Exhibit 10.1


    
      

    

     

    Exhibit
      10.1

    

      Vail
        Banks, Inc.

       

      May
        31,
        2006

      E.
        B.
        Chester

      Vail
        Banks, Inc.

      0015
        Benchmark Road, Suite 300

      P.O.
        Box
        6580

      Avon,
        Colorado 81620

       

      


      Dear
        E.
        B.:

       

      This
        letter agreement (this “Agreement”) is to confirm the agreements, arrangements
        and understandings relating to the payments that you will become entitled
        to
        receive in connection with the transactions contemplated by the Agreement
        and
        Plan of Merger (the “Merger Agreement”) by and among U.S. Bancorp, Powder
        Acquisition Corp., and Vail Banks, Inc. (the “Company”), dated May 31, 2006. The
        agreements, arrangement and understandings contained herein supersede in
        their
        entirety each of the Change in Control Severance Payment Agreement between
        you
        and the Company, dated as of November 19, 1999 (the “CIC Agreement”) and the
        Compensation Agreement between you and the Company, dated as of January 1,
        2004
        (the “Compensation Agreement”). The commitments set forth in this letter
        agreement are subject to the consummation of the Merger (as defined in the
        Merger Agreement). All terms not otherwise defined herein shall have the
        meaning
        given to them in the Merger Agreement.

       

      
        	
                1.

              	
                CIC
                  Agreement Payment.
                  Subject to your execution and non-revocation of a release of claims
                  against the Company and its affiliates in a form mutually agreed
                  upon
                  between you and the Company, immediately following the occurrence
                  of the
                  Closing, the Company shall make a lump sum cash payment to you
                  equal to
                  $463,500 pursuant to Sections 4(a)(i) and 4(a)(iv) of the CIC Agreement
                  and in full satisfaction of the Company’s obligations under the CIC
                  Agreement.

              


      

      


      
        	
                2.

              	
                Compensation
                  Agreement Payment.
                  Subject to your execution and non-revocation of a release of claims
                  against the Company and its affiliates in a form mutually agreed
                  upon
                  between you and the Company, and subject to the occurrence of the
                  Closing,
                  as of January 2, 2007 or such earlier date that complies with Section
                  409A
                  of the Internal Revenue Code of 1986, as amended (the “Code”) and the
                  regulations promulgated thereunder, the Company shall make a lump
                  sum cash
                  payment to the Executive in an amount equal to $712,737 pursuant
                  to
                  Sections 8(a), (c), (d), (i) and (j) of the Compensation Agreement.
                  

              


      

      


      
        	
                3.

              	
                Benefits.
                  While you are employed by the Company and its affiliates and for
                  three
                  years (or such shorter period of time necessary to comply with
                  Section
                  409A of the Code) following your involuntary termination of employment
                  by
                  the Company without “Cause” (as defined in Section 11 of the Compensation
                  Agreement), you will be entitled to receive the benefits described
                  in
                  Sections 8(b), (e) and (f) of the Compensation Agreement. The payments
                  set
                  forth in paragraph 2 above and the benefits set forth in this paragraph
                  3
                  shall be in full satisfaction of the Company’s obligations under the
                  Compensation Agreement.

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      


      
        	
                4.

              	
                Section
                  280G Gross-Up Payment.
                  Notwithstanding anything to the contrary contained herein, the
                  provisions
                  of Section 10 (“Tax Gross Up Payment”) of the Compensation Agreement shall
                  be incorporated herein by reference, as if restated herein in their
                  entirety. Section 10 of the Compensation Agreement will apply to
                  all
                  payments received by you pursuant to this Agreement. The provisions
                  of
                  this Section 4 shall survive the termination of the Compensation
                  Agreement. The aggregate amount of all Severance Tax Payments and
                  Gross-Up
                  Payments (each as defined in the Compensation Agreement) payable
                  under
                  Section 10 of the Compensation Agreement are currently expected
                  to be
                  approximately $1,873,000.

              


      

      


      
        	
                5.

              	
                Entire
                  Agreement.
                  This Agreement contains the entire understanding of the parties
                  in respect
                  of their subject matter and supersedes upon its effectiveness all
                  other
                  prior plans, arrangements, agreements and understandings, including,
                  without limitation, the CIC Agreement and the Compensation Agreement
                  (the
                  “Prior Agreements”). The Company may withhold from any amounts payable
                  under this Agreement such Federal, state, local or foreign taxes
                  as shall
                  be required to be withheld pursuant to any applicable law or
                  regulation.

              


      

      


      In
        the
        event that the Merger Agreement is terminated, this Agreement shall be void
        ab initio
        and of
        no further force and effect and the Prior Agreements shall remain fully in
        effect. This Agreement may not be amended without the prior written consent
        of
        U.S. Bancorp.

      


      Please
        sign below to indicate your acknowledgment and acceptance of the agreements
        set
        forth herein.

       

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	
                VAIL
                  BANKS, INC.

                 

              
	 	 
	 	
                By:
                  /s/
                  Lisa M. Dillon

              
	 	
                Name:Lisa
                  M. Dillon

              
	 	
                Title:Vice
                  Chairman

              


      

      


       

      


      Acknowledged
        and Accepted:

       

      


       

      /s/
        E.B. Chester

      E.
        B.
        Chester