Document:

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                                                                    EXHIBIT 10.3

                                CHANGE IN CONTROL
                           SEVERANCE PAYMENT AGREEMENT

         This Agreement, made and entered into as of the 19th day of November,
1999, by and between VAIL BANKS, INC., an Colorado corporation (the "Company"),
and E.B. CHESTER (hereinafter called the "Executive"),

                              W I T N E S S E T H:

         WHEREAS, the Executive is currently employed by the Company and certain
of its subsidiaries in various capacities and is rendering valuable services to
the Company and such subsidiaries; and

         WHEREAS, the Company desires to retain the Executive and is aware that
the possibility of a Change in Control of the Company (as defined in Section 3)
might impede the accomplishment of this end; and

         WHEREAS, the Company wishes to induce the Executive to remain in his
present employment 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 continuation in his present employment with the Company, the parties
hereto agree as follows:

         1.       Duties and Status of Executive.

         The Executive shall continue to perform such duties and
responsibilities as shall be assigned to him by 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.

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                  (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,

                                    (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(b), 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 third 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")

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         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, 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, the
         Company shall pay or provide to Executive (subject to withholding of
         applicable taxes) within ten (10) days after the date of the Change in
         Control:

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                           (i)      a lump sum amount equal to the sum of (A)
                  200% of his full base annual salary at the rate in effect on
                  the date prior to the date of the Change in Control, plus (B)
                  200% of the incentive payment Executive would have received
                  for the year during which the Change in Control occurs under
                  the Company's annual incentive plan, assuming the target level
                  of performance had been met for such year;

                           (ii)     an amount equal to the product of (aa) the
                  annual incentive bonus that would be paid or payable to the
                  Executive for the year of termination under the Company's
                  annual incentive plan, assuming the target level of
                  performance had been met for such year, multiplied by (bb) a
                  fraction of which the numerator is the number of weeks that
                  have elapsed in the then current year through the date of the
                  Change in Control and the denominator is 52 (and Executive's
                  participation in such annual incentive plan for the year of
                  the Change in Control shall be terminated);

                           (iii)    the amount of any annual or long-term bonus
                  with respect to any year that has then ended which has or
                  would have been earned and been paid to the Executive under
                  any annual or long-term bonus plan then in effect but which
                  has not yet been paid to him;

                           (iv)     an additional contribution to any deferred
                  compensation or savings plan (whether qualified or
                  non-qualified) in which the Executive is participating, the
                  maximum amount which the Company is permitted to contribute,
                  based on the payments made pursuant to paragraphs (i), (ii)
                  and (iii) above, provided that if the contributions on the
                  Executive's behalf to the plans covered by this paragraph (iv)
                  are not permitted under the terms of one or more of such
                  plans, the Company shall pay Executive in a lump sum, within
                  10 days, the present value of the benefits that cannot be
                  provided pursuant to such plan; and

                           (v)      accelerate to the date of the Change in
                  Control the vesting, exercisability, transferability and
                  payment date of all outstanding stock options, restricted
                  stock and any other share awards held by Executive.

                  (b)      If a Change in Control of the Company occurs and,
         subsequently on or before the third anniversary of such Change in
         Control, the Executive's employment with the Company is terminated (i)
         by the Company for any reason whatsoever other than for Cause (as
         defined in subsection (c) below) or the Executive's death or Disability
         (as defined in subsection (d) below), or (ii) by the Executive for Good
         Reason (as defined in subsection (e) below), the Company shall:

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                           (A)      pay to the Executive within 30 days after
                  the date of termination, an amount equal to the sum of:

                                    (I)      his full base salary through the
                           date of termination at the rate in effect at the time
                           notice of termination (as provided for in Section 5
                           below) is given, plus

                                    (II)     an amount equal to the product of
                           (aa) the number of unused vacation days accrued by
                           the Executive through the date of termination
                           multiplied by (bb) a fraction the numerator of which
                           is the Executive's base salary and the denominator of
                           which is 250;

