Document:

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                                                                    EXHIBIT 10.6

                              STANDSTILL AGREEMENT

          THIS STANDSTILL AGREEMENT dated as of December 31, 2001, between AJG
FINANCIAL SERVICES, INC., a Delaware corporation ("AJG"), and INTREPID CAPITAL
CORPORATION, a Delaware corporation (the "Company").

          WHEREAS, AJG has an option (the "Option") to acquire shares of the
Common Stock, par value $.01 per share (the "Common Stock"), of the Company and
has entered into a Convertible Note Agreement (the "Convertible Note
Agreement") and an Investment Agreement (the "Investment Agreement") with the
Company, pursuant to which AJG may acquire additional shares of the Common
Stock ; and

          WHEREAS, in order to provide a constructive and mutually beneficial
relationship between AJG and the Company, the parties wish to enter into this
Agreement;

          NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, covenants and agreements set forth herein, the parties, intending to
be legally bound, agree as follows:

1.       TERM OF AGREEMENT

         Except as otherwise expressly provided herein, (a) the covenants and
agreements of AJG set forth in paragraphs 2(a), (b)(ii), (c), (d), (e), (f) and
4 hereof will continue in full force and effect until the earliest to occur of
(i) the date that AJG fully exercises the Option, and (ii) the date that AJG
otherwise acquires direct or indirect beneficial ownership of at least 51% of
the Common Stock (such date being referred to herein as the "First Termination
Date"), and (b) the respective covenants and agreements of AJG and the Company
contained in this Agreement other than the covenants and agreements referred to
in paragraph 1(a) hereof will continue in full force and effect until the date
that is three (3) years after the First Termination Date (the "Term").

2.       COVENANTS OF AJG

         Prior to the expiration of the Term or the earlier termination of this
Agreement, and subject to the further provisions hereof:

         (a)      Neither AJG nor any corporation or other entity controlled by
AJG (collectively, the "AJG Group") will, directly or indirectly, alone or in
concert with others, and no member of the AJG Group will advise, assist or
encourage others to, acquire any class of capital stock of the Company entitled
to vote generally in the election of directors (the "Voting Securities")
(except by way of stock dividends or other distributions or offerings made
available to holders of Voting Securities generally) if the effect of such
acquisition would be to increase the aggregate voting power in the election of
directors of all Voting Securities then owned by all members of the AJG

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Group to greater than 51% of such total combined voting power of all the Voting
Securities then outstanding, provided that:

                  (i)      the AJG Group may acquire Voting Securities without
regard to the foregoing limitation if any of the following events shall occur:
(A) a tender or exchange offer is made by any person or 13D Group (as defined
in paragraph 6(d) hereof) (other than an affiliate of, or any person acting in
concert with, any member of the AJG Group) to acquire Voting Securities which,
if added to the Voting Securities (if any) already owned by such person or 13D
Group, would represent more than 25% of the total combined voting power of all
Voting Securities then outstanding, (B) it is publicly disclosed or AJG
otherwise learns that Voting Securities representing more than 25% of the total
combined voting power of all Voting Securities then outstanding have been
acquired subsequent to the date hereof, or are proposed (in a public
announcement or filing) to be acquired subsequent to such date by any person or
13D Group (other than an affiliate of, or any person acting in concert with,
any member of the AJG Group), or (C) any person or 13D Group (not including
affiliates or members of the AJG Group) shall beneficially own Voting
Securities representing a percentage of the total combined voting power of all
outstanding Voting Securities which exceeds the greater of (x) 25% or (y) the
largest percentage of the total combined voting power represented by all Voting
Securities owned at any time by the AJG Group, and would be required (under
rules and regulations in effect on the date hereof) to file a statement on
Schedule 13D with the Securities and Exchange Commission (the "SEC") reporting
beneficial ownership of such Voting Securities; and

                  (ii)     no member of the AJG Group shall be obligated to
dispose of any Voting Securities if the aggregate percentage ownership of the
AJG Group is increased as a result of a recapitalization of the Company or a
repurchase, reclassification, split or consolidation of the capital stock of
the Company or any other action taken by the Company or its affiliates other
than the AJG Group.

