Document:

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                                                                    EXHIBIT 10.2

                          GENERAL RELEASE AND AGREEMENT

         THIS GENERAL RELEASE AND AGREEMENT dated as of the 26th day of January,
2001, by and between VAIL BANKS, INC. (the "Company") and JOHN R. SPRUILL
("Spruill"):

                                   WITNESSETH:

         WHEREAS, the Company and Spruill entered into an Employment Agreement,
dated July 24, 2000 (the "Employment Agreement"); and

         WHEREAS, effective November 14, 2000, Spruill resigned from employment
with the Company, and the Company has agreed to provide Spruill certain
severance payments and benefits;

         NOW, THEREFORE, in consideration of the payments set forth below and in
the attached Consulting Agreement and the mutual promises stated in this
document, the parties hereby agree as follows:

         1. Spruill agrees that he resigned from active employment with the
Company effective November 14, 2000 ("Separation Date"). He hereby resigns from
the Board of Directors of each of the Company, WestStar Bank and First Western
Mortgage Services, Inc.

         2. In consideration of the payments and benefits set forth in Paragraph
5 below, Spruill, on behalf of himself, his heirs, executors, administrators,
attorneys and assigns, irrevocably and unconditionally releases, acquits, and
forever discharges the Company, any affiliated, related or successor corporation
or other entity, its benefit plans and programs, and all of the Company's
present and former owners, employees, trustees, representatives, attorneys,
divisions, subsidiaries, affiliates, agents, directors, officers, and all
persons acting by, through, under or in concert with any of them (collectively
the "Releasees"), or any of them individually, from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts, and expenses (including attorney's fees and legal
expenses), of any nature whatsoever, whether known or unknown, which Spruill now
has, has had, or may hereafter claim to have had against the Releasees by reason
of any matter, act, omission, cause, or event that has occurred up to the
present date; provided, that the release given herein shall not extend to any
claim brought to enforce the terms of, or arising from any failure of the
Releasees to perform under, (i) this General Release and Agreement, (ii) the
Consulting Agreement attached hereto as Exhibit A, (iii) the Indemnification
Agreement referenced in Paragraph 4(d) below, or (iv) the Stock Option Agreement
referenced in Paragraph 5(b) below (the "Excepted Claims"). Spruill represents
that he has not, and agrees that he will not, file any claim, complaints,
charges or lawsuits against the Releasees about anything which has occurred up
to and including the date he executes this Agreement; provided, that such
representation and agreement shall not extend to any Excepted Claims.

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         Except to the extend the following enumerated claims constitute
Excepted Claims, this General Release specifically includes, but is not limited
to, all claims arising from or relating in any way to the Employment Agreement
(including claims for salary, stock options, and extended health coverage, but
excluding claims for such items to the extent promised under this General
Release and Agreement), Spruill's employment relationship with the Company or
his resignation from employment; any claims for recovery of damages for personal
injury, loss of wages, fringe benefits, liquidated damages, penalties, front pay
or other equitable relief, including but not limited to those claims which have
been asserted or could have been asserted against the Company under the Fair
Labor Standards Act, 29 U.S.C. Sections 207, et. seq., the Age Discrimination in
Employment Act, 29 U.S.C. Sections 621 et. seq., Title VII of the Civil Rights
Act of 1964, 42 U.S.C. Section 2000e et. seq., The Americans With Disabilities
Act, 42 U.S.C. Section 12101 et. seq., the Employee Retirement Income Security
Act of 1974, 29 U.S.C. Section 2001 et seq., the Colorado Anti-Discrimination
Act, Colo. Rev. Stat. Section 24-34-301 et seq. (prohibiting discrimination on
account of disability, race, creed, color, sex, age, national origin, or
ancestry), or under any other federal, state, or local law, rule, regulations,
or any claim arising under the common law.

         Spruill expressly acknowledges that this General Release may be pled as
a complete defense and will fully and finally bar any such known or unknown
claim or claims based on any acts or omissions of the Releasees up to the
present date, other than acts or omissions that give rise to an Excepted Claim.

         3. Except for the Consulting Agreement attached hereto as Exhibit A,
which shall remain effective in accordance with its terms, the Company, on
behalf of itself, its affiliates, its successors, and assigns, irrevocably and
unconditionally releases, acquits, and forever discharges Spruill and Spruill's
attorneys, executors, administrators and heirs from any and all charges,
complaints, claims, liabilities, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts, and expenses, of
any nature whatsoever, whether known or unknown, which the Company now has, or
may hereafter claim to have had against Spruill by reason of any matter, act,
omissions, cause, or event that has occurred up to the present date, except any
claims pursuant to or arising from this General Release and Agreement. The
Company expressly acknowledges that this General Release and Agreement may be
pled as a complete defense and will fully and finally bar any such known or
unknown claim or claims based on any acts or omissions of Spruill up to the
present date.

