Document:

Exhibit 4.3

                                                                    EXHIBIT A TO
                                                  SECURITIES PURCHASE AGREEEMENT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

                                     WARRANT

                            TO PURCHASE COMMON STOCK

                                       OF

                            DEEP WELL OIL & GAS, INC.

Issue Date:  March 10, 2005                                    Warrant No.  __

      THIS CERTIFIES that _______________________ or any subsequent holder
hereof (the "Holder"), has the right to purchase from DEEP WELL OIL & GAS, INC.,
a Nevada corporation (the "Company"), up to [________] fully paid and
nonassessable shares of the Company's common stock, par value $0.001 per share
(the "Common Stock"), subject to adjustment as provided herein, at a price per
share equal to the Exercise Price (as defined below), at any time and from time
to time beginning on the date on which this Warrant is originally issued (the
"Issue Date") and ending at 6:00 p.m., eastern time, on the date that is the
fifth (5th) anniversary of the Issue Date (or, if such date is not a Business
Day, on the Business Day immediately following such date) (the "Expiration
Date"). This Warrant is issued pursuant to a Securities Purchase Agreement,
dated as of March 10, 2005 (the "Securities Purchase Agreement"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Securities Purchase Agreement.

      1. Exercise.

      (a) Right to Exercise; Exercise Price. The Holder shall have the right to
exercise this Warrant at any time and from time to time during the period
beginning on the Issue Date and ending on the Expiration Date as to all or any
part of the shares of Common Stock covered hereby (the "Warrant Shares"). The

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"Exercise Price" for each Warrant Share purchased by the Holder upon the
exercise of this Warrant shall be equal to fifty cent ($0.50), subject to
adjustment for the events specified in Section 6 below.

      (b) Exercise Notice. In order to exercise this Warrant, the Holder shall
send to the Company by facsimile transmission, at any time prior to 6:00 p.m.,
eastern time, on the Business Day on which the Holder wishes to effect such
exercise (the "Exercise Date"), (i) a notice of exercise in substantially the
form attached hereto as Exhibit A (the "Exercise Notice"), and (ii) a copy of
the original Warrant, and, in the case of a Cash Exercise (as defined below),
the Holder shall pay the Exercise Price to the Company by wire transfer of
immediately available funds. The Exercise Notice shall state the name or names
in which the shares of Common Stock that are issuable on such exercise shall be
issued. In the case of a dispute between the Company and the Holder as to the
calculation of the Exercise Price or the number of Warrant Shares issuable
hereunder (including, without limitation, the calculation of any adjustment
pursuant to Section 6 below), the Company shall issue to the Holder the number
of Warrant Shares that are not disputed within the time periods specified in
Section 2 below and shall submit the disputed calculations to a certified public
accounting firm of national reputation (other than the Company's regularly
retained accountants) within two (2) Business Days following the date on which
the Holder's Exercise Notice is delivered to the Company. The Company shall
cause such accountant to calculate the Exercise Price and/or the number of
Warrant Shares issuable hereunder and to notify the Company and the Holder of
the results in writing no later than three (3) Business Days following the day
on which such accountant received the disputed calculations (the "Dispute
Procedure"). Such accountant's calculation shall be deemed conclusive absent
manifest error. The fees of any such accountant shall be borne by the party
whose calculations were most at variance with those of such accountant.

      (c) Holder of Record. The Holder shall, for all purposes, be deemed to
have become the holder of record of the Warrant Shares specified in an Exercise
Notice on the Exercise Date specified therein, irrespective of the date of
delivery of such Warrant Shares. Except as specifically provided herein, nothing
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company prior to the Exercise Date.

      (d) Cancellation of Warrant. This Warrant shall be canceled upon its
exercise in full and, if this Warrant is exercised in part, the Company shall,
at the time that it delivers Warrant Shares to the Holder pursuant to such
exercise as provided herein, issue a new warrant, and deliver to the Holder a
certificate representing such new warrant, with terms identical in all respects
to this Warrant (except that such new warrant shall be exercisable into the
number of shares of Common Stock with respect to which this Warrant shall remain
unexercised); provided, however, that the Holder shall be entitled to exercise
all or any portion of such new warrant at any time following the time at which
this Warrant is exercised, regardless of whether the Company has actually issued
such new warrant or delivered to the Holder a certificate therefor.