         (b)(i)   AJG shall take such action as may be required so that all
Voting Securities owned by any member of the AJG Group are voted for nominees
to the Board of Directors of the Company (the "Board") in the same proportion
as the votes cast by other holders of Voting Securities, and no member of the
AJG Group shall solicit proxies or become a "participant" in a "solicitation"
(as such terms are defined in Regulation 14A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) in opposition to the recommendation
of the majority of the directors of the Company with respect to nominations to
the Board; provided that Voting Securities owned by members of the AJG Group
may be voted on the matters referred to in this paragraph 2(b)(i) as such
members determine in their sole discretion, and any AJG Group member may
solicit proxies or become a participant in a solicitation as described in this
paragraph 2(b)(i), if (and at any time thereafter) (A) the Board shall have
approved such actions, (B) the Company shall report a net loss for any fiscal
year during the Term beginning with the 2002 fiscal year, (C) the principal
executive officers of the Company shall have engaged in any act of illegality,
gross negligence, willful misconduct or fraud in connection with their duties
to the Company, or (D) the AJG Group believes, with the advice of counsel, that
it is required to do so in the exercise of its fiduciary duties to the
stockholders of the Company. AJG acknowledges and agrees that all transferees
of Voting Securities held by AJG and any member of the AJG Group transferred
during the Term, other than transferees in bona fide public offerings
registered under the Securities Act of 1933, as amended (the "Act"), or in
"brokers' transactions" (as such

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term is defined in Rule 144 under the Act) effected pursuant to Rule 144 under
the Act, shall acquire such Voting Securities subject to the terms and
conditions of this Section 2(b)(i).

                  (ii)     AJG shall take such action as may be required so
that all Voting Securities owned by any member of the AJG Group are voted on
all matters to be voted on by the holders of Voting Securities other than those
set forth in paragraph 2(b)(i) hereof in the same proportion as the votes cast
by other holders of Voting Securities; provided that Voting Securities owned by
members of the AJG Group may be voted as such members determine in their sole
discretion on any Significant Event. As used herein, the term "Significant
Event" means any charter or by-law amendment (other than a proposal to require
cumulative voting in the election of directors), acquisition or disposition of
assets (by way of merger, consolidation or otherwise), or change in
capitalization, liquidation, or other action out of the ordinary course of
business of the Company.

                  (iii)    The members of the AJG Group, as holders of Voting
Securities, shall be present, in person or by proxy, at all meetings of
stockholders of the Company so that all Voting Securities beneficially owned by
them may be counted for the purpose of determining the presence of a quorum at
such meetings.

         (c)      No member of the AJG Group shall deposit any Voting
Securities in a voting trust or subject any Voting Securities to any
arrangement or agreement with respect to the voting of such Voting Securities
with any person not a member of the AJG Group.

         (d)      No member of the AJG Group shall solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to the recommendation of the majority of
the directors of the Company with respect to any matter; provided that if AJG
opposes any solicitation by the Company's management with respect to any
Significant Event, the Company shall include in its proxy statement in
connection with such solicitation the fact that AJG opposes such solicitation
and a brief statement of AJG's reasons for such opposition.

         (e)      No member of the AJG Group shall join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with any
other person, for the purpose of acquiring, holding, voting or disposing of
Voting Securities, or otherwise become a "person" within the meaning of Section
13(d)(3) of the Exchange Act (in each case other than solely with members of
the AJG Group).

         (f)      No member of the AJG Group shall, directly or indirectly,
offer, sell or transfer any Voting Securities without offering the Company a
right of first refusal in the manner provided in paragraph 4 hereof, except (i)
to another member of the AJG Group, (ii) pursuant to a bona fide public
offering, registered under the Act of either Voting Securities or securities of
any member of the AJG Group convertible into, or exercisable or exchangeable
for, Voting Securities (provided that no sales of Voting Securities or
securities convertible into, or exercisable or exchangeable for, Voting
Securities are made to any person or related group of persons who would
immediately thereafter, to the knowledge of any member of the AJG Group, own or
have the right to acquire Voting Securities representing more than 1% of the
total combined voting power of all Voting Securities then outstanding), (iii)
pursuant to a rights

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offering or a dividend or other distribution to stockholders of one or more
members of the AJG Group (provided that if any affiliated person of AJG, who has
agreed separately with the Company not to acquire Voting Securities, receives
Voting Securities pursuant to a transaction described in this clause (iii), such
person shall have agreed to be bound by the provisions of this Agreement
applicable to the AJG Group and shall be deemed to be a member of the AJG Group
for all purposes of this Agreement), (iv) pursuant to Rule 144 under the Act,
(v) in other transactions in which Voting Securities are not sold or transferred
to any person or related group of persons who would immediately thereafter, to
the knowledge of any member of the AJG Group, own or have the right to acquire
Voting Securities representing more than 1% of the total combined voting power
of all Voting Securities then outstanding, (vi) pursuant to a private placement
of such Voting Securities (provided that if such private placement involves the
sale of 10% or more of the outstanding Voting Securities, then such AJG Group
member proposing to sell such Voting Securities in such private placement shall
have furnished to the Company a statement of the terms of the private placement
and a list of the transferees, the Company approves of the transferees, which
approval shall not be unreasonably withheld or delayed, and all transferees of
such Voting Securities in such private placement shall have agreed in writing to
be bound by the provisions of this Agreement applicable to the AJG Group), or
(vii) as a result of any pledge or hypothecation to a bona fide financial
institution to secure a bona fide loan or the foreclosure of any lien or
encumbrance which may be placed upon any Voting Securities (whether voluntarily
or involuntarily).

