Exhibit 10.3


STATE OF SOUTH CAROLINA                     )
                                            ) IN THE COURT OF COMMON PLEAS
COUNTY OF HORRY                             )   FIFTEENTH JUDICIAL CIRCUIT


Willis J. Duncan,  Harriette B. Duncan, and W. Jennings    )  Civil Action No.
Duncan,                                                    )  2005-CP-26-4667
                                                           )
                                            Plaintiffs,    )
                                                           )
                  v.                                       )
                                                           )
H. Buck  Cutts;  Paul R.  Dusenbury;  Robert P.  Hucks;    )   MUTUAL RELEASE
Richard M. Lovelace, Jr.; and Howard B. Smith, III,        )
                                                           ) (Paul R. Dusenbury)
                                            Defendants,    )
                                                           )
CNB Corporation and The Conway                             )
National Bank,                                             )
                                                           )
                                 Nominal Defendants.       )
                                                           )
                                                           )
----------------------------------------------------------

         This  Mutual  Release  ("Agreement")  is entered  into by and among the
below referenced Parties on this 28th day of December, 2006.

                                    Recitals

         WHEREAS, on or about September 6, 2005, Willis J. Duncan,  Harriette B.
Duncan,  and W.  Jennings  Duncan  initiated  litigation  against  H. Buck Cutts
("Cutts"), Paul R. Dusenbury ("Dusenbury"),  Robert P. Hucks ("Hucks"),  Richard
M. Lovelace,  Jr.  ("Lovelace") and Howard B. Smith, III ("Smith"),  also naming
CNB  Corporation  ("CNB") and The Conway  National  Bank (the "Bank") as nominal
Defendants,  which case is  presently  pending in the Court of Common  Pleas for
Horry County, Case Number  2005-CP-26-4667  (the "Director's  Litigation" or the
"Action"); and

         WHEREAS,   Cutts,   Dusenbury,   Hucks,  Lovelace  and  Smith  filed  a
counterclaim in that case against Willis J.
Duncan and W. Jennings Duncan; and

         WHEREAS,  subsequent  to filing the  Director's  Litigation,  Willis J.
Duncan and  Harriette B. Duncan died and W.  Jennings  Duncan was  appointed the
Personal Representative of their estates; and

         WHEREAS,  the  Parties  to this  Agreement  have  reached a  compromise
resolution and settlement of all issues and disputes existing with and among all


<PAGE>

other  Parties  to this  Agreement  as  provided  in the  terms of a  Settlement
Agreement of even date (the "Settlement Agreement").

         NOW, THEREFORE, for and in consideration of the foregoing premises, and
in consideration of the mutual promises and undertakings  contained herein,  the
Parties hereto agree as follows:

                                 Specific Terms

I. Parties to Agreement.  The following  persons or entities are Parties to this
Agreement (the "Parties"):

         A. W. Jennings Duncan, his heirs, estate,  grantees,  transferees,  and
assigns;

         B. The Estate of  Harriette  B. Duncan,  her heirs,  estate,  grantees,
transferees, and assigns;

         C. The  Estate  of Willis  J.  Duncan,  his  heirs,  estate,  grantees,
transferees, and assigns;

         D. The CNB Corporation;

         E. The  Conway  National  Bank  Profit-Sharing  and  Savings  Plan (the
"401(k) Plan");

         F. The Conway National Bank;

         G. Paul R. Dusenbury,  his heirs, estate,  grantees,  transferees,  and
assigns;

         H. Any other  natural or  artificial  person on whose behalf any of the
persons identified above as Parties are legally entitled to grant a release.

II. Consideration.  The consideration exchanged pursuant to this Agreement shall
be as follows:

         A. Payment shall be made to Dusenbury in the amount of  $95,861.17,  in
consideration  of settlement and release of all claims described in this Release
including,  without limitation, any claims for the costs and expense incurred in
the Director's  Litigation,  but excluding any claims  relating to the Dusenbury
Employment  Agreement or other employment related claims.  This payment shall be
subject  to  reporting  on Form  1099-Misc  and shall not be  subject to any tax
withholding.  Further  payment  shall  be made to  Dusenbury  in the  amount  of
$71,187.37,  in  consideration  of  cancellation  of  the  Dusenbury  Employment
Agreement and release of any employment  related  claims.  This payment shall be
treated as wages  subject to  reporting  on Form W-2 and shall be subject to all
applicable withholdings.



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<PAGE>

         B.  The   dismissal,   with   prejudice,   of  the   claim(s)  and  the
counterclaim(s) asserted by the Parties in the above-referenced lawsuit.

