EXHIBIT 10.15.1

                    TRUST UNDER AGREEMENT WITH KATHRYN T.
               BOARDMAN, THOMAS R. HAVERS AND SUSAN D. STRUBLE


      This Trust Agreement is made this 20th day of December, 1995, by and 
between THE MERCHANTS BANK (the "Company") and THE MERCHANTS TRUST COMPANY 
(the "Trustee").

                                 Background
                                 ----------

      1.  The Company has entered into a nonqualified deferred compensation 
Plan with Kathryn T. Boardman, Thomas R. Havers and Susan D. Struble (the 
"Agreement; capitalized terms used in this Trust Agreement that are not 
otherwise defined herein have the meanings and definitions set forth in the 
Agreement).

      2.  The Company has incurred liability under the terms of such 
Agreement with respect to the Participants.

      3.  The Company wishes to establish a trust (hereinafter called 
"Trust") and to contribute to the Trust assets that shall be held therein, 
subject to the claims of Company's creditors in the event of the Company's 
Insolvency, as herein defined, until paid to the Participants and their 
beneficiaries in such manner and at such times as is specified and provided 
for in the Agreement.

      4.  It is the intention of the parties that this Trust shall 
constitute an unfunded arrangement and shall not affect the status of the 
Agreement as an unfunded plan maintained for the purpose of providing 
deferred compensation for a select group of management or highly compensated 
employees for purposes of Title I of the Employee Retirement Income Security 
Act of 1974.

      5.  It is the intention of the Company to make contributions to the 
Trust to provide itself with a source of funds and resources to assist it in 
the meeting of its liabilities under the Agreement.

                        N O W ,  T H E R E F O R E ,

      The parties do hereby establish the Trust and agree that the Trust 
shall be comprised, held and disposed of as follows:

Section 1.  Establishment Of Trust.

      (a)  The Company hereby deposits with the Trustee in trust $160,862, 
           which shall become the principal of the Trust to be held, 
           administered and disposed of by the Trustee as provided in this 
           Trust Agreement.

      (b)  The Trust hereby established shall be irrevocable.

      (c)  The Trust is intended to be a grantor trust, of which the Company 
           is the grantor, within the meaning of subpart E, part I, 
           subchapter J, chapter 1, subtitle A of the Internal Revenue Code 
           of 1986, as amended, and shall be construed accordingly.

      (d)  The principal of the Trust, and any earnings thereon shall be 
           held separate and apart from other funds of the Company and 
           shall be used exclusively for the uses and purposes of the 
           Participants and general creditors, as herein set forth.  The 
           Participants and their beneficiaries shall have no preferred 
           claim on, or any beneficial ownership interest in, any assets of 
           the Trust.  Any rights created under the Agreement and this 
           Trust Agreement shall be mere unsecured contractual rights of 
           the Participants and their beneficiaries against the Company.  
           Any assets held by the Trust will be subject to the claims of 
           Company's general creditors under federal and state law in the 
           event of Insolvency, as defined in Section 3(a) herein.

      (e)  The Company, in its sole discretion, may at any time, or from 
           time to time, make additional deposits of cash or other property 
           in trust with the Trustee to augment the principal to be held, 
           administered and disposed of by the Trustee as provided in this 
           Trust Agreement.  Neither the Trustee nor any Participant or 
           beneficiary shall have any right to compel such additional 
           deposits.

      Section 2.  Payments to Participants and Their Beneficiaries.

      (a)  The Company shall deliver to the Trustee a schedule (the "Payment 
           Schedule") that indicates the amounts payable in respect of each 
           Participant (and his or her beneficiaries), that provides a 
           formula or other instructions acceptable to the Trustee for 
           determining the amounts so payable, the form in which such 
           amount is to be paid (as provided for or available under the 
           Agreement), and the time of commencement for payment of such 
           amounts.  Except as otherwise provided herein, the Trustee shall 
           make payments to the Participants and their beneficiaries in 
           accordance with such Payment Schedule.  The Trustee shall make 
           provision for the reporting and withholding of any federal, 
           state or local taxes that may be required to be withheld with 
           respect to the payment of benefits pursuant to the terms of the 
           Plan and shall pay amounts withheld to the appropriate taxing 
           authorities or determine that such amounts have been reported, 
           withheld and paid by the Company.

      (b)  The entitlement of a Participant or his or her beneficiaries to 
           benefits under the Agreement shall be determined by the Company 
           or such party as it shall designate under the Agreement, and any 
           claim for such benefits shall be considered and reviewed under 
           the procedures set out in the Agreement.

