8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

October 19, 2012

Date of Report (Date of earliest event reported)

UNITED SECURITY BANCSHARES

(Exact Name of Registrant as Specified in its Charter)

California

(State or Other Jurisdiction of Incorporation)

000-32897	91-2112732
(Commission	(IRS Employer
File Number)	Identification No.)

2126 Inyo Street, Fresno, CA	93721
(Address of Principal Executive Office)	(Zip Code)

559-248-4943

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 3 – Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

On October 19, 2012, United Security Bancshares, a California corporation (the “Company”) entered into certain subscription agreements and/or exchange agreements (the “Subscription Agreements” and “Exchange Agreements”) separately with 10 Directors of the Company, for the private placement of 134,761 newly issued shares of the Company’s no par common stock for total proceeds of $382,044. The total proceeds is comprised of $295,170 in cash subscription proceeds for 104,116 newly issued shares of common stock , and cancellation of $86,874 of principal amounts on notes payable to Directors in exchange of 30,645 newly issued common shares. The notes payable to Directors that were exchanged for newly issued shares of common stock of the Company were one-year notes totaling $86,874 in principal amount and accrued interest, with an annual interest rate of 6%. The proceeds from the stock subscription will be used to fund ongoing operations of the Company.

Pursuant to the Subscription and Exchange Agreements, the price of the newly issued stock was based upon a price of $2.835 per share which was the average of the high and low price of the Company’s stock (UBFO) that traded on October 18, 2012. The following table summarizes the total number of shares issued and the principal amounts of notes exchanged, if any related to each Director.

	Exchange		Subscription		Total
	Shares		Shares		Shares Issued
Robert G. Bitter, Pharm. D.		2,043		2,116		4,159
Stanley J. Cavalla		2,043		0		2,043
Tom Ellithorpe		2,043		0		2,043
R. Todd Henry		4,086		10,000		14,086
Ronnie D. Miller		2,043		2,000		4,043
Robert M. Mochizuki		2,043		30,000		32,043
Walter Reinhard		8,172		10,000		18,172
Dennis R. Woods		4,086		10,000		14,086
Michael T. Woolf, D.D.S.		4,086		40,000		44,086
Total		30,645		104,116		134,761

	Exchange		Subscription		Total
	Amount		Proceeds		Proceeds
Robert G. Bitter, Pharm. D.	$	5,792	$	6,000	$	11,792
Stanley J. Cavalla		5,792		0		5,792
Tom Ellithorpe		5,792		0		5,792
R. Todd Henry		11,583		28,350		39,933
Ronnie D. Miller		5,792		5,670		11,462
Robert M. Mochizuki		5,792		85,050		90,842
Walter Reinhard		23,165		28,350		51,515
Dennis R. Woods		11,583		28,350		39,933
Michael T. Woolf, D.D.S.		11,583		113,400		124,983
Total	$	86,874	$	295,170	$	382,044

On October 19, 2012, pursuant to the Subscription and Exchange Agreements described above, the Company completed the sale of 134,761 shares of newly issued common stock to the Directors for gross proceeds of $382,044.  The issuance of the common stock was not subject to any underwriting discounts or commissions.

The newly issued common shares will not be registered under the Securities Act of 1933, as amended (the “Act”), in reliance on an exemption from registration under Section 4(2) of the Act, and Rule 506 promulgated thereunder, based on the fact that all of the Directors are “accredited investors,” as such term is defined in Rule 501 of Regulation D.

The foregoing description of the Subscription Agreements and the Exchange Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Subscription Agreement and the Exchange Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K (this “Current Report”) and is incorporated by reference herein.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

EXHIBIT #

10.1	Form of Subscription Agreement, dated as of October 19, 2012, by and between the Company and certain Directors.
10.2	Form of Exchange Agreement issued on October 19, 2012 between the Company and certain Directors.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	United Security Bancshares
Date: October 25, 2012	By: /s/ Richard Shupe
	Senior Vice President &
	Chief Financial Officer

EX-10.1

SUBSCRIPTION AGREEMENT

United Security Bancshares

2126 Inyo Street

Fresno, CA 93721

(559) 248-4943

Ladies and Gentlemen:

Re: Subscription for the Purchase of Common Stock

1.            Subscription. The undersigned (the “Investor”) subscribes for and agrees to purchase the number of shares of common stock (“Shares”) of United Security Bancshares, a bank holding company, (the “Company”) set forth on the signature page below. The Shares are being offered for sale at $____ per Share. The Investor acknowledges and agrees that this subscription is irrevocable and that this subscription may not be withdrawn by the Investor unless the Company rejects this subscription. It is understood and agreed by the Investor that the Company shall have the right to accept or reject this subscription, in whole or in part, and that the same shall be deemed to be accepted by the Company only when the subscription has been approved by the Board of Directors of the Company, and an authorized officer of the Company has signed the signed subscription agreement. Thereafter, a certificate representing the subscribed amount of Shares shall be delivered to the Investor. For purposes of this Subscription Agreement, references to the “undersigned” refer to the undersigned and the Investor, where applicable.

