AGREEMENT AND PLAN OF REORGANIZATION
                      ------------------------------------


                  THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of this 21st day of March,  2000,  by and between ESTES
BANK CORPORATION,  a Colorado corporation (hereinafter "Company," and unless the
context  otherwise  requires,  the term "Company"  shall include both Estes Bank
Corporation and its wholly-owned subsidiary, United Valley Bank, a Colorado bank
("United  Valley  Bank")),  Jack G.  Haselbush  ("Haselbush"),  Bradley D. SISHC
("Sishc")  and VAIL  BANKS,  INC.,  a Colorado  corporation  (hereinafter  "Vail
Banks," and unless the context otherwise  requires,  the term "Vail Banks" shall
include both Vail Banks, Inc. and its wholly-owned subsidiary,  WestStar Bank, a
Colorado bank ("WestStar"). Haselbush and Sishc are signatories hereof solely to
be bound by Section  4.11 of this  Agreement.  They assume no other  obligations
hereunder.

                                R E C I T A L S:

                  WHEREAS,  the  respective  boards of  directors of Company and
Vail Banks deem it advisable  and in the best  interests of each such entity and
their  respective  shareholders  that Company be acquired by Vail Banks and that
such   acquisition  be  accomplished  by  a  merger  of  Company  and  Newco,  a
wholly-owned subsidiary of Vail Banks to be formed ("Newco"),  pursuant to which
Newco will merge with and into Company  with each of the issued and  outstanding
shares of common stock,  $1 par value per share,  of Company  ("Company  Stock")
being  converted into the right to receive common stock of Vail Banks (the "Vail
Common  Stock") and cash in  accordance  with  Article I herein and all upon the
terms and conditions hereinafter set forth and as set forth in the Agreement and
Plan of Merger attached hereto as Exhibit A and incorporated herein by reference
(the "Merger Agreement");

                  WHEREAS,  Haselbush  and Sishc have  agreed to vote all shares
owned directly or indirectly by them in favor of the  transactions  contemplated
by this Agreement.

                  NOW,  THEREFORE,  for and in consideration of the premises and
the  mutual  covenants  and  agreements  herein  contained,  and other  good and
valuable consideration,  the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:


                                    ARTICLE I
                                    ---------

                                 PURCHASE PRICE
                                 --------------

                  The aggregate Purchase Price (the "Purchase  Price"),  subject
to the adjustments  described  herein,  shall be Twenty One Million Five Hundred
Thousand Dollars ($21,500,000) payable as follows:

                  Three  Million  Two  Hundred  Twenty  Five  Thousand   Dollars
($3,225,000) in Vail Common Stock and the remainder in cash.
<PAGE>

                  The cash  portion  of the  Purchase  Price  will be  adjusted,
increased or reduced as applicable, by an amount equal to the difference between
$9,871,000  and  the  Net  Worth  of  the  Company  as of the  end of the  month
immediately  preceding  the Closing plus the Net Income of the Company as of the
end of such month until the Closing Date.  The Net Worth of the Company shall be
determined  in  accordance  with  generally  accepted   accounting   principles,
provided, however,

                  (a) that the value of  trading  securities,  held to  maturity
securities,  and  available-for-sale  securities  (held on December 31, 1999 and
held at the Closing)  shall be determined  as of December 31, 1999,  and changes
thereafter in such accounts  required by Financial  Accounting  Standards  Board
SFSA No. 115 shall be disregarded, and

                  (b) The Net  Income of the  Company  from the end of the month
immediately  preceding  Closing  to the  Closing  Date  shall  be paid as a post
closing  adjustment  within 30 days after the  Closing  Date (the "Post  Closing
Adjustment").

                  (c) The principal  balance of the Rains Estes Park Ford,  Inc.
Loan (the "Rains  Loan") will be charged off prior to Closing and will be deemed
to be zero for purposes of calculating  the Net Worth of the Company.  If United
Valley  Bank's  blanket bond carrier has declined or has not paid in full United
Valley Bank's claims on the Rains Loan, then the Rains Loan promissory  note(s),
all collateral  security  instruments of any nature and related collection files
and records shall be transferred and assigned  immediately prior to Closing to a
fiduciary  for the benefit of the  shareholders  of the Company.  The  fiduciary
shall be selected by the  management  of the Company.  The  shareholders  of the
Company shall bear all costs of the fiduciary and costs of collection  after the
Date of Closing.

                  The Vail Common Stock  portion of the Purchase  Price shall be
issued by Vail Banks and shall be registered  for resale by Vail Banks  pursuant
to a Form S-4 registration statement.

                  To compute the aggregate number of Vail Common Stock shares to
be issued pursuant to this Agreement, a share price shall be utilized that is in
no  instance  less than nine  dollars  ($9.00)  per share and in no  instance in
excess of twelve dollars ($12.00) per share. Within these parameters,  the price
per share of Vail Common Stock will be  determined by the average of the closing
sales price of Vail  Common  Stock as  reported  by the NASDAQ  National  Market
System on each of the fifteen (15) consecutive trading days immediately prior to
the Closing  Date (the  "Average  Vail Common  Stock  Price").  The Average Vail
Common Stock Price shall be divided into  $3,225,000  to determine the aggregate
number of shares of Vail  Common  Stock  that will be issued to the  holders  of
Company Stock pursuant to this Agreement.

                  The Purchase Price will be allocated among the shareholders of
Company in  proportion to their  respective  holdings of Company Stock as of the
Closing.

                  If at any time  during  the  period  between  the date of this
Agreement and the Closing  Date,  any change in the  outstanding  shares of Vail
Common  Stock  occurs  or  is  effected  by  reason  of  any   reclassification,
recapitalization,  stock  split or  combination,  exchange  or  readjustment  of


                                      -2-
<PAGE>

shares, or any stock dividend thereon with a record date during such period, the
number of shares of Vail Common Stock shall be adjusted on a pro rata basis.


                                   ARTICLE II
                                   ----------

                                     CLOSING
                                     -------

                  The transactions contemplated herein shall be consummated (the
"Closing") at the offices of Company, or some other mutually agreeable location,
on the first business day following the later to occur of (i) the receipt of all
approvals  from  any  governmental  authorities  having  jurisdiction  over  the
transactions  contemplated by this Agreement and the Merger  Agreement,  and the
expiration  of any waiting or similar  period  required by  applicable  law (ii)
compliance with the Colorado Business Corporation Act and (iii) the satisfaction
of all other conditions to consummation of the Merger (the "Closing  Date"),  or
at such  other time and place as may be  mutually  satisfactory  to the  parties
hereto.  Notwithstanding  the foregoing,  the transactions  contemplated  herein
shall be consummated on or prior to October 1, 2000.


                                   ARTICLE III
                                   -----------

                                     MERGER

                  3.1  Merger.  Pursuant  to the terms and  conditions  provided
herein,  on the Closing  Date,  Company and Newco shall be merged in  accordance
with  and in the  manner  set  forth  in the  Merger  Agreement.  The  surviving
corporation   following   the  Merger  will   operate   under  the  Articles  of
Incorporation of Company and will be a wholly-owned subsidiary of Vail Banks.

                  At  the  Closing,   (a)  Vail  Banks  shall  furnish  to  each
shareholder  of  Company  Stock  such  shareholder's  pro rata share of the cash
portion of the Purchase Price by cashier's check and (b) Company will cause each
shareholder of Company Stock to surrender the  certificate(s)  which represented
such  holder's  Company  Stock in exchange  for the cash portion of the Purchase
Price to which such holder is entitled.

                  Upon the terms and conditions of this Agreement and the Merger
Agreement,  Vail Banks shall make  available  on or before the  Closing  Date to
American Securities  Transfer & Trust,  Denver,  Colorado,  who is designated as
exchange  agent (the  "Exchange  Agent"),  such  number of shares of Vail Common
Stock as shall be issuable to the  shareholders  of Company  Stock in accordance
with this Agreement.  As soon as practicable  after the Closing Date, Vail Banks
or the  Exchange  Agent shall mail to each  holder of record of Company  Stock a
form letter of  transmittal  and  instructions  for the  issuance of Vail Common
Stock  certificates  pursuant to this  Agreement.  Upon  receipt by the Exchange
Agent of a properly completed and signed transmittal  letter, the Exchange Agent
shall  promptly  issue to such  holder  of  Company  Stock,  Vail  Common  Stock
certificates  representing  such holder's share of the Vail Common Stock portion
of the  Purchase  Price  and a check  for an  amount  in lieu of any  fractional


                                      -3-
<PAGE>

shares.  No fractional  shares will be issued. As of and after the Closing Date,
the holders of Company Stock shall be entitled to all of the rights and benefits
of a holder of Vail Common Stock.

                  Vail Banks shall  furnish to each holder of Company Stock such
holder's pro rata share of the Post Closing Adjustment by cashier's check mailed
to their address of record.

                  The transactions contemplated by this Agreement and the Merger
Agreement are not intended to qualify as a tax free reorganization under Section
368 of the Internal Revenue Code.

                  3.2 Registration  Statement.  (a) The parties agree jointly to
prepare a registration  statement on Form S-4 (the "Registration  Statement") to
be filed by Vail  Banks with the SEC in  connection  with the  issuance  of Vail
Banks  Common  Stock  pursuant to the Merger  Agreement.  The  parties  agree to
cooperate  with  the  other  party,  its  counsel  and its  accountants,  in the
preparation of the Registration  Statement;  and provided that both parties have
cooperated  as  provided  above,  Vail  Banks  agrees  to file the  Registration
Statement with the SEC as soon as reasonably  practicable after the execution of
this Agreement.  Each of the Company and Vail Banks agrees to use all reasonable
efforts to cause the Registration  Statement to be declared  effective under the
Securities  Act of 1933 as  promptly  as  reasonably  practicable  after any SEC
comments are resolved.  Vail Banks also agrees to use all reasonable  efforts to
obtain all necessary  state  securities  law or "Blue Sky" permits and approvals
required to carry out the transactions  contemplated by this Agreement.  Company
agrees to furnish to Vail Banks all  information  concerning  Company and United
Valley Bank, their subsidiaries,  officers, directors and stockholders as may be
reasonably requested in connection with the foregoing.

                  (b) Each of  Company  and Vail Banks  agrees  that none of the
information  supplied or to be supplied by it for inclusion or  incorporation by
reference  in the  Registration  Statement  will,  at the time the  Registration
Statement and each amendment or supplement  thereto,  if any, becomes  effective
under the  Securities  Act of 1933,  contain any untrue  statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances  under which such  statements  were made.  Each of the Company and
Vail Banks  further  agrees that if it shall  become  aware prior to the Closing
Date of any  information  furnished by it that would cause any of the statements
in the  Registration  Statement  to be false or  misleading  with respect to any
material  fact,  or to omit to state any  material  fact  necessary  to make the
statements  therein not false or misleading,  to promptly inform the other party
thereof and to take the necessary steps to the Registration Statement.

                  (c) Vail Banks agrees to advise  Company,  promptly after Vail
Banks receives notice thereof,  of the time when the Registration  Statement has
become  effective or any supplement or amendment has been filed, of the issuance
of any stop order or the  suspension of the  qualification  of Vail Banks Common
Stock for offering or sale in any  jurisdiction,  of the initiation or threat of
any  proceeding  for any  such  purpose,  or of any  request  by the SEC for the
amendment  or  supplement  of  the  Registration  Statement  or  for  additional
information.

                                      -4-
<PAGE>


                                   ARTICLE IV
                                   ----------

                                OTHER AGREEMENTS
                                ----------------

                  4.1 Meeting of Shareholders of Company. Company shall take all
actions  in   accordance   with  the  laws  of  Colorado  and  its  Articles  of
Incorporation  and  Bylaws to call a special  meeting of its  shareholders  (the
"Special  Meeting") for the purpose of submitting  the Merger  Agreement to such
shareholders for their approval.

                  4.2  Absence of  Brokers.  Each party  hereto  represents  and
warrants  to the other that no broker,  finder or other  finder has acted on its
behalf  in  connection  with this  Agreement  or the  transactions  contemplated
hereby.  Notwithstanding the preceding sentence, the Company has entered into an
agreement with The Wallach Company,  Inc. pursuant to which the Company will pay
a fee to The Wallach Company,  Inc. Each party agrees to indemnify the other and
hold and save it  harmless  from any claim or demand  for  commissions  or other
compensation by any broker, finder, financial consultant or similar agent (other
than The Wallach  Company,  Inc.) claiming to have been employed by or on behalf
of such party.

                  4.3 Access,  Information  and  Documents.  Company shall allow
Vail Banks and its authorized  representatives  reasonable  access during normal
business  hours from and after the date hereof and prior to the Closing  Date to
all of the respective properties,  books, contracts,  commitments and records of
Company  and its  subsidiary  and shall  furnish  Vail Banks and its  authorized
representatives  such information  concerning its affairs and the affairs of its
subsidiary as Vail Banks may reasonably request provided that such request shall
be reasonably  related to the  transactions  contemplated  by this Agreement and
shall not interfere  unreasonably with normal operations.  Company shall require
its  personnel to assist Vail Banks in making any such  investigation  and shall
cause the counsel (subject to attorney-client privilege), accountants, employees
and other  representatives  of  Company to be  available  to Vail Banks for such
purposes.  Such  investigation  will be conducted in a manner designed to be the
least   disruptive   of  the  affairs  of  Company  as  possible.   During  such
investigation,  Vail  Banks and its  authorized  representatives  shall have the
right,  subject to the  confidentiality  provisions of this  Agreement,  to make
copies of such records,  files,  tax returns and other  materials as it may deem
advisable  and shall advise  Company of those items of which copies are made. No
investigation  made  heretofore or hereafter by either party and its  authorized
representatives  shall affect the  representations and warranties of either such
party hereunder.

