any Key Associate who is a Director) who, at the time of grant, owns (within the meaning of Section 424(d) of the Code) securities
possessing more than 10% of the total combined voting power of all classes of securities of the Company, shall not be exercisable
after the expiration of five years from its Award Date.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Exercisability. </I>Options granted under the Plan shall be exercisable at such times and be subject to such restrictions
and conditions as the Committee shall determine (which may be based on performance or other criteria), and as shall be set forth
in the Agreement, which need not be the same for all Participants. No option may be exercised for a fraction of a share.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.6<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Method of Exercise. </I>Options shall be exercised by the delivery of a written notice to the Company in the form
prescribed by the Committee setting forth the number of Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares and payment of (or an arrangement satisfactory to the Company for the Participant to pay) any tax
withholding required in connection with the Option exercise. The Option Price shall be payable to the Company in full either in
cash, by delivery of Shares having a Fair Market Value at the time of exercise equal to the Option Price or by a combination of
the foregoing.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To the extent permitted under the applicable
laws and regulations, at the request of the Participant and with the consent of the Committee, the Company agrees to cooperate
in a &ldquo;cashless exercise&rdquo; of an Option. The cashless exercise shall be effected by the Participant delivering to a securities
broker instructions to exercise all or part of the Option, including instructions to sell a sufficient number of Shares to cover
the costs and expenses associated therewith.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As soon as practicable, after receipt of
written notice and payment of the Option Price and completion of payment of (or an arrangement satisfactory to the Company for
the Participant to pay) any tax withholding required in connection with the Option exercise, the Company shall deliver to the Participant,
stock certificates in an appropriate amount based upon the number of Options exercised, issued in the Participant&rsquo;s name.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.7<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Restrictions on</I>&nbsp;<I>Shares. </I>The Committee may impose such restrictions on any Shares acquired pursuant
to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under applicable
federal securities laws, under the requirements of The NASDAQ Stock Market, Inc. or any exchange upon which such Shares are then
listed or traded and under any state securities laws applicable to such Shares. The Committee may specify in an Agreement that
Shares delivered on exercise of an Option are Restricted Stock or Shares subject to forfeiture and cancellation or a buyback right
in the event that any term or condition specified in the Agreement is not satisfied.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.8<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Nontransferability of Options. </I>No Option granted under the Plan may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted
to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Notwithstanding the foregoing or any other
provision of the Plan to the contrary, to the extent permissible under Rule 16b-3 of the Exchange Act, a Participant who is granted
Non-Qualified Stock Options pursuant to the Plan may transfer such Non-Qualified Stock Options to his or her spouse, lineal ascendants,
lineal descendants, or to trusts for their benefit, provided that the Non-Qualified Stock Options so transferred may not again
be transferred other than to the Participant originally receiving the grant of Non-Qualified Stock Options or to an individual
or trust to whom such Participant could have transferred Non-Qualified Stock Options pursuant to this Section 6.8. Non-Qualified
Stock Options which are transferred pursuant to this Section 6.8 shall be exercisable by the transferee subject to the same terms
and conditions as would have applied to such Non-Qualified Stock Options in the hands of the Participant originally receiving the
grant of such Non-Qualified Stock Options.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">6.9<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Notification of Disqualifying Disposition of ISO Shares</I>. In the event of a disposition of Shares received
upon exercise of an ISO where the disposition occurs within two years from the date the ISO was granted or one year from the receipt
of the underlying Shares (a &ldquo;disqualifying disposition&rdquo;), the Participant shall notify the Company&rsquo;s Secretary
in writing as to the date of such disposition, the sale price (if any), and the number of Shares involved.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
VII</FONT><BR>
Stock Appreciation Rights</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant of Stock Appreciation Rights. </I>Subject to the terms and conditions of the Plan, Stock Appreciation Rights
may be granted to Key Associates and Directors, at the discretion of the Committee, in any of the following forms:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(a)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>In connection with the grant, and exercisable in lieu of, Options (&ldquo;Tandem SARs&rdquo;);</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(b)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>In connection with and exercisable in addition to the grant of Options (&ldquo;Additive SARs&rdquo;);</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(c)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>Independent of grant of the Options (&ldquo;Freestanding SARs&rdquo;); or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(d)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>In any combination of the foregoing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant Requirements</I>. Any Tandem or Additive SAR that relates to a Non-Qualified Stock Option may be granted
at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Non-Qualified Stock
Option. Any Tandem or Additive SAR that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock
Option is granted.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>SAR Agreement. </I>Each SAR grant shall be evidenced by an Agreement that shall specify its type of SAR and its
terms and conditions. The exercise price of a Free Standing SAR shall be determined by the Committee, but the exercise price of
any SAR that is intended to be a Performance-Based Compensation Award shall not be less than 100% of the Fair Market Value of one
Share of Stock on the Grant Date of such Stock Appreciation Right. A Tandem or Additive SAR granted simultaneously with or subsequent
to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the
Related Option, shall be transferable only upon the same terms and conditions as the Related Option, and shall be exercisable only
to the same extent as the Related Option. The Committee is expressly authorized to grant SARs which are deferred compensation covered
by Section 409A, as well as SARs which are not deferred compensation covered by Section 409A.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Exercise of Tandem SARs. </I> Tandem SARs may be exercised with respect to all or part of the Shares subject to
the Related Option. The exercise of Tandem SARs shall cause a reduction in the number of Shares subject to the Related Option equal