      2. Delivery of Warrant Shares Upon Exercise. Upon receipt of a fax copy of
an Exercise Notice pursuant to Section 1 above, the Company shall, (A) in the
case of a Cash Exercise, no later than the close of business on the later to
occur of (i) the third (3rd) Business Day following the Exercise Date specified
in such Exercise Notice and (ii) such later date on which the Company shall have
received payment of the Exercise Price, (B) in the case of a Cashless Exercise
(as defined below), no later than the close of business on the third (3rd)

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Business Day following the Exercise Date specified in such Exercise Notice, and
(C) with respect to Warrant Shares that are the subject of a Dispute Procedure,
the close of business on the third (3rd) Business Day following the
determination made pursuant to Section 1(b) (each of the dates specified in (A),
(B) or (C) being referred to as a "Delivery Date"), issue and deliver or caused
to be delivered to the Holder the number of Warrant Shares as shall be
determined as provided herein. The Company shall effect delivery of Warrant
Shares to the Holder, as long as the Company's designated transfer agent (the
"Transfer Agent") participates in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program ("FAST") and no restrictive legend is
required pursuant to the terms of this Warrant or the Securities Purchase
Agreement, by crediting the account of the Holder or its nominee at DTC (as
specified in the applicable Exercise Notice) with the number of Warrant Shares
required to be delivered, no later than the close of business on such Delivery
Date. In the event that the Transfer Agent is not a participant in FAST or if
the Holder so specifies in a Exercise Notice or otherwise in writing on or
before the Exercise Date, the Company shall effect delivery of Warrant Shares by
delivering to the Holder or its nominee physical certificates representing such
Warrant Shares, no later than the close of business on such Delivery Date.
Warrant Shares delivered to the Holder shall not contain any restrictive legend
unless such legend is required pursuant to the terms of the Securities Purchase
Agreement.

      3. Failure to Deliver Warrant Shares.

      (a) In the event that the Company fails for any reason to deliver to the
Holder the number of Warrant Shares specified in the applicable Exercise Notice
on or before the Delivery Date therefor (an "Exercise Default"), the Company
shall pay to the Holder payments ("Exercise Default Payments") in the amount of
(i) (N/365) multiplied by (ii) the aggregate Exercise Price of the Warrant
Shares which are the subject of such Exercise Default multiplied by (iii) the
lower of twelve percent (12%) per annum and the maximum rate permitted by
applicable law (the "Default Interest Rate"), where "N" equals the number of
days elapsed between the original Delivery Date of such Warrant Shares and the
date on which all of such Warrant Shares are issued and delivered to the Holder.
Cash amounts payable hereunder shall be paid on or before the fifth (5th)
Business Day of each calendar month following the calendar month in which such
amount has accrued.

      (b) In the event of an Exercise Default, the Holder may, upon written
notice to the Company (an "Exercise Default Notice"), regain on the date of such
notice the rights of the Holder under the exercised portion of this Warrant that
is the subject of such Exercise Default. In the event of such Exercise Default
and delivery of an Exercise Default Notice, the Holder shall retain all of the
Holder's rights and remedies with respect to the Company's failure to deliver
such Warrant Shares (including without limitation the right to receive the cash
payments specified in Section 3(a) above).

      (c) The Holder's rights and remedies hereunder are cumulative, and no
right or remedy is exclusive of any other. In addition to the amounts specified
herein, the Holder shall have the right to pursue all other remedies available
to it at law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Nothing herein shall limit the Holder's
right to pursue actual damages for the Company's failure to issue and deliver
Warrant Shares on the applicable Delivery Date (including, without limitation,

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damages relating to any purchase of Common Stock by the Holder to make delivery
on a sale effected in anticipation of receiving Warrant Shares upon exercise,
such damages to be in an amount equal to (A) the aggregate amount paid by the
Holder for the Common Stock so purchased minus (B) the aggregate amount of net
proceeds, if any, received by the Holder from the sale of the Warrant Shares
issued by the Company pursuant to such exercise).

      4. Exercise Limitations. In no event shall a Holder be permitted to
exercise this Warrant, or part hereof, if, upon such exercise, the number of
shares of Common Stock beneficially owned by the Holder (other than shares which
would otherwise be deemed beneficially owned except for being subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Section 4), would exceed 4.99% of the number of shares of Common Stock then
issued and outstanding. As used herein, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder. To the extent that the limitation contained
in this Section 4 applies, the submission of an Exercise Notice by the Holder
shall be deemed to be the Holder's representation that this Warrant is
exercisable pursuant to the terms hereof and the Company shall be entitled to
rely on such representation without making any further inquiry as to whether
this Section 4 applies. Nothing contained herein shall be deemed to restrict the
right of a Holder to exercise this Warrant, or part thereof, at such time as
such exercise will not violate the provisions of this Section 4. This Section 4
may not be amended unless such amendment is approved by the holders of a
majority of the Common Stock then outstanding; provided, however, that the
limitations contained in this Section 4 shall cease to apply (x) upon sixty (60)
days' prior written notice from the Holder to the Company, or (y) immediately
upon written notice from the Holder to the Company at any time after the public
announcement or other disclosure of a Major Transaction (as defined below) or a
Change of Control. For purposes hereof, "Change of Control" means the existence
or occurrence of any of the following: (a) the sale, conveyance or disposition
of all or substantially all of the assets of the Company; (b) the effectuation
of a transaction or series of transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of; (c) the consolidation,
merger or other business combination of the Company with or into any other
entity, immediately following which the prior stockholders of the Company fail
to own, directly or indirectly, at least fifty percent (50%) of the surviving
entity; (d) a transaction or series of transactions in which any Person or group
acquires more than fifty percent (50%) of the voting equity of the Company; and
(e) the individuals serving on the Board of Directors as of the Closing Date do
not at any time constitute at least a majority of the Board of Directors of the
Company.