                  4.4 Confidentiality. Prior to consummation of the transactions
contemplated  by this  Agreement  and the Merger  Agreement,  the  parties  will
provide each other with  information  which may be deemed by the party providing
the information to be  confidential  or  proprietary.  Each party agrees that it
will hold  confidential and protect all information  provided to it by the other
party to this  Agreement and use such  information  only in connection  with the
consummation of the  transactions  contemplated in this Agreement and the Merger
Agreement,  except that the obligations  contained in this Section 4.4 shall not
in any way  restrict the rights of any party or person to use  information  that
(i) was known to such party prior to disclosure  by the other party;  (ii) is or
becomes  generally  available  to the  public  other  than  by  breach  of  this
Agreement;  or (iii)  otherwise  becomes  lawfully  available to a party to this
Agreement  on a  non-confidential  basis from a third  party who is not under an

                                      -5-
<PAGE>

obligation of confidence to the other party to this Agreement. If this Agreement
is terminated  prior to consummation of the  transactions  contemplated  hereby,
each party agrees to return all  documents  and other  material,  and any copies
thereof,  whether  or not  confidential,  provided  to it by or on behalf of the
other  party to this  Agreement.  Each party  shall  insure  that its  officers,
directors,  investment  advisors,  attorneys and other  representatives  who are
given access to such  information are bound by and will use the information only
in accordance  with the foregoing  restrictions.  The provisions of this Section
4.4 shall survive any termination of this Agreement.

                  4.5 Full  Cooperation.  The parties shall cooperate fully with
each other in connection  with any acts or actions  required to be taken as part
of their respective  obligations under this Agreement,  including cooperation in
the filing of all  applications  and other  requests for consents and  approvals
with respect to the transactions contemplated hereby.

                  4.6  Expenses.  All of the expenses  incurred by Vail Banks in
connection  with the  authorization,  preparation,  execution and performance of
this Agreement and the Merger Agreement including,  without limitation, all fees
and expenses of its agents,  representatives,  counsel and  accountants  and the
fees and expenses related to filing of required registration statements, and all
other regulatory  applications with state and federal  authorities in connection
with the  transactions  contemplated  hereby and thereby,  shall be paid by Vail
Banks.  All expenses  incurred by Company in connection with the  authorization,
preparation,  execution  and  performance  of  this  Agreement  and  the  Merger
Agreement,  including,  without limitation, all fees and expenses of its agents,
representatives,  counsel and accountants for Company, shall be paid by Company.
The cost of preparing and mailing any Registration  Statement hereunder with the
Securities  and  Exchange  Commission  will be paid  by  Vail  Banks,  provided,
however, that in the event that the Company does not secure the shareholder vote
necessary  to  authorize  and approve the Merger  Agreement,  the Company  shall
reimburse  Vail Banks for the  reasonable  costs and  expenses  it  incurred  in
connection with the preparation and filing of the Registration Statement.

                  4.7  Preservation  of Goodwill.  Company shall use  reasonable
efforts to preserve its business  organization and the business  organization of
its subsidiary consistent with past practices, to keep available the services of
its present  employees and of the present  employees of its  subsidiary,  and to
preserve the goodwill of customers and others  having  business  relations  with
Company or its subsidiary.

                  4.8 Approvals and Consents.  Each party hereto  represents and
warrants to and covenants with the other that it will use its best efforts,  and
will cause its officers, directors,  employees and agents and its subsidiary and
subsidiary's  officers,  directors,  employees  and  agents  to use  their  best
efforts,  to obtain  as soon as is  reasonably  practicable  all  approvals  and
consents  of state  and  federal  departments  or  agencies  required  or deemed
necessary for  consummation of the  transactions  contemplated by this Agreement
and the  Merger  Agreement.  In  particular,  within 45 days of the date of this
Agreement,  Vail  Banks  shall  file all  applications  required  to obtain  all

                                      -6-
<PAGE>

consents  and  approvals of bank  regulatory  authorities  for the  transactions
contemplated  by this  Agreement.  Vail Banks shall provide drafts of the public
sections of applications to Company prior to filing the same, and shall promptly
provide  Company  with  copies  of all  correspondence  to and  from  regulatory
authorities with respect to the transactions contemplated by this Agreement.

                  4.9 Press  Releases.  Prior to the Closing  Date,  Company and
Vail Banks shall agree with each other as to the form and substance of any press
release or other public disclosure  materially  related to this Agreement or any
other transaction contemplated hereby;  provided,  however, that nothing in this
Section  4.9 shall be deemed to prohibit  any Party from  making any  disclosure
which its counsel deems  necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by law.

                  4.10  Employees  of United  Valley  Bank.  For purposes of any
length of service  requirements,  waiting  periods,  vesting periods or benefits
based on length of service in any benefit  plan of United  Valley Bank for which
an employee  may be eligible  after the  Closing,  Vail Banks shall  ensure that
service by such  employee  with United  Valley Bank shall be deemed to have been
service with Vail Banks.

                  (a) From and after the  Closing  employees  of the Company and
United Valley Bank shall be eligible to  participate  in all Vail Banks employee
plans in  accordance  with  their  terms  and in the same  manner  as  similarly
situated Vail Banks  employees.  Service of such  employees with the Company and
United  Valley Bank shall be counted as service  with Vail Banks for purposes of
determining eligibility, vesting and levels of benefits.

                  (b) Vail Banks will (i) waive any  pre-existing  conditions or
limitations and eligibility waiting periods under any group health plans of Vail
Banks with  respect  to  Company  and United  Valley  Bank  employees  and their
eligible  dependents,  provided that there is no material  adverse change in the
Company's  claims  history prior to Closing (from that  previously  disclosed to
Vail Banks by the  Company)  and (ii) give each  Company and United  Valley Bank
employee credit for the plan year in which the Closing occurs towards applicable
deductibles and out-of-pocket limits for expense incurred prior to Closing.

                  (c) Vail Banks agrees to honor in accordance  with their terms
all  benefits  vested as of the date of this  Agreement  under the  Company  and
United Valley Bank Benefit Plans.

                  4.11 Voting and Non-Compete Agreements of Haselbush and Sishc.
                       ---------------------------------------------------------

                  (a)  Haselbush  and Sishc  agree to vote all shares of Company
Stock owned by them, directly or indirectly,  and those shares allocated to them
pursuant  to the  Employee  Stock  Ownership  Plan (the  "ESOP") in favor of the
transactions contemplated by this Agreement. Haselbush shall not be obligated to
vote  unallocated  shares  held  by  the  ESOP  in  favor  of  the  transactions
contemplated by this Agreement in his capacity as Plan fiduciary.

                  (b) For a period commencing on the Closing Date and continuing
in effect for two (2) years,  each of Haselbush and Sishc will not,  directly or
indirectly, on his own behalf or on behalf of any other person or entity:

                                      -7-
<PAGE>

                  Provide  banking  products and services in the geographic area
encompassed  by the  following in the State of Colorado:  Grand  County,  Census
Tract # 136.02 of Boulder  County  and Census  Tracts # 28 and #19.03 of Larimer
County (the "Territory");

                           (i) Solicit any Company,  United  Valley  Bank,  Vail
Banks or WestStar  Bank  (collectively,  "Employer")  customer  with whom he has
worked during the one (1) year period prior to the Closing Date or about whom he
possesses   confidential   information  for  the  purposes  of  terminating  the
customer's  relationship with the Employer or of providing  products or services
reasonably  substitutable  for  the  Employer's  products  and  services  to the
customer in the Territory; or

                           (ii) Solicit or induce , or in any manner  attempt to
solicit  or  induce,   any  person  or  entity  (including   without  limitation
consultants and independent  contractors) employed by the Employer to leave such
employment.

                  (c)  Haselbush,  Sishc  and the  Employer  acknowledge  that a
breach or  threatened  breach of the terms of this  Agreement by  Haselbush  and
Sishc  would  result  in  material  and  irreparable  damage  and  injury to the
Employer,  and that it would be difficult or  impossible  to establish  the full
monetary  value of such damages.  Therefore,  the Employer  shall be entitled to
injunctive  relief  by a court  of  appropriate  jurisdiction  in the  event  of
Haselbush's or Sishc's  breach or threatened  breach of any of the provisions of
this Agreement.  Furthermore, in addition to all other remedies provided by law,
each of Haselbush and Sishc agrees that he will  indemnify and hold the Employer
harmless from any loss,  cost,  damage or expense  (including  attorney's  fees)
incurred  by the  Employer  arising  out of his  breach of any  portion  of this
Agreement.

                  4.12 "Run-off"  Liability  Insurance  Coverage.  Company shall
acquire  for the  benefit of its  officers  and  directors  "run-off"  liability
insurance  coverage  to  survive  the  Closing  Date,  which  coverage  shall be
satisfactory to Company. Alternatively, Vail Banks shall obtain coverage for the
officers  and  directors  of Company  under its officer and  director  liability
policy  satisfactory  to Company.  The cost of such  insurance  shall be paid by
Company.

                  4.13 Dividends.  The Company may declare its regular quarterly
dividends or other  distributions  on its Common  Stock.  United Valley Bank may
declare its ordinary quarterly  dividends.  Except with prior written consent of
Vail  Banks,  neither  the  Company  nor United  Valley  Bank may  issue,  sell,
repurchase, acquire or redeem any of its Common Stock.

                  4.14  Vail  Banks  Board of  Directors  Position.  Immediately
following the Closing,  Vail Banks shall use its best efforts to provide for the
nomination and election of Haselbush to the Board of Directors of Vail Banks for
a three (3) year term.

                  4.15  Employment  of  Haselbush  and  Sishc.  Vail  Banks  (or
WestStar)  anticipates  employing Haselbush and Sishc from and after the Closing
on terms mutually acceptable to the parties.

                                      -8-
<PAGE>

                  4.16   Termination  of  ESOP.  The  parties  will   reasonably
cooperate with respect to terminating the ESOP.

                  4.17  Exercise  of  Options.  The  Company  shall use its best
efforts to cause the holders of the 9,700 options  outstanding as of the date of
this Agreement to exercise such options prior to the Closing.


                                    ARTICLE V
                                    ---------

            REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
            --------------------------------------------------------

                  To induce Vail Banks to enter into and perform this Agreement,
Company   represents,   warrants,   covenants  and  agrees  as  follows,   which
representations,  warranties,  covenants and agreements are being made as of the
date hereof and shall be deemed to be made again as of the Closing:

                  5.1 Company  Disclosure  Memorandum.  Company shall deliver to
Vail Banks on or before the fifth (5th) day following the date of this Agreement
a  memorandum  (the  "Company   Disclosure   Memorandum")   containing   certain
information regarding the Company and United Valley Bank as indicated at various
places in this Agreement.  All  information set forth in the Company  Disclosure
Memorandum or in documents  incorporated by reference in the Company  Disclosure
Memorandum  is true,  correct  and  complete,  does  not omit to state  any fact
necessary in order to make the statements therein not misleading in any material
respect,  and shall be deemed for all purposes of this  Agreement to  constitute
part of the  representations and warranties of the Company under this Article V.
The information  contained in the Company Disclosure  Memorandum shall be deemed
to be part of and qualify only those representations and warranties contained in
this  Article  V  which  make  specific  reference  to  the  Company  Disclosure
Memorandum.  All  information  in  each  of the  documents  and  other  writings
furnished to Vail Banks  pursuant to this  Agreement  or the Company  Disclosure
Memorandum is or will be true, correct and complete in all material respects and
does not and will not  omit to  state  any fact  necessary  in order to make the
statements  therein not  misleading.  Company shall promptly  provide Vail Banks
with written notification of any material event, occurrence or other information
necessary to maintain the Company Disclosure  Memorandum and all other documents
and writings furnished to Vail Banks pursuant to this Agreement as true, correct
and complete in all material  respects at all times prior to and  including  the
Closing.

                  5.2      Corporate and Financial.

                  5.2.1 Authority.  (a) Subject to the approval of various state
and federal regulatory authorities and Company shareholder approval, the Company
has full power and authority to make,  execute and perform this Agreement and to
consummate  the  transactions  contemplated  hereby and thereby,  and no further
action is necessary on the part of the Company to authorize its  consummation of
the  transactions  contemplated  hereby and thereby.  Other than such regulatory
approvals  and Company  shareholder  approval,  no further  corporate  action is
necessary on the part of the Company to consummate the transactions contemplated
hereby.  This  Agreement  constitutes  the valid and binding  obligation  of the

                                      -9-
<PAGE>

Company and is  enforceable in accordance  with its terms,  except as limited by
the laws affecting  creditors'  rights generally and by the discretion of courts
to compel specific performance.

                  (b)  Subject  to the  approval  of various  state and  federal
regulators,  the execution,  delivery and  performance of this Agreement and the
other  transactions  contemplated  or required in connection  herewith will not,
with or  without  the  giving of notice or the  passage  of time,  or both,  (i)
violate  any  provision  of federal or state law  applicable  to the  Company or
United Valley Bank,  the violation of which could be expected to have a material
adverse  effect  on the  business,  operations,  properties,  assets,  financial
condition or prospects  of the Company or United  Valley Bank;  (ii) violate any
provision of the articles of  incorporation  or charter,  as the case may be, or
bylaws of the Company or United Valley Bank;  (iii) conflict with or result in a
breach of any provision of, or termination of, or constitute a default under any
instrument,  license,  agreement or commitment to which the Company or either of
United  Valley  Bank is a party,  which,  singly or in the  aggregate,  could be
expected  to  have  a  material  adverse  effect  on the  business,  operations,
properties,  assets,  financial  condition or prospects of the Company or United
Valley Bank; or (iv) constitute a violation of any order,  judgment or decree to
which the Company or United  Valley Bank is a party,  or by which the Company or
United Valley Bank or any of their respective assets or properties are bound.