2.            Payment of Purchase Price; Delivery of Shares.

(a)          The Investor herewith delivers the aggregate purchase price for the Shares by check or wire transfer in immediately available funds together with this Subscription Agreement completed and signed, and the accompanying Investor Questionnaire completed and signed. If the Investor delivers the aggregate purchase price for the Shares herewith and this subscription is not accepted, promptly after the Closing the Company will return the portion of the purchase price in excess of the amount the Investor’s subscription that has been accepted, if any, without interest.

(b)          This Subscription Agreement and funds for the purchase of Shares should be addressed to the Company as follows:

United Security Bancshares

Attention: Dennis Woods, CEO and President

2126 Inyo Street

Fresno, CA 93721

Checks for the purchase of Shares should be made to United Security Bancshares as follows:

United Security Bancshares -Stock Subscription Account

Wire Instructions:

Routing/Transit Number:	________
Online Federal Reserve Bank
Abbreviated Name:	_____________ Bank
Credit To:	United Security Bancshares
	Stock Subscription Account

Further Credit: [Investor’s Name/Registration – Please Provide]

(c)          As soon as practicable after the closing of the Offering, the Company shall deliver with respect to accepted subscriptions a certificate or certificates representing the Shares to the Investor.

3.            Representations, Warranties and Covenants of the Investor. To induce the Company to accept this subscription, the Investor represents, warrants and covenants as follows:

(a)          The Investor has been furnished and has carefully read this Subscription Agreement relating to the offering of the Shares by the Company, including all the appendices thereto. The Investor is not relying upon any other information, representation or warranty by the Company or any agent of it in determining to invest in the Company. The Investor has consulted to the extent deemed appropriate by the Investor with the Investor’s own advisers as to the financial, tax, legal and related matters concerning an investment in the Shares and on that basis believes that an investment in the Shares is suitable and appropriate for the Investor.

(b)          The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares, is able to bear the economic risks and lack of liquidity of an investment in the Shares, is able to bear the risk of loss of its entire investment in the Shares and understands the risks of, and other considerations relating to, the purchase of the Shares.

(c)          The Investor understands that the Shares have not been registered under the Securities Act, the securities laws of any state thereof or the securities laws of any other jurisdiction, nor is such registration contemplated. The Investor understands and agrees further that the Shares must be held indefinitely and may only be transferred in accordance with the restrictions set forth in a legend substantially in the form set forth below which will be placed on the certificate or certificates evidencing the Shares issued to the Investor at the Closing:

The shares evidenced by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be transferred, nor will any assignee or endorsee hereof be recognized as an owner hereof by the issuer for any purpose, unless a registration statement under the Securities Act of 1933, as amended, and any applicable state securities laws with respect to such shares shall then be in effect or unless the availability of an exemption from registration with respect to any proposed transfer or disposition of such shares shall be established to the satisfaction of counsel for the issuer.

(d)          The Investor is purchasing the Shares for its own account, with the intention of holding the Shares for investment and with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Shares. The Shares to be acquired hereunder are being acquired by the Investor for investment purposes only and not with a view to resale or distribution.

(e)          To the full satisfaction of the Investor, the Investor has been furnished any materials the Investor has requested relating to the Company and the offering of the Shares, and the Investor has been afforded the opportunity to ask questions of representatives of the Company concerning the Company and the terms and conditions of the Offering.

(f)          The attached Investor Questionnaire that the Investor has completed and all of the statements, answers and information therein are true and correct as of the date hereof and will be true and correct as of the date of the Closing. The Investor Questionnaire is incorporated herein by this reference.

(g)          The foregoing representations, warranties, and covenants and all other information which the Investor has provided concerning the Investor and the Investor’s financial condition are true and accurate as of the date hereof. The Investor agrees to immediately notify the Company if any information, representations, warranties, and covenants of the Investor contained in this Subscription Agreement, including the Investor Questionnaire, becomes untrue prior to the Closing.