                           (B)      maintain in full force and effect for the
                  benefit of the Executive and his dependents for a period of
                  two years from the date of termination (or, if shorter, the
                  period until Executive obtains other employment and becomes
                  actually covered by a plan providing the specific benefit
                  hereinafter described) all employee life, medical, dental, and
                  vision coverages in which the Executive is participating at
                  the time of the Executive's termination; provided, that if the
                  Executive's continued participation is not permitted under the
                  general terms of such plans, the Company shall arrange to
                  provide him with substantially similar benefits and the
                  Company shall pay the cost of such benefits; provided further,
                  Executive will be required to pay the "employee portion" of
                  any costs of such coverages in the same amount as required for
                  active executive employees of the Company;

                  (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 materially
                  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. Notwithstanding the foregoing, the Executive shall not be
         deemed to have been terminated for Cause unless and until there shall
         have

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         been delivered to him a copy of a resolution duly adopted by the
         affirmative vote of not less than three quarters of the entire
         membership of the Board of Directors of the Company at a meeting of the
         Board called and held for the purpose (after reasonable notice to him
         and an opportunity for him, together with his counsel, to be heard
         before the Board), finding that in the good faith opinion of the Board
         he was guilty of conduct set forth above in clauses (i) or (ii) above
         and specifying the particulars thereof in detail.

                  (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 thirty-six month period
         immediately after a Change in Control:

                           (i)      The assignment to the Executive of any
                  duties inconsistent with his positions, duties,
                  responsibilities and status with the Company, its subsidiaries
                  and affiliates immediately prior to a Change in Control, or a
                  change in his reporting responsibilities, titles or offices
                  which were in effect immediately prior to a Change in Control,
                  or any removal of him from or any failure to re-elect him to
                  any of such positions, except in connection with the
                  termination of his employment by the Company for Cause or as a
                  result of his death or Disability or termination by him other
                  than for Good Reason.

                           (ii)     A reduction by the Company in the
                  Executive's base salary as in effect on the date hereof or as
                  the same may be increased from time to time, or failure to
                  give him annual salary increases consistent with performance
                  review ratings as compared with other employees of the same or
                  similar rank.

                           (iii)    A failure by the Company to continue giving
                  the Executive bonuses comparable to the amount of bonuses
                  given to him prior to the Change in Control.

                           (iv)     The Company's requiring that the Executive
                  be based anywhere other than the Company's principal executive
                  offices in the Vail, Colorado area, except for required travel
                  on Company business to an extent substantially consistent with
                  his present business travel obligations, or in the event that
                  the Executive consents to any such relocations, the failure by
                  the Company to pay (or reimburse him for) all reasonable
                  moving expenses incurred by him.

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                           (v)      The failure by the Company to continue in
                  full force and effect any benefit, retirement, savings or
                  compensation plan or any employee life, accident, disability,
                  medical, dental, vision or other employee welfare benefit plan
                  in which the Executive is participating at the time of a
                  Change in Control of the Company, the taking of any action by
                  the Company which would adversely affect his participation in
                  or materially reduce his benefits under any of such plans or
                  deprive him of any material fringe benefit or perquisite
                  (including but not limited to the provision of an automobile
                  and the payment of club dues) enjoyed by him at the time of
                  the Change in Control, or the failure by the Company to
                  provide him with the number of paid vacation days to which he
                  is then entitled in accordance with the normal vacation policy
                  in effect on the date hereof.

                           (vi)     Any breach by the Company of its obligations
                  under this Agreement or any purported termination by the
                  Company of his employment which is not effected pursuant to a
                  notice of termination satisfying the requirements of Section 5
                  (and if applicable Section 4(c)); and for purposes of this
                  Agreement, no such purported termination shall be effective.

                  (f)      The Company agrees that if the Executive's employment
         is terminated and he is entitled to benefits under Section 4(a) and/or
         Section 4(b), he shall not be required to mitigate 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 (except as provided in paragraph (B) above relating to
         benefit changes upon subsequent employment).

