EXHIBIT 10.14

                   THE MERCHANTS BANK AMENDED AND RESTATED
                  DEFERRED COMPENSATION PLAN FOR DIRECTORS


      THE MERCHANTS BANK, a Vermont banking corporation with a principal 
place of business in Burlington, Vermont (the "Bank"), does hereby amend the 
Deferred Compensation Plan (the "Plan") heretofore adopted by the Bank and 
as set forth in the standard contract executed by the Bank and various 
directors of the Bank since the time of adoption.

      Section 1.  Purpose.  The purpose of this Plan is to provide a 
foundation for continued growth of the Bank by strengthening its capacity to 
attract and retain outstanding directors in continued service.

      Section 2.  Participants.  All Directors of the Bank are eligible to 
participate in the Plan ("Participants").  No officers who are not already 
Participants will be allowed to take part in this Plan.

      Section 3.  Participant's Election.

      (a)  For the purpose of this Plan, "compensation" shall mean all fees, 
           salary or other compensation paid by the Bank to said 
           Participant as a director or officer of the Bank (including any 
           amount of such fees which a Participant elects to defer under 
           this Plan, but not including amounts paid as expense 
           reimbursement).

      (b)  For the year 1986, a Participant, by filing a written election 
           with the Bank on or before January 31, 1986 may elect not to 
           receive a part or all of the compensation that would have 
           otherwise been paid during the remainder of the year.

      (c)  For the year 1987, and each year thereafter, a Participant, by 
           filing a written election with the Bank on or before December 31 
           of the preceding year, may elect not to receive a part or all of 
           the compensation that would have otherwise been paid during such 
           year.

      (d)  Individuals who first become eligible to participate in this Plan 
           after January 1 during any year, by filing a written election 
           with the Bank before becoming eligible to participate, may elect 
           not to receive a part or all of the compensation that would have 
           otherwise been paid during the remainder of such year.

      (e)  An election shall not be effective unless the Participant also 
           specifies the manner in which the account will be distributed 
           (see Section 5)  and whether the Growth Program shall be fixed 
           or floating (see Section 4).  The Fixed Growth Percentage shall 
           only be available in amounts and at times and rates in the sole 
           discretion of the Bank.

      (f)  Any election to defer compensation under this Section shall be 
           irrevocable for that year or the remainder of that year (or 
           longer in the case of Fixed Growth Program) and may not be 
           cancelled by the Participant for any reason except that if the 
           Board of Directors of the Bank or any committee appointed by it 
           (the "Board") amends the Plan pursuant to Section 11, the 
           Participant may elect, prior to the effective date of such 
           amendment, to discontinue contributions for the remainder of the 
           year (or other election period) commencing with the effective 
           date of such amendment.

      (g)  Any election to defer compensation under this Section will not 
           reduce benefits payable under any other benefit plan the Bank 
           may provide for its directors.  Such benefits will be calculated 
           as if the election had not been made.

      Section 4.  Deferral Account.

      (a)  The Bank shall establish one or more bookkeeping accounts (a 
           "Deferral Account") for each Participant to record the amounts 
           deferred according to the provisions of Section 3. The Bank 
           shall credit to each Participant's Deferral Account the 
           compensation deferred by the Participant in accordance with this 
           Plan.  Such credits shall be made at the times that payment to 
           the Participant of current compensation would have been made if 
           the deferral had not been elected hereunder.

      (b)  If the Participant shall elect a Floating Growth Program (as 
           hereinafter defined), the Bank shall also credit to such 
           Participant's Deferral Account on the last day of each month an 
           amount equal to a percentage (hereinafter referred to as the 
           "Growth Percentage") of the balance recorded in such account as 
           of the fifteenth day of said month.  The Growth Percentage will 
           be fixed from time to time in the discretion of the Board.  The 
           amount determined by applying the Growth Percentage will be 
           added to the balance in the Deferral Account.  The Board shall 
           have the right to establish or change the method of computing 
           Growth Percentages in its sole discretion.