         4. In consideration of Spruill's execution and delivery of this General
Release and Agreement and the Consulting Agreement attached hereto as Exhibit A
(the "Consulting Agreement"), the Company agrees that:

                  (a) The Company will enter into the Consulting Agreement.

                  (b) For a period of twenty-four months after the Separation
         Date, the Company will provide Spruill and his beneficiary with
         continued life and health insurance coverage or comparable life and
         health insurance coverage on the same terms as in effect prior to the
         Separation Date.

                  (c) Spruill hereby represents and warrants that he has
         forfeited $50,000 of earnest money on a contract to purchase a home in
         the Vail Valley, and the Company agrees the Company will refund to
         Spruill in cash this $50,000.

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                  (d) The Company shall continue to indemnify Spruill in
         accordance with Section 5 of the Indemnification Agreement by and
         between the Company and Spruill, dated as of July 24, 2000.

                  (e) The Company will reimburse Spruill in cash for $2,041 in
         travel expenses and $5,500 in legal expenses connected with the
         preparation of the Employment Agreement.

The Company further agrees that the amounts due under parts (c) and (e) of this
Paragraph 4 shall be paid to Spruill in full upon Spruill's entering into this
General Release and Agreement and the Consulting Agreement.

         5. Spruill and the Company agree that:

                  (a) Except for the Stock Option Agreement and Indemnification
         Agreement, referenced below, and except as provided herein, all
         agreements, written or oral, by and between the Company and Spruill,
         including, without limitation, the Employment Agreement and the Change
         in Control Severance Payment Agreement, shall terminate as of the
         Separation Date and he shall be ineligible for any additional
         compensation or benefits pursuant to these agreements.

                  (b) The Stock Option Agreement between the Company and Spruill
         dated July 24, 2000, shall continue in effect in accordance with its
         terms, with the consequence that the Option granted thereunder (i) is
         currently exercisable for 9,600 shares of stock (which will be treated
         as an incentive stock option if exercised on or before February 13,
         2001), (ii) will become exercisable as a nonqualified stock option for
         70,400 shares of stock in accordance with the vesting schedule under
         the Stock Option Agreement, and (iii) to the extent exercisable, may be
         exercised at any time prior to July 24, 2005.

                  (c) The Restricted Stock Award Agreement between the Company
         and Spruill dated July 24, 2000, is hereby amended to provide that
         5,000 shares of stock are vested and will be delivered to Spruill in
         certificate form without any restrictive legend within 30 days of the
         signing of this General Release and Agreement and the Consultant
         Agreement, and that the remaining 45,000 shares of Restricted Stock are
         forfeited as of the Separation Date. The Restricted Stock Award
         Agreement shall terminate as of the Separation Date.

                  (d) Spruill has returned all credit cards, keys, records in
         any form (whether electronic or hard copy), reports, work papers,
         dictating machines, computers, diskettes, data tape, CD-ROM or other
         storage medium, cellular telephone, pagers or other property of the
         Company.

                  (e) The Company and its management will refrain from taking
         any actions or making any statements that disparage Spruill. Spruill
         agrees not to make any oral or written statement or take any other
         action which disparages the Company's management or practices
         (including its business plans and strategies), damages the Company's
         good reputation, or impairs its normal operations.

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         6. Spruill hereby confirms his obligation to comply with the
obligations set forth in the Consulting Agreement which continue the obligations
set forth in Paragraphs 7(a) and (b) of the Employment Agreement and in the
Confidentiality and NonCompetition Agreement, dated as of July 24, 2000, and
confirms that these provisions shall survive the termination of his employment
and the termination of any of these agreements.

         7. The parties affirm that the only consideration for executing this
General Release and Agreement are the promises expressly stated herein including
any attachment hereto; and the parties represent and acknowledge that in
executing this General Release and Agreement, they do not and have not relied
upon any promise, inducement, representation, or statement made by the other
parties or their agents, representatives, or attorneys about the subject matter,
meaning, or effect of this General Release and Agreement that is not stated in
these documents.

         8. This General Release and Agreement shall be binding upon and accrue
to the benefit of Spruill and his heirs, representatives, administrators,
executors, successors, and assigns, and shall apply fully to Releasees and each
of them, and to their heirs, administrators, representatives, executors,
successors, and assigns.