                  (g)

                           (i)      Anything in this Agreement to the contrary
                  notwithstanding, in the event it shall be determined (as
                  hereafter provided) that any payment or distribution to or for
                  the Executive, whether paid or payable or distributed or
                  distributable pursuant to the terms of this Agreement or
                  pursuant to or by reason of any other agreement, policy, plan,
                  program or arrangement (including, without limitation, any
                  employment agreement, stock plan or salary continuation
                  agreement), or similar right (a "Payment"), would be subject
                  to the excise tax imposed by Section 4999 of the Code (or any
                  successor provisions thereto), or any interest or penalties
                  with respect to such excise tax (such excise tax, together
                  with any such interest and penalties, are hereafter
                  collectively referred to as the "Excise Tax"), then the
                  Executive shall be entitled to receive an additional payment
                  or payments (a "Gross-Up Payment") from the Company. The total
                  amount of the Gross-Up Payment shall be an amount such that,
                  after payment by (or on behalf of) the Executive of any Excise
                  Tax and all federal, state and other taxes (including any
                  interest or

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                  penalties imposed with respect to such taxes) imposed upon the
                  Gross-Up Payment, the remaining amount of the Gross-Up Payment
                  is equal to the Excise Tax imposed upon the Payments. For
                  purposes of clarity, the amount of the Gross-Up Payment shall
                  be that amount necessary to pay the Excise Tax in full and all
                  taxes assessed upon the Gross-Up Payment.

                           (ii)     An initial determination as to whether a
                  Gross-Up Payment is required pursuant to this subsection (g)
                  and the amount of such Gross-Up Payment shall be made by an
                  accounting firm selected by the Company and reasonably
                  acceptable to the Executive which is then designated as one of
                  the five largest accounting firms in the United States (the
                  "Accounting Firm"). The Accounting Firm shall provide its
                  determination (the "Determination"), together with detailed
                  supporting calculations and documentation to the Company and
                  the Executive as promptly as practicable after such
                  calculation is requested by the Company or by the Executive,
                  and if the Accounting Firm determines that no Excise Tax is
                  payable by the Executive with respect to a Payment or
                  Payments, it shall furnish the Executive with an opinion
                  reasonably acceptable to the Executive that no Excise Tax will
                  be imposed with respect to any such Payment or Payments.
                  Within fifteen (15) days of the delivery of the Determination
                  to the Executive, the Executive shall have the right to
                  dispute the Determination (the "Dispute"). The Gross-Up
                  Payment, if any, as determined pursuant to this Section 4
                  shall be paid by the Company to the Executive within fifteen
                  (15) days of the receipt of the Accounting Firm's
                  Determination. The existence of the Dispute shall not in any
                  way affect the right of the Executive to receive the Gross-Up
                  Payment in accordance with the Determination. If there is no
                  Dispute, the Determination shall be binding, final and
                  conclusive upon the Company and the Executive subject to the
                  application of subsection (iii) below.

                           (iii)    As a result of the uncertainty in the
                  application of Sections 4999 and 280G of the Code, it is
                  possible that a Gross-Up Payment (or a portion thereof) will
                  be paid which should not have been paid (an "Excess Payment")
                  or a Gross-Up Payment (or a portion thereof) which should have
                  been paid will not have been paid (an "Underpayment"). An
                  Underpayment shall be deemed to have occurred upon the
                  earliest to occur of the following events: (1) upon notice
                  (formal or informal) to the Executive from any governmental
                  taxing authority that the tax liability of the Executive
                  (whether in respect of the then current taxable year of the
                  Executive or in respect of any prior taxable year of the
                  Executive) may be increased by reason of the imposition of the
                  Excise Tax on a Payment or Payments with respect to which the
                  Company has failed to make a sufficient Gross-Up Payment, (2)
                  upon a determination by a court, (3) by reason of a
                  determination by the Company (which shall include

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                  the position taken by the Company, or its consolidated group,
                  on its federal income tax return), or (4) upon the resolution
                  to the satisfaction of the Executive of the Dispute. If any
                  Underpayment occurs, the Executive shall promptly notify the
                  Company and the Company shall pay to the Executive within
                  fifteen (15) days of the date the Underpayment is deemed to
                  have occurred under (1), (2), (3) or (4) above, but in no
                  event less than five days prior to the date on which the
                  applicable government taxing authority has requested payment,
                  an additional Gross-Up Payment equal to the amount of the
                  Underpayment plus any interest and penalties imposed on the
                  Underpayment.