      (c)  If the Participant shall elect a Fixed Growth Program, such as 
           may, from time to time, be offered by the Bank, the Participant 
           shall so signify on his Deferred Compensation Election Form and, 
           subject to the provisions of the remainder of this subsection 
           (c), Growth Percentages will be credited to such Participant's 
           account in accordance with the terms and schedule as shown on 
           the Deferred Compensation Election Form executed by the 
           Participant and as may, from time to time, be amended; provided, 
           however, that:

           (i)    From and after December 31, 1994, no further deferrals may 
                  be made to the Fixed Growth Program.

           (ii)   The amount that otherwise would be credited to a 
                  Participant's Fixed Growth Account to the effective date 
                  of this Amended and Restated Deferred Compensation Plan 
                  for Directors, whether on account of deferrals, on account 
                  of Fixed Growth Percentage credits, or otherwise, shall be 
                  replaced and supplanted by the credit to such 
                  Participant's Fixed Growth Account in the amount set 
                  opposite such Participant's name on the attached Schedule 
                  4(c).

           (iii)  On the effective date of this Amended and Restated Plan, 
                  in lieu of any amounts that the Bank otherwise would be 
                  obligated to pay to any Plan Participant from and after 
                  the Effective Date on account of the Fixed Growth Program, 
                  the Bank shall be obligated to distribute to each 
                  Participant, at the times and as provided in this Amended 
                  and Restated Plan:  (i) that number of shares of Merchants 
                  Bancshares, Inc. set forth on Schedule 4(c) opposite such 
                  Participant's name; plus (ii) all dividends, distributions 
                  or other consideration paid on, on account of, or in 
                  exchange for such shares prior to their distribution as 
                  herein provided; plus (iii) the amount, if any, set 
                  opposite the Participant's name under the Column labeled 
                  "1/2/96 Payment" on that schedule.  Notwithstanding the 
                  provisions of the immediately-preceding sentence:  (y) in 
                  the event of a merger, consolidation or reorganization of 
                  Merchants Bancshares, Inc., the Bank shall be obligated to 
                  distribute, in lieu of the shares of Merchants Bancshares, 
                  Inc. referred to above, such shares or other property as 
                  shall have been exchanged for said Merchants Bancshares, 
                  Inc. stock, or into which said Merchants Bancshares, Inc. 
                  shares shall have been converted pursuant to such merger, 
                  consolidation or reorganization; and (z) in the event of a 
                  Change of Control (as defined below), the Bank shall have 
                  the option, to be exercised (if at all) not earlier than 
                  sixty days prior to such Change of Control nor later than 
                  sixty days thereafter, and to be effective not earlier 
                  than the time when such Change of Control occurs nor later 
                  than one hundred eighty days thereafter, to provide that 
                  in lieu of any obligation thereafter to distribute shares 
                  of Merchants Bancshares, Inc., the Bank thereafter shall 
                  be required to pay or distribute to each Fixed Growth Plan 
                  Participant, in cash or in securities, a variable amount 
                  that equals the value from time to time of the balance 
                  posted to the bookkeeping account maintained for such 
                  Participant in the Trust referred to in Section 6, below; 
                  provided, however, that to the extent the balance posted 
                  to the credit of such Participant in the Trust has been 
                  reduced as a result of any withdrawals from the Trust for 
                  any purpose other than a payment to or for the benefit of 
                  the Participant or the Participant's designated 
                  beneficiary (see Section 7, below), the amount to be paid 
                  or distributed to such Participant shall be adjusted to 
                  take into account both such withdrawal(s) and the earnings 
                  (or losses) that would have been credited to the 
                  Participant's account under the Trust if such 
                  withdrawal(s) had not occurred.

