Exhibit 10.5


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,     )
                                                        ) (Richard M. Lovelace,
                                            Defendants, )  Jr.)
                                                        )
CNB Corporation and The Conway                          )
National Bank,                                          )
                                                        )
                                 Nominal Defendants.    )
                                                        )
                                                        )
--------------------------------------------------------

         This Mutual Release (the  "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



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

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

         F. The Conway National Bank;

         G. Richard M. Lovelace, Jr., 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 Lovelace in the amount of  $95,861.17,  in
consideration  of settlement and release of all claims described in this Release
including,  including,  without limitation, any claims for the costs and expense
incurred  in the  Director's  Litigation.  This  payment  shall  be  subject  to
reporting on Form 1099-Misc and shall not be subject to any tax withholding.

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

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<PAGE>

         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. 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

                           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 Lovelace

                  1.  General  Release.  Lovelace  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.



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<PAGE>

                  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 Lovelace:

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

                           c. 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

                           d. Any and all  existing  claim 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,
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

                           e. 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 Lovelace against any person or entity arising out of or in any
way related to Lovelace's  service or actions as a director,  regardless of when
or where such defamation may be alleged to have occurred.

         C. Release of Lovelace.

                  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  Richard M.
Lovelace, Jr. 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



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<PAGE>

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

                           c. 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.

IV. 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
lawsuit filed against Lovelace in the Action.

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

         C. Lovelace  agrees to dismiss with prejudice the lawsuit filed against
James M. Vaught,  which case is  presently  pending in the Court of Common Pleas
for Horry County,  Case Number  2006-CP-26-2500,  which Lovelace warrants is the
only  lawsuit he has filed  against  any third  party for a claim  described  in
paragraph III.B.2.e. above.

V. 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.

VI. Confidentiality Provision. (Intentionally omitted).

VII. 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):

VIII.  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


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<PAGE>

the State of South  Carolina.  All  terms  not  defined  herein  shall  have the
meanings ascribed to them in the Settlement Agreement.

IX. 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.

X. 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;

         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.

XI. 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.

XII. 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. All terms not defined herein shall have the meanings ascribed to them in
the Settlement Agreement.

XIII. 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.

XIV. 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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