      5. Payment of the Exercise Price; Cashless Exercise. The Holder may pay
the Exercise Price in either of the following forms or, at the election of
Holder, a combination thereof:

      (a) through a cash exercise (a "Cash Exercise") by delivering immediately
available funds, or

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      (b) if, for any reason, an effective Registration Statement is not
available for the resale of all of the Warrant Shares issuable hereunder at the
time an Exercise Notice is delivered to the Company, through a cashless exercise
(a "Cashless Exercise"), as hereinafter provided. The Holder may effect a
Cashless Exercise by surrendering this Warrant to the Company and noting on the
Exercise Notice that the Holder wishes to effect a Cashless Exercise, upon which
the Company shall issue to the Holder the number of Warrant Shares determined as
follows:

            X = Y x (A-B)/A

where:      X = the  number  of  Warrant  Shares  to be issued to the Holder;

            Y = the number of Warrant Shares with respect to which this
            Warrant is being exercised;

            A = the Market Price as of the Exercise Date; and

            B = the Exercise Price.

For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a Cashless Exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares required
by Rule 144 shall be deemed to have been commenced, on the Issue Date.

      6. Anti-Dilution Adjustments; Distributions; Other Events. The Exercise
Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 6. In the event that
any adjustment of the Exercise Price required herein results in a fraction of a
cent, the Exercise Price shall be rounded up or down to the nearest one
hundredth of a cent.

      (a) Subdivision or Combination of Common Stock. If the Company, at any
time after the Issue Date, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the outstanding
shares of Common Stock into a greater number of shares, then effective upon the
close of business on the record date for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the Issue Date,
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the outstanding shares of Common Stock into a
smaller number of shares, then, effective upon the close of business on the
record date for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionally increased.

      (b) Distributions. If, at any time after the Issue Date, the Company
declares or makes any distribution of cash or any other assets (or rights to
acquire such assets) to holders of Common Stock, as a partial liquidating
dividend or otherwise, including without limitation any dividend or distribution
to the Company's stockholders in shares (or rights to acquire shares) of capital
stock of a subsidiary) (a "Distribution"), the Company shall deliver written
notice of such Distribution (a "Distribution Notice") to the Holder at least
thirty (30) days prior to the earlier to occur of (i) the record date for
determining stockholders entitled to such Distribution (the "Record Date") and
(ii) the date on which such Distribution is made (the "Distribution Date") (the
earlier of such dates being referred to as the "Determination Date"). Within ten
(10) days following receipt of a Distribution Notice, the Holder shall notify
the Company whether the Holder has elected (A) to receive, upon any exercise of

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this Warrant after the Determination Date, the same amount and type of assets
being distributed in such Distribution as though the Holder were, on the
Determination Date, a holder of a number of shares of Common Stock into which
this Warrant is exercisable as of such Determination Date (such number of shares
to be determined at the Exercise Price then in effect and without giving effect
to any limitations on such exercise) or (B) upon any exercise of this Warrant on
or after the Determination Date, to reduce the Exercise Price applicable to such
exercise by reducing the Exercise Price in effect on the Business Day
immediately preceding the Determination Date by an amount equal to the fair
market value of the assets to be distributed divided by the number of shares of
Common Stock as to which such Distribution is to be made, such fair market value
to be reasonably determined in good faith by the Company's Board of Directors.
If the Holder does not notify the Company of its election pursuant to the
preceding sentence on or before the tenth (10th) day following receipt of a
Distribution Notice delivered in accordance with this paragraph (b), the Holder
shall be deemed to have elected clause (A) of the preceding sentence; and if the
Company does not deliver a Distribution Notice within the time frames specified
above, the Holder shall have the right to choose either clause (A) or clause (B)
of the preceding sentence at any time following the date on which Holder's
receives notice or otherwise becomes aware of the Distribution.

      (c) Dilutive Issuances. If, at any time after the Issue Date, the Company
issues or sells, or in accordance with paragraph (d) below, is deemed to have
issued or sold, any shares of Common Stock for a price per share less than the
Exercise Price on the date of such issuance or sale (a "Dilutive Issuance"),
then the Exercise Price shall be adjusted to equal such lower price. No
adjustment shall be made pursuant hereto if such adjustment would result in an
increase in the Exercise Price.