         9. The language of all parts of this General Release and Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against any of the parties.

         10. This General Release and Agreement shall be governed by the laws of
the State of Colorado.

         11. If any provision of this General Release and Agreement is declared
or determined by any court to be illegal or invalid, the validity of the
remaining parts, terms, or provisions shall not be affected, but the illegal or
invalid part, term, or provision shall be excluded from this General Release and
Agreement.

         The undersigned further states that he has carefully read this General
Release and Agreement; that he knows and understands its contents; that he
freely and voluntarily agrees to abide by its terms because they are
satisfactory; and that he has not been coerced into signing this Agreement.

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         This 26th day of January, 2001.

                                                  /s/ John R. Spruill
                                         ---------------------------------------
                                         JOHN R. SPRUILL

Sworn to and subscribed before me this
26th day of January, 2001.

     /s/ Sally Gore
------------------------------------
Notary Public
My commission expires: 1/13/07

                                         COMPANY:  VAIL BANKS, INC.

                                         By: /s/ E.B. Chester

Sworn to and subscribed before me this
29th day of January, 2001.

     /s/ Lori Reynolds
------------------------------------
Notary Public
My commission expires: 5/22/04

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                                    EXHIBIT A

                              CONSULTING AGREEMENT

         VAIL BANKS, INC. (the "Company") and JOHN R. SPRUILL (the "Consultant")
mutually desire to enter into a post-resignation Consulting Agreement (the
"Agreement"). This Agreement is intended and understood to be a supplement to
the General Release and Agreement executed simultaneously herewith by
Consultant. This Agreement does not modify or supersede the General Release and
Agreement, which shall remain in full force and effect.

         In consideration of the promises and undertakings herein, the
sufficiency of which is hereby acknowledged, the parties agree as follows:

         1. Consulting Services. Consultant has been President and Chief
Executive Officer of the Company prior to his resignation from those positions
on November 14, 2000. In order to insure an orderly transition, Consultant and
the Company agree that Consultant will, at reasonable times and from time to
time during the period beginning on November 14, 2000 and continuing through
July 14, 2002, upon the request of the Company, unless terminated earlier as
allowed herein, advise the Company concerning matters within his knowledge and
expertise, including, specifically, the Company's general operations, corporate
finance, and acquisition strategy. While Consultant has no obligation to spend
any specific minimum amounts or periods of time in connection with the
performance of his duties hereunder, Consultant agrees to respond as soon as
feasible to all reasonable requests from the Company for consultation and
advice. Further, during the period of this Agreement, Consultant agrees not to
perform any consulting or other services with respect to any other financial
institution with respect to its operations in any county in Colorado in which
WestStar Bank (a subsidiary of the Company) has an office on the date of
execution of this Consulting Agreement. Consultant shall perform his duties
professionally and in strict compliance with all applicable laws, rules and
regulations of duly constituted governmental authorities.

         2. Authority. Consultant does not have, nor shall he hold himself out
as having, any right, power, or authority to create any contract or obligation,
either express or implied, on behalf, in the name of, or binding upon the
Company, or to pledge Company's credit, or to extend credit in the Company's
name unless Company shall consent thereto in advance in writing.

         3. Consideration. Consultant shall be compensated at a rate of
$15,833.35 per month for performance of the services described above, the first
payment of which is due December 14, 2000 and monthly thereafter through July
14, 2002. All such services shall be professionally and expediently performed.
Consultant shall have full discretion concerning the method and manner of
performance of his consulting services, and except as expressly set forth
herein, all costs and expenses incurred in performing these services shall be
the responsibility of Consultant.

         4. Independent Contractor. Consultant understands and agrees that he
shall not be considered to be an employee of the Company; during the term of
this Agreement, he shall be classified as an independent contractor; and that he
shall be wholly and exclusively responsible

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and shall pay when due any and all taxes, fees and assessments (and all interest
and penalties thereon) of every kind and nature arising by reason of, or in
connection with, Consultant's performance hereunder, it being the intention of
the parties that the Company shall not be responsible or charged for any such
sums whatsoever. Without limiting the generality of the preceding sentence, any
taxes or contributions levied by any applicable law, rule or regulation, based
upon or related to the payroll, activities or income of Consultant, including
without limitation applicable Federal Insurance Contribution Act, Federal
Unemployment Tax Act, federal and state withholding, and similar taxes and
withholding, shall be paid by and shall be the exclusive liability of Consultant
and shall in no way be chargeable to the Company. Except for the payments
provided under this Agreement and under the General Release and Agreement,
Consultant shall not be eligible for any other payments or benefits, such as
profit sharing distribution, bonuses, or any Company-sponsored medical or
insurance benefits, that are or may be provided to Company employees.