3.       COVENANTS OF THE COMPANY

         Prior to the expiration of the Term or the earlier termination of this
Agreement, and subject to the further provisions hereof:

         (a)      The Company will not take or recommend to its stockholders
any action during the term of this Agreement which would impose limitations on
the legal rights of the AJG Group as Company stockholders other than those
imposed pursuant to the express terms of this Agreement, including, without
limitation, any action which would impose restrictions (i) based upon the size
of security holding, nationality of a security holder, the business in which a
security holder is engaged or other considerations applicable to the AJG Group
and not to security holders generally; or (ii) with reference to Common Stock
generally, by means of the issuance of or proposal to issue any other class of
securities having voting power disproportionately greater than the equity
investment in the Company represented by such securities.

         (b)      The Company will furnish to AJG's designees on the Board all
information that is provided to the other directors of the Company.

         (c)      The Company will furnish to AJG all information that is
required by generally accepted accounting principles to enable AJG to account
properly for its investment in the Company.

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4.       RIGHT OF FIRST REFUSAL

         Prior to the First Termination Date, to the extent required by
paragraph 2(f) hereof, any member of the AJG Group, prior to making any offer
to sell, sale or transfer of Voting Securities, shall give the Company the
opportunity to purchase such Voting Securities in the following manner:

         (a)      Any member of the AJG Group intending to make such an offer,
sale or transfer shall give notice (the "Transfer Notice") to the Company in
writing of such intention, specifying the number of Voting Securities proposed
to be disposed of and the proposed price therefor, and any specific offer to
purchase such Voting Securities theretofore received and then remaining open,
identifying the offeror and setting forth all the terms of such offer
(including, without limitation, price). For purposes hereof, a bona fide
third-party tender or exchange offer to purchase Voting Securities shall be
deemed to be an offer at the price specified therein, without regard to any
provisions thereof with respect to proration or conditions to the offeror's
obligation to purchase.

         (b)      The Company shall have the right, exercisable by written
notice given by the Company to the party which gave the Transfer Notice within
10 business days after receipt of such Notice (or in the case of a tender or
exchange offer, no later than 24 hours prior to the latest time by which Voting
Securities must be tendered in order to be accepted pursuant to such offer or
to qualify for any proration applicable to such offer), to purchase (or to
cause a person designated by the Company to purchase) all, but not a part of,
the Voting Securities specified in such Notice for cash at the price set forth
therein. If the purchase price specified in the Transfer Notice includes any
property other than cash, such purchase price shall be deemed to be the amount
of any cash included in the purchase price plus the value (as jointly
determined by a nationally recognized investment banking firm selected by each
party or, in the event such firms are unable to agree, a third nationally
recognized investment banking firm to be selected by them) of such other
property included in such price. For this purpose:

                  (i)      The parties shall use their best efforts to cause
any determination of the value of any securities included in the purchase price
to be made within three business days after the date of delivery of the
Transfer Notice. If the firms selected by AJG and the Company are unable to
agree upon the value of any such securities within such three-day period, the
parties shall promptly select a third firm whose determination shall be made
within an additional three-day period and shall be conclusive.

                  (ii)     The parties shall use their best efforts to cause
any determination of the value of property other than securities to be made
within seven business days after the date of delivery of the Transfer Notice.
If the firms selected by AJG and the Company are unable to agree upon a value
within such seven-day period, the parties shall promptly select a third firm
whose determination shall be made within an additional three-day period and
shall be conclusive.

                  (iii)    The date on which the Company must exercise its
right of first refusal shall be extended until three business days after the
determination of the value of property included in the purchase price.

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         (c)      If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Voting Securities with respect to
which such right has been exercised shall take place within 30 calendar days
(or if approval of such purchase by the Company's stockholders is required by
law or pursuant to any regulatory rule or policy, within 90 calendar days)
after the Company gives notice of such exercise. Upon exercise of its right of
first refusal, the Company shall be legally obligated to consummate the
purchase contemplated thereby, shall use its best efforts to secure all
approvals required in connection therewith, and shall be liable in damages to
AJG (or the selling member of the AJG Group), including, without limitation,
damages for AJG's or such selling member's reasonable attorneys fees and
expenses, if for any reason, including, without limitation, the failure to
obtain any requisite approvals, the purchase is not consummated.