         C. The mutual releases and other agreements,  promises,  and warranties
set forth in this Agreement.

         D. The  Parties  acknowledge  the  sufficiency  of the  above-described
consideration.

         E. The  Parties  acknowledge  and  agree  that this  Agreement  was not
intended or written by counsel to be used,  and cannot be used,  for the purpose
of avoiding  penalties under the Internal  Revenue Code that may be imposed upon
any  Party.  Each Party  shall  consult  with his or her own tax  adviser on the
proper  treatment of any payments  herein.

III. Resignation of Dusenbury from Employment.  As part of the settlement by and
among the Parties to this Agreement,  Paul R. Dusenbury  agrees that he resigned
his employment with CNB and/or the Bank effective  October 31, 2006, and that as
of the Effective Date, CNB and/or the Bank has paid him all amounts due pursuant
to his June 14, 2005 Employment Agreement, a copy of which is attached hereto as
Exhibit "A" (the "Dusenbury Employment Agreement"). Subject to the provisions of
Paragraph III of the Settlement  Agreement,  Dusenbury further agrees that as of
October 31,  2006,  neither CNB nor the Bank has any further  obligation  to him
under the Dusenbury Employment Agreement or any other agreement, written or oral
relating to his  employment by either CNB or the Bank and that  Dusenbury is not
entitled to any further salary, bonuses,  liquidated or other damages, attorneys
fees or any  other  compensation  or  benefits  under the  Dusenbury  Employment
Agreement or any other agreement,  written or oral relating to his employment by
either CNB or the Bank. CNB and/or the Bank agree to continue  health  insurance
coverage for  Dusenbury  through  December 31, 2006,  after which CNB and/or the
Bank will  provide  Dusenbury  with all COBRA and other  notices/paperwork  on a
timely basis just as with any other departing employee.

IV.      Matters Released.

         A. For purposes of this  Agreement,  the  following  definitions  shall
apply:

                  1. A  "claim"  shall  mean a claim,  demand,  right,  cause of
action, or other device through which compensation for loss may be sought.

                  2. An "existing claim" shall mean any claim,  damage, or right
to recovery  arising out of, related to or based on acts,  omissions,  or wrongs
which have taken place prior to the date of execution  of this  Agreement by the
Parties, whether discovered and known as of the date of this Agreement, or not.

                  3. A "future injury" shall mean




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<PAGE>

                           a.  any  injury,   loss,   or  damages  of  any  kind
whatsoever;

                           b.  that  is  discovered,   suffered,  sustained,  or
realized after the execution of this Agreement by any of the Parties; and

                           c. which  occurs as the direct or indirect  result of
acts, omissions, or wrongs which have taken place prior to the date of execution
of this Agreement by any of the Parties.

         B.       Release by Dusenbury

                  1.  General  Release.  Dusenbury  hereby  releases and forever
discharges the Estate of Willis J. Duncan, the Estate of Harriette B. Duncan, W.
Jennings  Duncan,  CNB  Corporation,  The Conway National Bank, the 401(k) Plan,
their present and former  officers,  directors,  agents,  employees,  affiliated
entities, insurers, trustees, and/or legal representatives, from and against any
and all existing claims and future injuries.

                  2. Specific Releases. Without in any way limiting the scope of
the foregoing  general  release,  it is agreed and understood that the following
matters are specifically released by Dusenbury:

                           a. Any and all  existing  claims and future  injuries
arising in tort or contract, or any other legal or equitable theory,  including.
but not limited to, any claims or future  injuries  arising out of, or resulting
from, any acts or omissions of any of the Parties being released;

                           b. Any and all claims,  demands,  actions,  causes of
action,  liabilities  of  any  kind,  suits  at  law  or in  equity,  actual  or
compensatory  damages,  exemplary or punitive damages,  statutory  damages,  any
rights or claims arising under federal, state or local statutory or common laws,
any rights or claims under The Civil  Rights Acts of 1866 and 1964,  as amended,
42 U.S.C.  ss.ss.  1981 and 2000(e) et seq.,  The Civil Rights Act of 1991,  the
Americans with Disabilities Act of 1990, as amended 42 U.S.C.  ss.ss.  12,101 et
seq., the National Labor Relations Act, as amended,  29 U.S.C. ss. 151, et seq.,
the South Carolina Human Affairs Law, S.C. Code  ss.1-13-10,  et seq., the South
Carolina Wage Payment Statute,  S.C. Code ss. 41-10-10,  et. seq., and any other
discrimination or employment related law, rule or regulation, any and all causes
of action  for  race,  sex,  age or other  discrimination,  breach of  contract,
retaliatory  discharge,  wrongful  termination,   retaliation,  lost  wages  and
benefits,  loss  of  earning  capacity,  emotional  distress,  personal  injury,
defamation,  all other  contract or tort  claims,  civil or criminal  penalties,
judgments,  executions,  costs and  expenses,  or any other expense or detriment
arising out of,  incident  to, or alleged to be caused by any act or omission of
CNB and/or the Bank, as a result of, or in any way connected  with,  Dusenbury's
employment with, and the ending of his employment with, CNB and/or the Bank; and