(h)          All action on the part of the Investor, and if the Investor is a corporation, its officers, directors, and stockholders, necessary for the purchase of the Shares pursuant hereto and the performance of the Investor's obligations hereunder, has been taken.

(i)          The Investor represents that it is an “accredited investor” as that term is defined in SEC Rule 501(a) of Regulation D, 17 C.F.R. 230.501(a).]

4.            Survival of Representations and Warranties; Indemnification. All representations, warranties and covenants contained herein or made in writing by the Investor in connection with the transactions contemplated by this Subscription Agreement shall survive the issuance and sale of the Shares.

5.            Successors and Assigns. This Subscription Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, successors and permitted assigns of the parties hereto.

6.            Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given to any party when delivered by hand, when delivered by fax and confirmed, or when mailed, first-class postage prepaid, (a) if to the Investor, to the Investor at the address or facsimile number set forth in the Investor Questionnaire attached hereto, or to such other address or facsimile number as the Investor shall have furnished to the Company in writing, and (b) if to the Company, to United Security Bancshares, Attention: Dennis Woods, 2126 Inyo Street, Fresno, CA 93721 (559) 248-4943 or to such other address or addresses, or facsimile number or numbers, as the Company shall have furnished to the Investor in writing, provided that any notice to the Company shall be effective only if and when received by the Company.

7.            Miscellaneous. This Subscription Agreement is not assignable by the Investor without the prior written consent of the Company. This Subscription Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. This Subscription Agreement may be amended only by a writing executed by both of the parties hereto. The Investor Questionnaire, including without limitation the representations and warranties contained therein, is an integral part of this Subscription Agreement and shall be deemed incorporated by reference herein. This Subscription Agreement may be executed in one or more counterparts, all of which together shall constitute one instrument, and shall be governed by and construed in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below.

Date

Amount of Shares Subscribed $___________________

INDIVIDUAL INVESTOR:

(Print Name)

(Signature)

INDIVIDUAL INVESTOR:

(Print Name)

(Signature)

TRUST, CUSTODIAL ACCOUNT

OR OTHER INVESTOR:

(Print Name of Entity)

By:

(Signature)

(Print Name and Title)

ACCEPTANCE OF SUBSCRIPTION

(to be filled out only by the Company)

The Company hereby accepts the above application for subscription for the Shares.

UNITED SECURITY BANCSHARES

By:

Name:

Title:

Date:

INVESTOR QUESTIONNAIRE

A. GENERAL INFORMATION

1.	Print Full Name of Investor:	Individual Investor:
		First	Middle	Last
		Trust, Custodial Account or Other Investor:
		Name of Entity
2.	Address for Notices:
3.	Telephone Number:
4.	Telecopier Number:
5.	Permanent Address:
	(if different from address
	for Notices above)
6.	U.S. Taxpayer Identification or
	Social Security Number:
7.	E-mail address:

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B. ACCREDITED INVESTOR STATUS

The Investor represents and warrants that the Investor is either (i) an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and has checked the box or boxes below that are next to the categories under which the Investor qualifies as an accredited investor or (ii) not an “accredited investor” and has so indicated in the appropriate box below:

For Individuals:

£	(A)	A natural person with individual net worth (or joint net worth with spouse) in excess of $1 million.  For purposes of this item, “net worth” means the excess of total assets at fair market value, including real property (excluding the primary residence), home furnishings and automobiles (and including property owned by a spouse), over total liabilities (excluding the mortgage on the primary residence unless it exceeds the residence’s fair market value.)
£	(B)	A natural person with individual income (without including any income of the Investor’s spouse) in excess of $200,000, or joint income with spouse of $300,000, in each of the two most recent years and who reasonably expects to reach the same income level in the current year.
For Entities:
£	(C)	An entity, including a grantor trust, in which all of the equity owners are accredited investors (for this purpose, a beneficiary of a trust is not an equity owner, but the grantor of a grantor trust may be an equity owner).
£	(D)	An organization described in Section 50l(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5 million.
£	(E)	A trust with total assets in excess of $5 million not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a person with such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares.

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£	(F)	An employee benefit plan within the meaning of ERISA if the decision to invest in the Shares is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5 million or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors and the investments are made only on behalf of those accredited investors.
Other Qualification:
£		The Investor is an “accredited investor” by means other than those categories listed above, including a qualified institutional investor such as a bank, savings and loan acting in individual or fiduciary capacity, registered broker-dealer, qualifying insurance company, qualifying investment company, or other qualifying company under Rule 501(a)(1) or (2) of Regulation D. Include on a supplement sheet the details of the Investor meeting the qualified institutional definition.