         (d)      If the Company does not exercise its right of first refusal
hereunder within the time specified for such exercise, the party giving the
Transfer Notice shall be free during the period of 90 calendar days following
the expiration of such time for exercise to sell the Voting Securities
specified in such Notice at the price specified therein or at any price in
excess thereof.

5.       TERMINATION

         (a)      Notwithstanding any other provision of this Agreement, either
party may terminate this Agreement, in its sole discretion, if the other party
fails to perform or observe any of its material obligations pursuant to this
Agreement. In addition, the Company shall have the right to terminate this
Agreement, in its sole discretion, as provided in paragraph 6(b) hereof.

         (b)      In the event of the termination of this Agreement pursuant to
this paragraph 5, AJG will cause all its designees serving on the Board or any
committee of the Board pursuant to the Investment Agreement to resign from the
Board and any such committee, effective as of the date of such termination.

6.       MISCELLANEOUS

         (a)      AJG, on the one hand, and the Company, on the other,
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled at
law or equity.

         (b)      If any provision of this Agreement is in violation of any
statute, rule, regulation, order or decree of any governmental authority, court
or agency, or subjects any member of the AJG Group to governmental regulation
to which it is not now subject, which violation or regulation would have a
material adverse impact on the operations of the AJG Group taken as a whole,
then such member of the AJG Group shall be relieved of its obligations under
such provision to the minimum extent necessary to cure such violation or
eliminate the applicability of such regulation; provided that this paragraph
6(b) shall not apply to any such violation or

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regulation resulting in part from activities or operations of any member of the
AJG Group other than its ownership of Voting Securities and the consummation of
the transactions contemplated by this Agreement.

         (c)      The Company, at its sole cost and expense, will prepare and
file a Form 13(d) or 13(g), and any other forms required to be filed with the
SEC or the NASD, on behalf of AJG on a timely basis, upon review and execution
by AJG. The provisions of this paragraph 6(c) shall survive the termination of
this Agreement.

         (d)      If requested in writing by the Company, AJG shall present or
cause to be presented promptly all certificates representing Voting Securities
now owned or hereafter acquired by members of the AJG Group, for the placement
thereon of the following legend, which will remain thereon as long as such
Voting Securities are subject to the restrictions contained in this Agreement:

         The securities represented by this certificate are subject to the
         provisions of a Standstill Agreement dated as of December 31, 2001,
         between AJG Financial Services, Inc. and Intrepid Capital Corporation,
         and may not be sold or transferred except in accordance therewith. A
         copy of said Agreement is on file at the office of the Corporate
         Secretary of Intrepid Capital Corporation.

         The Company may enter a stop transfer order with the transfer agent or
agents of Voting Securities against the transfer of Voting Securities except in
compliance with the requirements of this Agreement. The Company agrees to
remove promptly any stop transfer order with respect to, and issue promptly
unlegended certificates in substitution for, certificates for any Voting
Securities that are no longer subject to the restrictions contained in this
Agreement.

         (e)      As used herein, (i) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act, (ii) the term "person"
shall mean any individual, partnership, corporation, trust, limited liability
company or other entity, and (iii) the term "13D Group" shall mean any group of
persons formed for the purpose of acquiring, holding, voting or disposing of
Voting Securities which would be required under Section 13(d) of the Exchange
Act and the rules and regulations thereunder (as now in effect and based on
present legal interpretations thereof) to file a statement on Schedule 13D with
the SEC as a "person" within the meaning of Section 13(d)(3) of the Exchange
Act if such group beneficially owned Voting Securities representing more than
5% of the total combined voting power of all Voting Securities then
outstanding.

         (f)      This Agreement, together with the Option, the Convertible
Note Agreement, the Investment Agreement and the other agreements executed and
delivered pursuant hereto and thereto, contains the entire understanding of the
parties with respect to the subject matter hereof, and this Agreement may be
amended only by an agreement in writing executed by the parties hereto.

         (g)      Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.

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         (h)      For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.