         5. Expenses. All expenses and disbursements that may be incurred by
Consultant in connection with the services provided hereunder will be paid by
the Company if and only if approved in advance by the Company. All other
expenses and disbursements that may be incurred by Consultant in connection with
the services he renders pursuant to this Agreement shall be borne wholly and
completely by Consultant, and the Company shall not be in any way responsible or
liable therefor.

         6. Confidential Information.

                  (a) Consultant acknowledges that while he is engaged as a
Consultant, the Company may furnish to Consultant Confidential Information (as
defined in (d) below) which could be used by Consultant on behalf of a
competitor of the Company to the Company's substantial detriment. Moreover, the
parties recognize that Consultant has developed important relationships with
customers and others having valuable business relationships with customers and
others having valuable business relationships with the Company. In view of the
foregoing, Consultant acknowledges and agrees that the restrictive covenants
contained in this Section are reasonably necessary to protect the Company's
legitimate business interests and good will.

                  (b) Consultant agrees that he shall protect the Company's
Confidential Information and shall not disclose to any Person (as defined in (e)
below), or otherwise use, except in connection with his consulting duties
performed in accordance with this Agreement, any Confidential Information at any
time; provided, however, that Consultant may make disclosures required by a
valid order or subpoena issued by a court or administrative agency of competent
jurisdiction, in which event Consultant will promptly notify the Company of such
order or subpoena to provide the Company an opportunity to protect its
interests. Consultant's obligations under this Section 6(b) survives the
termination of his employment with the Company and shall survive the termination
of this Agreement.

                  (c) Upon the termination of this Agreement, Consultant agrees
to deliver promptly to the Company all Company files, customer lists, management
reports, memoranda, research, Company forms, financial data and reports (other
than financial data and reports in the public domain) and other documents
supplied to or created by him in connection with his employment (including all
copies of the foregoing) in his possession or control, and all of the

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Company's equipment and other materials in his possession or control.
Consultant's obligations under this Section 6(c) shall survive any expiration or
termination of this Agreement.

                  (d) For purposes of this Agreement, Confidential Information
means technical, business, and other information relating to the business of the
Company or its subsidiaries or affiliates, including, without limitation,
technical or nontechnical data, formulae, compilations, programs, devices,
methods, techniques, processes, financial data, financial plans, product plans,
and lists of actual or potential customers or suppliers, which (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other Persons, and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality. Such information and compilations of information
shall be contractually subject to protection under this Agreement whether or not
such information constitutes a trade secret and is separately protectable at law
or in equity as a trade secret. Confidential Information does not include
confidential business information which does not constitute a trade secret under
applicable law two years after Consultant's termination of employment.

                  (e) For purposes of this Agreement, Person means any
individual, corporation, bank, partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or other entity.

         7. Restrictive Covenants. Consultant agrees that for a period of twenty
(20) months from November 14, 2000, he shall not (i) enter into or engage in the
banking or financial institution business in any county in Colorado in which
WestStar Bank (a subsidiary of the Company) has an office on the date of
execution of this Agreement either as an individual, partner or joint venturer,
or as an officer, director, or shareholder of a corporation, (ii) divert or
attempt to divert any person, concern or entity which is furnished products or
services by the Company from doing business with the Company or otherwise change
its relationship with the Company, (iii) solicit, lure or attempt to hire away
any of the employees of the Company with whom the Consultant interacted directly
or indirectly while employed with the Company or (iv) perform any consulting or
other services for any bank or other financial institution with respect to its
business or operations in any county in Colorado in which WestStar Bank has an
office on the date of execution of this Agreement. The Consultant's ownership of
securities of the Company or any of its affiliates or successors, or a de
minimus investment by the Consultant in any other publicly-traded banking or
financial institution (i.e., a less than one percent (1%) interest in such
institution) shall not violate this Section 7.

         8. Remedies. Consultant acknowledges that if he breaches or threatens
to breach Sections 6 or 7 of this Agreement, his actions may cause irreparable
harm and damage to the Company which could not be compensated in damages.
Accordingly, if Consultant breaches or threatens to breach Sections 6 or 7 of
this Agreement, the Company shall be entitled to seek injunctive relief, in
addition to any other rights or remedies of the Company. Further, Consultant
covenants and agrees that any breach by Consultant of Sections 6 or 7 of this
Agreement shall be grounds for immediate termination of this Agreement and the
monthly payments provided under Section 3 shall terminate. The existence of any
claim or cause of action by Consultant against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of Consultant's agreement under Sections 6 or 7 of
this Agreement.