      (c)  The Company may make payment of benefits directly to Participants 
           or their beneficiaries as they become due under the terms of the 
           Agreement.  The Company shall notify the Trustee of its decision 
           to make payment of benefits directly prior to the time amounts 
           are payable to participants or their beneficiaries.  In 
           addition, if the principal of the Trust, and any earnings 
           thereon, are not sufficient to make payments of benefits in 
           accordance with the terms of the Agreement, the Company shall 
           make the balance of each such payment as it falls due.  The 
           Trustee shall notify the Company where principal and earnings 
           are not sufficient.

      Section 3.  Trustee Responsibility Regarding Payments to Trust 
Beneficiary When The Company Is Insolvent.

      (a)  The Trustee shall cease payment of benefits to the Participants 
           and their beneficiaries if the Company is Insolvent.  The 
           Company shall be considered "Insolvent" for purposes of this 
           Trust Agreement if:  (i) the Company is unable to pay its debts 
           as they become due; (ii) the Company is subject to a pending 
           proceeding as a debtor under the United States Bankruptcy Code; 
           or (iii) the Company is determined to be insolvent by the 
           federal and/or state regulatory agencies having authority over 
           the Company and its operations.

      (b)  At all times during the continuance of this Trust, as provided in 
           Section 1(d) hereof, the principal and income of the Trust shall 
           be subject to claims of general creditors of the Company under 
           federal and state law as set forth below.

           (i)    The Board of Directors and the Chief Executive Officer of 
                  the Company shall have the duty to inform the Trustee in 
                  writing of the Company's Insolvency.  If a person claiming 
                  to be a creditor of the Company alleges in writing to the 
                  Trustee that the Company has become Insolvent, the Trustee 
                  shall determine whether the Company is Insolvent and, 
                  pending such determination, the Trustee shall discontinue 
                  payment of benefits to the Participants or their 
                  beneficiaries.

           (ii)   Unless the Trustee has actual knowledge of Company's 
                  Insolvency, or has received notice from the Company or a 
                  person claiming to be a creditor alleging that the Company 
                  is Insolvent, the Trustee shall have no duty to inquire 
                  whether the Company is Insolvent.  The Trustee may in all 
                  events rely on such evidence concerning the Company's 
                  solvency as may be furnished to the Trustee and that 
                  provides the Trustee with a reasonable basis for making a 
                  determination concerning the Company's solvency.

           (iii)  If at any time the Trustee has determined that the 
                  Company is Insolvent, the Trustee shall discontinue 
                  payments to the Participants or their beneficiaries and 
                  shall hold the assets of the Trust for the benefit of the 
                  Company's general creditors.  Nothing in this Trust 
                  Agreement shall in any way diminish any rights of 
                  Participants or their beneficiaries to pursue their rights 
                  as general creditors of the Company with respect to 
                  benefits due under the Agreement or otherwise.

           (iv)   The Trustee shall resume the payment of benefits to the 
                  Participants or their beneficiaries in accordance with 
                  Section 2 of this Trust Agreement only after the Trustee 
                  has determined that the Company is not Insolvent (or is no 
                  longer Insolvent).

      (c)  Provided that there are sufficient assets, if the Trustee 
           discontinues the payment of benefits from the Trust pursuant to 
           Section 3(b) hereof and subsequently resumes such payments, the 
           first payment following such discontinuance shall include the 
           aggregate amount of all payments due to the Participants or 
           their beneficiaries under the terms of the Agreement for the 
           period of such discontinuance, less the aggregate amount of any 
           payments made to Participants or their beneficiaries by the 
           Company in lieu of the payments provided for hereunder during 
           any such period of discontinuance.

      Section 4.  Payments to the Company.  Except as provided in Section 3 
hereof, or on account of the Company's direct payments pursuant to Section 
2(c), the Company shall have no right or power to direct the Trustee to 
return to the Company or to divert to others any of the Trust assets before 
all payment of benefits have been made to the Participants and their 
beneficiaries pursuant to the terms of the Agreement.

      Section 5.  Investment Authority.  The Trustee shall invest the amount 
deposited with it pursuant to Section 1(a) initially in shares of Merchants 
Bancshares, Inc. stock except to the extent otherwise instructed by the 
Company.  Following such initial investment, the Trustee may invest in 
securities (including stock or rights to acquire stock) or obligations 
issued by the Company or its affiliates and may dispose of the amount of the 
initial investment in Merchants Bancshares, Inc. stock and take such other 
actions with respect to the Trust assets as directed by the Company, or, in 
the absence of such direction, as the Trustee, in its sole discretion, 
determines to be appropriate.  All rights associated with assets of the 
Trust shall be exercised by the Trustee or the person designated by the 
Trustee, and shall in no event be exercisable by, or rest with, the 
Participants, except that voting rights with respect to Trust assets will be 
exercised by the Company.  The Company shall have the right at any time, and 
from time to time in its sole discretion, to substitute assets of equal fair 
market value for any asset held by the Trust.  This right is exercisable by 
the Company in a nonfiduciary capacity without the approval or consent of 
any person in a fiduciary capacity.

