Registration Rights Agreement

REGISTRATION RIGHTS AGREEMENT


THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into this ___ day of __________, 200__, by and among Appalachian Bancshares, Inc., a Georgia corporation (the "Company") and _______________________ ("Holder").


WHEREAS, Holder has agreed to purchase from the Company ____ shares of Common Stock of the Company, at a price of $15.00 per share (the "Shares"), in accordance with that certain subscription agreement, entered into by and between the Company and Holder (the "Subscription Agreement"), to which this Agreement is attached;


NOW, THEREFORE, for and in consideration of the covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby mutually agree as follows:


1. Definitions. Unless otherwise defined herein, the following terms shall
have the following respective meanings:


"Agreement" shall mean this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative.


"Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.


"Common Stock" shall mean the Company's $.01 par value per share common stock.


"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.


"Holder" shall mean the purchaser of the Shares, as set forth above, and, pursuant to a transfer or assignment of the Shares which meets the requirements of Section 4 of this Agreement, any transferee or assignee of the Shares.


"Other Holders" means persons who hold Other Registrable Securities.


"Other Registrable Securities" means shares of Common Stock held by any person, other than Holder, who holds registration rights in respect of Common Stock.


(The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act (as hereinafter defined), and the declaration or ordering of the effectiveness of such registration statement.)


"Registrable Securities" shall mean the Shares acquired by Holder from the Company, pursuant to the Subscription Agreement; provided, however, that the Shares shall only be treated as Registrable Securities if and so long as (i) they have not been sold through a broker, dealer, or underwriter in a public distribution or public securities transaction, (ii) they have not been sold in a transaction exempt from the registration and prospectus delivery requirement of the Securities Act under Section 4(1) thereof, so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, (iii) they have not been transferred or assigned to more than three (3) transferees or assignees, (iv) the Company is given written notice, by the Holder, of such sale, transfer or assignment of the Shares prior to such sale, transfer or assignment, and (v) the Holder otherwise is in compliance with the provisions of Section 4 of this Agreement.


"Registration Expenses" shall mean all expenses incurred by the Company in complying with Section 5 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company and one counsel of record for Holder, blue sky fees and expenses, and the expense of any special audits incident to, or required by, any such registration.


"Restricted Securities" shall mean the securities of the Company required to bear a restrictive legend, such as the legend set forth in Section 3 hereof (or any similar restrictive legend).


"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.


"Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the securities registered by Holder.


"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.


2. Restrictions on Transferability. The Restricted Securities shall not be
transferable except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. With respect to Restricted Securities held by Holder,
Holder will cause any proposed transferee of the Restricted Securities held
by such Holder to agree to take and hold such Restricted Securities subject
to the provisions and upon the conditions specified in this Agreement.


3. Restrictive Legend. Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of Section 4 below) be
stamped or otherwise imprinted with a legend in substantially the following
form (in addition to any legend required under applicable state securities
laws):


"THE SECURITIES EVIDENCED HEREBY WERE ISSUED AND SOLD WITHOUT REGISTRATION
UNDER THE FEDERAL SECURITIES ACT OF


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1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, IN RELIANCE UPON CERTAIN EXEMPTIVE PROVISIONS OF SAID ACTS. SAID
SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER ANY APPLICABLE STATE LAWS OR THE
SECURITIES ACT, (2) PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES
ACT, OR (3) OTHER EXEMPTION FROM SUCH REGISTRATION, AS TO WHICH THE ISSUER
HAS RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO ISSUER."


4. Notice of Proposed Transfers. Holder, by acceptance of each certificate
representing Restricted Securities, agrees to comply in all respects with
the provisions of this Section 4. Prior to any proposed transfer of any
Restricted Securities, unless there is, in effect, a registration statement
under the Securities Act covering the proposed transfer, Holder shall give
written notice to the Company of Holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall, if the Company so
requests, be accompanied (except in transactions in compliance with Rule
144 promulgated by the Commission under the Securities Act) by a written
opinion of legal counsel, who shall be reasonably satisfactory to the
Company, addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed
transfer of the Restricted Securities may be effected without registration
under the Securities Act, whereupon Holder shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice
delivered by Holder to the Company. Each certificate evidencing the
Restricted Securities, transferred in accordance with this Section 4, shall
bear the appropriate restrictive legend set forth in Section 3 above,
except that such certificate shall not bear such restrictive legend if, in
the opinion of counsel for the Company, such legend is not required in
order to establish compliance with any provisions of the Securities Act.


5. Company Registration.


(a) Notice of Registration. If the Company shall determine to register any
of its securities, either for its own account or the account of a
security holder or holders, other than a registration relating solely
to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction, the Company will:


(i) promptly give to Holder written notice thereof; and


(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 business days after
receipt of such written notice from the Company, by Holder,
provided that to the extent so advised by the underwriters in
accordance with Section 5(b) below, the Company may limit the
amount of Registrable Securities to be included by Holder in any
registration and, to the extent so advised by the underwriters,
may exclude all Registrable Securities entirely from the
registration relating to the Company's registration of it's
securities.


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(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company
shall so advise Holder by written notice. If proposing to distribute
Holder's securities through such underwriting, Holder shall (together
with the Company) enter into an underwriting agreement in customary
form with the underwriter, or underwriters, selected by the Company.
Notwithstanding any other provision of this Section 5, if the
underwriter, or (as the case may be) the representative of the
underwriters, advises the Company in writing that, in its opinion,
inclusion of the full number of Registrable Securities and Other
Registrable Securities requested to be included in the registration
would adversely affect the underwriting, the underwriter or
representative of the underwriters may limit the number of shares of
Registrable Securities and Other Registrable Securities to be included
in the registration and underwriting. The Company shall so advise
Holder and Other Holders of the limitation and the number of
Registrable Securities and Other Registrable Securities to be excluded
from the registration by reason of the limitation imposed by the
underwriter or representative of the underwriters. The number of
shares of Registrable Securities and Other Registrable Securities to
be excluded from the registration shall be allocated pro rata among
Holder and those Other Holders who are requesting registration, based
on the ratio that the number of Registrable Securities and Other
Registrable Securities, proposed to be registered by each of Holder
and Other Holders, bears to the total number of Registrable Securities
and Other Registrable Securities proposed to be registered by Holder
and Other Holders in the registration.


If Holder or any Other Holder who has requested inclusion in such registration, as provided above, disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company and the underwriter. The securities so withdrawn shall also be withd ...