      (d) Effect On Exercise Price Of Certain Events. For purposes of
determining the adjusted Exercise Price under paragraph (c) above, the following
will be applicable:

                  (A) Issuance Of Purchase Rights. If the Company issues or
      sells any Purchase Rights, whether or not immediately exercisable, and the
      price per share for which Common Stock is issuable upon the exercise of
      such Purchase Rights (and the price of any conversion of Convertible
      Securities, if applicable) is less than the Exercise Price in effect on
      the date of issuance or sale of such Purchase Rights, then the maximum
      total number of shares of Common Stock issuable upon the exercise of all
      such Purchase Rights (assuming full conversion, exercise or exchange of
      Convertible Securities, if applicable) shall, as of the date of the
      issuance or sale of such Purchase Rights, be deemed to be outstanding and
      to have been issued and sold by the Company for such price per share. For
      purposes of the preceding sentence, the "price per share for which Common
      Stock is issuable upon the exercise of such Purchase Rights" shall be
      determined by dividing (x) the total amount, if any, received or
      receivable by the Company as consideration for the issuance or sale of all
      such Purchase Rights, plus the minimum aggregate amount of additional
      consideration, if any, payable to the Company upon the exercise of all
      such Purchase Rights, plus, in the case of Convertible Securities issuable
      upon the exercise of such Purchase Rights, the minimum aggregate amount of
      additional consideration payable upon the conversion, exercise or exchange
      thereof (determined in accordance with the calculation method set forth in
      subparagraph (B) below) at the time such Convertible Securities first
      become convertible, exercisable or exchangeable, by (y) the maximum total

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      number of shares of Common Stock issuable upon the exercise of all such
      Purchase Rights (assuming full conversion, exercise or exchange of
      Convertible Securities, if applicable). No further adjustment to the
      Exercise Price shall be made upon the actual issuance of such Common Stock
      upon the exercise of such Purchase Rights or upon the conversion, exercise
      or exchange of Convertible Securities issuable upon exercise of such
      Purchase Rights.

                  (B) Issuance Of Convertible Securities. If the Company issues
      or sells any Convertible Securities, whether or not immediately
      convertible, exercisable or exchangeable, and the price per share for
      which Common Stock is issuable upon such conversion, exercise or exchange
      is less than the Exercise Price in effect on the date of issuance or sale
      of such Convertible Securities, then the maximum total number of shares of
      Common Stock issuable upon the conversion, exercise or exchange of all
      such Convertible Securities shall, as of the date of the issuance or sale
      of such Convertible Securities, be deemed to be outstanding and to have
      been issued and sold by the Company for such price per share. If the
      Convertible Securities so issued or sold do not have a fluctuating
      conversion or exercise price or exchange ratio, then for the purposes of
      the immediately preceding sentence, the "price per share for which Common
      Stock is issuable upon such conversion, exercise or exchange" shall be
      determined by dividing (x) the total amount, if any, received or
      receivable by the Company as consideration for the issuance or sale of all
      such Convertible Securities, plus the minimum aggregate amount of
      additional consideration, if any, payable to the Company upon the
      conversion, exercise or exchange thereof (determined in accordance with
      the calculation method set forth in this subparagraph (B)), by (y) the
      maximum total number of shares of Common Stock issuable upon the exercise,
      conversion or exchange of all such Convertible Securities. If the
      Convertible Securities so issued or sold have a fluctuating conversion or
      exercise price or exchange ratio (a "Variable Rate Convertible Security"),
      then for purposes of the first sentence of this subparagraph (B), the
      "price per share for which Common Stock is issuable upon such conversion,
      exercise or exchange" shall be deemed to be the lowest price per share
      which would be applicable (assuming all holding period and other
      conditions to any discounts contained in such Variable Rate Convertible
      Security have been satisfied) if the conversion price of such Variable
      Rate Convertible Security on the date of issuance or sale thereof were
      seventy-five percent (75%) of the actual conversion price on such date
      (the "Assumed Variable Market Price"), and, further, if the conversion
      price of such Variable Rate Convertible Security at any time or times
      thereafter is less than or equal to the Assumed Variable Market Price last
      used for making any adjustment under this paragraph (c) with respect to
      any Variable Rate Convertible Security, the Exercise Price in effect at
      such time shall be readjusted to equal the Exercise Price which would have
      resulted if the Assumed Variable Market Price at the time of issuance of
      the Variable Rate Convertible Security had been seventy-five percent (75%)
      of the actual conversion price of such Variable Rate Convertible Security
      existing at the time of the adjustment required by this sentence;
      provided, however, that if the conversion or exercise price or exchange
      ratio of a Convertible Security may fluctuate solely as a result of
      provisions designed to protect against dilution, such Convertible Security
      shall not be deemed to be a Variable Rate Convertible Security. No further
      adjustment to the Exercise Price shall be made upon the actual issuance of
      such Common Stock upon conversion, exercise or exchange of such
      Convertible Securities.

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                  (C) Change In Option Price Or Conversion Rate. If, following
      an adjustment to the Exercise Price upon the issuance of Purchase Rights
      or Convertible Securities pursuant to a Dilutive Issuance, there is a
      change at any time in (x) the amount of additional consideration payable
      to the Company upon the exercise of any Purchase Rights; (y) the amount of
      additional consideration, if any, payable to the Company upon the
      conversion, exercise or exchange of any Convertible Securities; or (z) the
      rate at which any Convertible Securities are convertible into or
      exercisable or exchangeable for Common Stock (in each such case, other
      than under or by reason of provisions designed to protect against
      dilution), then in any such case, the Exercise Price in effect at the time
      of such change shall be readjusted to the Exercise Price which would have
      been in effect at such time had such Purchase Rights or Convertible
      Securities still outstanding provided for such changed additional
      consideration or changed conversion, exercise or exchange rate, as the
      case may be, at the time initially issued or sold.