to the number of Shares with respect to which the Tandem SAR is exercised. Conversely, the exercise, in whole or part, of a Related
Option, shall cause a reduction in the number of Shares subject to the Tandem SAR equal to the number of Shares with respect to
which the Related Option is exercised. Shares with respect to which the Tandem SAR shall have been exercised may not be subject
again to an Award under the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Notwithstanding any other provision of the
Plan to the contrary, a Tandem SAR shall expire no later than the expiration of the Related Option, shall be transferable only
when and under the same conditions as the Related Option and shall be exercisable only when the Related Option is eligible to be
exercised. In addition, if the Related Option is an ISO, a Tandem SAR shall be exercised for no more than 100% of the difference
between the Option Price of the Related Option and the Fair Market Value of Shares subject to the Related Option at the time the
Tandem SAR is exercised.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>Ex<I>ercise of Additive SARs. </I>Additive SARs shall be deemed to be exercised upon, and in addition to, the exercise
of the Related Options. The deemed exercise of Additive SARs shall not reduce the number of Shares with respect to which the Related
Options remains unexercised.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.6<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Exercise of Freestanding SARs. </I>Freestanding SARs may be exercised upon whatever terms and conditions the Committee,
in its sole discretion imposes upon such SARs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.7<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Other Conditions Applicable to SAR. </I>In no event shall the term of any SAR granted under the Plan exceed ten
years from the Grant Date. A SAR may be exercised only when the Fair Market Value of a Share exceeds either (a) the Fair Market
Value per Share on the Grant Date in the case of a Freestanding <I>S</I>AR or (b) the Option Price of the Related Option in the
case of either a Tandem or Additive SAR. A SAR shall be exercised by delivery to the Committee of a notice of exercise in the form
prescribed by the Committee.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.8<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Payment after Exercise of SARs. </I>Subject to the provisions of the Agreement, upon the exercise of a SAR, the
Participant is entitled to receive, without any payment to the Company (other than required tax withholding amounts), an amount
equal (the &ldquo;SAR Value&rdquo;) to the product of multiplying (a) the number of Shares with respect to which the SAR is exercised
by (b) an amount equal to the excess of (1) the Fair Market Value per Share on the date of exercise of the SAR over (2) either
(x) the Fair Market Value per Share on the Award Date in the case of a Freestanding SAR or (y) the Option Price of the Related
Option in the case of either a Tandem or Additive SAR. The Agreement may provide for payment of the SAR Value at the time of exercise
or, on an elective or non-elective basis, for payment of the SAR Value at a later date, adjusted (if so provided in the Agreement)
from the date of exercise based on an interest, dividend equivalent, earnings, or other basis (including deemed investment of the
SAR Value in Shares) set out in the Agreement (the &ldquo;adjusted SAR Value&rdquo;).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Payment of the SAR Value or adjusted SAR
Value to the Participant shall be made in Shares, valued at the Fair Market Value on the date of exercise in the case of an immediate
payment after exercise or at the Fair Market Value on the date of settlement in the event of an elective or non-elective delayed
payment, in cash or a combination thereof as determined by the Committee, either at the time of the Award or thereafter, and as
provided in the Agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">7.9<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Nontransferability of SARs. </I>No SAR granted under the Plan, and no right to receive payment in connection therewith,
may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent
and distribution. Further, all SARs, and rights in connection therewith, granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant or his guardian or legal representative.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
VIII</FONT><BR>
Restricted Stock</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant of Restricted Stock. </I>Subject to the terms and conditions of the Plan, the Committee, at any time and
from time to time, may grant Shares of Restricted Stock under the Plan to such Key Associates and Directors and in such amounts
as it shall determine. Participants receiving Restricted Stock Awards are not required to pay the Company therefor (except for
applicable tax withholding) other than the rendering of services. If determined by the Committee, custody of Shares of Restricted
Stock may be retained <I>by </I>the Company until the termination of the Period of Restriction pertaining thereto.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Restricted Stock Agreement. </I>Each Restricted Stock Award shall be evidenced by an Agreement that shall specify,
the Period of Restriction, the number of Shares of Restricted Stock granted, and the applicable restrictions and such other provisions
as the Committee shall determine. If an Award of Restricted Stock is intended to be a Performance-Based Compensation Award, the
terms and conditions of such Award, including the Performance Goal and Performance Period, shall be set forth in an Agreement or
in a subplan of the Plan which is incorporated by reference into an Agreement and the requirements to satisfy or achieve the Performance
Goal as so provided therein shall be considered to be restrictions under the Plan.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Nontransferability of Restricted Stock. </I>Except as provided in this Article VIII and subject to the limitation
in the next sentence, the Shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until the termination of the applicable Period of Restriction or upon the earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and set forth in the Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his
guardian or legal representative.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Other Restrictions. </I>The Committee may impose such other restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including, without limitation, restrictions under applicable Federal or state securities
laws, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Certificate Legend. </I> In addition to any legends placed on certificates pursuant to Section 8.4 herein each
certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.5in 0pt 45.35pt">THE SALE OR OTHER TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER SET FORTH IN THE SHORE BANCSHARES, INC. 2016 STOCK AND INCENTIVE COMPENSATION PLAN, IN THE RULES AND ADMINISTRATIVE PROCEDURES
ADOPTED PURSUANT TO SUCH PLAN, AND IN AN AGREEMENT DATED (DATE OF GRANT). A COPY OF THE PLAN, SUCH RULES AND PROCEDURES, AND SUCH
RESTRICTED STOCK AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF SHORE BANCSHARES, INC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.5in 0pt 45.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.6<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Removal of Restrictions. </I>Except as otherwise provided in this Article VIII, Shares of Restricted Stock covered
