Exhibit 10.20

UNITED SECURITY BANCSHARES

INCENTIVE STOCK OPTION AGREEMENT

          This Incentive Stock Option Agreement (“Agreement”) is made and
entered into as of the 1st day of August 2005, by and between UNITED SECURITY
BANCSHARES, a Company holding company (the “Company”), and William Scarborough
(“Optionee”);

          WHEREAS, pursuant to the UNITED SECURITY BANCSHARES 2005 Stock Option
Plan (the “Plan”), a copy of which is attached hereto, the Stock Option
Committee of the Company has authorized granting to Optionee an incentive stock
option to purchase all or any part of Thirty thousand (30,000) authorized but
unissued shares of the Company’s common stock (hereinafter referred to as
“stock”) at the price of Twenty-eight Dollars and eighty-seven Cents ($28.87)
per share, such option to be for the term and upon the terms and conditions
hereinafter stated;

          NOW, THEREFORE, it is hereby agreed:

          1. Grant of Option.  Pursuant to said action of the Stock Option
Committee and pursuant to authorizations granted by all appropriate regulatory
and governmental agencies, the Company hereby grants to Optionee the option to
purchase, upon and subject to the terms and conditions of the Plan, which is
incorporated in full herein by this reference, all or any part of Thirty
thousand (30,000) shares of the Company’s stock at the price of Twenty-eight
Dollars and eighty-seven cents (28.87) per share, which price is not less than
one hundred percent (100%) of the fair market value of the stock (or not less
than 110% of the fair market value of the stock for Optionee-shareholders who
own securities possessing more than ten percent (10%) of the total combined
voting power of all classes of securities of the Company) as of the date of
action of the Stock Option Committee granting this option.

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          2. Exercisability.  This option shall be exercisable as to:

One thousand shares (6,000) on or after August 1, 2006,

One thousand shares (6,000) on or after August 1, 2007,

One thousand shares (6,000) on or after August 1, 2008,

One thousand shares (6,000) on or after August 1, 2009,

and One thousand shares ((6,000) on or after August 1, 2010.  This option shall
remain exercisable as to all vested shares until August 1, 2015 (but not later
than ten (10) years from the date this option is granted) unless this option has
expired or terminated earlier in accordance with the provisions hereof or in the
Plan.  Subject to paragraphs 4 and 5, shares as to which this option becomes
exercisable may be purchased at any time prior to expiration of this option.

          3. Exercise of Option.  This option may be exercised by a written
notice (substantially in the form as that which is attached as Exhibit A)
delivered to the Company stating the number of shares with respect to which this
option is being exercised, together (a) with cash in the amount of the purchase
price of such shares, or (b) subject to applicable law, with the Company’s stock
previously acquired by Optionee.  Notwithstanding the foregoing, in the event
Optionee does exercise the option by utilizing (b) above, Optionee should obtain
tax advice as to the consequences of such action.  Not less than ten (10) shares
may be purchased at any one time unless the number purchased is the total number
which may be purchased under this option and in no event may the option be
exercised with respect to fractional shares.  Upon exercise, Optionee shall make
appropriate arrangements and shall be responsible for the withholding of any
federal and state taxes then due.

          4. Cessation of Employment.  Except as provided in Paragraphs 2 and 5
hereof, if Optionee shall cease to be an employee of the Company or a subsidiary
corporation for any reason other than Optionee’s death or disability [as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended from time
to time (the “Code”)], this option shall expire three (3) months thereafter. 
During the three (3) month period this option shall be exercisable only as to
those installments, if any, which had accrued as of the date when Optionee
ceased to be an employee of the Company or a subsidiary corporation.

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          5. Termination of Employment for Cause.  If Optionee’s employment with
the Company or a subsidiary corporation is terminated for cause, this option
shall expire immediately, unless reinstated by the Board of Directors within
thirty (30) days of such termination by giving written notice of such
reinstatement to Optionee at his or her last known address.  In the event of
such reinstatement, Optionee may exercise this option only to such extent, for
such time, and upon such terms and conditions as if Optionee had ceased to be an
employee of the Company or a subsidiary corporation upon the date of such
termination for a reason other than cause, death or disability.  Termination for
cause shall include, but not be limited to, termination for malfeasance or gross
misfeasance in the performance of duties or conviction of a crime involving
moral turpitude, and, in any event, the determination of the Board of Directors
with respect thereto shall be final and conclusive.

          6. Nontransferability; Death or Disability of Optionee.  This option
shall not be transferable except by will or the applicable laws of descent and
distribution and shall be exercisable during Optionee’s lifetime only by
Optionee.  If Optionee dies while serving as an employee of the Company or a
subsidiary corporation, or during the three (3) month period referred to in
Paragraph 4 hereof, this option shall expire one (1) year after the date of
termination or on the day specified in Paragraph 2 hereof, whichever is
earlier.  After Optionee’s death but before such expiration, the persons to whom
Optionee’s rights under this option shall have passed by will or the applicable
laws of descent and distribution or the executor or adminis-trator of Optionee’s
estate shall have the right to exercise this option as to those shares for which
installments had accrued under Paragraph 2 hereof as of the date on which
Optionee ceased to be an employee of the Company or a subsidiary corporation.