                  5.2.2    Corporate Status.

                           (a) The Company.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Colorado  and has no direct or indirect  subsidiaries  other than United  Valley
Bank.  The  Company  has all  requisite  corporate  power and  authority  and is
entitled to own or lease its  properties and assets and to carry on its business
as and in the places where such  properties  or assets are now owned,  leased or
operated and such business is conducted. The Company is duly licensed, qualified
or domesticated as a foreign corporation in the jurisdictions  listed in Section
5.2.2(a) of the Company Disclosure Memorandum, which are all jurisdictions where
the  character  of the  property  owned  by it or  the  nature  of the  business
transacted by it make such license, qualification or domestication necessary.

                           (b) United Valley Bank.  United Valley Bank is a bank
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Colorado.  United  Valley Bank has all  requisite  corporate  power and
authority  and is  entitled  to own and lease its  properties  and assets and to
carry on its business as and in the places where such  properties  or assets are
now owned, leased or operated and such business is conducted.

                  5.2.3    Capital Structure.

                           (a) The  Company.  (i) The Company has an  authorized
capital  stock  consisting  solely of 100,000  shares,  $1.00 par value,  common
stock,  of which  45,300  (subject to the exercise of 9,700  options)  shares of
common  stock are issued and  outstanding  as of the date  hereof (a list of the
Company  Shareholders and the number of shares of Company Stock owned by each is
attached  hereto as Exhibit  B).  All of the  outstanding  capital  stock of the
Company  is duly and  validly  issued,  fully  paid and  non-assessable  and was
offered,  issued and sold in compliance  with all  applicable  federal and state

                                      -10-
<PAGE>

securities  laws.  No person has any right of  rescission  or claim for  damages
under  federal or state  securities  laws with  respect to the  issuance  of any
shares of capital stock of the Company  previously  issued.  None of the capital
stock of the Company has been issued in  violation  of any  preemptive  or other
rights of its shareholders.

                           (ii) Except as set forth in Section  5.2.3(a)(ii)  of
the Company  Disclosure  Memorandum,  the Company does not have  outstanding any
securities  which  are  either  by their  terms or by  contract  convertible  or
exchangeable into capital stock of the Company,  or any other securities or debt
of the Company,  or any  preemptive  or similar  rights to  subscribe  for or to
purchase,  or any options or warrants or  agreements or  understandings  for the
purchase or the issuance (contingent or otherwise) of, or any calls, commitments
or  claims  of any  character  relating  to,  its  capital  stock or  securities
convertible into its capital stock. The Company is not subject to any obligation
(contingent  or otherwise) to repurchase or otherwise  acquire or retire,  or to
register, any shares of its capital stock.

                           (iii) Except as set forth in Section 5.2.3(a)(iii) of
the  Company  Disclosure  Memorandum,  there  is no  agreement,  arrangement  or
understanding to which the Company is a party restricting or otherwise  relating
to the transfer of any shares of capital stock of the Company.

                           (iv) All  shares of  Company  Stock or other  capital
stock,  or any  other  securities  or debt,  of the  Company,  which  have  been
purchased  or  redeemed  by the  Company  have been  purchased  or  redeemed  in
accordance  with all  applicable  federal,  state and  local  laws,  rules,  and
regulations,  including,  without  limitation,  all federal and state securities
laws and rules and  regulations  of any  securities  exchange or system on which
such stock,  securities or debt are, or at such time were,  traded,  and no such
purchase or  redemption  has resulted or will with the giving of notice or lapse
of time,  or both,  result in a default or  acceleration  of the maturity of, or
otherwise modify, any agreement,  note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of the Company.

         (b) United  Valley  Bank.  (i)  United  Valley  Bank has an  authorized
capital  stock  consisting  solely of 4,000  shares,  $100.00 par value,  common
stock,  of which 4,000 shares of common stock are issued and  outstanding  as of
the date  hereof and of which the  Company  owns 4,000  shares,  or 100 % of the
issued and outstanding  common stock.  All of the  outstanding  capital stock of
United Valley Bank is duly and validly issued, fully paid and non-assessable and
was offered, issued and sold in compliance with all applicable federal and state
securities  laws.  No person has any right of  rescission  or claim for  damages
under  federal or state  securities  laws with  respect to the  issuance  of any
shares of capital stock of United  Valley Bank  previously  issued.  None of the
capital  stock of  United  Valley  Bank  has been  issued  in  violation  of any
preemptive or other rights of its shareholders.

                  (ii)  United  Valley  Bank  does  not  have   outstanding  any
securities  which  are  either  by their  terms or by  contract  convertible  or
exchangeable  into capital stock of United Valley Bank, or any other  securities
or debt of United Valley Bank, or any  preemptive or similar rights to subscribe
for or to purchase,  or any options or warrants or agreements or  understandings
for the purchase or the issuance  (contingent  or  otherwise)  of, or any calls,

                                      -11-
<PAGE>

commitments  or  claims of any  character  relating  to,  its  capital  stock or
securities convertible into its capital stock. United Valley Bank is not subject
to any obligation  (contingent or otherwise) to repurchase or otherwise  acquire
or retire, or to register, any shares of its capital stock.

                  (iii) There is no agreement,  arrangement or  understanding to
which  either  United  Valley  Bank or the  Company  is a party  restricting  or
otherwise  relating  to the  transfer  of any shares of capital  stock of United
Valley Bank.

                  (iv) All shares of United  Valley Bank  Common  Stock or other
capital  stock,  or any other  securities or debt, of United Valley Bank,  which
have been  purchased  or redeemed by United  Valley Bank have been  purchased or
redeemed in accordance with all applicable federal, state and local laws, rules,
and regulations, including, without limitation, all federal and state securities
laws and rules and  regulations  of any  securities  exchange or system on which
such stock,  securities or debt are, or at such time were,  traded,  and no such
purchase or redemption has resulted or will,  with the giving of notice or lapse
of time,  or both,  result in a default or  acceleration  of the maturity of, or
otherwise modify, any agreement,  note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of United Valley Bank.

                  5.2.4 Corporate Records. The stock records and minute books of
the Company and United Valley Bank, as applicable,  whether previously or in the
future  furnished  or made  available  to Vail Banks by the  Company  and United
Valley  Bank,  fully  and  accurately  reflect  all  issuances,   transfers  and
redemptions  of the  common  stock of the  Company  or United  Valley  Bank,  as
applicable, correctly show the record addresses and the number of shares of such
stock issued and outstanding on the date hereof held by the  shareholders of the
Company or United Valley Bank,  correctly show all corporate action taken by the
directors  and  shareholders  of the Company or United  Valley  Bank  (including
actions taken by consent without a meeting), and contain true and correct copies
or originals of their respective  articles of  incorporation or charter,  as the
case may be, and all  amendments  thereto,  bylaws,  as amended and currently in
force,  and the minutes of all meetings or consent  actions of their  respective
directors and  shareholders.  No  resolutions,  regulations  or bylaws have been
passed,  enacted,  consented  to or  adopted  by  the  respective  directors  or
shareholders  of the Company or United Valley Bank except those contained in the
minute books.  All corporate  records of the Company and United Valley Bank have
been maintained in accordance with all applicable statutory requirements and are
complete and accurate.

                  5.2.5 Tax Returns,  Taxes.  (a) The Company and United  Valley
Bank have duly filed or will file when due (i) all  required  federal  and state
tax  returns and  reports,  and (ii) all  required  returns and reports of other
governmental units having  jurisdiction with respect to taxes imposed upon their
respective incomes, properties, revenues, franchises, operations or other assets
or taxes imposed which might create a lien or  encumbrance on any of such assets
or affect adversely their respective  businesses or operations.  Such returns or
reports are, and when filed will be, true, complete and correct, and the Company
and United Valley Bank have paid, or will pay with respect to returns or reports
related to their respective businesses not yet filed because not yet due, to the
extent such taxes or other  governmental  charges have become due, all taxes and
other governmental charges including all applicable interest and penalties,  set
forth in such returns or reports  related to their  respective  businesses.  All

                                      -12-
<PAGE>

federal, state and local taxes and other governmental charges paid or payable by
the  Company  or United  Valley  Bank have been  paid,  or have been  accrued or
reserved  on  their  respective  books in  accordance  with  generally  accepted
accounting principles applied on a basis consistent with prior periods. Adequate
reserves  for the  payment  of taxes have been  established  on the books of the
Company and United Valley Bank for all periods through the date hereof,  whether
or not due and payable and whether or not disputed.  Until the Closing Date, the
Company and United Valley Bank shall  continue to reserve  sufficient  funds for
the payment of expected tax  liabilities in accordance  with generally  accepted
accounting principles applied on a basis consistent with prior periods.  Neither
the Company nor United  Valley Bank has received any notice of a tax  deficiency
or assessment of additional  taxes of any kind and, to the knowledge of officers
of the Company or United Valley Bank  (collectively  "Management"),  there is no
threatened  claim against either the Company or United Valley Bank, or any basis
for any such  claim,  for payment of any  additional  federal,  state,  local or
foreign  taxes for any period  prior to the date of this  Agreement in excess of
the  accruals  or  reserves  with  respect to any such  claim  shown in the 1999
Financial  Statements  (as defined below) or disclosed in the notes with respect
thereto.  There are no waivers or  agreements by either the Company or either of
the Banks for the extension of time for the assessment of any taxes. The federal
income tax returns of the Company or either of the Banks have not been  examined
by the Internal Revenue Service for any period since calendar year 1997.

                  (b) Except as set forth in  Section  5.2.5(b)  of the  Company
Disclosure  Memorandum,  proper and accurate  amounts have been  withheld by the
Company and United Valley Bank from their  employees for all periods in full and
complete  compliance with the tax withholding  provisions of applicable federal,
state and local tax laws, and proper and accurate  federal,  state and local tax
returns  have been filed by the Company  and United  Valley Bank for all periods
for which  returns were due with  respect to  withholding,  social  security and
unemployment  taxes,  and the amounts  shown  thereon to be due and payable have
been paid in full.

                  5.2.6 Financial  Statements.  The Company will deliver to Vail
Banks  contemporaneously  with the delivery of the Company Disclosure Memorandum
true, correct and complete copies of (i) the unaudited  financial  statements of
the Company for the years ended  December  31,  1997,  1998 and 1999,  including
balance  sheets,  statements  of income,  statements  of  shareholders'  equity,
statement of cash flows and related notes, (ii) the audited financial statements
of United  Valley Bank for the years ended  December  31,  1997,  1998 and 1999,
including  balance  sheets,  statements of income,  statements of  shareholders'
equity,  statement  of cash flows and  related  notes (the  unaudited  financial
statements of the Company and the audited financial  statements of United Valley
Bank for the year ended December 31, 1999 shall be  collectively  referred to as
the "1999 Financial  Statements"),  (iii) unaudited financial  statements of the
Company and United Valley Bank for the period ended March 31, 2000,  including a
balance  sheet,  statement of income and related notes and (iv) monthly  interim
unaudited  financial  statements  of each of the Company and United  Valley Bank
ending at the end of each month prior to Closing and after March 31,  2000.  All
of such financial statements,  except for the interim statements which have been

                                      -13-
<PAGE>

prepared  consistently with the audited financial  statements of the Company but
without  footnotes,  etc.,  have been  prepared  in  accordance  with  generally
accepted accounting  principles  consistently applied and truthfully reflect, in
all material  aspects,  the assets,  liabilities and financial  condition of the
Company and United Valley Bank as of the dates indicated therein and the results
of its operations for the respective periods then ended.

                  5.2.7 Regulatory  Reports.  Company will deliver to Vail Banks
contemporaneously  with the delivery of the Company  Disclosure  Memorandum  for
review and  inspection  all Forms FRY6  filed by the  Company  with the Board of
Governors of the Federal  Reserve  System (the "Federal  Reserve") for the three
years ended December 31, 1999 and through the date of this  Agreement,  together
with all other  reports  filed by the Company or United Valley Bank for the same
period with the Division of Banking of the Department of Regulatory  Agencies of
the  State of  Colorado  (the  "Division  of  Banking"),  and  other  applicable
regulatory  agencies  (collectively,  the  "Reports").  All of such Reports,  as
amended,  have been prepared in accordance with applicable rules and regulations
applied on a basis  consistent  with prior  periods and contain in all  material
respects all  information  required to be presented  therein in accordance  with
such rules and regulations.

                  5.2.8  Accounts.  Section  5.2.8  of  the  Company  Disclosure
Memorandum contains a list of each and every bank and other institution in which
the Company or United  Valley Bank  maintains an account or safety  deposit box,
the account numbers and the names of all persons who are presently authorized to
draw thereon, have access thereto or give instructions regarding distribution of
funds or assets therein.