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<PAGE>

                           c. Each and every  claim  stated  or  alleged  in the
counterclaim,  including specifically all claims for defamation,  in the Action;
and

                           d. Any and all  claims,  including  claims for future
injuries,  that might have been  alleged in the Action,  or which arise from the
same transaction(s) or occurrence(s) as the Action; and

                           e. Any and all  existing  claim and future  injuries,
causes of action, liabilities of any kind, suits at law or equity, or damages of
any kind or  nature  that may  exist as of the date of this  Agreement,  whether
known or unknown,  against any person or entity  related in any way or connected
in any way,  directly or  indirectly,  to the actions taken by the Boards of CNB
and Bank on or prior to the date of this Agreement; and

                           f. Any and all existing  claims and future  injuries,
demands,  causes of action,  liabilities of any kind, suits at law or equity, or
damages  of any kind or nature  that may exist as of the date of this  Agreement
for  defamation of Dusenbury  against any person or entity  arising out of or in
any way related to  Dusenbury's  service or actions as an  employee,  officer or
director,  regardless  of when or where such  defamation  may be alleged to have
occurred.

         C. Release of Dusenbury.

                  1. General Release. The Estate of Willis J. Duncan, the Estate
of Harriette B. Duncan, W. Jennings Duncan, CNB Corporation, The Conway National
Bank, and the 401(k) Plan hereby release and forever discharge Paul R. Dusenbury
from and against any and all existing claims and future injuries.

                  2. Specific Releases. Without in any way limiting the scope of
the foregoing  general  release,  it is agreed and understood that the following
matters are specifically  released by the Estate of Willis J. Duncan, the Estate
of Harriette B. Duncan, W. Jennings Duncan, CNB Corporation, The Conway National
Bank, and the 401(k) Plan:

                           a. Any and all  existing  claims and future  injuries
arising in tort or contract, or any other legal or equitable theory,  including.
but not limited to, any claims or future  injuries  arising out of, or resulting
from, any acts or omissions of any of the Parties being released; and

                           b. Any and all existing  claims and further  injuries
arising out of,  incident  to, or alleged to be caused by any act or omission of
Dusenbury, as a result of, or in any way connected with his employment with, and
the  ending of his  employment  with,  CNB  and/or  the Bank and  service  as an
officer, director or trustee of the 401(k) Plan; and

                           c. Each and every  claim  stated  or  alleged  in the
complaint, including specifically all claims in the Action; and




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<PAGE>

                           d. Any and all  claims,  including  claims for future
injuries,  that might have been  alleged in the Action,  or which arise from the
same transaction or occurrence as the Action.

V. Phantom Stock Agreement and Executive  Supplemental Income ("ESI") Agreement.
Dusenbury,  CNB and Bank  acknowledge  and agree  that this  settlement  and the
releases herein do not alter or affect Dusenbury's rights under the terms of the
Dusenbury  Phantom Stock Agreement and any ESI Agreement  between  Dusenbury and
Bank. Dusenbury shall retain his rights in any vested benefits as of the date of
Dusenbury's  termination and cease further vesting of additional  benefits as of
the date of Dusenbury's termination according to the terms of that Phantom Stock
Plan and the  Dusenbury  Phantom Stock  Agreement.  Such vested  benefits  shall
accrue  interest and shall be paid in  accordance  with the terms of the Phantom
Stock Plan and the Dusenbury  Phantom Stock  Agreement.  Dusenbury,  CNB and the
Bank  acknowledge  that  Dusenbury is 80% vested in the Phantom Stock Plan as of
the date of this Agreement.  Dusenbury,  CNB and the Bank also  acknowledge that
Sun Trust  performed a valuation of the CNB stock for the purposes of the Conway
National Bank  Profit-Sharing and Savings Plan and that as of September 30, 2006
such  valuation was $162.00 per share and that such  valuation  shall be used to
value the CNB stock for the purposes of this  Agreement,  the Phantom Stock Plan
and the Dusenbury Phantom Stock Agreement.

VI. Dismissal with Prejudice.

         A. The Estate of Willis J.  Duncan,  the Estate of Harriette B. Duncan,
W. Jennings Duncan, CNB, and Bank hereby agree to dismiss,  with prejudice,  the
Action.

         B.  Dusenbury  agrees to  dismiss,  with  prejudice,  his  counterclaim
asserted in the Action.

VII.     Post Resignation Restrictions with Regard to Dusenbury

         A. Dusenbury  agrees to be bound by the Dusenbury  Confidentiality  and
Non-Solicitation Agreement as defined in the Settlement Agreement.