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         9. Termination of Agreement. This Agreement may be terminated in any of
the following ways:

                  (a) This Agreement shall terminate automatically in the event
of any revocation or breach by Consultant of the General Release and Agreement
executed by Consultant simultaneously herewith. In the event of any such
revocation or breach, the Company's obligations under this Agreement shall cease
immediately.

                  (b) The Company may terminate this Agreement at will. In the
event the Company exercises this right, the Company shall pay Consultant a
cancellation fee of $316,667, less the total of all monthly payments previously
made to Consultant under this Agreement.

                  (c) The Company may terminate this Agreement for Cause.
"Cause" shall include the following: (i) actions or statements that disparage
the Company's management or practices; (ii) failure to cooperate fully with the
Company in providing consulting services under this Agreement; (iii) actions
that damage the Company's business; (iv) the filing of any claim, charge or suit
against the Company or its affiliates or any of their past or present officers,
directors or employees, other than with respect to "Excepted Claims," as defined
in the General Release and Agreement executed by Consultant simultaneously
herewith; (v) material breach of any provision of this Agreement; and/or (vi)
gross misconduct; provided, however, that Consultant's death shall not
constitute cause. If this Agreement is terminated by the Company for Cause, the
Company's obligations under this Agreement shall cease immediately.

                  (d) Consultant may terminate this Agreement at will. If
Consultant exercises this right, the Company's obligations under this Agreement
shall cease immediately.

                  (e) This Agreement shall terminate automatically at its
expiration on July 14, 2002.

         10. Survival. Consultant agrees that Paragraphs 6 through 8 of this
Agreement survive its termination, regardless of which party initiates the
termination.

         11. Indemnification. The Company agrees to defend, indemnify and save
the Consultant harmless from and against any and all claims, demands, losses,
damages, costs, liabilities and expenses (including, but not limited to,
attorneys' fees and costs of suit) of whatever kind or character, on account of
any actual or alleged loss, injury or damages to any person, firm or corporation
or to any property, or arising out of or in connection with the services
rendered by Consultant (or by any of his agents, employees, or servants) under
this Agreement.

         12. Waiver. No failure on the part of either party to exercise, and no
delay by either party in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy by either party preclude any other or further exercise
thereof, or the exercise by such party of any other right, power or remedy. No
express waiver or assent by either party of or to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or an
assent to any succeeding breach of or default in the same or any other term or
condition hereof.

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         13. Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Colorado, without regards to the principals of conflict of law. This
Agreement shall be deemed to have been made in the State of Colorado and shall
be construed according to the laws of Colorado.

         14. Entire Agreement. This Agreement, the General Release and
Agreement, and the Indemnification Agreement and Stock Option Agreement,
referenced in Paragraphs 4 and 5, respectively, of the General Release and
Agreement, contain all of the terms and conditions agreed upon by the parties
hereto with reference to the subject matter hereof, and no other agreements,
oral or otherwise, shall be deemed to exist or to bind any of the parties
hereto, and all prior agreements and understandings are superseded hereby. No
officer, employee or agent of the Company has any authority to make any
representation or promise not contained in this Agreement, the General Release
and Agreement, the Indemnification Agreement or the Stock Option Agreement, and
Consultant agrees that he has executed this Agreement without reliance upon any
such representation or promise. This Agreement cannot be modified or changed
except by written instrument signed by all of the parties hereto.

         15. Severability. Nothing contained in this Agreement shall be
construed as requiring the commission of any act contrary to law. Whenever there
is any conflict between any provisions of this Agreement and any present or
future statute, law, ordinance or regulation contrary to which the parties have
no legal right to contract, the latter shall prevail, but, in such event the
provision of this Agreement thus affected shall be curtailed and limited only to
the extent necessary to bring it within the requirements of the law. In the
event that any part, article, paragraph or clause of this Agreement shall be
held to be indefinite, invalid or otherwise unenforceable, the entire Agreement
shall not fail on account thereof, and the balance of this Agreement shall
continue in full force and effect. If any tribunal or court of appropriate
jurisdiction deems any provision hereof (other than for the payment of money)
unreasonable, said tribunal or court may declare a reasonable modification
hereof, and this Agreement shall be valid and enforceable, and the parties
hereto agree to be bound by and perform the same, as thus modified.

             IN WITNESS WHEREOF, the Parties have affixed their signatures to
the above and  foregoing document on the dates herein written.