by each Restricted Stock Award made under the Plan shall become freely transferable by the Participant after the last day of the
Period of Restriction and, where applicable, after a determination of the satisfaction or achievement on any applicable Performance
Goal. Once the Shares are released from the restrictions, the Participant shall be entitled to have the legend required by Section
8.5 herein removed from his or her stock certificate.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.7<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Voting Rights. </I>During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.8<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Dividends and Other Distributions. </I>Unless otherwise provided in the Agreement, during the Period of Restriction,
Participants entitled to or holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and
other distributions paid with respect to those Shares while they are so held. If any such dividends or distributions are paid in
Shares, the Shares shall be subject to the same restrictions on transferability and the same rules for custody as the Shares of
Restricted Stock with respect to which they were distributed.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">8.9<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Termination of Employment or Service. </I>Unless otherwise provided in the Agreement, in the event that a Participant
terminates his employment or service with the Company for any reason during the Period of Restriction, then any Shares of Restricted
Stock still subject to restrictions as of the date of such termination shall automatically be forfeited and returned to the Company.
The Committee may provide for vesting of Restricted Stock in connection with the termination of a Participant's employment or service
on such basis as it deems appropriate.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
IX</FONT><BR>
Restricted Stock Units</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">9.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant of Restricted Stock Units. </I>Subject to the terms and conditions of the Plan, the Committee, at any time
and from time to time, may grant Restricted Stock Units under the Plan (with one Unit representing one Share) to such Key Associates
and Directors and in such amounts as it shall determine. Participants receiving Restricted Stock Unit Awards are not required to
pay the Company therefor (except for applicable tax withholding) other than the rendering of services. No Shares shall be issued
at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any
such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee
may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date until the
occurrence of a future payment date or event set forth in an Award Agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">9.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Restricted Stock Unit Agreement. </I>Each Restricted Stock Unit Award shall be evidenced by an Agreement that
shall specify the Period of Restriction, the number of Restricted Stock Units granted, and the applicable restrictions and such
other provisions as the Committee shall determine. If an Award of Restricted Stock Units is intended to be a Performance-Based
Compensation Award, the terms and conditions of such Award, including the Performance Goal and Performance Period, shall be set
forth in an Agreement or in a subplan of the Plan which is incorporated by reference into an Agreement and the requirements to
satisfy or achieve the Performance Goal as so provided therein shall be considered to be restrictions under the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Unless otherwise provided in the Agreement,
during the Period of Restriction, Participants holding Restricted Stock Units shall have added to their rights all dividends and
other distributions which would have been paid with respect to the Shares represented by those Restricted Stock Units if such Shares
were outstanding, and such deemed dividends or distributions shall be subject to the same restrictions, vesting and payment as
the Restricted Stock Units to which they are attributable. Unless otherwise provided in the Agreement, during the Period of Restriction,
any such deemed dividends and other distributions shall be deemed converted to additional Restricted Stock Units based on the Fair
Market Value of a Share on the date of payment or distribution of the deemed dividend or distribution.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">9.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Payment after Lapse of Restrictions. </I>Subject to the provisions of the Agreement, upon the lapse of restrictions
with respect to a Restricted Stock Unit, the Participant is entitled to receive, without any payment to the Company (other than
required tax withholding amounts), an amount equal (the &ldquo;RSU Value&rdquo;) to the product of multiplying (a) the number of
Shares with respect to which the restrictions lapse by (b) the Fair Market Value per Share on the date the restrictions lapse.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(a)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>The Agreement may provide for payment of the RSU Value at the time of settlement or, on an elective or non-elective
basis, for payment of the RSU Value at a later date, adjusted (if so, provided in the Agreement) from the date of exercise based
on an interest, dividend equivalent, earnings, or other basis (including deemed investment of the RSU Value in Shares) set out
in the Agreement (the &ldquo;adjusted RSU Value&rdquo;). The Committee is expressly authorized to grant Restricted Stock Units
which are deferred compensation covered by Section 409A, as well as Restricted, Stock Units which are not deferred compensation
covered by Section 409A provided that any deferral of the settlement of a Restricted Stock Unit or any election to defer the settlement
of Restricted Stock Unit shall be made in accordance with the requirements of Scetion 409A.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(b)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>Payment of the RSU Value or adjusted RSU Value to the Participant shall be made in Shares, in cash equal to the value
of the Shares, or a combination thereof as determined by the Committee and as provided in the Agreement, valued at the Fair Market
Value on the date the restrictions therefor lapse in the case of an immediate payment after vesting or at the Fair Market Value
on the date of settlement in the event of an elective or non-elective delayed payment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">9.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Nontransferability of Restricted Stock Units. </I>No Restricted Stock Unit granted under the Plan, and no right
to receive payment in connection therewith, may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all Restricted Stock Units, and rights in connection therewith,
granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal
representative.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">9.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Termination of Employment or Service. </I>Unless otherwise provided in the Agreement, in the event that a Participant
terminates his employment or service with the Company for any reason during the Period of Restriction, then any Restricted Stock
Units still subject to restriction as of the date of such termination shall automatically be forfeited and returned to the Company.
The Committee may provide for vesting of Restricted Stock Units in connection with the termination of a Participant's employment
or service on such basis as it deems appropriate.</P>