          If Optionee terminates his or her employment because of disability,
(as defined in Section 22(e)(3) of the Code), Optionee may exercise this option
to the extent he or she is entitled to do so at the date of termination, at any
time within one (1) year of the date of termination, or before the expiration
date specified in Paragraph 2 hereof, whichever is earlier.

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          7. Employment.  This Agreement shall not obligate the Company or a
subsidiary corporation to employ Optionee for any period, nor shall it interfere
in any way with the right of the Company or a subsidiary corporation to reduce
Optionee’s compensation.

          8. Privileges of Stock Ownership.  Optionee shall have no rights as a
shareholder with respect to the Company’s stock subject to this option until the
date of issuance of stock certificates to Optionee.  Except as provided in the
Plan, no adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificates are issued.

          9. Modification and Termination.  The rights of Optionee are subject
to modification and termination upon the occurrence of certain events as
provided in Sections 13 and 14 of the Plan.

          10. Notification of Sale.  Optionee agrees that Optionee, or any
person acquiring shares upon exercise of this option, will notify the Company
not more than five (5) days after any sale or other disposition of such shares.

          11.  Representations of Optionee.  Optionee understands that no shares
issuable upon the exercise of this option shall be issued and delivered unless
and until the Company has complied with all applicable requirements of any
regulatory agency having jurisdiction over the Company including registration of
the stock options and underlying shares, as necessary, and all applicable
requirements of any exchange upon which stock of the Company may be listed. 
Optionee agrees to ascertain that such requirements shall have been complied
with at the time of any exercise of this option.  In addition, if Optionee is an
“affiliate” for purposes of the Securities Act of 1933, there may be additional
restrictions on the resale of stock, and Optionee therefore agrees to ascertain
what those restrictions are and to abide by the restrictions and other
applicable federal securities laws.

          Furthermore, the Company may, if it deems appropriate, issue stop
transfer instructions against any shares of stock purchased upon the exercise of
this option and affix to any certificate representing such shares the legends
which the Company deems appropriate.

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          Optionee represents that the Company, its directors, officers,
employees and agents have not and will not provide tax advice with respect to
the option, and Optionee agrees to consult with his or her own tax advisor as to
the specific tax consequences of the option, including the application and
effect of federal, state, local and other tax laws.

          12. Notices.  Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its President or Chief Financial Officer at
its main office and any notice to Optionee shall be addressed to Optionee’s
address on file with the Company or a subsidiary corporation, or to such other
address as either may designate to the other in writing.  Any notice shall be
deemed to be duly given if and when enclosed in a properly sealed envelope and
addressed as stated above and deposited, postage prepaid, with the United States
Postal Service.  In lieu of giving notice by mail as aforesaid, any written
notice under this Agreement may be given to Optionee in person, and to the
Company by personal delivery to its President or Chief Financial Officer.

          13. Incentive Stock Option.  This Agreement is intended to be an
incentive stock option agreement as defined in Section 422 of the Code;
provided, however, that if the option shall fail to constitute an incentive
stock option for any reason, the option shall thereafter be governed by the
provisions of the Plan regarding nonqualified stock options.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

OPTIONEE

 

UNITED SECURITY BANCSHARES

 

 

 

 

 

 

 

 

 

 

By

 

 

By

 

 

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William Scarborough

 

 

Dennis R. Woods, Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

 

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Ken Donahue, Assistant Secretary

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EXHIBIT A

NOTICE OF STOCK OPTION EXERCISE

Mr. Dennis R. Woods
President
UNITED SECURITY BANCSHARES
2151 West Shaw Avenue
Fresno, California 93711

Dear Mr. Woods:

Pursuant to my incentive stock option agreement dated _______________, I am
exercising my stock option to acquire ____________ shares of common stock of
UNITED SECURITY BANCSHARES.  I am also enclosing payment by means of (cash in
the amount of $_________, or ________ shares of UNITED SECURITY BANCSHARES
having a fair market value) equal to the sum of the option exercise price.

I further acknowledge that the UNITED SECURITY BANCSHARES makes no
representations as to federal or state tax matters, and that I am to consult
with my own tax attorney or tax accountant for advice with respect to the
exercise of my stock option and the effect of the sale of the option shares. 
[(For executive officers of the Company or insiders of the Company) I further
acknowledge that I am an affiliate or insider of UNITED SECURITY BANCSHARES and
that federal securities laws are applicable to the exercise of the stock option
and any subsequent sale of the option shares including the applicability of the
Securities Act of 1933 and Rule 144 (both dealing with the sale of shares by an
affiliate).  I agree to comply with such securities laws and rules.]

 

Sincerely,

 

 

 

 

 

William Scarborough

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