                  5.2.9  Notes  and  Obligations.  (a)  Except  as set  forth in
Section 5.2.9(a) of the Company Disclosure  Memorandum or as provided for in the
loss reserve  described in subsection (b) below,  all notes  receivable or other
obligations owned by the Company or United Valley Bank or due to any one of them
shown  in the  1999  Financial  Statements  and any such  notes  receivable  and
obligations  on the  date  hereof  and on the  Closing  Date  are,  and will be,
genuine,  legal,  valid and  collectible  obligations of the  respective  makers
thereof  and are not and will not be  subject  to any  offset  or  counterclaim.
Except as set forth in Section 5.2.9(a) of the Company Disclosure  Memorandum or
in subsection (b) below, all such notes and obligations are evidenced by written
agreements,  true and  correct  copies of which will be made  available  to Vail
Banks for examination  prior to the Closing Date. All such notes and obligations
were entered into by either the Company or United  Valley Bank,  as the case may
be, in the ordinary  course of business and in  compliance  with all  applicable
laws and regulations.

         (b)  United  Valley  Bank has  established  a loss  reserve in its 1999
Financial  Statements  and as of the date of this Agreement and will establish a
loan loss  reserve  as of the  Closing  Date in  accordance  with  formulas  and
procedures  consistent  with past practice which is or will be adequate to cover
anticipated  losses  which  might  result from such items as the  insolvency  or
default of  borrowers or obligors on such loans or  obligations,  defects in the
notes  or  evidences  of  obligation  (including  losses  of  original  notes or
instruments),  offsets or counterclaims  properly chargeable to such reserve, or
the  availability  of legal or equitable  defenses which might preclude or limit
the ability of the Company or United Valley Bank, as the case may be, to enforce
the note or  obligation,  and the  representations  set forth in subsection  (a)
above are qualified in their entirety by the aggregate of such loss reserve.

                                      -14-
<PAGE>

                  5.2.10 Liabilities. Neither the Company nor United Valley Bank
has any debt,  liability or obligation of any kind required to be shown pursuant
to generally accepted accounting principles on the consolidated balance sheet of
the  Company,  whether  accrued,  absolute,  known  or  unknown,  contingent  or
otherwise, including, but not limited to, (a) liability or obligation on account
of any  federal,  state or local  taxes or  penalty,  or  interest or fines with
respect  to  such  taxes,  (b)  liability  arising  from  or by  virtue  of  the
distribution,  delivery or other  transfer  or  disposition  of goods,  personal
property or services of any type, kind or variety, (c) unfunded liabilities with
respect to any pension, profit sharing or employee stock ownership plan, whether
operated  by the  Company or United  Valley  Bank or any other  entity  covering
employees of the Company or United Valley Bank, or (d) environmental  liability,
except  (i)  those  reflected  in the  1999  Financial  Statements,  or  (ii) as
disclosed in Section 5.2.10 of the Company Disclosure Memorandum.  Except as set
forth in Section  5.2.10 of the Company  Disclosure  Memorandum,  on the Closing
Date,  the Company shall have no  indebtedness  for borrowed money of any nature
whatsoever, and United Valley Bank shall have no indebtedness resulting from the
borrowing  of any funds,  property or  services;  provided,  however,  that this
section  5.2.10 shall not apply to the purchase of Federal Funds in the ordinary
course of business.

                  5.2.11 Absence of Changes. Except as specifically provided for
in this  Agreement or  specifically  set forth in Section  5.2.11 of the Company
Disclosure Memorandum, since December 31, 1999:

                           (a)      there have been no changes in the business
assets, properties, liabilities, results of operations or financial condition of
the Company or United Valley Bank, or in any of their  respective  relationships
with customers, employees, lessors or others, other than changes in the ordinary
course of business,  none of which  individually  or in the aggregate has had or
which  Management   believes  will  have  a  material  adverse  effect  on  such
businesses, assets, liabilities,  results of operations, financial conditions or
properties;

                           (b)      there  has  been  no  material  damage,
destruction  or loss to the  assets,  properties  or  business of the Company or
United Valley Bank, whether or not covered by insurance,  which has had or which
Management believes may have an adverse effect thereon;

                           (c) the  businesses  of the Company and United Valley
Bank have been operated in the ordinary course;

                           (d) the  properties  and  assets of the  Company  and
United Valley Bank used in their  respective  businesses have been maintained in
good order, repair and condition, ordinary wear and tear excepted;

                           (e) the respective books, accounts and records of the
Company and United Valley Bank have been  maintained  in the usual,  regular and
ordinary manner;

                           (f)  except  as set forth in the  Company  Disclosure
Memorandum,  there has been no increase in the compensation payable or to become
payable to any director,  executive officer or employee of the Company or United
Valley Bank;

                                      -15-
<PAGE>

                           (g) there  have been no changes  in the  articles
incorporation or charter, as the case may be, or bylaws of the Company or either
of United Valley Bank;

                           (h) there  has been no labor  dispute,  unfair  labor
practice charge or employment  discrimination  charge,  nor, to the knowledge of
Management, any organizational effort by any union, or institution or threatened
institution  of  any  effort,   complaint  or  other  proceeding  in  connection
therewith,  involving  the Company or United  Valley Bank,  or  affecting  their
respective operations;

                           (i) there  has been no  issuance,  sale,  repurchase,
acquisition  or  redemption by the Company or United Valley Bank of any of their
respective  capital  stock,  bonds,  notes,  debt  or  other  securities  or any
modification  or  amendment  of the  rights of the  holders  of any  outstanding
capital stock, bonds, notes, debt or other securities thereof;

                           (j) except as set forth in Section  5.2.11(j)  of the
Company  Disclosure  Memorandum,  there  has  been no  mortgage,  lien or  other
encumbrance or security interest (other than liens for current taxes not yet due
or purchase  money  security  interests or pledges to secure public  deposits or
federal funds purchased  arising in the ordinary course of business)  created on
or in (including without limitation, any deposit for security consisting of) any
asset or assets of the  Company or United  Valley  Bank or assumed by any one of
them with respect to any of their assets;

                           (k)  except  as  disclosed  in  the  1999   Financial
Statements, any interim financial statements or Section 5.2.11(k) of the Company
Disclosure  Memorandum,  there  has  been  no  material  indebtedness  or  other
liability or obligation  (whether  absolute,  accrued,  contingent or otherwise)
incurred  by the  Company or United  Valley  Bank which  would be required to be
reflected on a balance sheet of the Company or United Valley Bank prepared as of
the date hereof in accordance  with  generally  accepted  accounting  principles
applied on a  consistent  basis,  except as incurred in the  ordinary  course of
business;

                           (l) no material obligation or liability of either the
Company or United Valley Bank has been  discharged  or satisfied,  other than in
the ordinary course of business;

                           (m) there have been no material  sales,  transfers or
other dispositions of any asset or assets of either the Company or United Valley
Bank, other than sales in the ordinary course of business; and

                           (n)  there  has  been no  amendment,  termination  or
waiver of any right of either  the  Company  or  United  Valley  Bank  under any
governmental license,  permit or permission which has had or may have an adverse
effect on either of their businesses or properties.

                  5.2.12  Litigation  and  Proceedings.  Except  as set forth in
Section  5.2.12 of the  Company  Disclosure  Memorandum,  there are no  actions,
decrees, suits,  counterclaims,  claims,  proceedings or governmental actions or
investigations  pending or, to the knowledge of Management,  threatened against,
by or  affecting  either the  Company or United  Valley  Bank,  or any  officer,
director,  employee or agent in such person's capacity as an officer,  director,
employee or agent of either the Company or United Valley Bank or relating to the
business or affairs of either the Company or United Valley Bank, in any court or

                                      -16-
<PAGE>

before any arbitrator or governmental  agency, and no judgment,  award, order or
decree of any nature has been  rendered  against or with respect  thereto by any
agency,  arbitrator,  court, commission or other authority,  nor does either the
Company or United Valley Bank have any unasserted  contingent  liabilities which
might have an adverse  effect on either of their  assets or on the  operation of
their respective businesses or which might prevent or impede the consummation of
the transactions contemplated by this Agreement.

                  5.3      Business Operations.

                  5.3.1 Customers.  Management has no knowledge of any presently
existing  facts which could  reasonably be expected to result in the loss of any
material  borrower or  depositor  of United  Valley Bank or in the  inability of
United Valley Bank to collect amounts due therefrom or to return funds deposited
thereby,  except  as set  forth  in  Section  5.3.1  of the  Company  Disclosure
Memorandum.

                  5.3.2 Permits; Compliance with Law. (a) The Company and United
Valley  Bank  have  all  permits,   licenses,   approvals,   authorizations  and
registrations under all federal, state, local and foreign laws required for them
to carry on their respective businesses as presently conducted,  and all of such
permits, licenses, approvals, authorizations and registrations are in full force
and effect,  and no suspension or  cancellation of any of them is pending or, to
the knowledge of Management, threatened.

                           (b) The Company and United  Valley Bank have complie
with all laws,  regulations,  and orders applicable to them or their businesses.
Section  5.3.2(b) of the Company  Disclosure  Memorandum  contains a list of any
known violations of such laws,  regulations,  ordinances or rules by any present
officer,  director,  or  employee  of the  Company or United  Valley  Bank which
occurred since  December 31, 1995, and which resulted in any order,  proceeding,
judgment or decree  which would be  required  to be  disclosed  pursuant to Item
401(f) of Regulation S-K  promulgated by the Securities and Exchange  Commission
if the  Company  or  United  Valley  Bank  had  been  subject  to the  reporting
requirements  under the Securities Act or the Exchange Act. No past violation of
any such law, regulation,  ordinance or rule has occurred which could impair the
right  or  ability  of the  Company  or  United  Valley  Bank to  conduct  their
businesses.

                           (c)  Except as set forth in Section  5.3.2(c)  of the
Company  Disclosure  Memorandum,  no notice  or  warning  from any  governmental
authority  with  respect to any  failure or  alleged  failure of the  Company or
United  Valley Bank to comply in any respect with any law,  regulation  or order
has been  received,  nor is any such  notice  or  warning  proposed  or,  to the
knowledge of Management, threatened.

                  5.3.3  Environmental.  (a)  Except  as set  forth  in  Section
5.3.3(a) of the Company  Disclosure  Memorandum,  the Company and United  Valley
Bank:

                                      -17-
<PAGE>

                           (i)  have  not  caused  or  permitted,  and  have  no
knowledge of, the  generation,  manufacture,  use, or handling or the release or
presence of any  hazardous  substances  on, in, under or from any  properties or
facilities  currently  owned or leased by the  Company or United  Valley Bank or
adjacent to any properties so owned or leased; and

                           (ii) have  complied  with,  and have kept all records
and made all filings  required  by,  applicable  federal,  state and local laws,
regulations,   orders,   permits  and  licenses   relating  to  the  generation,
manufacture,  use, handling,  release or presence of any hazardous substance on,
in, under or from any properties or facilities  currently owned or leased by the
Company or United Valley Bank.

                           (b)  Except as set forth in Section  5.3.3(b)  of the
Company  Disclosure  Memorandum,  neither the Company nor United Valley Bank nor
any of their officers,  directors,  employees or agents,  in the course of their
employment  by the Company or United  Valley Bank,  has  directly or  indirectly
given  advice  with  respect to, or  participated  in any  respect,  directly or
indirectly,  in, the  management  or  operation  of any entity or concern  whose
business  relates in any way to the  generation,  storage,  handling,  disposal,
transfer,  production or processing of hazardous substances, nor has the Company
or United Valley Bank  foreclosed on any property on which there is a threatened
release of any  hazardous  substances  or on which there has been such a release
and full remediation has not been completed,  or any property on which contained
(non-released) hazardous substances or solid wastes are located.

                           (c)  Except as set forth in Section  5.3.3(c)  of the
Company Disclosure  Memorandum,  neither the Company nor United Valley Bank, nor
any of their officers, directors, employees, and agents, are aware of, have been
told of, or have  observed,  the  presence of any  hazardous  substance or solid
waste on, in,  under,  or around  property on which the Company or United Valley
Bank holds a legal or security interest,  in violation of, or creating liability
under,  federal,  state  or  local  environmental  statutes,   regulations,   or
ordinances.

                  5.3.4  Insurance.  Section  5.3.4  of the  Company  Disclosure
Memorandum  contains a complete list and  description  (including the expiration
date,  premium amount and coverage  thereunder) of all policies of insurance and
bonds presently maintained by, or providing coverage for, the Company and United
Valley Bank or any of their officers, directors and employees, all of which are,
and will be  maintained  through  the  Closing  Date,  in full force and effect,
together with a complete  list of all pending  claims under any of such policies
or bonds.  All terms,  obligations  and  provisions of each of such policies and
bonds have been complied  with,  all premiums due thereon have been paid, and no
notice of  cancellation  with respect  thereto has been received.  Except as set
forth in Section 5.3.4 of the Company Disclosure Memorandum, Management believes
that such policies and bonds provide adequate  coverage to insure the properties
and businesses of the Company and United Valley Bank and the activities of their
officers,  directors and employees against such risks and in such amounts as are
prudent and customary. Neither the Company nor United Valley Bank will as of the
Closing  Date have any  liability  for  premiums  or for  retrospective  premium
adjustments  for any period  prior to the Closing  Date.  The Company and United
Valley Bank have  previously  made  available to Vail Banks a true,  correct and
complete copy of each insurance  policy and bond in effect since January 1, 1997
with respect to the business and affairs of the Company and United Valley Bank.