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

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

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
X</FONT><BR>
Performance Units</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">10.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Grant of Performance Units. </I>Subject to the terms and conditions of the Plan, Performance Units may be granted
to Key Associates and Directors at any time and from time to time as shall be determined by the Committee. Otherwise, the Committee
shall have complete discretion in determining the number of Performance Units granted to each Participant. Participants receiving
such Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">10.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Performance Unit Agreement. </I>Each Performance Unit is intended to be a Performance-Based Compensation Award,
and the terms and conditions of each such Award, including the Performance Goal and Performance Period (which may be equal to,
less than or more than one year), shall be set forth in an Agreement or in a subplan of the Plan which is incorporated by reference
into an Agreement. The Committee shall set the Performance Goal in its discretion for each Participant who is granted a Performance
Unit.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">10.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Settlement of Performance Units. </I>The number of Performance Units earned by a Participant will depend on the
extent to which the Performance Goals established by the Committee are attained within the applicable Performance Period, as determined
by the Committee. No payout shall be made with respect to any Performance&ndash;Based Compensation Award except upon written certification
by the Committee that the minimum threshold Performance Goal(s) have been achieved. After a Performance Period has ended, the holder
of a Performance Unit shall be entitled to receive the value thereof based on the degree to which the Performance Goals and other
conditions established by the Committee and set forth in the Agreement (or in a subplan of the Plan which is incorporated by reference
into an Agreement) have been satisfied.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">10.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Form of Payment. </I>Payment of the amount to which a Participant shall be entitled upon the settlement of a Performance
Unit shall be made in cash, Shares or a combination thereof as determined by the Committee. Payment may be made in a lump sum or
installments as determined by the Committee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">10.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Nontransferability of Performance Units. </I>No Performance Unit granted under the Plan may be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. All
rights with respect to Performance Units granted to a Participant under the Plan shall be exercisable during his lifetime only
by such Participant or his guardian or legal representative.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XI</FONT><BR>
Change in Control</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">11.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>The provisions of this Section 11.1 shall apply unless otherwise provided in the Award Agreement, or to the extent
otherwise determined by the Committee, upon the occurrence of a Change in Control:</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(a)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Assumption of Outstanding Awards</I>. Upon a Change in Control where the Company is not the surviving corporation
(or survives only as a subsidiary of another corporation), all outstanding Awards that are not exercised or paid at the time of
the Change in Control shall be assumed by, or substituted with Awards that have comparable terms by, the surviving corporation
(or a parent or subsidiary of the surviving corporation). For the purposes of this Section 11.1(a), an Award shall be considered
assumed or substituted for if following the Change in Control the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective
date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares); <I>provided, however</I>, that if such consideration received in the transaction constituting
a Change in Control is not solely common stock of the surviving corporation (or a parent or subsidiary of the surviving corporation),
the Committee may, with the consent of the surviving corporation (or a parent or subsidiary of the surviving corporation), provide
that the consideration to be received upon the exercise or vesting of an Award, for each Share subject thereto, will be solely
common stock of the surviving corporation (or a parent or subsidiary of the surviving corporation) substantially equal in fair
market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control.
The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding. After a Change in Control, references to the &ldquo;Company&rdquo; as they
relate to employment matters shall include the successor employer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(b)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Vesting Upon Certain Terminations of Employment in Connection with a Change in Control</I>. The Committee shall
have the discretion to provide for full or partial vesting of Awards upon a Participant&rsquo;s involuntary termination of service
that occurs in connection with a Change in Control, subject to such terms and conditions set forth in a Participant&rsquo;s employment
agreement, or if none, the Agreement. If any such Awards vest based upon the attainment of certain Performance Goals, the vesting
of the Award may accelerate pro rata based on the portion of performance period completed as of the date of the Participant&rsquo;s
termination of service or based on the actual performance of the Company based on a shortened performance period which extends
through the end of the fiscal quarter immediately preceding the Participant&rsquo;s termination of employment or service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in"><FONT STYLE="color: #010000">(c)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Other Alternatives</I>. In the event of a Change in Control, if all outstanding Awards are not assumed by, or
substituted with Awards that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation),
the Committee may take any of the following actions with respect to any or all outstanding Awards, without the consent of any Participant:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.55in; text-indent: 0.45in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(i)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>the Committee may determine that the vesting of each outstanding Award shall be accelerated so that each Award shall,
immediately prior to the effective date of the Change in Control, become fully vested with respect to the total number of Shares
of Stock subject to such Award provided that the vesting of any Award based upon the attainment of certain Performance Goals may
accelerate pro rata based on the portion of Performance Period completed as of the date of the Change in Control or based on the
actual performance of the Company based on a shortened Performance Period which extends through the end of the fiscal quarter immediately
preceding the Change in Control;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(ii)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>the Committee, in its sole discretion, may determine that, upon the occurrence of a Change in Control of the Company,
all or a portion of certain outstanding Awards shall terminate within a specified number of days after notice to the Participants,
and each such Participant shall receive an amount equal to the value of such Award on the date of the Change in Control, and with
respect to each Share of Stock subject to an Option or SAR, an amount equal to the excess of the Fair Market Value of such Shares
immediately prior to the occurrence of such Change in Control (or such other greater amount as the Committee may determine in its
sole and absolute discretion to be equitable to prevent dilution or enlargement of Participants&rsquo; rights under the Plan) over
the exercise price per share of such Option or SAR. Such amount shall be payable in cash, in one or more kinds of property (including
the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its sole discretion, shall
determine; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.05in; text-indent: 0.4in"><FONT STYLE="color: #010000">(iii)<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT>after giving Participants an opportunity to exercise all of their outstanding Options and SARs, the Committee may
terminate any or all unexercised Options and SARs at such time as the Committee deems appropriate. Such surrender, termination
or payment shall take place as of the date of the Change in Control or such other date as the Committee may specify. Without limiting
the foregoing, if the per share Fair Market Value of the Shares does not exceed the per Share Option exercise price or SAR grant
price, as applicable, the Company shall not be required to make any payment to the Participant upon surrender of the Option or
SAR.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XII</FONT><BR>
Modification, Extension and Renewal of Awards</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Subject to the terms and conditions and
within the limitations of the Plan: (a) the Committee may modify, extend or renew outstanding Awards and may modify the terms of
an outstanding Agreement, provided that the exercise price of any Award may not be lowered other than pursuant to Section 4.4 herein;
and (b) the Committee may accept the surrender of outstanding Awards (to the extent not yet exercised) granted under the Plan or
outstanding awards granted under any other equity compensation plan of the Company and authorize the granting of new Awards pursuant
to the Plan in substitution therefor so long as the new or substituted awards do not specify a lower exercise price than the surrendered
Awards, and otherwise the new Awards may be of a different type than the surrendered Awards, may specify a longer term than the
surrendered Awards, may provide for more rapid vesting and exercisability than the surrendered Awards and may contain any other
provisions that are authorized by the Plan. Notwithstanding the foregoing, however, no modification of an Award, shall, without
the consent of the Participant, adversely affect the rights or obligations of the Participant.</P>