CONSULTANT

    /s/ John R. Spruill             Date January 26, 2001
-----------------------------
John R. Spruill

VAIL BANKS, INC.

By:    /s/ E.B. Chester             Date January 29, 2001
   --------------------------

Title: Chairman

                                       5<PAGE>   1
                                                                   EXHIBIT 10.03

                                CHANGE IN CONTROL
                           SEVERANCE PAYMENT AGREEMENT

         This Agreement, made and entered into as of the 5th day of July, 2000,
by and between VAIL BANKS, INC., a Colorado corporation (the "Company"), and
Peter G. Williston (hereinafter called the "Executive"),

                                   WITNESSETH:

         WHEREAS, the Executive has been hired by the Company and will render
valuable services to the Company and its subsidiaries; and

         WHEREAS, the Company wishes to induce the Executive to remain in
employment during a possible Change in Control of the Company (as defined in
Section 3 below) and believes that the execution of this Agreement will further
its aim in retaining the Executive during an actual or attempted Change in
Control and will tend to assure fair treatment of executives in the event of a
Change in Control;

         NOW, THEREFORE, for and in consideration of the premises and of the
Executive's employment with the Company, the parties hereto agree as follows:

         1. Duties and Status of Executive.

         The Executive shall perform such duties and responsibilities as shall
be assigned to him by the Chief Executive Officer or the Board of Directors of
the Company. The Executive shall devote his working time and attention to the
discharge of his duties with the Company and its subsidiaries. In addition to
the compensation and other benefits provided the Executive by the Company, the
Executive shall have the additional benefits provided by this Agreement.

         2. Term.

                  (a) Initial Term. The term of this Agreement shall initially
         be a fixed period of two years that expires on the second anniversary
         of the date of this Agreement and may be extended as provided in
         subsection (b) below.

                  (b) Extension. The term of this Agreement shall be extended
         automatically on the first anniversary and on each subsequent
         anniversary of the date of this Agreement (each such anniversary being
         referred to as an "Extension Date") for an additional one year period
         so that the Agreement then expires on the second anniversary of the
         applicable Extension Date; provided that

                           (i) the then current term of this Agreement will not
                  be extended on any Extension Date if,

<PAGE>   2

                                    (A) not later than 90 days before such
                           Extension Date the Company gives the Executive
                           written notice that it does not wish to extend the
                           term, or

                                    (B) before such Extension Date the Company
                           terminates the employment of the Executive for Cause
                           (as defined in Section 4(c), and

                           (ii) whether or not the Company has given notice to
                  the Executive pursuant to clause (i) (A) above that it does
                  not wish to extend the term of this Agreement, if a Change in
                  Control occurs during the initial term of this Agreement, or
                  any extension thereof, the term of this Agreement shall not
                  expire sooner than the first anniversary of the date of such
                  Change in Control.

         3. Change in Control. For the purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred in the event of:

                  (a) an acquisition by any Person of Beneficial Ownership of
         the Shares of the Company then outstanding (the "Company Common Stock
         Outstanding") or the voting securities of the Company then outstanding
         entitled to vote generally in the election of directors (the "Company
         Voting Securities Outstanding"), if such acquisition of Beneficial
         Ownership results in the Person beneficially owning (within the meaning
         of Rule 13d-3 promulgated under the Exchange Act) twenty-five percent
         (25%) or more of the Company Common Stock Outstanding or twenty-five
         percent (25%) or more of the combined voting power of the Company
         Voting Securities Outstanding; provided, that immediately prior to such
         acquisition such Person was not a direct or indirect Beneficial Owner
         of twenty-five percent (25%) or more of the Company Common Stock
         Outstanding or twenty-five percent (25%) or more of the combined voting
         power of Company Voting Securities Outstanding, as the case may be; or

                  (b) the approval by the shareholders of the Company of a
         reorganization, merger, consolidation, complete liquidation or
         dissolution of the Company, the sale or disposition of all or
         substantially all of the assets of the Company or similar corporate
         transaction (in each case referred to in this Section 3 as a "Corporate
         Transaction") or, if consummation of such Corporate Transaction is
         subject, at the time of such approval by shareholders, to the consent
         of any government or governmental agency, the obtaining of such consent
         (either explicitly or implicitly); or