         (i)      All notices, demands or requests provided for or permitted to
be given pursuant to this Agreement must be in writing. All notices, demands
and requests shall be deemed to have been properly served if given by personal
delivery, or if transmitted by telecopy, or if delivered to Federal Express or
other reputable overnight carrier for next Business Day delivery, charges
billed to or prepaid by shipper, or if deposited in the United States mail,
registered or certified with return receipt requested, proper postage prepaid,
addressed as follows:

         If to the Company:         Intrepid Capital Corporation
                                    3652 South Third Street
                                    Suite 200
                                    Jacksonville Beach, Florida 32250
                                    Attn:  Forrest Travis
                                    Fax No.:  904-246-3533

         With a copy to:            Steven E. Fox, Esq.
                                    Rogers & Hardin
                                    2700 International Tower
                                    Peachtree Center
                                    229 Peachtree Street, N.E.
                                    Atlanta, Georgia 30303
                                    Fax No.:  404-525-2224

         If to AJG:                 AJG Financial Services, Inc.
                                    Two Pierce Place
                                    Itasca, Illinois 60143-3141
                                    Attn:  Kerry S. Abbott, Esq.
                                    Assistant General Counsel
                                    Fax No.:  (630) 285-4272

         With a copy to:            Stephen A. Landsman, Esq.
                                    Piper Marbury Rudnick & Wolfe
                                    203 North LaSalle Street, Suite 1800
                                    Chicago, Illinois 60601
                                    Fax No.:  (312) 236-7516

         Each notice, demand or request shall be effective upon personal
delivery, or upon confirmation of receipt of the applicable telecopy, or one
(1) business day after delivery to a reputable overnight carrier in accordance
with the foregoing, or three (3) business days after the date on which the same
is deposited in the United States mail in accordance with the foregoing.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall not adversely impact the
effectiveness of any such notice, demand or request. Service by personal
delivery upon the Company or AJG shall be valid only

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if delivered personally to an officer of the Company or AJG, respectively. Any
addressee may change its address for notices hereunder by giving written notice
in accordance with this paragraph 6(i).

         (j)      From and after the Termination Date or earlier termination of
this Agreement, the covenants of the parties set forth herein shall be of no
further force or effect, and the parties shall be under no further obligation
with respect thereto.

         (k)      This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.

         (l)      This Agreement shall become effective on the date first
written above.

                             [Signatures Next Page]

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         IN WITNESS WHEREOF, AJG and the Company have caused this Agreement to
be duly executed by their respective officers, each of whom is duly authorized,
all as of the day and year first above written.

                                    INTREPID CAPITAL CORPORATION

                                    By:      /s/ Forrest Travis
                                       ----------------------------------------
                                       Name:  Forrest Travis
                                       Title: President

                                    AJG FINANCIAL SERVICES, INC.

                                    By:      /s/ Mark P. Strauch
                                       ----------------------------------------
                                       Name:    Mark P. Strauch
                                       Title: Executive Vice President<PAGE>

                                                                    EXHIBIT 10.9

              SEPARATION, SETTLEMENT AND NON-COMPETITION AGREEMENT

         This SEPARATION, SETTLEMENT AND NON-COMPETITION AGREEMENT ("Non-Compete
Agreement") is entered into between KENT W. SANFORD (hereinafter "Employee") and
APPALACHIAN COMMUNITY BANK and APPALACHIAN BANCSHARES, INC. (Appalachian
Community Bank and Appalachian Bancshares, Inc. are hereinafter collectively
referred to as the "Company"), as follows:

                                   WITNESSETH:

         WHEREAS, Employee has been employed by Appalachian Community Bank as
its Executive Vice President and is a member of the Board of Directors of
Appalachian Community Bank;

         WHEREAS, Employee has been employed by Appalachian Bancshares, Inc. as
its Executive Vice President and is a member of the Board of Directors of
Appalachian Bancshares, Inc.;

         WHEREAS, the parties hereto wish to enter into this Non-Compete
Agreement for the purposes of providing for certain limited restraints on
possible competition by the Employee with the Company, to provide for an orderly
termination of their employment relationship and of the Employee's positions on
the respective Boards of Directors of Appalachian Community Bank and Appalachian
Bancshares, Inc., and to provide for a full and final settlement of any and all
claims arising out of or pertaining to those relationships, including their
termination, whether past, present or future, including claims for attorney's
fees and expenses;

         NOW, THEREFORE, in consideration of the mutual promises and
undertakings contained herein, and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties do agree as follows:

         1.       Separation From Employment. The Employee's employment with the
Company terminated effective January 11, 2002 (hereinafter, the "Separation
Date"). On and after the Separation Date, the employment relationship that
existed between Employee and the Company terminated in all respects.

         2.       Resignation from Board of Directors. Employee hereby resigns
from the Boards of Directors of Appalachian Community Bank and Appalachian
Bancshares, Inc., and from all committees thereof, effective January 11, 2002.

