by and between
Merchants Bancshares, Inc.
WILMINGTON TRUST COMPANY
Dated as of December 15, 2004
This GUARANTEE AGREEMENT (this "Guarantee"), dated as of December 15, 2004, is executed
and delivered by Merchants Bancshares, Inc., a Delaware corporation (the "Guarantor"), and Wilmington
Trust Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of MBVT
Statutory Trust I, a Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as
of the date hereof among Wilmington Trust Company, not in its individual capacity but solely as
institutional trustee, the administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on
the date hereof those undivided beneficial interests, having an aggregate liquidation amount of
$20,000,000.00 (the "Capital Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires
irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of
Capital Securities the Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities,
which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee for the benefit of the Holders.
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation. In this Guarantee, unless the context otherwise