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

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XIII</FONT><BR>
Amendment, Modification and Termination of the Plan</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">13.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Amendment, Modification and Termination. </I>At any time and from time to time, the Board may terminate, amend
or modify the Plan. Such amendment or modification may be without shareholder approval except to the extent that such approval
is required by the Code, pursuant to the rules under Section 16 of the Exchange Act, by any national securities exchange or system
on which the Shares are then traded, listed or reported, by any regulatory body having jurisdiction with respect thereto or under
any other applicable laws, rules or regulations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">13.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Awards Previously Granted</I>. No termination, amendment or modification of the Plan other than pursuant to Section
4.4 herein shall in any manner adversely affect any Award theretofore granted under the Plan, without the written consent of the
Participant.</P>

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XIV</FONT><BR>
Withholding</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">14.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Tax Withholding. </I>The Company shall have the power and the right to deduct or withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy Federal, State and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">14.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Withholding of Shares. </I>With respect to employees, the Company may require a Participant whose Award granted
hereunder has vested, or who exercises an Option or SAR granted hereunder to reimburse the Company for any taxes required by any
governmental regulatory authority to be withheld or otherwise deducted and paid by such corporation or entity in respect of the
issuance or disposition of such Shares or the payment of any amounts. In lieu thereof, the Company shall have the right to withhold
the amount of such taxes from any other sums due or to become due from the Company to the Participant upon such terms and conditions
as the Committee shall in its sole discretion prescribe. The Company, in its discretion, may hold the stock certificate to which
such Participant is entitled upon the vesting of an Award or the exercise of a Stock Option or SAR as security for the payment
of such withholding tax liability, until cash sufficient to pay that liability has been accumulated by or paid to the Company.
With respect to employees, at any time that the Company, Subsidiary or other entity that employs such Participant becomes subject
to a withholding obligation under applicable law with respect to the vesting of an Award or the exercise of an Option (the &ldquo;Tax
Date&rdquo;), except as set forth below, a Participant may, subject to the approval of the Committee, elect to satisfy, in whole
or in part, the Participant&rsquo;s related personal tax liabilities (an &ldquo;Election&rdquo;) by (a) directing the Company to
withhold from Shares issuable in the related vesting or exercise either a specified number of Shares of Stock having a specified
value (in each case equal to the related minimum statutory personal withholding tax liabilities with respect to the applicable
taxing jurisdiction in order to comply with the requirements for a &ldquo;fixed plan&rdquo; under Accounting Principles Board Opinion
No. 25), (b) tendering Shares of Stock or other securities of the Company previously issued pursuant to the exercise of an Option
or other Shares of Stock owned by the Participant, or (iii) combining any or all of the foregoing Elections in any fashion. The
foregoing notwithstanding, however, when previously issued Shares of Stock or other securities of the Company are tendered pursuant
to an Election, such tender of Shares will not be accepted unless the Participant has held such Shares for the requisite period
necessary to avoid a charge to the Company&rsquo;s earnings for financial reporting purposes. An Election shall be irrevocable.
The withheld Shares and other Shares of Stock or other securities tendered in payment shall be valued at their Fair Market Value
on the Tax Date. The Committee may in its sole discretion disapprove of any Election, suspend or terminate the right to make Elections
or provide that the right to make Elections shall not apply to particular Shares or exercises. The Committee may impose any additional
conditions or restrictions on the right to make an Election as it shall deem appropriate, including conditions or restrictions
with respect to Section&nbsp;16 of the Exchange Act.</P>

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

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XV</FONT><BR>
Successors</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All obligations of the Company under the
Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company.</P>