                           An Excess Payment shall be deemed to have occurred
                  upon a "Final Determination" (as hereinafter defined) that the
                  Excise Tax shall not be imposed upon a Payment or Payments (or
                  portion of a Payment) with respect to which the Executive had
                  previously received a Gross-Up Payment. A Final Determination
                  shall be deemed to have occurred when the Executive has
                  received from the applicable government taxing authority a
                  refund of taxes or other reduction in his tax liability by
                  reason of the Excess Payment and upon either (1) the date a
                  determination is made by, or an agreement is entered into
                  with, the applicable governmental taxable authority which
                  finally and conclusively binds the Executive and such taxing
                  authority, or in the event that a claim is brought before a
                  court of competent jurisdiction, the date upon which a final
                  determination has been made by such court and either all
                  appeals have been taken and finally resolved or the time for
                  all appeals has expired, or (2) the statute of limitations
                  with respect to the Executive's applicable tax return has
                  expired. If an Excess Payment is determined to have been made,
                  the amount of the Excess Payment shall be treated as a loan by
                  the Company to the Executive and the Executive shall pay to
                  the Company within 15 days following demand (but not less than
                  30 days after the determination of such Excess Payment) the
                  amount of the Excess Payment plus interest at an annual rate
                  equal to the rate provided for in Section 1274(b)(2)(B) of the
                  Code from the date the Gross-Up Payment (to which the Excess
                  Payment relates) was paid to the Executive until the date of
                  repayment to the Company.

                           (iv)     Notwithstanding anything contained in this
                  Agreement to the contrary, in the event that, according to the
                  Determination, an Excise Tax will be imposed on any Payment or
                  Payments, the Company shall pay to the applicable government
                  taxing authorities as Excise Tax withholding, the amount of
                  any Excise Tax that the Company has actually withheld from the
                  Payment or Payments; provided that the Company's payment of
                  withheld Excise Tax shall not change the Company's obligation
                  to pay the Gross-Up Payment required under this subsection
                  (g).

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                           (v)      The Executive and the Company shall each
                  provide the Accounting Firm access to and copies of any books,
                  records and documents in the possession of the Company or the
                  Executive, as the case may be, reasonably requested by the
                  Accounting Firm, and otherwise cooperate with the Accounting
                  Firm in connection with the preparation and issuance of the
                  Determination contemplated by subsection (ii) hereof.

                           (vi)     The fees and expenses of the Accounting Firm
                  for its services in connection with the determinations and
                  calculations contemplated by subsection (ii) shall be paid by
                  the Company.

         5.       Notice of Termination. Any termination by the Company or by
the Executive of the Executive's employment by the Company shall he 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.       Litigation Expenses; Indemnification and Insurance.

                  (a)      The Company shall pay all reasonable legal fees and
         expenses incurred by the Executive as a result of his seeking to obtain
         or enforce any right or benefit provided by this Agreement, promptly
         and from time to time at his request as such fees and expenses are
         incurred, regardless of whether such rights are pursued through
         settlement discussions, mediation, arbitration, litigation or
         otherwise.

                  (b)      Unless the Executive is terminated for Cause, at all
         times after a Change of Control the Company shall continue to provide
         for Executive the indemnification provisions contained in the Company's
         by-laws and shall continue to maintain for the benefit of the Executive
         such policies of liability insurance, providing protection to him as an
         officer, director, agent or employee of the Company and its
         subsidiaries, as may from time to time be purchased by the Company for
         officers and directors generally as authorized by or in furtherance of
         the indemnification provisions contained in the Company's by-laws.
         Unless the Executive is terminated for Cause, neither the insurance nor
         the Executive's right to indemnification thereunder may be canceled by
         the Company without his permission for a period of five years following
         the date of termination under this Agreement; provided, however, that
         the Company may obtain a substitute insurance policy as long as the
         rights of indemnity to the Executive are at least equivalent to the
         most favorable rights provided under the policies in effect immediately
         prior to the date of a Change of Control.

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         7.       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.