                  (D) Calculation Of Consideration Received. If any Common
      Stock, Purchase Rights or Convertible Securities are issued or sold for
      cash, the consideration received therefor will be the amount received by
      the Company therefore. In case any Common Stock, Purchase Rights or
      Convertible Securities are issued or sold for a consideration part or all
      of which shall be other than cash, including in the case of a strategic or
      similar arrangement in which the other entity will provide services to the
      Company, purchase services from the Company or otherwise provide
      intangible consideration to the Company, the amount of the consideration
      other than cash received by the Company (including the net present value
      of the consideration expected by the Company for the provided or purchased
      services) shall be the fair market value of such consideration, except
      where such consideration consists of publicly traded securities, in which
      case the amount of consideration received by the Company will be the
      Market Price thereof on the date of receipt. In case any Common Stock,
      Purchase Rights or Convertible Securities are issued in connection with
      any merger or consolidation in which the Company is the surviving
      corporation, the amount of consideration therefor will be deemed to be the
      fair market value of such portion of the net assets and business of the
      non-surviving corporation as is attributable to such Common Stock,
      Purchase Rights or Convertible Securities, as the case may be. The
      independent members of the Company's Board of Directors shall calculate
      reasonably and in good faith, using standard commercial valuation methods
      appropriate for valuing such assets, the fair market value of any
      consideration other than cash or securities.

                  (E) Issuances Without Consideration Pursuant to Existing
      Securities. If the Company issues (or becomes obligated to issue) shares
      of Common Stock pursuant to any anti-dilution or similar adjustments
      (other than as a result of stock splits, stock dividends and the like)
      contained in any Convertible Securities or Purchase Rights outstanding as
      of the date hereof, then all shares of Common Stock so issued shall be
      deemed to have been issued for no consideration.

      (e) Exceptions To Adjustment Of Exercise Price. Notwithstanding the
foregoing, no adjustment to the Exercise Price shall be made pursuant to
paragraph (c) above upon the issuance of any Excluded Securities. For purposes
hereof, "Excluded Securities" means (I) securities purchased under the
Securities Purchase Agreement; (II) securities issued upon exercise of the

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Warrants; (III) shares of Common Stock issuable or issued to (x) employees,
consultants or directors from time to time upon the exercise of options, in such
case granted or to be granted in the discretion of the Board of Directors
pursuant to one or more stock option plans or restricted stock plans in effect
as of the Issue Date or adopted after the Issue Date by the independent members
of the Board of Directors with substantially the same terms as such plans in
effect as of the Issue Date, or (y) vendors pursuant to warrants to purchase
Common Stock that are outstanding on the date hereof or issued hereafter,
provided such issuances are approved by the Board of Directors; (IV) shares of
Common Stock issued in connection with a commercial lending transaction with a
federally-insured financial institution that is approved by the independent
members of the Board of Directors, provided that the fair market value of such
shares does not exceed ten percent (10%) of the amount borrowed; (V) shares of
Common Stock issued in connection with any stock split, stock dividend or
recapitalization of the Company; (VI) shares of Common Stock issued in
connection with the acquisition by the Company of any corporation or other
entity occurring after the Effective Date, provided that a fairness opinion with
respect to such acquisition is rendered by an investment bank of national
recognition; (VII) shares of Common Stock issued in connection with any
Convertible Securities or Purchase Rights outstanding on the date hereof and
disclosed in a schedule to the Securities Purchase Agreement; and (VIII) shares
issued to Persons with whom the Company is entering into a joint venture,
strategic alliance or other commercial relationship in connection with the
operation of the Company's business and not in connection with a transaction the
purpose of which is to raise equity capital.

      (f) Notice Of Adjustments. Upon the occurrence of one or more adjustments
or readjustments of the Exercise Price pursuant to paragraph (c) above or any
change in the number or type of stock, securities and/or other property issuable
upon exercise of this Warrant, the Company, at its expense, shall promptly
compute such adjustment or readjustment or change and prepare and furnish to the
Holder a notice (an "Adjustment Notice") setting forth such adjustment or
readjustment or change and showing in detail the facts upon which such
adjustment or readjustment or change is based, and, on or before the time that
it delivers an Adjustment Notice, publicly disclose the contents thereof. The
failure of the Company to deliver an Adjustment Notice shall not affect the
validity of any such adjustment.