                                      -18-
<PAGE>

                  5.4      Properties and Assets.

                  5.4.1 Contracts and Commitments.  Section 5.4.1 of the Company
Disclosure  Memorandum  contains a list  identifying and briefly  describing all
written contracts,  purchase orders,  agreements,  security deeds, guaranties or
commitments  to which the Company or United Valley Bank is a party,  or by which
they may be bound,  involving the payment or receipt,  actual or contingent,  of
more than  $25,000 or having a term or  requiring  performance  over a period of
more than ninety (90) days,  other than agreements,  contracts,  security deeds,
guaranties or commitments made in the ordinary course of the Company's  business
and other  agreements  pursuant  to which the  Company  has  received a security
interest.  Except  as set  forth  in  Section  5.4.1 of the  Company  Disclosure
Memorandum,  each such  contract,  agreement,  guaranty  and  commitment  of the
Company  and  United  Valley  Bank is in full  force and effect and is valid and
enforceable in accordance  with its terms (subject to any applicable  bankruptcy
or  creditor  laws)  and  constitutes  a legal  and  binding  obligation  of the
respective  parties  thereto  and is not the  subject of any notice of  default,
termination,  partial  termination  or of any  ongoing,  pending,  completed  or
threatened  investigation,  inquiry or other proceeding or action that will give
rise to any notice of default,  termination or partial termination.  The Company
and United  Valley Bank have complied  with the  provisions  of such  contracts,
agreements,  guaranties and  commitments.  A true and complete copy of each such
document has been made available to Vail Banks for examination.

                  5.4.2 Licenses;  Intellectual Property. The Company and United
Valley  Bank  have  all  patents,   trademarks,   trade  names,  service  marks,
copyrights,  trade  secrets and know-how  reasonably  necessary to conduct their
businesses as presently  conducted and,  except as described in Section 5.4.2 of
the Company Disclosure Memorandum, neither the Company nor United Valley Bank is
a party,  either as  licensor  or  licensee,  to any  agreement  for any patent,
process,  trademark,  service mark, trade name, copyright, trade secret or other
confidential information,  and there are no rights of third parties with respect
to any trademark, service mark, trade secrets,  confidential information,  trade
name, patent, patent application,  copyright, invention, device or process owned
or used by the Company or United Valley Bank or presently expected to be used by
either of them in the  future.  All  patents,  copyrights,  trademarks,  service
marks, trade names, and applications therefor or registrations thereof, owned or
used by the Company or United  Valley Bank,  are listed in Section  5.4.2 of the
Company Disclosure Memorandum.  The Company and United Valley Bank have complied
with all  applicable  Colorado  laws relating to the filing or  registration  of
"fictitious names" or trade names.

                  5.4.3  Personal  Property.  The Company and United Valley Bank
each  have  good and  marketable  title to all of their  respective  personalty,
tangible and intangible,  reflected in the 1999 Financial  Statements (except as
since sold or otherwise  disposed of by either of them in the ordinary course of
business),  free and clear of all encumbrances,  liens or charges of any kind or
character  except  (i)  those  referred  to in the  notes to the 1999  Financial
Statements as securing  specified  liabilities (with respect to which no default
exists or, to the  knowledge  of  Management,  is claimed to exist),  (ii) those
described in Section 5.4.3 of the Company Disclosure  Memorandum and (iii) liens
for taxes not due and payable.

                                      -19-
<PAGE>

                  5.4.4  Leases.  (a) All leases  pursuant  to which  either the
Company or United Valley Bank is lessor or lessee (the  "Leases") of any real or
personal  property are valid and  enforceable  in  accordance  with their terms;
there is not,  under any of such  Leases any  default  or, to the  knowledge  of
Management,  any claimed  default by the Company or United  Valley Bank,  as the
case may be, or event of default or event which with notice or lapse of time, or
both would  constitute a default by the Company or United  Valley  Bank,  as the
case may be,  and in  respect  of which  adequate  steps  have not been taken to
prevent a default on either of their parts from occurring.

         (b) Except as set forth in Section  5.4.4(b) of the Company  Disclosure
Memorandum,  there are no  contractual  obligations,  agreements in principle or
present  plans for either the  Company or United  Valley  Bank to enter into new
leases  of real  property  or to  renew or amend  existing  Leases  prior to the
Closing Date.

         (c) The copies of the Leases heretofore  furnished or made available by
the Company and United Valley Bank to Vail Banks are true, correct and complete,
and the Leases  have not been  modified in any  respect  other than  pursuant to
amendments,  copies of which have been concurrently  delivered or made available
to Vail Banks, and are in full force4 and effect in accordance with their terms.

         (d) Except as set forth in Section  5.4.4(d) of the Company  Disclosure
Memorandum,  no rent has been paid in advance and no  security  deposit has been
paid, nor is any brokerage  commission  payable,  by or to the Company or United
Valley Bank with respect to any Lease.

                  5.4.5 Real  Property.  (a) The Company  shall  furnish to Vail
Banks a title  insurance  binder on each  parcel of real  property  owned by the
Company or United  Valley Bank on or prior to April 15,  2000.  Vail Banks shall
have the right to obtain, at its expense,  a Phase One environmental  assessment
of each parcel of real estate owned by the Company or United Valley Bank. Except
as  disclosed  in Section  5.4.5(a) of the Company  Disclosure  Memorandum,  the
Company  and  United  Valley  Bank  have good and  marketable  title to the real
property  reflected in the 1999 Financial  Statements  (the  "Realty"),  and the
titles to the Realty are covered by title insurance  policies providing coverage
in the amount of the original purchase price.

         (b) Except as set forth in Section  5.4.5(b) of the Company  Disclosure
Memorandum, the interests of the Company or United Valley Bank in the Realty and
in and  under  each of the  Leases  are free and  clear of any and all liens and
encumbrances  except for liens for current taxes not yet due, and are subject to
no present claim, contest,  dispute,  action or, to the knowledge of Management,
threatened action at law or in equity.

         (c) The present and (and to the  knowledge of the Company) past use and
operations of, and improvements  upon, the Realty and all real properties leased
by  the  Company  and  United  Valley  Bank  (the  "Leased  Properties")  are in
compliance with all applicable building, fire, zoning and other applicable laws,
ordinances and regulations,  including the Americans with  Disabilities Act, and
with all deed  restrictions  of record,  no notice of any  violation  or alleged
violation thereof has been received,  and to the knowledge of Management,  there
are no  proposed  changes  therein  that  would  affect the  Realty,  the Leased
Properties or their uses.

                                      -20-
<PAGE>

         (d) To the  knowledge of Company,  Company is not aware of any proposed
or pending  change in the zoning of, or of any proposed or pending  condemnation
proceeding with respect to, any of the Realty or the Leased Properties which may
adversely affect the Realty or the Leased Properties or the current or currently
contemplated use thereof.

         (e) The buildings and structures  owned,  leased or used by the Company
and United Valley Bank are, taken as a whole,  in good  operating  order (except
for ordinary wear and tear), usable in the ordinary course of business,  and are
sufficient  and adequate to carry on the  businesses  and affairs of the Company
and United Valley Bank as presently conducted.

                  5.5      Employees and Benefits.

                  5.5.1  Compensation  Structure.  Section  5.5.1 of the Company
Disclosure  Memorandum  contains a true and complete list of the names,  titles,
responsibilities  and  compensation  arrangements  of each person  whose  earned
compensation (including without limitation all salary, wages, bonuses and fringe
benefits,  other than those fringe benefits made available to all employees on a
non-discriminatory  basis), regardless of whether actually payable in such year,
from the Company and United  Valley Bank for the current  fiscal year will equal
or exceed $25,000.  Section 5.5.1 of the Company Disclosure  Memorandum contains
copies  of  all  material  written   agreements,   correspondence   (other  than
outstanding  offers of employment to prospective  employees  whose  compensation
levels will not exceed $25,000 in cash),  memoranda and other written  materials
currently in effect which have been provided to such employees relating to their
compensation.

                  5.5.2 Directors or Officers of Other  Corporations.  Except as
set forth in Section 5.5.2 of the Company  Disclosure  Memorandum,  no director,
officer, or employee of the Company or United Valley Bank serves, or in the past
five years has served, as a director or officer of any other corporation  (other
than the  Company or United  Valley  Bank) on behalf of or as a designee  of the
Company or any of its subsidiaries.

                  5.5.3  Employee  Benefits.  (a) Except as set forth in Section
5.5.3(a) of the Company  Disclosure  Memorandum,  neither the Company nor United
Valley  Bank has or  maintains  a  pension  plan,  profit  sharing  plan,  group
insurance  plan,  employee  welfare  benefit  plan (as such term is  defined  in
Section 3(l) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA")),   severance  plan,   bonus  plan,  stock  option  plan  or  deferred
compensation plan for any of its current or former employees.

         (b) Each  "employee  benefit plan" as defined in Section 3(3) of ERISA,
maintained by or on behalf of the Company or United Valley Bank  (including  any
plans  which  are   "multiemployer   plans"  under  Section  3(37)(A)  of  ERISA
("Multiemployer  Plans")  and any  defined  benefit  plan (as defined in Section
3(35) of ERISA)  terminated by the Company or United Valley Bank within the five
plan-years ending  immediately before the Closing Date), which covers or covered
any employees of the Company,  United  Valley Bank, or any  subsidiary or of any
predecessors  thereof  (each a  "Plan"),  is listed in Section  5.5.3(b)  of the

                                      -21-
<PAGE>

Company Disclosure  Memorandum,  and copies of all the Plans and Plan trusts (if
applicable),  Summary Plan  Descriptions,  Actuarial  Reports and valuations (if
any),  and Annual  Reports  (and  attachments  thereto) on Form 5500,  5500-C or
5500-R, as the case may be (if required pursuant to ERISA),  for the most recent
three years with respect to the Plans,  Internal  Revenue Service  determination
letters and any other related  documents  requested by Vail Banks or its counsel
have been, or prior to the Closing Date will be, provided to Vail Banks.

         (c) Except as set forth in Section  5.5.3(c) of the Company  Disclosure
Memorandum,  with respect to each Plan: no litigation or administrative or other
proceeding is pending or, to the knowledge of Management,  threatened; each Plan
has been restated or amended so as to comply with all applicable requirements of
law,  including all applicable  requirements of ERISA, the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations  promulgated thereunder by
the Internal Revenue Service and the United States Department of Labor.  Neither
the Plan nor any trustee,  administrator  or  fiduciary  thereof has at any time
been involved in any transaction  relating to the Plan which would  constitute a
breach of fiduciary  duty under ERISA or a "prohibited  transaction"  within the
meaning  of  Section  406 of ERISA or  Section  4975 of the  Code,  unless  such
transaction  is  specifically  permitted  under  Sections  407 or 408 of  ERISA,
Section 4975 of the Code or a class or  administrative  exemption  issued by the
Department of Labor.

         (d) Except as set forth in Section  5.5.3(d) of the Company  Disclosure
Memorandum,  each  Plan has been  administered  in  compliance  in all  material
respects with applicable law and the terms of the Plan.

         (e) Except as disclosed in Section  5.5.3(e) of the Company  Disclosure
Memorandum  and except for  obligations  under the  Consolidated  Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), neither the Company nor United
Valley Bank has any obligation to provide,  or material  liability  for,  health
care, life insurance or other benefits after  termination of active  employment.
As of the Closing  Date,  the Company and United  Valley Bank will have provided
adequate  reserves,  or  insurance  or  qualified  trust  funds,  for all claims
incurred through the Closing Date,  including  adequate  reserves to provide for
any  post-retirement  health care, life insurance or other benefits with respect
to  periods of  employment  prior to the  Closing  Date,  based on an  actuarial
valuation  satisfactory  to the  actuaries of the Company and United Valley Bank
representing  a projection  of claims  expected to be incurred for such retirees
during their period of coverage under such Plan.

         (f) To the  knowledge of  Management,  no fact or  circumstance  exists
which could  constitute  grounds in the future for the Pension Benefit  Guaranty
Corporation  ("PBGC")  (or  any  successor  to the  PBGC)  to  take  any  action
whatsoever  under  Section  4042 of ERISA in  connection  with any plan which an
Affiliate  (as  defined  below) of the Company  maintains  within the meaning of
Section  4062 or 4064 of ERISA,  and, in either  case,  PBGC has not  previously
taken any such action which has, or reasonably might, result in any liability of
an Affiliate or the Company to the PBGC,  which would have an adverse  effect on
the business of the Company.  The term  "Affiliate" for purposes of this Section
means any trade or business (whether  incorporated or unincorporated) which is a
member of a group  described  in Sections  414(b) or 414(c) of the Code of which
the Company is also a member.

                                      -22-
<PAGE>

         (g)  Except  as  specifically  identified  in  the  Company  Disclosure
Memorandum, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not result in any payment or series of
payments by the Company or United  Valley Bank to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code),  increase or secure
(by way of a trust or other  vehicle)  any benefits  payable  under any Employee
Benefit Plan of Company or United Valley Bank, or accelerate the time of payment
or vesting of any such benefit.

         (h) The Company and United  Valley  Bank shall take such  actions  with
respect to any  Plans,  and  refrain  from such  actions,  as are  necessary  to
maintain the  qualifications of each such Plan under Section 401(a) of the Code,
and the  exemption  of the trust  maintained  for each such Plan  under  Section
401(a) of the Code.  Company  and  United  Valley  Bank  shall  timely  make all
contributions  and other  payments to the Plans which they are obligated to make
as of the date hereof.  Other than contributions or payments declared,  required
or  obligated  to be paid to the Plans as of the date  hereof,  no  contribution
shall be declared for or paid to any such Plan. Except as required by Applicable
Law and contractual  commitment  existing as of the date hereof and disclosed in
Section 5.5.3(h) of the Company Disclosure Memorandum, no amendment or change to
the  provisions of any Plan shall be made or adopted prior to Closing,  and each
of such Plans shall be continued in accordance with its terms.