         8.       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 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

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

                                                   EXECUTIVE

                                                   /s/ E.B. Chester
                                                   -----------------------------
                                                   Name:  E. B. CHESTER

                                       12<PAGE>   1
                                                                    EXHIBIT 10.4

                                CHANGE IN CONTROL
                           SEVERANCE PAYMENT AGREEMENT

         This Agreement, made and entered into as of the 19th day of November,
1999, by and between VAIL BANKS, INC., an Colorado corporation (the "Company"),
and LISA M. DILLON (hereinafter called the "Executive"),

                              W I T N E S S E T H:

         WHEREAS, the Executive is currently employed by the Company and certain
of its subsidiaries in various capacities and is rendering valuable services to
the Company and such subsidiaries; and

         WHEREAS, the Company desires to retain the Executive and is aware that
the possibility of a Change in Control of the Company (as defined in Section 3)
might impede the accomplishment of this end; and

         WHEREAS, the Company wishes to induce the Executive to remain in his
present employment 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; and

         WHEREAS, the Company wishes to provide certain rights to the Executive
in the event of the termination of his employment under certain circumstances;

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

         1.       Duties and Status of Executive.

         The Executive shall continue to perform such duties and
responsibilities as shall be assigned to him by 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.

<PAGE>   2

                  (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,

                                    (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(b), 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 third 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")

                                       2
<PAGE>   3

         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, 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.       Severance Payments.

                  (a) If a Change in Control of the Company occurs and, within
         six months prior to such Change in Control in connection with the
         Change in Control, or subsequently on or before the third anniversary
         of such Change in Control, the Executive's

                                       3
<PAGE>   4

         employment with the Company is terminated (i) by the Company for any
         reason whatsoever other than for Cause (as defined in subsection (b)
         below) or because of the Executive's death or Disability (as defined in
         subsection (c) below), or (ii) by the Executive for Good Reason (as
         defined in subsection (d) below), the Company shall:

                                    (A) pay to the Executive within 30 days
                           after the date of termination, an amount equal to the
                           sum of:

                                            (I) his full base salary through the
                                    date of termination at the rate in effect at
                                    the time notice of termination (as provided
                                    for in Section 5 below) is given, plus

                                            (II) the amount of any annual or
                                    long-term bonus with respect to any year
                                    that has then ended which has or would have
                                    been earned and been paid to the Executive
                                    under any annual or long-term bonus plan
                                    then in effect but which has not yet been
                                    paid to him, plus

                                            (III) an amount equal to the product
                                    of (aa) the annual bonus that would be paid
                                    or payable to the Executive for the year of
                                    termination under the Company's annual
                                    incentive plan, assuming the target level of
                                    performance had been met for such year,
                                    multiplied by (bb) a fraction of which the
                                    numerator is the number of weeks that have
                                    elapsed in the then current year through the
                                    date of termination and the denominator is
                                    52, plus

                                            (IV) an amount equal to the product
                                    of (aa) the number of unused vacation days
                                    accrued by the Executive through the date of
                                    termination multiplied by (bb) a fraction
                                    the numerator of which is the Executive's
                                    base salary and the denominator of which is
                                    250;

                                    (B) provide for an additional contribution
                           to any deferred compensation or savings plan (whether
                           qualified or non-qualified) in which the Executive is
                           participating, within 30 days after his date of
                           termination, the maximum amount which the Company is
                           permitted to contribute based on the payments made
                           pursuant to paragraph (A) above, provided that if the
                           Executive's continued participation in the plans
                           covered by this paragraph (B) is not permitted under
                           the terms of one or more of such plans, the Company
                           shall pay Executive in a lump sum, within thirty days
                           after the date of termination, the present value of
                           the benefit that cannot be provided pursuant to such
                           plan;

                                       4
<PAGE>   5

                                    (C) pay to the Executive within 30 days
                           after the date of termination, a severance payment in
                           an amount equal to the sum of (i) 200% of his full
                           base annual salary at the rate in effect at the time
                           notice of termination is given, plus (ii) 200% of the
                           incentive payment the Executive would have received
                           for the year of termination under the annual
                           incentive plan, assuming the target level of
                           performance had been met for such year;

                                     (D) maintain in full force and effect for
                           the benefit of the Executive and his dependents for a
                           period of two years from the date of termination (or,
                           if shorter, the period until Executive obtains other
                           employment and becomes actually covered by a plan
                           providing the specific benefit hereinafter described)
                           all employee life, medical, dental, and vision
                           coverages in which the Executive is participating at
                           the time of the Executive's termination; provided,
                           that if the Executive's continued participation is
                           not permitted under the general terms of such plans,
                           the Company shall arrange to provide him with
                           substantially similar benefits and the Company shall
                           pay the cost of such benefits; provided further,
                           Executive will be required to pay the "employee
                           portion" of any costs of such coverages in the same
                           amount as required for active executive employees of
                           the Company;

                                     (E) accelerate to Executive's date of
                           termination the vesting, exercisability,
                           transferability and payment date of all outstanding
                           stock options, restricted stock and any other share
                           awards held by Executive.