         3.       Post-Separation Non-Compete Payments.

         (a)      Employee, upon his continuing compliance with the terms and
                  conditions of this Non-Compete Agreement, shall receive
                  payments from the Company in the

<PAGE>

                  amount of $165,000 payable as follows: (1) $23,000 payable
                  upon execution of this Non-Compete Agreement; (2) twenty-three
                  (23) payments of $4,000, payable on the 15th of each month,
                  beginning on February 15, 2002; and (3) a payment of $50,000,
                  payable on January 15, 2004. In addition, Company shall pay
                  Employee $21,363.52 upon execution of this Non-Compete
                  Agreement, which payment represents payment for all accrued
                  leave and vacation days owed by Company to Employee. The
                  Company will withhold all applicable taxes and statutory
                  deductions from said payments.

         (b)      Company will issue Employee a COBRA notice, and Company agrees
                  to reimburse Employee for the monthly COBRA payments in order
                  to continue Employee's present level of medical insurance
                  coverage until July 15, 2003 or until Employee becomes covered
                  under a different health insurance plan, whichever occurs
                  sooner. Employee agrees to immediately provide the Company
                  with notice should he become covered under a health insurance
                  plan on or before July 15, 2003.

         (c)      Appalachian Bancshares, Inc. agrees to fully vest all of
                  Employee's unexercised stock options in Appalachian
                  Bancshares, Inc. and Employee and Appalachian Bancshares, Inc.
                  hereby agree that stock options for 86,000 shares of
                  Appalachian Bancshares, Inc. common stock remain unexercised
                  as of the date Employee executes this Non-Compete Agreement.
                  Company further agrees that, in the event Employee chooses to
                  exercise his stock options and Employee requires a loan to
                  exercise such stock options, Company will lend sufficient
                  funds for Employee to exercise his stock options at its prime
                  lending rate (as determined and announced from time to time by
                  the Company), minus .25%, such loan rate to float, and be
                  determined, as of each anniversary date of the loan; provided,
                  however, that Employee shall execute all necessary loan
                  documentation and provide adequate security (all as determined
                  in the discretion of the Company) for such loan. Company and
                  Employee further agree that, if the loan is secured by
                  Appalachian Bancshares, Inc. stock, the applicable
                  loan-to-value ratio will be determined by the book value of
                  the stock, not the market value thereof, subject to compliance
                  with applicable regulatory guidelines, and, further, that the
                  terms and provisions of the loan will be subject to all
                  applicable laws and regulations.

         4.       Additional Consideration. The Company agrees to transfer all
title and interest to the 2000 Chrysler Town & Country van now being used by
Employee ("Van") to Employee, in an "as is" condition, by January 15, 2002 (the
"Transfer Date"). Employee will be solely responsible for all insurance
coverage, tag, taxes, maintenance and any other expenses related to the Van on
and after the Transfer Date.

         5.       Non-Competition. Employee expressly covenants and agrees that,
for a period of two (2) years following the execution of this Non-Compete
Agreement, he will not, directly or indirectly, seek, obtain or accept a
"Competitive Position" in the "Restricted Territory" with a

                                      -2-

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"Competitor" of the Company (as such terms are defined below), if the Company or
its successors or assigns are also then still engaged in the "Company's
Business." For purposes of this Non-Compete Agreement, a "Competitor" of the
Company means any business, individual, partnership, joint venture, association,
firm, corporation or other entity engaged, wholly or partly, in the Company's
Business; the "Company's Business" means the business of banking, as such
business is contemplated and permitted for "financial institutions" (as such
term is defined in Section 7-1-4(21) of the Official Code of Georgia Annotated)
under Title 7 (Banking and Finance) of the Official Code of Georgia Annotated
(the "Georgia Banking Code"), including (but not limited to) commercial lending
or residential lending activities, commercial or residential loan brokerage
activities, and the other financial activities and financial services permitted
to financial institutions and their subsidiaries and affiliates under applicable
provisions of the Georgia Banking Code; a "Competitive Position" means any
employment with any Competitor of the Company whereby Employee will use or is
likely to use any Trade Secrets or Confidential Information (as those terms are
defined in Sections 9 and 10 of this Non-Compete Agreement), or whereby Employee
has duties for such Competitor that are the same as, or substantially similar
to, those actually performed by him as an employee for the Company; the
"Restricted Territory" means and includes the geographic area comprising Gilmer,
Fannin, and Union counties in Georgia. Employee acknowledges and agrees that he
has been working within and throughout the Restricted Territory as defined above
and has had material contact with customers or actively sought prospective
customers of the Company located within such areas.