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C. SUPPLEMENTAL DATA FOR ENTITIES

1. If the Investor is not a natural person, furnish the following supplemental data (natural persons may skip this Section of the Investor Questionnaire):

Legal form of entity (trust, etc.):

Jurisdiction of organization:

2. Are holders of beneficial interests in the Investor able to decide individually whether to participate, or the extent of their participation, in the Investor’s investment in the Company (i.e., can shareholders, partners or other holders of equity or beneficial interests in the Investor determine whether their capital will form part of the capital invested by the Investor in the Company)?

¨ Yes                                    ¨ No

3.(a)        Please indicate whether or not the Investor is, or is acting on behalf of, (i) an employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not such plan is subject to ERISA, or (ii) an entity which is deemed to hold the assets of any such employee benefit plan pursuant to 29 C.F .R. § 2510.3-101. For example, a plan which is maintained by a foreign corporation, governmental entity or church, a Keogh plan covering no common-law employees and an individual retirement account are employee benefit plans within the meaning of Section 3(3) of ERISA but generally are not subject to ERISA (collectively, “Non-ERISA Plans”). In general, a foreign or U.S. entity which is not an operating company and which is not publicly traded or registered as an investment company under the Investment Company Act, and in which 25% or more of the value of any class of equity interests is held by employee pension or welfare plans (including an entity which is deemed to hold the assets of any such plan), would be deemed to hold the assets of one or more employee benefit plans pursuant to 29 C.F.R. § 2510.3-101. However, if only Non-ERISA Plans were invested in such an entity, the entity generally would not be subject to ERISA. For purposes of determining whether this 25% threshold has been met or exceeded, the value of any equity interests held by a person (other than such a plan or entity) who has discretionary authority or control with respect to the assets of the entity, or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person, is disregarded.

£ Yes                                   £ No

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3.(b)        If the Investor is, or is acting on behalf of, such an employee benefit plan, or is an entity deemed to hold the assets of any such plan or plans, please indicate whether or not the Investor is subject to ERISA.

¨ Yes                                    ¨ No

If the question above was answered “Yes,” please indicate what percentage of the Investor’s assets invested in the Company is subject to ERISA:

 ________________________

4.(a) Is the Investor a grantor trust, a partnership or an S Corporation for U.S. federal income tax purposes?

¨ Yes                                    ¨ No

4.(b) If the previous question was answered “Yes,” please indicate whether or not more than 50 percent of the value of the ownership interest of any beneficial owner in the Investor is (or may at any time during the Company’s existence be) attributable to the Investor’s (direct or indirect) interest in the Company.

¨ Yes                                    ¨ No

D. RELATED PARTIES:

1. To the best of the Investor’s knowledge, does the Investor control, or is the Investor controlled by or under common control with, any other investor in the Company?

¨ Yes                                    ¨ No

2. Will any other person or persons have a beneficial interest in the Shares to be acquired hereunder (other than as a shareholder, partner, po1icy owner or other beneficial owner of equity interests in the Investor)?

¨ Yes                                    ¨ No

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The Investor understands that the foregoing information will be relied upon by the Company for the purpose of determining the eligibility of the Investor to purchase and own Shares in the Company. The Investor agrees to notify the Company immediately if (i) any representation or warranty contained in the Subscription Agreement, including this Investor Questionnaire, becomes untrue prior to the closing of the transactions contemplated hereby or (ii) any response to any question contained in Sections C or D of this Investor Questionnaire becomes untrue at any time. The Investor agrees to provide, if requested, any additional information that may reasonably be required to substantiate the Investor’s status as an accredited investor or to otherwise determine the eligibility of the Investor to purchase the Shares. To the fullest extent permitted by law, the Investor agrees to indemnify and hold harmless the Company and any agents thereof from and against any loss, damage or liability due to or arising out of a breach of any representation, warranty or agreement of the Investor contained herein.

Signatures:

INDIVIDUAL INVESTOR:

(Signature)

(Print Name)

INDIVIDUAL INVESTOR:

(Signature)

(Print Name)

TRUST, CUSTODIAL ACCOUNT

OR OTHER INVESTOR:

(Name of Entity)

By:

(Signature)

(Print Name and Title)

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EX-10.2

SHAREHOLDER EXCHANGE AGREEMENT

This Shareholder Exchange Agreement ("Agreement") is made and entered into this _____ day of _____, 2012, by and between ________________ ("Shareholder") and United Security Bancshares ("USB"), a California corporation.