                  (b)      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 materially
                  harmful to the Company or its subsidiaries or affiliates,
                  monetarily or otherwise.

         For the purpose of this subsection (b), 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. Notwithstanding the foregoing, the Executive shall not be
         deemed to have been terminated for Cause unless and until there shall
         have been delivered to him a copy of a resolution duly adopted by the
         affirmative vote of not less than three

                                       5
<PAGE>   6

         quarters of the entire membership of the Board of Directors of the
         Company at a meeting of the Board called and held for the purpose
         (after reasonable notice to him and an opportunity for him, together
         with his counsel, to be heard before the Board), finding that in the
         good faith opinion of the Board he was guilty of conduct set forth
         above in clauses (i) or (ii) above and specifying the particulars
         thereof in detail.

                  (c) 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.

                  (d) 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 six month period immediately
         prior to or after a Change in Control:

                           (i) The assignment to the Executive of any duties
                  inconsistent with his positions, duties, responsibilities and
                  status with the Company, its subsidiaries and affiliates
                  immediately prior to a Change in Control, or a change in his
                  reporting responsibilities, titles or offices which were in
                  effect immediately prior to a Change in Control, or any
                  removal of him from or any failure to re-elect him to any of
                  such positions, except in connection with the termination of
                  his employment by the Company for Cause or as a result of his
                  death or Disability or termination by him other than for Good
                  Reason.

                           (ii) A reduction by the Company in the Executive's
                  base salary as in effect on the date hereof or as the same may
                  be increased from time to time, or failure to give him annual
                  salary increases consistent with performance review ratings as
                  compared with other employees of the same or similar rank.

                           (iii) A failure by the Company to continue giving the
                  Executive bonuses comparable to the amount of bonuses given to
                  him prior to the Change in Control.

                           (iv) The Company's requiring that the Executive be
                  based anywhere other than the Company's principal executive
                  offices in the Vail, Colorado area, except for required travel
                  on Company business to an extent substantially consistent with
                  his present business travel obligations, or in the event that
                  the Executive consents to any such relocations, the failure by
                  the Company to pay (or reimburse him for) all reasonable
                  moving expenses incurred by him.

                                       6
<PAGE>   7

                           (v) The failure by the Company to continue in full
                  force and effect any benefit, retirement, savings or
                  compensation plan or any employee life, accident, disability,
                  medical, dental, vision or other employee welfare benefit plan
                  in which the Executive is participating at the time of a
                  Change in Control of the Company, the taking of any action by
                  the Company which would adversely affect his participation in
                  or materially reduce his benefits under any of such plans or
                  deprive him of any material fringe benefit or perquisite
                  (including but not limited to the provision of an automobile
                  and the payment of club dues) enjoyed by him at the time of
                  the Change in Control, or the failure by the Company to
                  provide him with the number of paid vacation days to which he
                  is then entitled in accordance with the normal vacation policy
                  in effect on the date hereof.

                           (vi) Any breach by the Company of its obligations
                  under this Agreement or any purported termination by the
                  Company of his employment which is not effected pursuant to a
                  notice of termination satisfying the requirements of Section 5
                  (and if applicable Section 4(b)); and for purposes of this
                  Agreement, no such purported termination shall be effective.

                   (e) 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 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 (except as
         provided in paragraph (D) bove relating to benefit changes upon
         subsequent employment).