         B. CNB and/or the Bank agree that,  subsequent to the execution of this
Agreement,  the Confidential  Information provisions contained in Section 9.1 of
the Dusenbury Employment Agreement, and the Non-Competition provisions contained
in (i)  Paragraph  9.2 of the  Dusenbury  Employment  Agreement;  (ii)  any  ESI
Agreement (as defined in the Settlement  Agreement);  and (iii) Paragraph 7.2 of
the Dusenbury  Phantom Stock  Agreement will be considered null and void and CNB
and/or  the  Bank  agree  that  they  will  not  seek to  enforce  any of  these
provisions.

         C. CNB and/or the Bank agree that,  subsequent to the execution of this
Agreement,  the Solicitation After Termination of Employment  provision found in
Section 7.3 of Dusenbury's Phantom Stock Agreement,  will be considered null and



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<PAGE>

void and CNB  and/or  the Bank  agree  that they will not seek to  enforce  this
provision.   In  return,   Dusenbury   agrees  to  enter   into  the   Dusenbury
Confidentiality and Non-Solicitation Agreement.

VIII. Warranties. The Parties give the following warranties:

         A. The Parties  warrant that they have the necessary  legal capacity to
grant all of the releases contained in this Agreement.

         B. The  Parties  warrant  that they are the true  owners of all  claims
released in this Agreement, that no other person(s) is entitled to assert any of
the claims released by the Parties in this Agreement,  and that the Parties have
not assigned,  transferred,  pledged, or hypothecated any of those claims to any
person.

IX. Confidentiality Provision. (Intentionally omitted).

X. Advice of Counsel.  The Parties  acknowledge and agree that they have had the
advice of competent  counsel to advise and represent them in the prosecution and
compromise  settlement of their claims  against the other  Parties.  The Parties
specifically  acknowledge,  by initialing the following  spaces,  that they have
consulted counsel prior to signing this Agreement, and have no further questions
regarding the same (INITIAL HERE):

XI.  Interpretation  of this Agreement.  The Parties  acknowledge and agree that
their attorneys have been given full opportunity to review,  and where necessary
clarify, this Agreement, and that, should this Agreement require construction or
interpretation by a court, it shall not be construed or interpreted  against any
other Party as drafter.  Subject to this agreement,  the Parties agree that this
Agreement  shall be interpreted  in all other respects  according to the laws of
the State of South  Carolina.  All  terms  not  defined  herein  shall  have the
meanings ascribed to them in the Settlement Agreement.

XII. No Admissions.  The Parties  acknowledge and agree that none of the Parties
admit  liability  or  wrongdoing  of any kind,  and that they have  tendered the
consideration  recited  above solely for the purpose of avoiding the expense and
inconvenience of protracted litigation.

XIII. Use of this Agreement

         The Parties agree that this Agreement:

         A. may never be  admissible  as evidence  against  the  persons  herein
released  in any  present or future  suit,  claim or  proceeding  of any nature,
except a suit,  claim,  or  proceeding  to recover sums to be paid in accordance
with this Agreement;



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<PAGE>

         B. but may be asserted by and  introduced  as evidence  for the persons
hereby  released as an absolute and final defense and bar to any claim  released
herein in any present or future suit or proceeding of any nature.

XIV. Final and Binding  Settlement.  The Parties agree and acknowledge  that the
purpose of this  Agreement  is to bring about a complete,  final,  binding,  and
permanent  settlement  of the Parties'  claims  against each other,  and promise
never to make demand upon or sue the  Parties,  or to trouble  them in any other
manner,  for or on  account  of any  claim or  future  injury  released  in this
Agreement.

XV. Entire  Agreement.  This  Agreement  contains the entire  understanding  and
agreement between the parties relating to the subject matter hereof and replaces
and  supersedes  all prior  agreements  between the parties  related to the same
subject matter.  Further,  no agreement may be effective to change,  modify,  or
terminate  this  Agreement,  in whole or in part,  unless such  agreement  is in
writing and duly signed  after the date of  execution  of this  Agreement by the
person against whom enforcement of such change, modification,  or termination is
sought.

XVI.  Severability.  If any portion of this Agreement should be, for any reason,
not enforceable, the parties agree that the remaining portion or portions should
continue to be enforceable.

XVII.  Counterparts.  This Agreement may be executed in  counterparts  signed by
each  party,  each of which shall be valid and  enforceable  against the signing
party.


                    (Signatures continued on following pages)

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<PAGE>


         IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Settlement Agreement as of the 28th day of December 2006.

                              [SIGNATURES OMITTED]

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