      A "Change of Control" shall occur upon the earliest of the following:

      (A)  any "person," as such term is used in Sections 3(a)(9) and 13(d) 
           of the Securities Exchange Act of 1934 (a "Person"), becomes a 
           "beneficial owner," as such term is used in Rule 13D-3 
           promulgated under such Act (an "Owner") of twenty-five percent 
           (25%) or more of the Voting Stock, as defined below, of 
           Merchants Bancshares, Inc.; or

      (B)  the majority of the Board of Merchants Bancshares, Inc. consists 
           of individuals other than the Incumbent Directors;

      (C)  Merchants Bancshares, Inc., or the Bank, adopts any plan of 
           liquidation providing for the distribution of all or 
           substantially all of its assets;

      (D)  all or substantially all of the business of Merchants Bancshares, 
           Inc. is disposed of pursuant to a merger, consolidation, or 
           other transaction in which Merchants Bancshares, Inc. is not the 
           surviving corporation or is substantially or completely 
           liquidated (unless the shareholders of Merchants Bancshares, 
           Inc. immediately prior to such merger, consolidation, or other 
           transaction beneficially own, directly or indirectly, in 
           substantially the same proportion as they owned the Voting Stock 
           of Merchants Bancshares, Inc., all of the Voting Stock, or 
           correlative ownership interests, of the entity or entities, if 
           any, that succeed to the business of Merchants Bancshares, 
           Inc.); or

      (E)  Merchants Bancshares, Inc. combines with another company and is 
           the surviving corporation but, immediately after the 
           combination, the shareholders of Merchants Bancshares, Inc. 
           immediately prior to the combination (other than shareholders 
           who, immediately prior to the combination, were "affiliates" of 
           such other company, as such term is defined in the rules of the 
           Securities and Exchange Commission) do not beneficially own, 
           directly or indirectly, fifty percent (50%) or more of the 
           Voting Stock of the combined company; or

      (F)  Merchants Bancshares, Inc. transfers to any Person or Persons not 
           controlled by Merchants Bancshares, Inc.:  (1) fifty percent 
           (50%) of the Voting Stock of the Bank; or (2) forty percent 
           (40%) or more of the assets of the Bank.

      Notwithstanding the occurrence of any of the events described in 
clauses (A), (D) or (E), above, no "Change of Control" shall be deemed to 
have occurred if:

      (1)  immediately following such event, members of the Board or 
           employees of Merchants Bancshares, Inc. and its subsidiaries who 
           file or are required to file (or immediately prior to such 
           event, filed or were required to file) reports under Section 
           16(a) of the 1934 Act) are beneficial owners, directly or 
           indirectly, of twenty-five percent (25%) or more of the Voting 
           Stock of Merchants Bancshares, Inc. or its successor, as the 
           case may be; or

      (2)  such Change of Control event occurs as a result of a proposal 
           initiated by the Board of Merchants Bancshares, Inc. (and not as 
           a result of prior actions taken by the Person or Persons 
           effecting the Change of Control), and if at the time of making 
           the proposal, the Board of Directors notifies the Fixed Growth 
           Plan Participants that any such Change of Control event 
           resulting from the proposal shall not constitute a Change of 
           Control.  For this purpose, a Change of Control event shall be 
           considered to result from a proposal if the event occurs because 
           of the acquisition of stock or assets of Merchants Bancshares, 
           Inc., directly or indirectly, by Persons, or a group of some of 
           whose members are Persons, identified in the written notice 
           described above.

      "Incumbent Director(s)" shall mean the members of the Board of 
Merchants Bancshares, Inc. on the date of this Amended Plan, provided that 
any person becoming a director subsequent to the date of this Amended Plan 
whose election or nomination for election was approved by two-thirds (but in 
no event less than two) of the directors who at the time of such election or 
nomination comprise the Incumbent Directors shall be considered to be an 
Incumbent Director.

      "Voting Stock" of any corporation shall mean the capital stock of any 
class or classes having general voting power under ordinary circumstances, 
in the absence of contingencies, to elect directors of such corporation.

      Section 5.  Distribution of Deferral Account.