      (g) Major Transactions. In the event of a merger, consolidation, business
combination, tender offer, exchange of shares, recapitalization, reorganization,
redemption or other similar event, as a result of which shares of Common Stock
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities or other assets of the Company
or another entity or the Company shall sell all or substantially all of its
assets (each of the foregoing being a "Major Transaction"), the Company will
give the Holder at least twenty (20) Trading Days written notice prior to the
earlier of (x) the closing or effectiveness of such Major Transaction and (y)
the record date for the receipt of such shares of stock or securities or other
assets. In the event of a Major Transaction, the Holder shall be permitted to
either (i) require the Company to repurchase this Warrant for an amount to the
value of this Warrant calculated pursuant to the Black-Scholes pricing model or
(ii) exercise this Warrant in whole or in part at any time prior to the record
date for the receipt of such consideration and shall be entitled to receive, for
each share of Common Stock issuable to Holder upon such exercise, the same per
share consideration payable to the other holders of Common Stock in connection
with such Major Transaction. If and to the extent that the Holder retains any

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portion of this Warrant following such record date, the Company will cause the
surviving or, in the event of a sale of assets, purchasing entity, as a
condition precedent to such Major Transaction, to assume the obligations of the
Company under this Warrant, with such adjustments to the Exercise Price and the
securities covered hereby as may be necessary in order to preserve the economic
benefits of this Warrant to the Holder.

      (h) Adjustments; Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 6,
the Holder of this Warrant shall, upon exercise of this Warrant, become entitled
to receive securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 6. Any adjustment
made herein that results in a decrease in the Exercise Price shall also effect a
proportional increase in the number of shares of Common Stock into which this
Warrant is exercisable.

      7. Fractional Interests.

            No fractional shares or scrip representing fractional shares shall
be issuable upon the exercise of this Warrant, but on exercise of this Warrant,
the Holder hereof may purchase only a whole number of shares of Common Stock.
If, on exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, the Company shall, in lieu of issuing any such fractional share,
pay to the Holder an amount in cash equal to the product resulting from
multiplying such fraction by the Market Price as of the Exercise Date.

      8. Transfer of this Warrant.

            The Holder may sell, transfer, assign, pledge or otherwise dispose
of this Warrant, in whole or in part, as long as such sale or other disposition
is made pursuant to an effective registration statement or an exemption from the
registration requirements of the Securities Act. Upon such transfer or other
disposition (other than a pledge), the Holder shall deliver this Warrant to the
Company together with a written notice to the Company, substantially in the form
of the Transfer Notice attached hereto as Exhibit B (the "Transfer Notice"),
indicating the person or persons to whom this Warrant shall be transferred and,
if less than all of this Warrant is transferred, the number of Warrant Shares to
be covered by the part of this Warrant to be transferred to each such person.
Within three (3) Business Days of receiving a Transfer Notice and the original
of this Warrant, the Company shall deliver to the each transferee designated by
the Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of Warrant Shares and, if less than all this Warrant is transferred,
shall deliver to the Holder a Warrant for the remaining number of Warrant
Shares.

                                      -10-
<PAGE>

      9. Benefits of this Warrant.

            This Warrant shall be for the sole and exclusive benefit of the
Holder of this Warrant and nothing in this Warrant shall be construed to confer
upon any person other than the Holder of this Warrant any legal or equitable
right, remedy or claim hereunder.

      10. Loss, theft, destruction or mutilation of Warrant.

            Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity reasonably satisfactory to the Company, and upon
surrender of this Warrant, if mutilated, the Company shall execute and deliver a
new Warrant of like tenor and date.

      11. Notice or Demands.

            Any notice, demand or request required or permitted to be given by
the Company or the Holder pursuant to the terms of this Warrant shall be in
writing and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile transmission, unless such delivery is made on a day that is
not a Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:

            If to the Company:

            Deep Well Oil & Gas, Inc.
            Suite 2600 Sun Life Plaza
            144 Fourth Avenue SW
            Calgary, AB, T2P 3N4
            Attn:       Chief Financial Officer
            Tel:  (403) 303-4793
            Fax:  (403) 232-1464

            with a copy (which shall not constitute notice) to:

            Sichenzia Ross Friedman Ference LLP.
            1065 Avenue of the Americas
            New York, NY 10018
            Attn: Darrin M. Ocasio, Esq.
            Tel:  (212) 930-9700
            Fax:  (212) 930-9725

and if to the Holder, to such address as the Holder shall have furnished to the
Company in writing.

                                      -11-
<PAGE>

      12. Applicable Law.

            This Warrant is issued under and shall for all purposes be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely within the State of New York.

      13. Amendments.

            No amendment, modification or other change to, or waiver of any
provision of, this Warrant may be made unless such amendment, modification or
change is (A) set forth in writing and is signed by the Company and the Holder
and (B) agreed to in writing by the holders of at least two-thirds (2/3) of the
number of shares into which the Warrants are exercisable (without regard to any
limitation contained herein on such exercise), it being understood that upon the
satisfaction of the conditions described in (A) and (B) above, each Warrant
(including any Warrant held by the Holder who did not execute the agreement
specified in (B) above) shall be deemed to incorporate any amendment,
modification, change or waiver effected thereby as of the effective date
thereof.

      14. Entire Agreement.

      This Warrant and the other Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Warrant and the
other Transaction Documents supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

      15.   Headings.

      The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

                           [Signature Page to Follow]

                                      -12-
<PAGE>

      IN WITNESS WHEREOF, the Company has duly executed and delivered this
Warrant as of the Issue Date.