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><FONT STYLE="text-transform: uppercase; color: #010000">Article
XVI</FONT><BR>
General</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.1<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Minimum Vesting Restriction</I>. Awards shall fully vest over a period that is not less than one year from the
date of grant; <I>provided, however</I>, that up to five percent of the Shares of Stock subject to the aggregate share reserve
set forth in Section 4.1 as of Effective Date may be subject to Awards that are not subject to the vesting restriction in this
Section 16.1.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.2<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Forfeiture Events</I>. The Committee may specify in an Agreement that the Participant's rights, payments and benefits
with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events,
in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition,
non-solicitation, confidentiality or other restrictive covenants that are contained in the Agreement or otherwise applicable to
the Participant, a termination of the Participant's employment or service for cause, or other conduct by the Participant that is
detrimental to the business or reputation of the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.3<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Clawback</I>. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under
any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be
required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by
the Company pursuant to any such law, government regulation or stock exchange listing requirement).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.4<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Deferral of Awards</I>. The Committee may establish one or more programs under the Plan to permit selected Participants
the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of Performance Goals or other
event that absent the election would entitle the Participant to payment or receipt of Shares of Stock or other consideration under
an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and
accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions,
rules and procedures that the Committee deems advisable for the administration of any such deferral program.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Requirements of Law. </I>The granting of Awards and the issuance of Shares of Stock under the Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or self-regulatory organizations
as may be required.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.6<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Effect of the Plan. </I>The establishment of the Plan shall not confer upon any Key Associate or Director any
legal or equitable right against the Company, a Subsidiary or the Committee, except as expressly provided in the Plan. The Plan
does not constitute an inducement or consideration for the employment or service of any Key Associate or Director, nor is it a
contract between the Company or any of its Subsidiaries and any Key Associate or Director. Participation in the Plan shall not
give any Key Associate or Director any right to be retained in the service of the Company or any of its Subsidiaries. No Key Associate
or Director who receives an Award shall have rights as a shareholder of the Company prior to the date Shares are issued to the
Participant pursuant to the Plan.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.7<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Creditors. </I> The interests of any Participant under the Plan or any Agreement are not subject to the claims
of creditors and may not, in any way, be assigned, alienated or encumbered.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.8<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Governing Law. </I>The Plan, and all Agreements hereunder, shall be governed, construed and administered in accordance
with and governed by the laws of the State of Maryland and the intention of the Company is that ISOs granted under the Plan qualify
as such under Section 422 of the Code.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.9<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Severability. </I>In the event any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: #010000">16.10<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></FONT><I>Unfunded Status of Plan. </I>The Plan is intended to constitute an &ldquo;unfunded&rdquo; plan for incentive and
deferred compensation. With respect to any payments as to which a Participant has a fixed and vested interest but which are not
yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater
than those of a general unsecured creditor of the Company.</P>

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

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

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

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

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-transform: uppercase; text-align: center"><A NAME="a_042"></A>APPENDIX B<BR>
Form of Proxy</P>