      Section 6.  Disposition of Income.  During the term of this Trust, all 
income received by the Trust, net of expenses and taxes, shall be 
accumulated and reinvested.

      Section 7.  Accounting by the Trustee.  The Trustee shall keep 
accurate and detailed records of all investments, receipts, disbursements, 
and all other transactions required to be made, including such specific 
records as shall be agreed upon in writing between the Company and the 
Trustee.  Within sixty (60) days following the close of each calendar year 
and within sixty (60) days after the removal or resignation of the Trustee, 
the Trustee shall deliver to the Company a written account of its 
administration of the Trust during such year or during the period from the 
close of the last preceding year to the date of such removal or resignation, 
setting forth all investments, receipts, disbursements and other 
transactions effected by it, including a description of all securities and 
investments purchased and sold with the cost or net proceeds of such 
purchases or sales (accrued interest paid or receivable being shown 
separately), and showing all cash, securities and other property held in the 
Trust at the end of such year or as of the date of such removal or 
resignation, as the case may be.

      Section 8.  Responsibility of the Trustee.

      (a)  The Trustee shall act with the care, skill, prudence and 
           diligence under the circumstances then prevailing that a prudent 
           person acting in like capacity and familiar with such matters 
           would use in the conduct of an enterprise of a like character 
           and with like aims, provided, however, that the Trustee shall 
           incur no liability to any person for any action taken pursuant 
           to a direction, request or approval given by the Company which 
           is contemplated by, and in conformity with, the terms of the 
           Agreement or this Trust and is given in writing by the Company.  
           In the event of a dispute between the Company and a party, the 
           Trustee may apply to a court of competent jurisdiction to 
           resolve the dispute.

      (b)  If the Trustee undertakes or defends any litigation arising in 
           connection with this Trust, the Company agrees to indemnify the 
           Trustee against Trustee's costs, expenses and liabilities 
           (including, without limitation, attorneys' fees and expenses) 
           relating thereto and to be primarily liable for such payments.  
           If the Company does not pay such costs, expenses and liabilities 
           in a reasonably timely manner, the Trustee may obtain payment 
           from the Trust.

      (c)  The Trustee may consult with legal counsel (who may also be 
           counsel for the Company generally) with respect to any of its 
           duties or obligations hereunder.

      (d)  The Trustee may hire agents, accountants, actuaries, investment 
           advisors, financial consultants or other professionals to assist 
           it in performing any of its duties or obligations hereunder.

      (e)  The Trustee shall have, without exclusion, all powers conferred 
           on Trustees by applicable law, unless expressly provided 
           otherwise herein, provided, however, that if an insurance policy 
           is held as an asset of the Trust, the Trustee shall have no 
           power to name a beneficiary of the policy other than the Trust, 
           to assign the policy (as distinct from conversion of the policy 
           to a different form) other than to a successor Trustee, or to 
           loan to any person the proceeds of any borrowing against such 
           policy.

      (f)  However, notwithstanding the provisions of Section 8(e) above, 
           the Trustee may loan to the Company the proceeds of any 
           borrowing against an insurance policy held as an asset of the 
           Trust.

      (g)  Notwithstanding any powers granted to the Trustee pursuant to 
           this Trust Agreement or to applicable law, the Trustee shall not 
           have any power that could give this Trust the objective of 
           carrying on a business and dividing the gains therefrom, within 
           the meaning of section 301.7701-2 of the Procedure and 
           Administrative Regulations promulgated pursuant to the Internal 
           Revenue Code.

      Section 9.  Compensation and Expenses of the Trustee.  The Company 
shall pay all administrative and Trustee's fees and expenses. If not so 
paid, the fees and expenses shall be paid from the Trust.

      Section 10.  Resignation and Removal of the Trustee.

      (a)  The Trustee may resign at any time by written notice to the 
           Company, which shall be effective thirty (30) days after receipt 
           of such notice unless the Company and the Trustee agree 
           otherwise.

      (b)  The Trustee may be removed by the Company on thirty (30) days' 
           notice or upon shorter notice accepted by the Trustee.

      (c)  If the Trustee resigns or is removed within five (5) years of a 
           Change of Control, as defined in Section 13(d), the Trustee 
           shall select a successor trustee in accordance with the 
           provisions of Section 11(b) hereof prior to the effective date 
           of Trustee's resignation or removal.

      (d)  Upon resignation or removal of the Trustee and appointment of a 
           successor trustee, all assets shall subsequently be transferred 
           to the successor trustee.  The transfer shall be completed 
           within thirty (30) days after receipt of notice of resignation, 
           removal or transfer, unless the Company extends the time limit.