                  (c) a change in the composition of the Board such that the
         individuals who, as of the date of this Agreement, constitute the Board
         (such Board shall be hereinafter referred to as the "Incumbent Board")
         cease for any reason to constitute at least a majority of the Board;
         provided, however, for purposes of this Section 3 that any individual
         who becomes a member of the Board subsequent to the date of this
         Agreement whose election, or nomination for election by the Company's
         shareholders, was approved by a vote of at least a majority of those
         individuals who are members of the Board and who were also members of
         the Incumbent Board (or deemed to be such pursuant to this proviso)
         shall be considered as though such individual were a member of the
         Incumbent Board; but,

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         provided, further, that any such individual whose initial assumption of
         office occurs as a result of either an actual or threatened election
         contest (as such terms are used in Rule 14a-11 of Regulation 14A
         promulgated under the Exchange Act, including any successor to such
         Rule), or other actual or threatened solicitation of proxies or
         consents by or on behalf of a Person other than the Board, shall not be
         so considered as a member of the Incumbent Board.

                  (d) Notwithstanding the provisions set forth in subsections
         (a) and (b), the following shall not constitute a Change in Control for
         purposes of this Agreement: (1) any acquisition of Shares by, or
         consummation of a Corporate Transaction with, any Subsidiary or any
         employee benefit plan (or related trust) sponsored or maintained by the
         Company or an affiliate; or (2) any acquisition of Shares, or
         consummation of a Corporate Transaction, following which more than
         fifty percent (50%) of, respectively, the shares then outstanding of
         common stock of the corporation resulting from such acquisition or
         Corporate Transaction and the combined voting power of the voting
         securities then outstanding of such corporation entitled to vote
         generally in the election of directors is then beneficially owned,
         directly or indirectly, by all or substantially all of the individuals
         and entities who were Beneficial Owners, respectively, of the Company
         Common Stock Outstanding and Company Voting Securities Outstanding
         immediately prior to such acquisition or Corporate Transaction in
         substantially the same proportions as their ownership, immediately
         prior to such acquisition or Corporate Transaction, of the Company
         Common Stock Outstanding and Company Voting Securities Outstanding, as
         the case may be.

         4. Change in Control Payments And Severance Payments.

                  (a) If a Change in Control of the Company occurs, and within
         12 months of the date of such Change in Control the Executive's
         employment is terminated:

                      (i)  by the Company, other than for Cause, death or
                  Disability; or

                      (ii) by the Executive for Good Reason,

         then the Executive shall be entitled to payment (subject to payment of
         all applicable taxes) of the Severance Payment described in (b) below
         within ten (10) days after his termination of employment. If the
         Executive's employment is terminated by the Company for Cause or as a
         result of death or Disability, or by the Executive without Good Reason,
         the Executive shall not be entitled to any payments under this
         Agreement;

                  (b) The Severance Payment to Executive under subsection (a)
         above shall be equal to $390,000.00, minus the difference between the
         exercise price for the Shares for which the option has not been
         exercised under that certain Stock Option Agreement ("Option"), dated
         July 5, 2000, for 10,000 Shares, and the Fair Market Value of the
         Shares subject to the Option on the date of Executive's termination of
         employment. If the Option has been exercised in whole or in part prior
         to Executive's date of termination, the difference between the exercise
         price and the Fair Market Value of the Shares for which

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         the Option has been exercised on the date of Executive's termination of
         employment, or if greater, the Fiar Market Value of the Shares on the
         date Executive sold any such Shares, shall also be used to reduce any
         payment due Executive. If Executive has otherwise received payment
         (whether in cash, stock or other property) for the value of the Option
         prior to his termination of Employment, then the amount received by
         Executive shall be used to reduce any payment due Executive under this
         Section 4. The Company shall have the authority in good faith to
         determine the amount due Executive as a Severance Payment pursuant to
         this Section 4.

                  (c) For the purposes of this Section 4, "Cause" means:

                           (i) the conviction of the Executive of, or a plea of
                  guilty or nolo contendere by the Executive to, any felony
                  involving conduct on the part of the Executive that renders
                  him unfit for the performance of his duties to the Company, or
                  its subsidiaries and affiliates, or

                           (ii) any willful misconduct on the part of the
                  Executive in the performance of his duties that is harmful to
                  the Company or its subsidiaries or affiliates, monetarily or
                  otherwise.

                  For the purpose of this subsection (c), no act, or failure to
         act, on the Executive's part shall be considered "willful" unless done,
         or omitted to be done, by him not in good faith and without reasonable
         belief that his action or omission was in the best interest of the
         Company.

                  (d) For the purpose of this Section 4, "Disability" shall be
         deemed to exist if, as a result of the Executive's incapacity due to
         physical or mental illness, he shall have been absent from his duties
         with the Company on a full-time basis for 150 consecutive calendar days
         and within 30 days after he has received notice of termination pursuant
         to Section 5 he has not returned to the performance of his duties on a
         full-time basis.