                           (f)(i) Anything in this Agreement to the contrary
                  notwithstanding, in the event it shall be determined (as
                  hereafter provided) that any payment or distribution to or for
                  the Executive, whether paid or payable or distributed or
                  distributable pursuant to the terms of this Agreement or
                  pursuant to or by reason of any other agreement, policy, plan,
                  program or arrangement (including, without limitation, any
                  employment agreement, stock plan or salary continuation
                  agreement), or similar right (a "Payment"), would be subject
                  to the excise tax imposed by Section 4999 of the Code (or any
                  successor provisions thereto), or any interest or penalties
                  with respect to such excise tax (such excise tax, together
                  with any such interest and penalties, are hereafter
                  collectively referred to as the "Excise Tax"), then the
                  Executive shall be entitled to receive an additional payment
                  or payments (a "Gross-Up Payment") from the Company. The total
                  amount of the Gross-Up Payment shall be an amount such that,
                  after payment by (or on behalf of) the Executive of any Excise
                  Tax and all federal, state and other taxes (including any
                  interest or penalties imposed with respect to such taxes)
                  imposed upon the Gross-Up

                                       7
<PAGE>   8

                  Payment, the remaining amount of the Gross-Up Payment is equal
                  to the Excise Tax imposed upon the Payments. For purposes of
                  clarity, the amount of the Gross-Up Payment shall be that
                  amount necessary to pay the Excise Tax in full and all taxes
                  assessed upon the Gross-Up Payment.

                           (ii) An initial determination as to whether a
                  Gross-Up Payment is required pursuant to this subsection (f)
                  and the amount of such Gross-Up Payment shall be made by an
                  accounting firm selected by the Company and reasonably
                  acceptable to the Executive which is then designated as one of
                  the five largest accounting firms in the United States (the
                  "Accounting Firm"). The Accounting Firm shall provide its
                  determination (the "Determination"), together with detailed
                  supporting calculations and documentation to the Company and
                  the Executive as promptly as practicable after such
                  calculation is requested by the Company or by the Executive,
                  and if the Accounting Firm determines that no Excise Tax is
                  payable by the Executive with respect to a Payment or
                  Payments, it shall furnish the Executive with an opinion
                  reasonably acceptable to the Executive that no Excise Tax will
                  be imposed with respect to any such Payment or Payments.
                  Within fifteen (15) days of the delivery of the Determination
                  to the Executive, the Executive shall have the right to
                  dispute the Determination (the "Dispute"). The Gross-Up
                  Payment, if any, as determined pursuant to this Section 4
                  shall be paid by the Company to the Executive within fifteen
                  (15) days of the receipt of the Accounting Firm's
                  Determination. The existence of the Dispute shall not in any
                  way affect the right of the Executive to receive the Gross-Up
                  Payment in accordance with the Determination. If there is no
                  Dispute, the Determination shall be binding, final and
                  conclusive upon the Company and the Executive subject to the
                  application of subsection (iii) below.

                           (iii) As a result of the uncertainty in the
                  application of Sections 4999 and 280G of the Code, it is
                  possible that a Gross-Up Payment (or a portion thereof) will
                  be paid which should not have been paid (an "Excess Payment")
                  or a Gross-Up Payment (or a portion thereof) which should have
                  been paid will not have been paid (an "Underpayment"). An
                  Underpayment shall be deemed to have occurred upon the
                  earliest to occur of the following events: (1) upon notice
                  (formal or informal) to the Executive from any governmental
                  taxing authority that the tax liability of the Executive
                  (whether in respect of the then current taxable year of the
                  Executive or in respect of any prior taxable year of the
                  Executive) may be increased by reason of the imposition of the
                  Excise Tax on a Payment or Payments with respect to which the
                  Company has failed to make a sufficient Gross-Up Payment, (2)
                  upon a determination by a court, (3) by reason of a
                  determination by the Company (which shall include the position
                  taken by the Company, or its consolidated group, on its
                  federal

                                       8
<PAGE>   9

                  income tax return), or (4) upon the resolution to the
                  satisfaction of the Executive of the Dispute. If any
                  Underpayment occurs, the Executive shall promptly notify the
                  Company and the Company shall pay to the Executive within
                  fifteen (15) days of the date the Underpayment is deemed to
                  have occurred under (1), (2), (3) or (4) above, but in no
                  event less than five days prior to the date on which the
                  applicable government taxing authority has requested payment,
                  an additional Gross-Up Payment equal to the amount of the
                  Underpayment plus any interest and penalties imposed on the
                  Underpayment.