                                DEEP WELL OIL & GAS, INC.

                                By: /s/ Steven Gawne
                                    ----------------------------------------
                                    Name: Steven Gawne
                                    Title: President and Chief Executive Officer

                                      -13-
<PAGE>

                                                            EXHIBIT A to WARRANT

                                 EXERCISE NOTICE

      The undersigned Holder hereby irrevocably exercises the right to purchase
of the shares of Common Stock ("Warrant Shares") of DEEP WELL OIL & GAS, INC.
evidenced by the attached Warrant (the "Warrant"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.

      1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:

            ______ a Cash Exercise with respect to _________________ Warrant
Shares; and/or

            ______ a Cashless Exercise with respect to _________________ Warrant
Shares, as permitted by Section 5(b) of the attached Warrant.

      2. Payment of Exercise Price. In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the sum of $________________ to the
Company in accordance with the terms of the Warrant.

Date:
      ------------------

------------------------------------
      Name of Registered Holder

By:
     -------------------------------
       Name:
       Title:

                                      -14-
<PAGE>

                                                            EXHIBIT B to WARRANT

                                 TRANSFER NOTICE

FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons named below the right to
purchase shares of the Common Stock of DEEP WELL OIL & GAS, INC. evidenced by
the attached Warrant.

Date:
      ------------------

------------------------------------
      Name of Registered Holder

By:
     -------------------------------
       Name:
       Title:

Transferee Name and Address:

------------------------------------------

------------------------------------------

------------------------------------------

                                      -15-SUPPLEMENTAL INCOME PLAN AGREEMENT

      THIS AGREEMENT made and entered into as of the 21st day of September, 2004
(the "Effective Date") by and between First South Bank, a commercial bank
organized and existing under the laws of the State of North Carolina (the
"Bank"), and Robert E. Branch (the "Employee").

                                   WITNESSETH:

      WHEREAS, the Employee is employed by the Bank;

      WHEREAS, the Bank recognizes the valuable services heretofore performed
for it by the Employee and wishes to encourage his continued employment;

      WHEREAS, the Employee wishes to be assured that he will be entitled to a
certain amount of additional compensation for some definite period of time from
and after the termination of his employment with the Bank and that his
beneficiary will be entitled to a death benefit from and after the Employee's
death;

      WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall pay such additional compensation to the Employee after the
termination of his employment with the Bank or such death benefit to his
beneficiary after the Employee's death.

      NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the parties hereto agree as follows:

      Section 1. Retirement Benefits. Except as otherwise specifically provided
herein, if the Employee shall remain in the employment of the Bank until he
attains the age of 65 (the "Retirement Date"), the Bank shall pay the Employee
the sum of ten thousand dollars ($10,000.00) per annum for a period of five (5)
years, payable in equal monthly installments, commencing on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Retirement Date occurs.

      Section 2. Post-Retirement Death Benefits. In the event that the Employee
should die after becoming entitled to receive payments under Section I but
before all such payments have been made, the Bank will make all remaining
payments to such beneficiary or beneficiaries as the Employee has designated to
the Bank in writing (the "Beneficiaries'). In the event of death of the last
living Beneficiary before all unpaid payments have been made, the balance of any
payments which remain unpaid at the time of the death of such Beneficiary shall
be commuted on the basis of six percent (6%) per annum compounded interest and
shall be paid in a single sum to the estate of the last Beneficiary to die. In
the absence of such beneficiary designation, any amount remaining unpaid at the
Employee's death shall be commuted on the basis of six percent (6%) per annum
compounded interest and shall be paid in a single sum to the Employee's estate.

<PAGE>

      Section 3. Pre-RetirementDeathBenefits. In the event of the death of the
Employee while employed by the Bank and before the Retirement Date, the Bank
shall make the payments described in Section I above to the Beneficiaries, and
the amount of such payments shall be determined as if the date of death of the
Employee was his Retirement Date. The first monthly payment shall be made on a
date to be determined by the Bank, but in no event later than the first day of
the sixth calendar month following the month in which the Employee died. In the
event of death of the last living Beneficiary before all the payments have been
made, the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on the basis of six percent (6%) per annum
compounded interest and shall be paid in a single sum to the estate of the last
Beneficiary to die. In the absence of any beneficiary designation made by the
Employee pursuant to Section 2, above, or if no Beneficiary survives the
Employee, the payments to be made hereunder shall be commuted on the basis of
six percent (6%) per annum compounded interest and shall be paid in a single sum
to the Employee's estate. Notwithstanding the foregoing, if the Employee dies as
result of suicide on or before the two-year anniversary of the Effective Date,
no benefits of whatever nature shall be payable to the Beneficiaries under this
Agreement.