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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>28969 Information Lane, Easton, Maryland
21601</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>410-763-7800/Fax 410-763-8560</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The undersigned shareholder of Shore Bancshares,
Inc. (the &ldquo;Company&rdquo;) hereby appoints Lloyd L. Beatty, Jr. and James A. Judge, or either of them, the lawful attorneys
and proxies of the undersigned, with full power of substitution, and hereby authorizes them to represent and to vote, as designated
below, all shares of Common Stock of the Company held by the undersigned as of March 7, 2016 at the Annual Meeting of Shareholders
called to convene on Wednesday, April 27, 2016, and any adjournment or postponement thereof, for the purposes identified on this
proxy and with discretionary authority as to any other matters that may properly come before the Annual Meeting, including substitute
nominees if any of the named nominees for director should be unavailable to serve for election in accordance with and as described
in the Notice of Annual Meeting of Shareholders and Proxy Statement.</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; border-left: Black 1pt solid; padding-left: 0.2in; text-indent: -0.15in"><FONT STYLE="font-size: 10pt"><B>The Board of Directors recommends a vote &ldquo;FOR ALL NOMINEES&rdquo; in Proposal 1.</B></FONT></TD>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-top: Black 1pt solid; border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; padding-left: 0.2in; text-align: justify; text-indent: -0.15in; padding-right: 5.4pt"><FONT STYLE="font-size: 10pt"><B>1.&nbsp;&nbsp;Elect four Class I directors to serve for a three-year term ending at the 2019 Annual Meeting of Shareholders, two Class II directors to serve for a one-year term ending at the 2017 Annual Meeting of Shareholders and one Class III director to serve for a two-year term ending at the 2018 Annual Meeting of Shareholders.</B></FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; border-left: Black 1pt solid; padding-left: 0.2in"><FONT STYLE="font-size: 10pt"><B>Class I (term expires
    &nbsp;2019)</B></FONT></TD>
    <TD STYLE="width: 28%; border-right: Black 1pt solid; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Wingdings">&uml;</FONT><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;FOR ALL NOMINEES</FONT></TD>
    <TD STYLE="width: 2%; border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 36%; border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">01&nbsp;&nbsp;&nbsp;&nbsp;Christopher F. Spurry</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">02&nbsp;&nbsp;&nbsp;&nbsp;Frank E. Mason, III</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">03&nbsp;&nbsp;&nbsp;&nbsp;Jeffery E. Thompson</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">04&nbsp;&nbsp;&nbsp;&nbsp;John H. Wilson</P></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-left: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Wingdings">&uml;</FONT><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;WITHHOLD AUTHORITY </FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-left: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt">FOR ALL NOMINEES</FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; padding-left: 0.2in"><FONT STYLE="font-size: 10pt"><B>Class
    II (term expires&nbsp;&nbsp;2017)</B></FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">01&nbsp;&nbsp;&nbsp;&nbsp;Clyde V. Kelly, III</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.45in; text-indent: -0.25in">02&nbsp;&nbsp;&nbsp;&nbsp;David A. Fike</P></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-left: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-left: Black 1pt solid; padding-left: 0.2in"><FONT STYLE="font-size: 10pt"><B>Class III (term expires&nbsp;&nbsp;2018)</B></FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Wingdings 2">&pound;</FONT><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;FOR ALL EXCEPT</FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-left: Black 1pt solid; padding-left: 0.45in; text-indent: -0.25in"><FONT STYLE="font-size: 10pt">01&nbsp;&nbsp;&nbsp;&nbsp;R. Michael Clemmer, Jr.</FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; padding-left: 9pt"><FONT STYLE="font-size: 10pt">(see instruction below)</FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-left: Black 1pt solid; padding-left: 7.5pt">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; padding-left: 9pt">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; padding-left: 0.05in; padding-right: 5.4pt"><FONT STYLE="font-size: 10pt"><B>INSTRUCTION:&nbsp;&nbsp;To withhold authority to vote for any individual nominee, mark &ldquo;FOR ALL EXCEPT&rdquo; and strike a line through that nominee&rsquo;s name in the list above.</B></FONT></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; text-align: justify">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<!-- Field: Page; Sequence: 85; Value: 1 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">&nbsp;</TD><TD STYLE="width: 33%; text-align: right"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->80<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 62%; border: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The Board of Directors recommends a vote &ldquo;FOR&rdquo; in