         (i) Except as disclosed in Section  5.5.3(i) of the Company  Disclosure
Memorandum, Company or United Valley Bank does not provide and has no obligation
to provide benefits,  including,  without  limitation,  death, health or medical
benefits (whether or not insured) with respect to current or former employees of
Company or United Valley Bank beyond their  retirement or other  termination  of
service with Company or United  Valley Bank other than (i) coverage  mandated by
Applicable Law, (ii) benefits under any Plan, or (iii) benefits the full cost of
which is borne by the current or former employee or beneficiary.

                  5.5.4  Labor-Related  Matters.  Neither the Company nor United
Valley Bank is, and neither the Company nor United Valley Bank has been, a party
to any collective  bargaining  agreement or agreement of any kind with any union
or labor organization or to any agreement with any of its employees which is not
terminable  at will or upon  ninety  (90) days  notice at the  election  of, and
without  cost or penalty to, the Company or United  Valley  Bank.  Except as set
forth in Section 5.5.4 of the Company Disclosure Memorandum, neither the Company
nor United Valley Bank has received at any time in the past five (5) years,  any
demand for  recognition  from any union,  and no attempt has been made,  or will
have been made as of the Closing Date, to organize any of their  employees.  The
Company has complied with all  obligations  under the National  Labor  Relations
Act, as amended,  the Age Discrimination in Employment Act, as amended,  and all
other  federal,  state  and  local  labor  laws and  regulations  applicable  to
employees.  To the knowledge of  Management,  there are no unfair labor practice
charges  pending or threatened  against the Company or United  Valley Bank,  and
there  are,  and in the past  three (3)  years  there  have  been,  no  charges,
complaints, claims or proceedings, or slowdowns or strikes pending or threatened
against,  or  involving,  as the case may be, the Company or United  Valley Bank
with  respect to any  alleged  violation  of any legal duty  (including  but not
limited to any wage and hour claims,  employment discrimination claims or claims
arising out of any employment relationship) by the Company or United Valley Bank
as to any of their employees or as to any person seeking  employment  therefrom,
and no such violations exist.

                                      -23-
<PAGE>

                  5.5.5  Related-Party  Transactions.  Except  for (a) loans and
extensions of credit made on substantially  the same terms,  including  interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions by the Company or United Valley Bank with other persons who are not
affiliated with the Company or United Valley Bank, and which do not involve more
than the normal risk of repayment or present  other  unfavorable  features,  (b)
deposits,  all of which  are on terms and  conditions  identical  to those  made
available to all  customers of United Valley Bank at the time such deposits were
entered into, and (c)  transactions  specifically  described in Section 5.5.5 of
the Company Disclosure Memorandum, there are no contracts with or commitments to
present or former 5% or greater shareholders,  directors, officers, or employees
of the Company or United Valley Bank  involving the  expenditure  after December
31, 1997 of more than $60,000 as to any one  individual,  including with respect
to any  business  directly  or  indirectly  controlled  by any such  person,  or
$100,000 for all such  contracts or  commitments  in the  aggregate for all such
individuals  (other than  contracts  or  commitments  relating to services to be
performed by any officer, director or employee as a currently-employed  employee
of the Company or United Valley Bank).

                  5.6      Other Matters.

                  5.6.1 Approvals, Consents and Filings. Except for the approval
of the Federal Reserve, the Federal Deposit Insurance  Corporation (the "FDIC"),
the Division of Banking, Company shareholder approval or as set forth in Section
5.6.1 of the Company Disclosure  Memorandum,  neither the execution and delivery
of this  Agreement  by the  Company  nor the  consummation  of the  transactions
contemplated  hereby  or  thereby,  will  (a)  require  any  consent,  approval,
authorization  or permit of, or filing with or notification to, any governmental
or regulatory  authority,  or (b) violate any order, writ,  injunction,  decree,
statute,  rule or regulation applicable to the Company or United Valley Bank, or
any of their respective assets.

                  5.6.2 Default.  (a) Except for those consents  described in or
set forth pursuant to Section 5.6.1 above or as set forth in Section 5.6.2(a) of
the Company Disclosure  Memorandum,  neither the execution of this Agreement nor
the  consummation  of  the  transactions  contemplated  herein  or  therein  (i)
constitutes a breach of or default under any contract or commitment to which the
Company  or  United  Valley  Bank is a party or by which the  Company  or United
Valley Bank or their properties or assets are bound, (ii) does or will result in
the creation or imposition of any security interest, lien, encumbrance,  charge,
equity or restriction of any nature  whatsoever in favor of any third party upon
any assets of the Company or United Valley Bank, or (iii)  constitutes  an event
permitting  termination of any agreement or the acceleration of any indebtedness
of the Company or United Valley Bank.

         (b) Except as set forth in Section  5.6.2(b) of the Company  Disclosure
Memorandum,  neither the Company nor United  Valley Bank is in default under its
articles of incorporation or charter, as the case may be, or bylaws or under any
term  or  provision  of any  security  deed,  mortgage,  indenture  or  security

                                      -24-
<PAGE>

agreement or of any other  material  contract or instrument to which the Company
or  United  Valley  Bank is a party or by which  either  of them or any of their
property is bound.

                  5.6.3 United Valley Bank.  The Company owns 100% of the equity
interests of United Valley Bank, and pursuant to this Agreement, Vail Banks will
acquire all of the  Company's  rights,  title and interest in and to such equity
interests.

                  5.6.4    Representations    and   Warranties.    No   material
representation  or  warranty  contained  in  this  Article  V or in any  written
statement  delivered by or at the direction of the Company or United Valley Bank
pursuant  hereto or in  connection  with the  transactions  contemplated  hereby
contains or shall contain any untrue statement,  nor shall such  representations
and  warranties  taken as a whole omit any statement  necessary in order to make
any statement not misleading. Copies of all documents furnished to Vail Banks in
connection with this Agreement or pursuant hereto are true, correct and complete
as of the date given.  If Vail Banks has relied on the Banker's Book supplied by
The Wallach Company, Inc., its contents are accurate as of the date of the book.


                                   ARTICLE VI
                                   ----------

                       CONDUCT OF BUSINESS OF THE COMPANY
                       ----------------------------------
                      OR UNITED VALLEY BANK PENDING CLOSING
                      -------------------------------------

                  During  the  period  from  the  date  of  this  Agreement  and
continuing until the Closing Date, or the earlier  termination of this Agreement
pursuant  to  Article  X  hereof,   the  Company  agrees  (except  as  expressly
contemplated  by this Agreement or to the extent that Vail Banks shall otherwise
consent in advance in writing) that:

                  (a) Ordinary Course.  Except in specific  contemplation of the
transactions  contemplated by this Agreement, the Company and United Valley Bank
shall carry on their businesses in the usual, regular and ordinary course in the
same manner as heretofore  conducted,  without the creation of any  indebtedness
for borrowed money (other than deposit and similar accounts and customary credit
arrangements  between  banks in the ordinary  course of  business),  and, to the
extent  consistent  with such  businesses,  use their best  efforts to  preserve
intact their  present  business  organizations,  keep  available the services of
their  present  officers and  employees and preserve  their  relationships  with
representatives,  customers,  suppliers,  personnel and others  having  business
dealings with the Company and United Valley Bank.

                  (b) Dividends; Changes in Stock. Except as provided in Section
4.13,  the  Company  shall not and or shall not  propose  to  declare or pay any
dividends  on, or make other  distributions  in respect  of, any of its  capital
stock,  and neither the Company nor United Valley Bank shall or shall propose to
(i) split, combine or reclassify any of their capital stock or issue,  authorize

                                      -25-
<PAGE>

or propose the issuance of any other  securities in respect of, in lieu of or in
substitution  for shares of capital  stock of the Company or United Valley Bank,
or (ii)  repurchase  or  otherwise  acquire  any shares of their  capital  stock
(except for the 9,700 options outstanding as of the date of this Agreement).

                  (c) Issuance of Securities. The Company and United Valley Bank
shall not sell, issue, authorize or propose the sale or issuance of, or purchase
or propose the  purchase of, any shares of their  capital  stock or any class of
securities  convertible into, or rights,  warrants or options to acquire (except
for the 9,700 options  outstanding as of the date of this  Agreement),  any such
shares, or other convertible securities or enter into any agreement with respect
to the foregoing.

                  (d) Governing Documents;  Compliance With Law. The Company and
United Valley Bank shall not amend their articles of  incorporation  or charter,
as the case may be, or bylaws.  The  Company  and United  Valley Bank shall each
maintain their corporate existence and powers and fully comply with all federal,
state and local laws with respect to their  operations  and the conduct of their
businesses.

                  (e) No Acquisitions.  The Company and United Valley Bank shall
not acquire by merging or  consolidating  with,  or by  purchasing a substantial
portion  of  the  assets  of,  or by  any  other  manner,  any  business  or any
corporation,  partnership,  association  or other entity or division  thereof or
otherwise   acquire  or  agree  to  acquire  any  assets  which  are   material,
individually or in the aggregate, to them.

                  (f) No Dispositions.  The Company and United Valley Bank shall
not sell,  lease or otherwise  dispose of any of their assets  except for sales,
leases and other dispositions in the ordinary course of business consistent with
prior practice.

                  (g)  Maintenance of Properties.  The Company and United Valley
Bank shall maintain their  properties and assets in  satisfactory  condition and
repair for the purposes  intended,  ordinary wear and tear and damage by fire or
other casualty excepted.

                  (h) Benefit  Plans,  Etc.  The Company and United  Valley Bank
shall  not enter  into or amend  any  bonus,  incentive  compensation,  deferred
compensation,  profit  sharing,  retirement,  pension,  group  insurance,  stock
option,  stock  purchase  or other  benefit  plan or any  union,  employment  or
consulting  agreement  except as  required by law or  regulations  and shall not
accelerate  the   exercisability  of  any  options  (except  the  9,700  options
outstanding  as of the date of this  Agreement),  warrants or rights to purchase
securities of the Company or United Valley Bank pursuant to any benefit plan.

                  (i) Books and  Records.  The books and  records of the Company
and United Valley Bank shall be  maintained  in the usual,  regular and ordinary
course on a basis consistent with prior years.

                  (j) Increase in  Compensation.  The Company and United  Valley
Bank  shall  not  grant to any  officer,  employee  or  agent  any  increase  in
compensation  (other than any increase  referred to in Section 5.2.11(f) hereof)
or in  severance or  termination  pay, or enter into any  employment  agreement,
except as may be required under  employment,  termination or other agreements in
effect on the date of this  Agreement  and which are  described  in the  Company
Disclosure Memorandum.

                                      -26-
<PAGE>

                  (k) Payment of Debt.  The Company and United Valley Bank shall
not pay any claim or  discharge  or satisfy any lien or  encumbrance  or pay any
obligation  or  liability  other than in the  ordinary  course of business or as
required by the terms of any written  instrument  evidencing  or  governing  the
same, a copy of which has been heretofore made available to Vail Banks.

                  (l) Other  Actions.  The Company and United  Valley Bank shall
not take any action that would or could  reasonably be expected to result in any
of the  representations and warranties of the Company and United Valley Bank set
forth in this Agreement  becoming  untrue at any time on or prior to the Closing
Date.

                  (m)  Maintenance  of Insurance.  The Company and United Valley
Bank shall  maintain and keep or cause to be  maintained  and kept in full force
and effect all of the  insurance  referred to in Section  5.3.4  hereof or other
insurance equivalent thereto.

                  (n) Investment  Portfolio.  The Company and United Valley Bank
shall only invest funds of the Company or United  Valley Bank in  securities  of
the government of the United States, Repurchase Agreements secured by securities
of the government of the United States,  federal funds,  or deposits  insured by
the FDIC;  provided,  however,  that no such investment by the Company or United
Valley Bank shall have a stated  maturity of greater than five (5) years and the
various stated maturities of the Company's and United Valley Banks'  investments
shall be consistent with the stated  maturities of the  investments  held in the
ordinary course of the Company's and United Valley Banks' businesses.

                  (o) Banking Relationships.  Except for changes in the ordinary
course of  business,  no change  will be made in the  banking  and safe  deposit
arrangements referred to in Section 5.2.8 hereof.

                  (p) Notice of  Changes.  The  Company  and United  Valley Bank
shall  promptly  advise Vail Banks  orally and in writing of any change or event
having, or which Management of the Company and United Valley Bank believes could
have, a material adverse effect on the assets, liabilities, business, operations
or financial condition of the Company or United Valley Bank.


                                   ARTICLE VII
                                   -----------

                  REPRESENTATIONS AND WARRANTIES OF VAIL BANKS
                  --------------------------------------------

                  To  induce  the  Company  to  enter  into  and  perform   this
Agreement,  Vail Banks  represents,  warrants,  covenants and agrees as follows,
which representations, warranties, covenants and agreements are being made as of
the date hereof and shall be deemed to be made again as of the Closing:

                                      -27-
<PAGE>

                  7.1      Corporate and Financial.

                  7.1.1 Authority.  (a) Subject to the approval of various state
and federal regulatory  authorities,  Vail Banks has full power and authority to
make,  execute and perform this  Agreement  and to  consummate  the  transaction
contemplated hereby and thereby,  and no further action is necessary on the part
of Vail Banks to authorize  its  consummation  of the  transaction  contemplated
hereby and thereby.  Other than such regulatory approvals,  no further corporate
action is  necessary  on the part of Vail Banks to  consummate  the  transaction
contemplated hereby. This Agreement constitutes the valid and binding obligation
of Vail Banks and is enforceable in accordance with its terms, except as limited
by the laws  affecting  creditors'  rights  generally  and by the  discretion of
courts to compel specific performance.