                           An Excess Payment shall be deemed to have occurred
                  upon a "Final Determination" (as hereinafter defined) that the
                  Excise Tax shall not be imposed upon a Payment or Payments (or
                  portion of a Payment) with respect to which the Executive had
                  previously received a Gross-Up Payment. A Final Determination
                  shall be deemed to have occurred when the Executive has
                  received from the applicable government taxing authority a
                  refund of taxes or other reduction in his tax liability by
                  reason of the Excess Payment and upon either (1) the date a
                  determination is made by, or an agreement is entered into
                  with, the applicable governmental taxable authority which
                  finally and conclusively binds the Executive and such taxing
                  authority, or in the event that a claim is brought before a
                  court of competent jurisdiction, the date upon which a final
                  determination has been made by such court and either all
                  appeals have been taken and finally resolved or the time for
                  all appeals has expired, or (2) the statute of limitations
                  with respect to the Executive's applicable tax return has
                  expired. If an Excess Payment is determined to have been made,
                  the amount of the Excess Payment shall be treated as a loan by
                  the Company to the Executive and the Executive shall pay to
                  the Company within 15 days following demand (but not less than
                  30 days after the determination of such Excess Payment) the
                  amount of the Excess Payment plus interest at an annual rate
                  equal to the rate provided for in Section 1274(b)(2)(B) of the
                  Code from the date the Gross-Up Payment (to which the Excess
                  Payment relates) was paid to the Executive until the date of
                  repayment to the Company.

                           (iv) Notwithstanding anything contained in this
                  Agreement to the contrary, in the event that, according to the
                  Determination, an Excise Tax will be imposed on any Payment or
                  Payments, the Company shall pay to the applicable government
                  taxing authorities as Excise Tax withholding, the amount of
                  any Excise Tax that the Company has actually withheld from the
                  Payment or Payments; provided that the Company's payment of
                  withheld Excise Tax shall not change the Company's obligation
                  to pay the Gross-Up Payment required under this subsection
                  (f).

                                       9
<PAGE>   10

                           (v) The Executive and the Company shall each provide
                  the Accounting Firm access to and copies of any books, records
                  and documents in the possession of the Company or the
                  Executive, as the case may be, reasonably requested by the
                  Accounting Firm, and otherwise cooperate with the Accounting
                  Firm in connection with the preparation and issuance of the
                  Determination contemplated by subsection (ii) hereof.

                           (vi) The fees and expenses of the Accounting Firm for
                  its services in connection with the determinations and
                  calculations contemplated by subsection (ii) shall be paid by
                  the Company.

         5.       Notice of Termination. Any termination by the Company or by
the Executive of the Executive's employment by the Company shall he 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.       Litigation Expenses; Indemnification and insurance.

                  (a) The Company shall pay all reasonable legal fees and
         expenses incurred by the Executive as a result of his seeking to obtain
         or enforce any right or benefit provided by this Agreement, promptly
         and from time to time at his request as such fees and expenses are
         incurred, regardless of whether such rights are pursued through
         settlement discussions, mediation, arbitration, litigation or
         otherwise.

                  (b) Unless the Executive is terminated for Cause, at all times
         after a Change of Control the Company shall continue to provide for
         Executive the indemnification provisions contained in the Company's
         by-laws and shall continue to maintain for the benefit of the Executive
         such policies of liability insurance, providing protection to him as an
         officer, director, agent or employee of the Company and its
         subsidiaries, as may from time to time be purchased by the Company for
         officers and directors generally as authorized by or in furtherance of
         the indemnification provisions contained in the Company's by-laws.
         Unless the Executive is terminated for Cause, neither the insurance nor
         the Executive's right to indemnification thereunder may be canceled by
         the Company without his permission for a period of five years following
         the date of termination under this Agreement; provided, however, that
         the Company may obtain a substitute insurance policy as long as the
         rights of indemnity to the Executive are at least equivalent to the
         most favorable rights provided under the policies in effect immediately
         prior to the date of a Change of Control.

                                       10
<PAGE>   11

         7.       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.

         8.       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 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

                                       11
<PAGE>   12

         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/ E.B. Chester
                                                     ---------------------------

                                                EXECUTIVE

                                                /s/ Lisa M. Dillon
                                                -------------------------------
                                                Name:  LISA M. DILLON

                                       12

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