         6.       Non-Solicitation: Customers. For two years following the
execution of this Non-Compete Agreement, Employee shall not, directly or
indirectly, or in any manner, on Employee's own behalf or on behalf of any
person, firm, partnership, association, corporation or business organization,
entity or enterprise, solicit any customer of the Company, or any representative
of any customer, with a view to selling or providing any product or service
competitive or potentially competitive with any product or service sold or
provided by the Company during the two-year period immediately preceding
cessation of Employee's employment with the Company, provided that the
restrictions set forth in this section shall apply only to customers of the
Company, or representatives of customers of the Company with whom Employee had
material contact during such two-year period. "Material contact" exists between
Employee and each of the Company's existing customers: (i) with whom Employee
actually dealt; or (ii) whose dealings with the Company were handled,
coordinated or supervised by Employee.

         7.       Non-Solicitation: Employees. For two years following the
execution of this Non-Compete Agreement, Employee will not, directly or
indirectly, or in any manner, solicit or encourage employees of the Company to
leave the employ of the Company. The foregoing prohibition applies only to
employees with whom Employee had material contact pursuant to Employee's duties
during the period of two years immediately preceding cessation of Employee's
employment with the Company. "Material contact" means interaction between the
Employee and another employee of the Company: (i) with whom Employee actually
dealt; or (ii) whose employment or dealings with the Company or services for the
Company were handled, coordinated or supervised by the Employee.

                                      -3-

<PAGE>

         8.       Company Property. Employee shall immediately return to the
Company all property, equipment, records, correspondence, documents, files,
keys, computer disks, computer programs, data, and any other information,
including trade secrets (as defined herein) and confidential information (as
defined herein) whether originals, copies or extracts, belonging to the Company,
whether maintained by Employee at the Company, at Employee's home, or at any
other location, and Employee will not retain any copies or reproductions of any
property of the Company.

         9.       Trade Secrets. Employee agrees that he will not use, disclose
or exploit any Trade Secret of the Company at any time. "Trade secret(s)" means
information, without regard to form, including, but not limited to, technical or
non-technical data, a formula, a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial plans,
product plans, or a list of actual or potential customers or suppliers which is
not commonly known by or available to the public and which information: (a)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

         10.      Confidential Information. Employee agrees that for two years
following the execution of this Non-Compete Agreement, Employee will not,
directly or indirectly, use, disclose or exploit, for any reason, any
Confidential Information of the Company. "Confidential information" means data
and information relating to the business of the Company (which may not rise to
the level of a trade secret under applicable law) which is or has been disclosed
to Employee or of which Employee became aware as a consequence of or through his
relationship with the Company and which has value to the Company and is not
generally known to the public or to the Company's competitors. Confidential
information shall not include any data or information that has been voluntarily
disclosed to the public by the Company (except where public disclosure has been
made by Employee without authorization) or that has been independently developed
and disclosed by others, or that otherwise enters the public domain through
lawful means.

         11.      Non-Disparagement. Employee agrees that he will not at any
time, directly or indirectly, denigrate, degrade, ridicule, intentionally
criticize or make negative remarks about the Company or any of its respective
employees, officers, directors, agents, affiliates, parents or subsidiaries.

         12.      Future Employment. Employee agrees not to apply for any
position of employment with the Company and their affiliates, parents or
subsidiaries.

         13.      Continuing Cooperation. From the Separation Date through
January 11, 2003, Employee acknowledges and agrees that he shall provide certain
consulting, administrative and advisory services to the Company (the "Transition
Period"). During the Transition Period,

                                      -4-
<PAGE>

Employee agrees to provide reasonable cooperation and assistance to the Company
with respect to the transitioning of matters previously handled by him and to
make himself available on reasonable terms on a when-needed, as-needed basis
during the Transition Period. The parties acknowledge that such services may
require telephone consultations or Employee's physical presence at the Company's
facilities from time-to-time. Employee further agrees and warrants that during
this Transition Period, he shall provide such time and best efforts as are
reasonably needed to accomplish the transitioning of his duties and
responsibilities. Employee agrees that he will only be entitled to receive the
amounts set forth in this Non-Compete Agreement, and he shall not be entitled to
any further or additional compensation during the Transition Period.