         (b)  Subject  to  the  approval  of  the  various   state  and  federal
regulators,  the execution,  delivery and  performance of this Agreement and the
transaction  contemplated  or required in connection  herewith will not, with or
without  the giving of notice or the passage of time,  or both,  (i) violate any
provision  of federal or state law  applicable  to Vail Banks or  WestStar,  the
violation of which could be expected to have an adverse  effect on the business,
operations,  properties,  assets, financial condition or prospects of Vail Banks
or WestStar;  (ii) violate any  provision  of the articles of  incorporation  or
charter, as the case may be, or bylaws of Vail Banks or WestStar; (iii) conflict
with or result in a breach of any provision of, or termination of, or constitute
a default under any instrument,  license,  agreement or commitment to which Vail
Banks or  WestStar  is a party,  which,  singly  or in the  aggregate,  could be
expected  to have an adverse  effect on the  business,  operations,  properties,
assets,  financial  condition or  prospects  of Vail Banks or WestStar;  or (iv)
constitute a violation  of any order,  judgment or decree to which Vail Banks or
WestStar  is a  party,  or by  which  Vail  Banks  or  WestStar  or any of their
respective assets or properties are bound.

                  7.1.2    Corporate Status.
                           ----------------

         (a) Vail Banks.  Vail Banks is a corporation  duly  organized,  validly
existing and in good standing under the laws of the state of Colorado and has no
direct or indirect  subsidiaries  other than  WestStar and  Mortgage  Associates
Vail,  Inc.  Vail Banks has all requisite  corporate  power and authority and is
entitled to own or lease its  properties and assets and to carry on its business
as and in the places where such  properties  or assets are now owned,  leased or
operated and such business is conducted.

         (b) WestStar.  WestStar is a bank duly organized,  validly existing and
in good  standing  under the laws of the  State of  Colorado.  WestStar  has all
requisite  corporate  power and  authority  and is entitled to own and lease its
properties  and assets and to carry on its  business as and in the places  where
such properties or assets are now owned, leased or operated and such business is
conducted.

                  7.1.3    Capital Structure.
                           -----------------

         (a) Vail Banks.  Vail Banks has an authorized  capital stock consisting
of 20,000,000 shares,  $1.00 par value,  common stock, of which 6,040,608 shares
of common stock are issued and outstanding as of the date hereof. Although there
are no shares of preferred stock issued and outstanding,  the Board of Directors
of Vail Banks is authorized to issue preferred stock in one or more series.  All
of the outstanding capital stock of Vail Banks is duly and validly issued, fully
paid and non-assessable and was offered,  issued and sold in compliance with all
applicable  federal  and  state  securities  laws.  No  person  has any right of
rescission  or claim for damages  under  federal or state  securities  laws with
respect to the issuance of any shares of capital stock of Vail Banks  previously
issued.  None of the capital stock of Vail Banks has been issued in violation of
any preemptive or other rights of its shareholders.

         (b)  WestStar.  WestStar has an  authorized  capital  stock  consisting
solely of 130,693 shares, $6.00 par value, common stock, of which 130,693 shares
of common  stock are issued and  outstanding  as of the date hereof and of which
Vail Banks owns 130,693  shares,  or 100% of the issued and  outstanding  common
stock.  All of the  outstanding  capital  stock of  WestStar is duly and validly
issued,  fully  paid and  non-assessable  and was  offered,  issued  and sold in
compliance with all applicable  federal and state securities laws. No person has
any right of rescission  or claim for damages under federal or state  securities
laws with  respect to the  issuance  of any shares of capital  stock of WestStar
previously  issued.  None of the capital  stock of  WestStar  has been issued in
violation of any preemptive or other rights of its shareholders.

                                      -28-
<PAGE>

                  7.1.4  Financial  Statements.  Vail Banks has delivered to the
Company  true,  correct and  complete  copies of (i) the  audited,  consolidated
financial statements of Vail Banks and WestStar for the years ended December 31,
1997, 1998 and 1999, including balance sheets,  statements of income, statements
of  shareholders'  equity,  statements  of cash  flows and  related  notes  (the
audited,  consolidated financial statements for the year ended December 31, 1999
being  referred  to as the "Vail  Banks  1999  Financial  Statements")  and (ii)
unaudited,  consolidated financial statements of Vail Banks and WestStar for the
period ended March 31, 2000, including a balance sheet,  statement of income and
related  notes.  In  addition,  Vail Banks will  provide to the Company  monthly
interim unaudited,  consolidated financial statements of Vail Banks and WestStar
ending at the end of each month prior to Closing and after March 31,  2000.  All
of such financial statements,  except for the interim statements which have been
prepared  consistently with the audited financial  statements of the Company but
without  footnotes,  etc.,  have been  prepared  in  accordance  with  generally
accepted accounting  principles  consistently applied and truthfully reflect the
assets, liabilities and financial condition of Vail Banks and WestStar as of the
dates  indicated  therein and the results of its  operations  for the respective
periods then ended.

                  7.2      Other Matters.

                  7.2.1 Approvals, Consents and Filings. Except for the approval
of the Federal Reserve,  the Federal Deposit Insurance  Corporation (the "FDIC")
or the Division of Banking, neither the execution and delivery of this Agreement
by Vail Banks nor the  consummation of the transactions  contemplated  hereby or
thereby, will (a) require any consent, approval,  authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate  any  order,  writ,  injunction,  decree,  statute,  rule or  regulation
applicable to Vail Banks or WestStar, or any of their respective assets.

                                      -29-
<PAGE>

                  7.2.2 Default.  (a) Except for those consents  described in or
set forth  pursuant  to Section  7.2.1  above,  neither  the  execution  of this
Agreement  nor the  consummation  of the  transactions  contemplated  herein (i)
constitutes  a breach of or default  under any contract or  commitment  to which
Vail Banks or  WestStar  is a party or by which Vail Banks or  WestStar or their
properties  or assets are bound,  (ii) does or will  result in the  creation  or
imposition  of any  security  interest,  lien,  encumbrance,  charge,  equity or
restriction of any nature whatsoever in favor of any third party upon any assets
of Vail Banks or WestStar, or (iii) constitutes an event permitting  termination
of any  agreement  or the  acceleration  of any  indebtedness  of Vail  Banks or
WestStar.

         (b) Neither Vail Banks nor WestStar is in default under its articles of
incorporation  or  charter,  as the case may be,  or bylaws or under any term or
provision of any security deed, mortgage,  indenture or security agreement or of
any other  contract or  instrument to which Vail Banks or WestStar is a party or
by which either of them or any of their property is bound.

         7.2.3  WestStar.  Vail  Banks  owns  100% of the  equity  interests  of
WestStar.


                  7.2.4 Status of Vail Common Stock to be Issued.  The shares of
Vail  Common  Stock into which the shares of Company  Stock are to be  exchanged
pursuant  to this  Agreement  will  be,  when  delivered  as  specified  in this
Agreement,  validly  authorized and issued,  fully paid and  nonassessable,  and
registered pursuant to an effective  registration statement under the Securities
Act of 1933.

                  7.2.5    Representations    and   Warranties.    No   material
representation  or  warranty  contained  in this  Article  VII or in any written
statement  delivered by or at the  direction of Vail Banks or WestStar  pursuant
hereto or in connection with the  transactions  contemplated  hereby contains or
shall  contain  any  untrue  statement,   nor  shall  such  representations  and
warranties  taken as a whole omit any  statement  necessary in order to make any
statement not  misleading.  Copies of all documents  furnished to the Company in
connection  with  this  Agreement  or  pursuant  hereto  are true,  correct  and
complete.


                                  ARTICLE VIII

                      CONDUCT OF THE BUSINESS OF VAIL BANKS
                           OR WESTSTAR PENDING CLOSING

                  During  the  period  from  the  date  of  this  Agreement  and
continuing until the Closing Date, or the earlier  termination of this Agreement
pursuant  to  Article  IX  hereof,   Vail  Banks  agrees  (except  as  expressly
contemplated by this Agreement or to the extent that the Company shall otherwise
consent in advance in writing) that:

                  8.1 Ordinary Course.  Except in specific  contemplation of the
transactions contemplated by this Agreement, Vail Banks and WestStar shall carry
on their businesses in the usual, regular and ordinary course in the same manner
as heretofore conducted.

                                      -30-
<PAGE>

                  8.2 Other Actions.  Vail Banks and WestStar shall not take any
action  that  would or could  reasonably  be  expected  to  result in any of the
representations  and  warranties  of Vail Banks and  WestStar  set forth in this
Agreement becoming untrue at any time on or prior to the Closing Date.

                  8.3      Indemnification

                  (a) Following the Closing  Date,  Vail Banks shall  indemnify,
defend and hold  harmless the present and former  directors  and officers of the
Company and United Valley Bank (each, an "Indemnified  Party") against all costs
or expenses (including  reasonable  attorneys fees),  judgments,  fines, losses,
claims, damages or liabilities (collectively, "Costs") as incurred in connection
with any claim,  action,  suit,  proceeding  or  investigation,  whether  civil,
criminal,  administrative or investigative,  arising out of actions or omissions
occurring at or prior to the Closing Date  (including  without  limitation,  the
transaction contemplated by this Agreement),  to the extent that the Company and
United Valley bank are currently  obligated to indemnify  (and advance  expenses
to)  their  respective  directors  and  officers  under the laws of the State of
Colorado, their respective articles of incorporation and by-laws.

                  (b) Vail Banks shall  indemnify,  defend and hold harmless the
Company and its stockholders,  directors, officers and employees from all Costs,
whether arising under the federal or state  securities laws or otherwise,  which
may be  asserted  against any of them which arise as a result of any alleged act
or failure to act, or any alleged  statement or omission,  of Vail Banks done or
made in connection with any  registration  statement,  proxy  statement,  or any
other  statement or form filed or required to be filed with the  Securities  and
Exchange Commission or state securities departments, or delivered or required to
be delivered to the holders of Company Stock.

                  (c) The Company shall indemnify, defend and hold harmless Vail
Banks and its  stockholders,  directors,  officers and employees from all Costs,
whether arising under the federal or state  securities laws or otherwise,  which
may be  asserted  against  any of them  which  arise as a result of  information
provided  by the  Company  to  Vail  Banks  for  inclusion  in the  Registration
Statement that contains any untrue statement.

                  (d) Any  Indemnified  Party  wishing to claim  indemnification
under this Section,  upon  learning of any claim,  action,  suit,  proceeding or
investigation described above, shall promptly notify Vail Banks thereof.

                  (e) If Vail Banks or any of its  successors  or assigns  shall
consolidate  with or merge into any other entity and shall not be the continuing
or surviving  entity of such  consolidation  or merger or shall  transfer all or
substantially  all of its  assets to any other  entity,  then in each such case,
Vail Banks shall cause proper  provision to be made so that the  successors  and
assigns of Vail Banks shall assume the obligations set forth in this Section.

                  (f) The  provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each  Indemnified  Party and his or her
heirs and representatives.


                                      -31-
<PAGE>


                  8.4 Articles of Merger.  On the Closing Date, Vail Banks shall
file with the Secretary of State of the State of Colorado, Articles of Merger in
accordance  with the  provisions of the Colorado  Business  Corporations  Act to
effect the transactions contemplated by this Agreement.


                                   ARTICLE IX

                     CONDITIONS TO OBLIGATIONS OF VAIL BANKS

                  All of the  obligations of Vail Banks under this Agreement are
subject  to the  fulfillment  prior  to or at the  Closing  Date  of each of the
following conditions, any one or more of which may be waived by Vail Banks:

                  9.1  Representations  and Warranties.  The representations and
warranties of the Company  contained herein or in any  certificate,  schedule or
other document  delivered  pursuant to the provisions  hereof,  or in connection
herewith,  shall be true in all material  respects as of the date when made and,
except where otherwise  expressly  provided  herein,  shall be deemed to be made
again at and as of the Closing Date and shall be true in all  material  respects
at and as of such time,  except  (i) for those  representations  and  warranties
confined to a specific date, which shall be true and correct as of such date, or
(ii) as a result  of  changes  or events  expressly  permitted  or  contemplated
herein.

                  9.2  Performance  of Conditions  and  Agreements.  The Company
shall have  performed and complied in all material  respects with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.

         9.3  Certificates,   Resolutions,   Opinion.  The  Company  shall  have
delivered,  or cause the  Company and United  Valley  Bank to  deliver,  to Vail
Banks:

                                    (a) a certificate  executed by the President
                  or Chairman of the Company,  dated as of the Closing Date, and
                  certifying in such detail as Vail Banks may reasonably request
                  to the fulfillment of the conditions specified in Sections 9.1
                  and 9.2 hereof;

                                    (b)  certificates  executed by the Secretary
                  of State of the State of  Colorado  dated not more than thirty
                  (30)  business  days prior to the Closing  Date,  of the valid
                  existence of the Company and United Valley Bank, respectively,
                  under the laws of Colorado; and

                                    (c) an opinion  from  counsel of the Company
                  in form and substance reasonably  acceptable to Vail Banks and
                  its  counsel,  dated  the  Closing  Date,  covering  customary
                  corporate matters.