      (e)  If the Trustee resigns or is removed, a successor shall be 
           appointed, in accordance with Section 11 hereof, by the 
           effective date of resignation or removal under Section 10(a) or 
           10(b).  If no such appointment has been made, the Trustee may 
           apply to a court of competent jurisdiction for appointment of a 
           successor or for instructions.  All expenses of the Trustee in 
           connection with the proceeding shall be allowed as 
           administrative expenses of the Trust.

      Section 11.  Appointment of Successor.

      (a)  Except as provided in Section 11(b), if the Trustee resigns or is 
           removed in accordance with Section 10(a) or 10(b) hereof, the 
           Company may appoint any third party, such as a bank trust 
           department or other party that may be granted corporate trustee 
           powers under state law, as a successor to replace the Trustee 
           upon resignation or removal.  The appointment shall be effective 
           when accepted in writing by the new trustee, who shall have all 
           of the rights and powers of the former Trustee, including 
           ownership rights in the Trust assets.  The former Trustee shall 
           execute any instrument necessary or reasonably requested by the 
           Company or the successor trustee to evidence the transfer.

      (b)  If the Trustee resigns or is removed pursuant to the provisions 
           of Section 10(c) hereof and is to select a successor trustee, 
           the Trustee may appoint any third party such as a bank trust 
           department or other party that may be granted corporate trustee 
           powers under state law.  The appointment of a successor trustee 
           shall be effective when accepted in writing by the new trustee.  
           The new trustee shall have all the rights and powers of the 
           former Trustee, including ownership rights in Trust assets.  The 
           former Trustee shall execute any instrument necessary or 
           reasonably requested by the successor trustee to evidence the 
           transfer.

      (c)  The successor trustee need not examine the records and acts of 
           any prior Trustee and may retain or dispose of existing Trust 
           assets, subject to Sections 7 and 8 hereof.  The successor 
           trustee shall not be responsible for and the Company shall 
           indemnify and defend the successor trustee from any claim or 
           liability resulting from any action or inaction of any prior 
           trustee or from any other past event, or any condition existing 
           at the time it becomes successor trustee.

      Section 12.  Amendment or Termination.

      (a)  Notwithstanding Section 1(b) hereof, the Trustee and the Company, 
           acting jointly or solely, shall have the power to amend the 
           Trust in any manner required for the sole purpose of insuring 
           that the Trust qualifies and continues to qualify as a "rabbi 
           trust" for purposes of Revenue Procedure 92-64, any successor 
           provisions thereto or any other similar or successor provisions 
           of the Internal Revenue Code of 1986, as amended.

      (b)  The Trust shall not terminate until the date on which the 
           Participants and their beneficiaries are no longer entitled to 
           benefits pursuant to the terms of the Agreement.  Upon 
           termination of the Trust any assets remaining in the Trust shall 
           be returned to the Company.

      Section 13.  Miscellaneous.

      (a)  Any provision of this Trust Agreement prohibited by law shall be 
           ineffective to the extent of any such prohibition, without 
           invalidating the remaining provisions hereof.

      (b)  Benefits payable to the Participants and their beneficiaries 
           under this Trust Agreement may not be anticipated, assigned 
           (either at law or in equity), alienated, pledged, encumbered or 
           subjected to attachment, garnishment, levy, execution or other 
           legal or equitable process.

      (c)  This Trust Agreement shall be governed by and construed in 
           accordance with the laws of Vermont.

      (d)  For purposes of this Trust, "Change of Control" shall mean the 
           purchase or other acquisition by any person, entity or group of 
           persons, within the meaning of Section 13(d) or 14(d) of the 
           Securities Exchange Act of 1934 ("Act"), or any comparable 
           successor provisions, of beneficial ownership (within the 
           meaning of Rule l3d-3 promulgated under the Act) of 30 percent 
           or more of either the outstanding shares of common stock or the 
           combined voting power of Company's then outstanding voting 
           securities entitled to vote generally, or the approval by the 
           stockholders of the Company of a reorganization, merger, or 
           consolidation, in each case, with respect to which persons who 
           were stockholders of the Company immediately prior to such 
           reorganization-merger or consolidation do not, immediately 
           thereafter, own more than 50 percent of the combined voting 
           power entitled to vote generally in the election of directors of 
           the reorganized, merged or consolidated Company's then 
           outstanding securities, or a liquidation or dissolution of the 
           Company or of the sale of all or substantially all of Company's 
           assets.

      Section 14.  Effective Date.  The effective date of this Trust 
Agreement shall be December 20, 1995.


THE MERCHANTS BANK                     THE MERCHANTS TRUST COMPANY


By: /s/ Joseph L. Boutin               By: /s/ Rebecca P. Arnold
------------------------------         -------------------------------
    Duly Authorized                        Duly Authorized