         14.      General Release.

         (a)      Employee accepts the terms of this Separation and Settlement
                  Agreement in full, final and complete settlement and
                  satisfaction of any and all claims which in any way relate to,
                  pertain to or arise out of his employment with the Company,
                  the termination of that employment, or Employee's dealings or
                  affiliation with the Company. Accordingly, Employee does
                  hereby release the Company, and any and all parent, subsidiary
                  or affiliated corporations or business entities, and any and
                  all respective past or present employees, officers, agents,
                  directors, shareholders and representatives of the foregoing,
                  and others acting for or on behalf of the foregoing
                  (hereinafter "Releasees") from all past, present or future
                  claims, actions, rights or benefits of whatever nature or
                  description, including any claims for attorney's fees and
                  expenses, from the beginning of time, through and including
                  the date of execution of this Non-Compete Agreement, including
                  any and all claims arising out of or relating to Employee's
                  employment with the Company or the termination of that
                  employment, including claims for wages, salary, bonuses,
                  commissions, or other forms of compensation or benefits.

         (b)      It is further understood and agreed that this document is
                  intended to be a total accord, settlement and satisfaction of
                  any and all claims which Employee has or may have had against
                  Releasees, including but not limited to, any and all claims
                  arising under the Fair Labor Standards Act, Civil Rights Acts
                  of 1866, 1964 and 1991, Rehabilitation Act of 1973, Equal Pay
                  Act of 1963, State Fair Employment Practice Laws, Vietnam Era
                  Veteran's Readjustment Assistance Act of 1974, Occupational
                  Safety and Health Act, Immigration Reform and Control Act of
                  1986, Americans with Disabilities Act, Older Workers Benefit
                  Protection Act, Age Discrimination in Employment Act (which
                  Act and laws prohibits discrimination based upon race, sex,
                  color, national origin, religion, age, handicap, citizenship
                  status, veteran status, other) and any other federal, state or
                  local laws, regulations, ordinances or common law theories of
                  recovery.

         15.      Confidentiality. Employee agrees that he will keep the terms
of this Non-Compete Agreement and the amount of the payments specified in
Section 3 and Section 4 above confidential, and he will not disclose the terms
of this Non-Compete Agreement or the amount of

                                      -5-

<PAGE>

said payments to anyone unless required by law; provided however, that Employee
may disclose to his accountants, attorneys, tax advisors, business or financial
consultants or advisors such information as may be necessary and required for
legal advice, business, financial or tax advice, tax planning, business or
financial planning or the preparation of tax returns. This provision is subject
to and shall be construed in accordance with all applicable federal, state and
local laws, statutes and regulations.

         16.      Acknowledgement. Employee acknowledges and warrants that he is
less than forty years old. Employee further acknowledges that nothing contained
in this Non-Compete Agreement shall be construed as an admission of liability or
responsibility on the part of the Company and further acknowledges that all such
liability or responsibility is expressly denied.

         17.      Interpretations. The headings to the various paragraphs herein
are for convenience only and have no legal effect.

         18.      Whole Agreement. This Non-Compete Agreement constitutes the
entire agreement and understanding between the parties and all previous
discussions, undertakings, representations, promises, negotiations and
agreements with respect to the matters included in this Non-Compete Agreement
are merged into this Non-Compete Agreement. It is further agreed and understood
that this Non-Compete Agreement cannot be changed, altered or amended except in
a subsequent writing signed by each of the parties hereto.

         19.      Choice of Law. It is further understood and agreed that this
Non-Compete Agreement shall be subject to and construed in accordance with the
laws of the State of Georgia and not of any other state.

         20.      Severability. Should any provision of this Non-Compete
Agreement be declared or determined by any court of competent jurisdiction to be
unenforceable or invalid for any reason, the validity of the remaining parts,
terms or provisions of this Non-Compete Agreement shall not be affected thereby,
and that the Non-Compete Agreement will be amended to delete or modify, as
necessary, any invalid or unenforceable parts, terms or provisions to the extent
necessary to allow for enforcement.

         21.      Miscellaneous. Employee and the Company acknowledge and
represent that they each have read or caused to be read this Non-Compete
Agreement and that each understands it fully and signs it voluntarily.

                          [THE SIGNATURE PAGE FOLLOWS.]

                                      -6-
<PAGE>

         IN WITNESS WHEREOF, the undersigned hereunto set their hands and seals
on the date shown below.

                                    KENT W. SANFORD

                                    /s/ Kent W. Sanford
                                    ------------------------------

                                    Date: January 11, 2002
                                         -------------------------

                                    APPALACHIAN COMMUNITY BANK

                                    By: /s/ Tracy R. Newton
                                       ---------------------------
                                    Title: President and CEO
                                          ------------------------
                                    Date:  January 11, 2002
                                         -------------------------

                                    APPALACHIAN BANCSHARES, INC.

                                    By: /s/ Frank E. Jones
                                       ---------------------------
                                    Title: Chairman
                                          ------------------------
                                    Date:  January 11, 2002
                                         -------------------------

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