                                      -32-
<PAGE>

                  9.4  Accountants'  Letter.  Vail Banks  shall have  received a
letter from Fortner Baynes Levkulich & Company, P.C., dated the Closing Date, to
the effect that: At the request of the Company they have carried out  procedures
to a specified  date not more than five business days prior to the Closing Date,
which  procedures did not constitute an examination in accordance with generally
accepted  auditing  standards,  of the financial  statements of the Company,  as
follows:  (a) read the unaudited  balance sheets and statements of income of the
Company and United  Valley Bank from  December  31, 1999 through the date of the
most recent monthly  financial  statements  available in the ordinary  course of
business;  (b) read the  minutes of the  meetings of  shareholders  and Board of
Directors of the Company and United  Valley Bank from  December 31, 1999 to said
date not more  than  five  business  days  prior to the  Closing  Date;  and (c)
consulted  with certain  officers and employees of the Company and United Valley
Bank  responsible  for  financial  and  accounting  matters  and,  based on such
procedures,  nothing  has come to their  attention  which  would  cause  them to
believe that (i) such unaudited  interim balance sheets and statements of income
are not fairly  presented  in  conformity  with  generally  accepted  accounting
principles  applied  on a  basis  consistent  with  that of the  1999  Financial
Statements,  (ii) as of said date not more than five  business days prior to the
Closing Date the shareholders' equity, long-term debt, reserve for possible loan
losses  and total  assets of the  Company,  in each  case as  compared  with the
amounts shown in the 1999 Financial Statements,  are not different except as set
forth in such  letter,  or (iii) for the period from  December  31, 1999 to said
date not more  than  five  business  days  prior to the  Closing  Date,  the net
interest  income,  total and per share amounts of  consolidated  income  (before
extraordinary  items)  and net  income  of the  Company,  as  compared  with the
corresponding portion of the preceding 12-month period, are not different except
as set forth in such letter.  The  Company's  accountants  shall provide the Net
Worth determination of the Company for the Purchase Price determination and will
calculate the Purchase Price as of Closing and for the  post-Closing  adjustment
within twenty (20) days after the Closing.

                  9.5 Regulatory Approvals.  Vail Banks shall have received from
any and all  governmental  authorities,  bodies or agencies having  jurisdiction
over the transaction contemplated by this Agreement,  including, but not limited
to, the Federal  Reserve,  FDIC and the Division of Banking,  all such consents,
authorizations  and approvals as are necessary for the consummation  thereof and
all applicable waiting or similar periods required by law shall have expired.

                  9.6   Employment.   All   written   employment,   termination,
consulting  or similar  agreements  entered into by the Company or United Valley
Bank shall  have been  effectively  terminated  with no  remaining  liabilities,
duties or  obligations  on the part of the  Company or United  Valley Bank under
said agreements.

                  9.7 Resignation of Executive  Officers and Board of Directors.
The Boards of Directors and Executive  Officers of the Company and United Valley
Bank shall have tendered their resignations immediately prior to the Closing.

                                      -33-
<PAGE>


                  9.8  Exercise  of Options.  The Company  shall have caused the
holders of the 9,700  outstanding  options as of the date of this  Agreement  to
have  exercised  such options so that no options  remain  outstanding  as of the
Closing Date.


                                    ARTICLE X

                    CONDITIONS TO OBLIGATIONS OF THE COMPANY

                  All of the obligations of the Company under this Agreement are
subject  to the  fulfillment  prior  to or at the  Closing  Date  of each of the
following conditions, any one or more of which may be waived by the Company:

                  10.1  Representations and Warranties.  The representations and
warranties of Vail Banks  contained  herein or in any  certificate,  schedule or
other document  delivered  pursuant to the provisions  hereof,  or in connection
herewith,  shall be true in all  material  respects as of the date when made and
shall be deemed to be made again at and as of the Closing Date and shall be true
in all material respects at and as of such time.

                  10.2   Performance  of  Agreements.   Vail  Banks  shall  have
performed  and  complied  in all  material  respects  with  all  agreements  and
conditions  required by this  Agreement to be  performed or complied  with by it
prior to or at the Closing Date.

                  10.3     Certificates, Resolutions, Opinions.  Vail Banks
 shall have delivered to the Company:


                                    (a) a certificate  executed by the President
                  of Vail Banks,  dated the  Closing  Date,  certifying  in such
                  detail  as  the   Company  may   reasonably   request  to  the
                  fulfillment of the  conditions  specified in Sections 10.1 and
                  10.2 hereof;

                                    (b) duly adopted resolutions of the Board of
                  Directors  of Vail Banks,  certified  by the  Secretary  or an
                  Assistant   Secretary   thereof,   dated  the  Closing   Date,
                  authorizing  and approving (i) the execution of this Agreement
                  and the consummation of the transactions  contemplated  herein
                  and therein in accordance  with their  respective  terms,  and
                  (ii) all other necessary and proper corporate action to enable
                  Vail Banks to comply with the terms hereof;

                                    (c) an opinion of  Kilpatrick  Stockton LLP,
                  counsel  for  Vail  Banks  in form  and  substance  reasonably
                  acceptable to Company and its counsel, dated the Closing Date.

                                    (d)  certificates  executed by the Secretary
                  of State of the State of Colorado,  dated not more than thirty
                  (30)  business  days prior to the Closing  Date,  of the valid
                  existence of Vail Banks under the laws of Colorado.

                  10.4   Regulatory   Approvals.   Any  and   all   governmental
authorities,  bodies  or  agencies  having  jurisdiction  over the  transactions
contemplated  by this  Agreement,  including,  but not  limited  to, the Federal

                                      -34-
<PAGE>

Reserve,  the FDIC and the  Division  of  Banking,  shall have  granted all such
consents,  authorizations  and approvals as are  necessary for the  consummation
thereof,  and all applicable  waiting or similar  periods  required by law shall
have expired.

         10.5  Delivery of  Consideration  by Vail Banks.  Vail Banks shall have
delivered the Purchase Price pursuant to Article I hereof.

         10.6  Shareholder  Approval.  The  Merger  Agreement  shall  have  been
approved by the vote of the holders of at least two-thirds of Company Stock.


                                   ARTICLE XI

                            WARRANTIES, NOTICES, ETC.

                  11.1 Warranties.  All statements  contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant to Article
V or Vail  Banks  pursuant  to  Article  VII  hereto or in  connection  with the
transactions  contemplated hereby shall be deemed representations and warranties
hereunder by the delivering party.

                  11.2  Survival  of   Representations.   All   representations,
warranties, covenants, and agreements made by either party hereto, except as set
forth hereafter or specifically stated in this Agreement, shall expire and be of
no  further  force  and  effect  upon  the   consummation  of  the  transactions
contemplated  by this  Agreement;  provided,  however,  that the  covenant  with
respect to the confidentiality of certain information  contained in Section 4.4,
the obligations of Haselbush and Sishc in Section 4.11 of this Agreement and the
obligations of Vail Banks with regard to the Purchase Price and  registration of
Vail  Common  Stock  shall  survive  consummation  of  this  Agreement  and  the
transactions contemplated hereby.



                  11.3  Notice.  All  notices,   requests,   demands  and  other
communications  required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if  delivered or mailed,  first class,  certified
mail, postage prepaid to each of the parties hereto at the respective  addresses
set forth  below (or at such other  address  either  party may have  theretofore
notified the other party in writing):

                  (a)      To the Company:      Estes Bank Corporation
                                                P.O. Box 2270
                                                363 E. Elkhorn Avenue
                                                Estes Park, Colorado 80517
                                                Attn.:  Jack G. Haselbush

                                      -35-
<PAGE>

                           With copies to:      Ted R. Sikora II, Esq.
                                                Davis, Graham & Stubbs LLP
                                                Suite 4700
                                                370 Seventeenth Street
                                                Denver, Colorado 80202
                                                Facsimile:  (303) 893-1379

                  (b)      To Vail Banks:       Vail Banks, Inc.
                                                108 S. Frontage Road, West
                                                Suite 101
                                                Vail, Colorado 81657
                                                Attn.:  E. B. Chester, Jr.

                           With copies to:   Kilpatrick Stockton LLP
                                             Suite 2800
                                             1100 Peachtree Street
                                             Atlanta, Georgia  30309-4530
                                             Attn.: R. Alexander Bransford, Jr.

                  11.4 Entire  Agreement.  This  Agreement  supersedes all prior
discussions  and  agreements  by and  between  Vail Banks and the  Company  with
respect to the Merger  and the other  matters  with  respect  thereto,  and this
Agreement  contains sole and entire  agreement  between the parties  hereto with
respect to the transactions contemplated herein.

                  11.5 Waiver; Amendment.  Prior to or on the Closing Date, Vail
Banks, acting through its Board of Directors,  Chairman or President, shall have
the right to waive any default in the  performance of any term of this Agreement
by the Company,  to waive or extend the time for the  fulfillment by the Company
of any and all of their  obligations  under this Agreement,  and to waive any or
all of the  conditions  precedent  to the  obligations  of Vail Banks under this
Agreement,  except any condition  which,  if not satisfied,  would result in the
violation of any law or applicable governmental  regulation.  Prior to or on the
Closing Date, the Company, acting individually or through the Company's Board of
Directors  or  Chairman,  shall  have  the  right to waive  any  default  in the
performance of any term of this Agreement by Vail Banks,  to waive or extend the
time for the fulfillment by Vail Banks of any and all of its  obligations  under
this  Agreement,  and to waive  any or all of the  conditions  precedent  to the
obligations of the Company under this Agreement,  except any condition which, if
not  satisfied,  would  result  in  the  violation  of  any  law  or  applicable
governmental  regulation.  This Agreement may be amended by a subsequent writing
signed by the parties hereto; provided, however, that the provisions of Sections
9.5 and 10.4 requiring  regulatory  approval shall not be amended by the parties
hereto without such approval.


                                      -36-
<PAGE>

                                   ARTICLE XII

                                   TERMINATION

         12.1  Termination of Agreement.  This Agreement may be terminated  only
for the following reasons:

                  (a) Material  Adverse  Change of the Company or United  Valley
Bank. By either party,  if, after the date hereof,  a material adverse change in
the financial  condition or business of the Company,  United  Valley Bank,  Vail
Banks or WestStar,  as the case may be,  shall have  occurred or if the Company,
United  Valley  Bank,  Vail Banks or  WestStar,  as the case may be,  shall have
suffered a material  loss or damage to any of its  properties  or assets,  which
change,  loss or damage materially  affects or impairs the ability of any of the
Company,  United  Valley Bank,  Vail Banks or  WestStar,  as the case may be, to
conduct its business.

         (b) Company Disclosure  Memorandum.  By Vail Banks within ten (10) days
after receipt of the Company Disclosure Memorandum.

                  (c) Noncompliance of the Company. By Vail Banks, if the terms,
covenants or  conditions  of this  Agreement to be complied with or performed by
the  Company  at or before  the  Closing  shall not have been  complied  with or
performed in all material  respects and such  noncompliance  or  non-performance
shall not have been waived by Vail Banks.

                  (d) Noncompliance of Vail Banks. By the Company, if the terms,
covenants or  conditions  of this  Agreement to be complied with or performed by
Vail  Banks at or  before  the  Closing  shall not have  been  complied  with or
performed in all material  respects and such  noncompliance  or  non-performance
shall not have been waived by the Company.

                  (e) Adverse Proceedings.  By either party, if any action, suit
or proceeding  shall have been instituted or threatened  against either party to
this  Agreement to restrain or  prohibit,  or to obtain  substantial  damages in
respect of, this Agreement or the consummation of the transactions  contemplated
herein,  which, in the good faith opinion of such party,  makes  consummation of
the transactions herein contemplated inadvisable.

         (f)  Termination  Date. By either  party,  if the receipt of Regulatory
Approvals has not occurred on or before October 1, 2000.


                                  ARTICLE XIII

                          COUNTERPARTS, HEADINGS, ETC.

                  This Agreement may be executed simultaneously in any number of
counterparts,  each of which shall be deemed an original, but all of which shall
constitute  one and the same  instrument.  The  headings  herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.


                                   ARTICLE XIV

                                 BINDING EFFECT

                  This  Agreement  shall be binding  upon and shall inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns;
provided,  however, that this Agreement may not be assigned by any party without
the prior written consent of the others.


                                   ARTICLE XV

                                  GOVERNING LAW

                  The validity and effect of this  Agreement  and the rights and
obligations  of the  parties  hereto  shall be  governed  by and  construed  and
enforced in accordance with the laws of the State of Colorado.


                                   ARTICLE XVI

                           THIRD PARTIES NOT BENEFITED

                  Except as provided herein, nothing contained in this Agreement
is intended or shall be deemed to benefit  any third  party,  and no third party
shall be entitled to require  either  party to enforce any right which the party
may have under this Agreement or otherwise.







                        [Signatures follow on next page]











                  IN WITNESS  WHEREOF,  Company  and Vail Banks have caused this
Agreement to be executed by their respective duly authorized  corporate officers
and their respective corporate seals to be affixed hereto as of the day and year
first  above  written  and  Haselbush  and Sishc have  executed  this  Agreement
individually.



                                                 ESTES BANK CORPORATION

(CORPORATE SEAL)                                 By:
                                                      Jack G. Haselbush
                                                      Secretary and Treasurer
Attest:

-------------------------------------
Bradley D. Sishc
Vice President
                                                     VAIL BANKS, INC.

(CORPORATE SEAL)                                     By:
                                                           E. B. Chester, Jr.
                                                           Chairman
Attest:

-------------------------------------

Secretary
                                       ------------------------------------
                                       Jack G. Haselbush, individually


                                       ------------------------------------
                                       Bradley D. Sishc, individually