      (a)  Commencing on January 2 of the year following the Participant's 
           attaining the age of sixty-five (65) or the Participant's 
           earlier death ("Termination Date"), the Bank shall commence 
           distribution and/or payment of the Merchants Bancshares, Inc. 
           shares and/or other amounts which the Bank is obligated to 
           distribute and/or pay pursuant to Section 4 of this Amended and 
           Restated Plan, in accordance with the provisions of the 
           Participant's Deferred Compensation Election Form and this Plan.

      (b)  Notwithstanding the provisions of Section 5(a), above, to the 
           extent, if at all, that the Bank is provided with evidence 
           reasonably satisfactory to it that all or part of the shares or 
           other amounts to be distributed to the Participant or the 
           Participant's beneficiary are includible in the Participant's or 
           such beneficiary's taxable estate for estate tax purposes, and 
           increase the estate taxes otherwise payable by such estate, the 
           Bank shall promptly distribute or pay to the person(s) or 
           entity(ies) entitled thereto, the entire remaining amounts 
           payable by the Bank under this Plan to such person(s) or 
           entity(ies).

      (c)  Notwithstanding the provisions of Section 5(a), above, a 
           Participant may request, and the Bank may approve, a 
           distribution due to hardship by submitting a written request to 
           the Board accompanied by evidence to demonstrate that the 
           circumstances being experienced qualify as a hardship.  If a 
           hardship is found by the Bank, the distribution shall be limited 
           to an amount sufficient to meet the emergency.

      (d)  For purposes of Section 5(c), "hardship" means a severe financial 
           hardship to the Participant resulting from a sudden and 
           unexpected illness or accident of the Participant or a dependent 
           of the Participant, loss of the Participant's property due to 
           casualty, or other similar extraordinary and unforeseeable 
           circumstances arising as a result of events beyond the control 
           of the Participant.  The circumstances that will constitute a 
           hardship will depend on the facts of each case.  However, in no 
           event shall payment be made if such purported hardship is or may 
           be relieved:

           (i)    through reimbursement or compensation by insurance or 
                  otherwise;

           (ii)   by liquidation of the Participant's assets, to the extent 
                  that such liquidation would not itself cause severe 
                  financial hardship; or

           (iii)  by the Participant's ceasing deferrals under the Plan.

           In no case shall the need to send a Participant's child to 
           college or the desire to purchase a home be considered a 
           hardship.

      (e)  Prior to the year in which payments are to commence under Section 
           5(a) a Participant may request in writing to defer commencement 
           of the such payments for any amount of time up to three years 
           from the first January 2 following the Termination Date.

      (f)  During the period of time that payments are being made to a 
           Participant who has elected a Floating Growth Program, the 
           Growth Percentage shall be applied to the unpaid balance of the 
           Floating Growth Deferral Account in the manner prescribed 
           herein, and the resulting growth amount shall be paid to the 
           Participant upon the due date of the next regular distribution 
           payment.  Participants who elect a Fixed Growth Program will be 
           paid in accordance with the provisions of the Deferred 
           Compensation Election Form and Section 4 hereof.

      Section 6.  Nature of Accounts.

      (a)  With respect to the Fixed Growth Program, the Bank shall 
           establish and maintain, from and after the Effective Date, a 
           Trust Under The Merchants Bank Amended and Restated Deferred 
           Compensation Plan For Directors in substantially the form 
           attached hereto as Exhibit "A" (the "Trust").

      (b)  Except as provided in the Trust:  all amounts credited to 
           Deferral Accounts shall remain the sole property of the Bank and 
           shall be usable by it as a part of its general funds for any 
           legal purpose whatever; the Deferral Accounts shall exist only 
           for the purpose of facilitating the computation of benefits 
           hereunder; nothing contained in this Plan and no action taken 
           pursuant to the provisions of this Plan shall create or be 
           construed to create a trust or escrow of any kind, or a 
           fiduciary relationship between the Bank and the Participant, the 
           designated beneficiary or any other person; and to the extent 
           that any person acquires a right to receive payments from the 
           Bank under this Plan, such right shall be no greater than the 
           right of any unsecured general creditor of the Bank.

