MERCHANTS BANCSHARES, INC.
2008 STOCK OPTION PLAN
1. Purpose .
The purpose of the Merchants Bancshares, Inc. 2008 Stock Option Plan (the "Plan") is to provide an
incentive to certain employees of Merchants Bancshares, Inc. a Delaware corporation (the "Company"),
and its subsidiaries, by granting to such employees: (i) incentive stock options ("ISOs"), within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) options not
constituting ISOs ("NQSOs"), in either case to acquire common stock, ($.01) par value of the Company
("Stock"). Options granted under this Plan may be either ISO's or NQSO's, as determined at the
discretion of the Committee (as defined below) and as reflected in the terms of the written option
2. Effective Date and Term of the Plan.
(a) The Plan is effective as of February 21, 2008 (the "Effective Date"), subject to subsequent
approval, within 12 months of its adoption by the Board of Directors of the Company (the "Board"), by
shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the
requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if
applicable), applicable requirements under the rules of any stock exchange or automated quotation system
on which the Stock may be listed or quoted, and other laws, regulations, and obligations of the Company
applicable to the Plan. Options may be granted subject to shareholder approval, but may not be exercised
in the event the shareholder approval is not obtained.
(b) Unless sooner terminated, the Plan shall continue in effect from the Effective Date until the day
before the tenth anniversary of the Effective Date (the "Termination Date"). In no event shall an ISO or
NQSO (collectively "Options") be granted after the Termination Date. Options granted prior to the
Termination Date shall remain in effect unti