A. WHEREAS, the Articles of Incorporation of USB authorize the issuance of up to 20,000,000 shares of its no par value common stock ("USB Common Stock");

B. WHEREAS, Shareholder is a director and shareholder of USB and desires to contribute to the capital of USB by exchanging debt in the form of a note issued USB to Shareholder for shares of newly issued and authorized USB common stock at the price per share of $___ per share;

NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED by and between USB and Shareholder as follows:

1. Exchange. USB and Shareholder agree to exchange Shareholder’s note issued by USB in the principal amount of $______, including any accrued interest for whole shares of USB common stock at the price per share of $______ (which the parties agree is the fair market value per share of USB common stock as of the date of the transaction) (the “Exchange”). USB and Shareholder agree that no fractional shares of USB common stock will be issued by USB, and any unconverted amount shall be paid to the Shareholder in cash. The Exchange shall be effective at the close of business on _________ (“Effective Date”), provided that the exchange shall not occur during any black out period for trading of USB common stock by insiders of USB.

2. Trade Blackout. In addition to any other trading blackout period, Shareholder agrees not to enter any orders for or make any purchase or sale of any shares of USB common stock between the date of the board of directors of USB approving the Exchange and prior to the Effective Date.

3. Restricted Stock, Notices and Filings. Shareholder acknowledges that Shareholder will receive restricted stock in the Exchange, and Shareholder agrees with USB that such shares of stock will carry a restrictive transfer legend and be subject to the conditions in Rule 144 as to any resale of such restricted stock.

                   Shareholder further acknowledges that under the federal securities laws, Shareholder will be responsible for the timely filing of a Form 4 for the acquisition of shares of common stock of USB in the Exchange. USB agrees to file an 8-K and Form D to report the issuance of shares of common stock of USB for the Exchange and related issuance of stock in a private placement by USB.

4. Termination. This Agreement may be terminated at any time prior to the Effective Time by the mutual consent of USB and the Shareholder.

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5. Board of Directors Approval. The Exchange is subject to USB Board of Directors approval of the Exchange.

6. Shareholder Representations.

               In that the Exchange as set forth Paragraph 1 will be made pursuant to exemptions in securities laws for private placement offerings, it is necessary that the Shareholder make a representation that would qualify the Shareholder to participate in such exchange. Therefore, Shareholder represents that Shareholder qualifies as an "accredited investor" by meeting the specific criteria presented below.

1. Shareholder is a director or executive officer of the USB;

2. Shareholder is a natural person whose individual net worth, excluding his or her primary home or residence, or whose joint net worth, excluding their primary home or residence with that person's spouse, at the time of his/her purchase exceeds $1,000,000; or

3. Shareholder is a natural person whose income exceeded $200,000 in each of the two most recent years or whose joint income with that person's spouse exceeded $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

In addition, Shareholder represents that Shareholder has either or both (i) a preexisting personal or business relationship of a nature and duration with any of the directors or officers of USB such that Shareholder would be aware of the character, business acumen and general business and financial circumstances of such director or officer or (ii) by reason of business or financial experience the ability to evaluate the merits and risks of transactions contemplated by this Agreement, including the Exchange contemplated in paragraph 1 of the Agreement and Shareholder has the capacity to protect Shareholder's interest in the transactions contemplated by this Agreement, including the Exchange contemplated in paragraph 1 of the Agreement.

In addition, Shareholder represents that Shareholder as a result of the Exchange will not be an owner of 10% or more of USB’s outstanding common stock as determined pursuant to NASDAQ Rules, including Rule 5635(b).

Finally, Shareholder represents that Shareholder has consulted with his or her tax counsel or accountant on the income tax effects of the Exchange and understands the tax consequences of the Exchange with respect to Shareholder.

7. Governing Law. This Agreement shall be construed and governed by the laws of the State of California.

8. Entire Agreement. This Agreement constitutes the sole and only agreement of the parties hereto respecting the sale and purchase of the shares of USB's Common Stock and correctly sets forth the rights, duties and obligations of each party to the other in relation thereto as of this date.

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Any prior agreements, promises, negotiations or representations concerning the subject matter of this Agreement not expressly set forth in this Agreement are of no force or effect.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in _________, _______________, on the date first above written.

SHAREHOLDER	UNITED SECURITY BANCSHARES
	By:
	Its:

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