      (c)  It is the intention of all parties that this Plan be unfunded for 
           purposes of the Internal Revenue Code of 1986, as amended, and 
           Title I of the Employee Retirement Income Security Act of 1974, 
           as amended.

      Section 7.  Beneficiary Designation.  A Participant may designate a 
beneficiary to receive, in the event of Participant's death, all amounts 
which are then and thereafter payable under the Plan.  Beneficiaries shall 
receive such amounts in accordance with the Participant's specifications 
(see Section 5) and the provisions of this Plan.  Such designation and any 
subsequent changes thereto shall be made in writing and filed with the 
Treasurer.  In the event of the Participant's death prior to receipt of the 
total Deferral Account and without so designating a beneficiary, the balance 
of said Deferral Account shall be paid to Participant's spouse, if then 
living, otherwise to Participant's estate in accordance with the election 
made pursuant to Section 5.

      Section 8.  Nontransferability.  No right to payment or distribution 
under this Plan shall be subject to anticipation, alienation, sale, 
assignment, pledge, encumbrance or charge, and any attempt to anticipate, 
alienate, sell, assign, pledge, encumber or charge the same shall be void.  
No right to payment or distribution shall, in any manner, be liable for or 
subject to the debts, contracts, liabilities or torts of the person entitled 
thereto.  If, at the time when payments or distributions are to be made 
hereunder, the Participant or the beneficiary is indebted to the Bank, then 
any payments or distributions remaining to be made hereunder may, at the 
discretion of the Bank, be reduced by the amount of such indebtedness.  An 
election by the Bank not to reduce such payments or distributions shall not 
constitute a waiver of its claim for such indebtedness.

      Section 9.  Plan Interpretation.  The Board shall have full power and 
authority to interpret, construe and administer this Plan, and the Board's 
interpretations and construction thereof, and actions thereunder, including 
any valuation of the Deferral Account, or the amount or recipient of the 
payment to be made therefrom, shall be binding and conclusive on all persons 
for all purposes.  No member of the Board shall be liable to any person for 
any action taken or omitted in connection with the interpretation and 
administration of this Plan unless attributable to that member's own willful 
misconduct or lack of good faith.

      Section 10.  Successors and Assigns.  This Plan shall be binding upon 
and inure to the benefit of the Bank, its successors and assigns, and the 
Participant and the Participant's heirs, executors, administrators and legal 
representatives.

      Section 11.  Amendment and Termination.  The Bank may, in its sole 
discretion, at any time, amend or terminate this Plan with respect to any 
future period, provided, however, that (except as specifically provided in 
subsection 4(c), above) no such amendment or termination shall reduce the 
distributions and/or payments which the Bank is obligated to make as of the 
effective date of the amendment or termination nor reduce the amount of any 
deferral account existing as of such effective date.  Notice of any such 
amendment or termination shall be given to the Participants sixty days 
before the effective date(s) thereof.  Notwithstanding anything to the 
contrary elsewhere in this Plan or in the Trust, the Bank shall have the 
right to order the immediate distribution to all Fixed Growth Participants 
of the full number of shares of Merchants Bancshares, Inc. stock and/or 
other amounts which the Bank is then obligated to distribute or pay 
hereunder in full and final settlement and satisfaction of all such 
Participants' rights to any payment under this Plan with respect to or on 
account of any Fixed Growth deferral, if the Bank determines in good faith 
that financial market, regulatory, legislative, income tax, or other 
objective conditions would make failure to do so materially adverse to the 
Bank's interests.

      Section 12.  Governing Law.  This Plan shall be governed by and 
construed in accordance with the laws of the State of Vermont, without 
giving effect to such jurisdiction's principles of conflict of laws.

      IN WITNESS WHEREOF, the Bank has caused this Amended Plan to be 
executed by its duly authorized officer as of the 20th day of December, 
1995.

IN PRESENCE OF:          THE MERCHANTS BANK


/s/ Jennifer L. Varin                  By: /s/ Joseph L. Boutin
------------------------------         -------------------------------
Secretary                                  Its President and
                                           Chief Executive Officer