                  (e) For the purposes of this Section 4, "Good Reason" shall be
         deemed to exist under any of the following circumstances, but only to
         the extent that they occur within the twelve month period immediately
         after a Change in Control:

                           (i) A material adverse alteration in the nature or
                  status of Executive's responsibilities from those in effect
                  immediately prior to the Change in Control, or

                           (ii) A material reduction by the Company in the
                  Executive's compensation and benefits as in effect on the date
                  hereof or as the same may be increased from time to time,
                  except in connection with a reduction for executives
                  generally.

                  (f) The Company agrees that, if the Executive's employment is
         terminated and he is entitled to benefits under Section 4(a), he shall
         not be required to mitigate

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<PAGE>   5

         damages by seeking other employment, nor shall any amount he earns
         after his termination of employment reduce the amount payable by the
         Company under this Agreement.

         5. Notice of Termination. Any termination by the Company or by the
Executive of the Executive's employment shall be communicated by a written
notice of termination to the other party, and shall specify the provision of
this Agreement relied upon and shall set forth in reasonable detail the
circumstances claimed to provide a basis for termination. The date of
termination shall be the date on which the notice of termination is delivered if
by the Executive or 30 days after the date of the notice of termination if given
by the Company.

         6. Assignment; Successors in Interest.

                  (a) General. Except with the prior written consent of the
         Executive, no assignment by operation of law or otherwise by the
         Company of any of its rights and obligations under this Agreement may
         be made other than to an entity which is a successor to all or a
         substantial portion of the business of the Company (but then only if
         such entity assumes by operation of law or by specific assumption
         executed by the transferee and delivered to the Executive all
         obligations and liabilities of the Company under this Agreement); no
         transfer by operation of law or otherwise by the Company of all or a
         substantial part of its business or assets shall be made unless the
         obligations and liabilities of the Company under this Agreement are
         assumed in connection with such transfer either by operation of law or
         by specific assumption executed by the transferee. In such event, the
         Company shall remain liable for the performance of all of its
         obligations under this Agreement (which liability shall be a primary
         obligation for full and prompt performance rather than a secondary
         guarantee of collectibility of damages). Except for any transfer or
         assignment of rights under this Agreement, in whole or in part, upon
         the death of the Executive to his heirs, devisees, legatees or
         beneficiaries or except with the prior written consent of the Company,
         no assignment or transfer by operation of law or otherwise may be made
         by the Executive of any of his rights under this Agreement.

                  (b) Binding Nature. This Agreement shall be binding upon the
         parties to this Agreement and their respective legal representatives,
         heirs, devisees, legatees, beneficiaries and successors and assigns;
         shall inure to the benefit of the parties to this Agreement and their
         respective permitted legal representatives, heirs, devisees, legatees,
         beneficiaries and other permitted successors and assigns (and to or for
         the benefit of no other person or entity, whether an employee or
         otherwise, whatsoever); and any reference to a party to this Agreement
         shall also be a reference to a permitted successor or assign.

         7. Miscellaneous.

                  (a) The failure of any party to this Agreement at any time or
         times to require performance of any provision of this Agreement shall
         in no manner affect the right to enforce the same. No waiver by any
         party to this Agreement of any provision (or of a breach of any
         provision) of this Agreement, whether by conduct or otherwise, in any
         one

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<PAGE>   6

         or more instances shall be deemed or construed either as a further or
         continuing waiver of any such provision or breach or as a waiver of any
         other provision (or of a breach of any other provision) of this
         Agreement.

                  (b) Wherever possible each provision of this Agreement shall
         be interpreted in such manner as to be effective and valid but if any
         one or more of the provisions of this Agreement shall be invalid,
         illegal or unenforceable in any respect for any reason, the validity,
         legality or enforceability of any such provisions in every other
         respect and of the remaining provisions of this Agreement shall not be
         impaired.

                  (c) This Agreement shall be governed by and interpreted in
         accordance with the laws of the State of Colorado (without giving
         effect to any choice of law provisions).

                  (d) This Agreement may only be amended by a written instrument
         signed by the parties hereto which makes specific reference to the
         Agreement.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the date and year first written above.

                                    VAIL BANKS, INC.

                                    By:  /s/ Lisa M. Dillon
                                         Lisa M. Dillon, President and CEO

                                    EXECUTIVE

                                    /s/ Peter G. Williston
                                    Name:  Peter G. Williston

                                       6

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