        Proposal 2.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify; text-indent: -9pt"><B>2.&nbsp;Ratify
        the appointment of Stegman &amp; Company as the Company&rsquo;s independent registered public accounting firm for 2016.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">FOR <FONT STYLE="font-family: Wingdings">&uml;</FONT><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>AGAINST
        <FONT STYLE="font-family: Wingdings">&uml;</FONT><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>ABSTAIN
        <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Wingdings">&nbsp;</FONT></P></TD>
    <TD ROWSPAN="3" STYLE="width: 2%; border-top: Black 1pt solid; border-right: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 36%; border-top: Black 1pt solid; border-right: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The Board of Directors recommends a vote &ldquo;FOR&rdquo; in
        Proposal 3.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify; text-indent: -9pt">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify; text-indent: -9pt"><B>3.&nbsp;Adopt a
        non-binding advisory resolution approving the compensation of the named executive officers.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">FOR <FONT STYLE="font-family: Wingdings">&uml;</FONT><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</B>AGAINST <FONT STYLE="font-family: Wingdings">&uml;</FONT><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>ABSTAIN
<FONT STYLE="font-family: Wingdings 2">&pound;</FONT></P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; border-top: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>I/WE ACKNOWLEDGE
        RECEIPT OF NOTICE OF THE 2016 ANNUAL MEETING OF </B></FONT>SHAREHOLDERS</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Date: _______________________, 2016</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">_________________________________</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Signature</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; border-left: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The Board of Directors recommends a vote &ldquo;FOR&rdquo; in
        Proposal 4.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>4. Approve the Shore Bancshares, Inc. 2016 Stock and Incentive
        Compensation Plan.</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FOR <FONT STYLE="font-family: Wingdings">&uml;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AGAINST
<FONT STYLE="font-family: Wingdings">&uml;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ABSTAIN
<FONT STYLE="font-family: Wingdings">&uml;</FONT></B></P></TD>
    <TD STYLE="border-right: Black 1pt solid; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">NOTE: Please sign exactly as name appears hereon. Joint holders
        should each sign. When signing as attorney, executor, administrator, trustee or guardian, please indicate the capacity in which
        you are signing. If a corporation or other entity, please sign in full corporate or entity name by authorized person.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>If you plan to attend the meeting, please designate the number
        that will attend <FONT STYLE="font-family: Wingdings">&uml;</FONT></B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If this proxy is properly executed, then all
shares represented hereby will be voted in accordance with the instructions appearing on the proxy. In the absence of specific
instructions, proxies will be voted &ldquo;<B><U>FOR ALL NOMINEES</U></B>&rdquo; with respect to Proposal 1, &ldquo;<B><U>FOR</U></B>&rdquo;
the ratification of appointment of Stegman &amp; Company with respect to Proposal 2, &ldquo;<B><U>FOR</U></B>&rdquo; the adoption
of the resolution approving the compensation of the named executive officers with respect to Proposal 3, and &ldquo;<U>FOR</U>&rdquo;
the approval of the Shore Bancshares, Inc. 2016 Stock and Incentive.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Important Notice Regarding the Availability
of Proxy Materials</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>For the Shareholder Meeting to be Held on
April 27, 2016:</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>This form of Proxy,
the related Proxy Statement, and Shore Bancshares, Inc.&rsquo;s Annual Report to Shareholders (including its Annual Report on Form
10-K) are available at <U>www.shorebancshares.com</U></B></P>

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

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

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