      Section 4. Termination Benefits. Except as otherwise provided in Section 6
with respect to termination of employment in certain circumstances, in the event
that the employment of the Employee terminates prior to the time he is first
entitled to receive payments under this Agreement for any reason other than his
death, the Employee or his Beneficiaries, as applicable, shall be entitled, upon
the occurrence of the Employee's 65th birthday or prior death, to receive the
percentage of the applicable annual payment described in Section I above
determined by Exhibit A attached hereto an incorporated herein by reference.
Such payments shall be made in equal monthly installments, with the first
monthly installment commencing on a date to be determined by the Bank, but in no
event later than the first day of the sixth calendar month following the
calendar month of the Employee's 65th birthday or death, as applicable, occurs.

      Section 5. Benefits Not Transferable. Neither the Employee, any
Beneficiary nor any other person claiming any right or interest under this
Agreement through the Employee or any other Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

      Section 6. Binding Upon Successors. This Agreement and the Bank's
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its right or obligations under this Agreement
without the Employee's prior written consent. In addition, the Bank shall not
enter into any agreement proving for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business entity, person or group of persons that does not
specifically provide that such successor by merger or purchaser(s) of assets
shall assume and satisfy each and every obligation of the Bank to the Employee
under this Agreement. In the case of an asset sale, such assumption shall not
relieve the Bank of its liability to fulfill such obligations.

      Except as otherwise provided in Sections 1, 2 or 3, above, as applicable,
in the event that, on or before the occurrence of the Employee's Retirement
Date, a "Termination of Protected Employment" occurs following a "Change in
Control" (as these terms are defined below), the Employee shall be deemed to
have retired as of his Retirement Date and the provisions of Section I shall be
deemed applicable, except that the Retirement Date shall be deemed to be the
date that such Change in Control shall occur.

                                       2
<PAGE>

      For purposes of this Agreement, "Change in Control" shall mean any one of
the following events: (i) the acquisition of ownership, holding, or power to
vote more than 25% of the voting stock of the Bank or First South Bancorp, Inc.
(the "Company"), (ii) the acquisition of the ability to control the election of
a majority of the Bank's or the Company's directors, (iii) the acquisition of a
controlling influence over the management or policies of the Bank or of the
Company by any person or by persons acting as a "group" (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934), or (iv) during any period
of two consecutive years, individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors of the Bank or of the
Company (the "Existing Board") cease for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. Notwithstanding the foregoing, the Company's ownership of
the Bank shall not of itself constitute a Change in Control for purposes of the
Agreement. For purposes of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.

      For purposes of this Agreement, a "Termination of Protected Employment"
shall occur if: (i) the Employee is terminated without Just Cause, with "Just
Cause" meaning, in the good faith determination of the Bank's Board of
Directors, the Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, or rule or regulation
(other than traffic violations or similar offenses) or final cease-and-desist
order; provided that no act, or failure to act, on the Employee's part shall be
considered "willful" unless he has acted, or failed to act, with an absence of
good faith and without a reasonable belief that his action or failure to act was
in the best interests of the Bank or of the Company; or (ii) the Employee
voluntarily terminates employment for an event that constitutes "Good Reason,"
which shall mean any of the following events, that has not been consented to in
advance by the Employee in writing: (a) the requirement that the Employee move
his personal residence, or perform his principal executive functions, more than
30 miles from his primary office as of the later of the Effective Date and the
most recent voluntary relocation by the Employee; (b) a material reduction in
the Employee's base compensation in effect on the date of the Change in Control;
(c) the failure by the Bank to continue to provide the Employee with
compensation and benefits in effect on the date of the Change in Control, or
with benefits substantially similar to those provided to him under any of the
employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Bank which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him; (d) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (e) a failure to reelect the Employee to the Board of Directors of the
Bank, if the Employee has served on such Board at any time during the term of
the Agreement; (f) a material diminution or reduction in the Employee's
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank; or (g) a material reduction in the
secretarial or other administrative support of the Employee.

      Section 7. Benefits Payable Only from General Corporate Assets; Unsecured
General Creditor Status of Employee.

      The payments to the Employee or his Beneficiaries hereunder shall be made
from assets, which shall continue for all purposes, to be a part of the general
unrestricted assets of the Bank; no person shall have nor acquire any interest
in any such assets by virtue of the provisions of this Agreement. The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future. To the extent that the Employee or any person acquires a right to
receive payments from the Bank under the provisions hereof, such right shall be
no greater than the right of any unsecured general creditor of the Bank; no such
person shall have nor require any legal or equitable right, interest or claim in
or to any property or assets of the Bank.

                                       3
<PAGE>

      In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Employee (or any other property) in
order to allow the Bank to recover the cost of providing the benefits, in whole,
or in part, hereunder, neither the Employee nor any beneficiary shall have the
rights whatsoever therein or in the proceeds therefrom. The Bank shall be the
sole owner and beneficiary of any such policy or policies and, as such, shall
possess and, may exercise all incidents of ownership therein.

      Notwithstanding any other provision of this Agreement that may be contrary
or inconsistent herewith, not later than ten business days after a Change in
Control, the Bank shall (i) deposit in a grantor trust (the "Trust") that is
designed in accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank, the Company and any successor to their interest, an
amount equal to the present value of all benefits that may become payable under
this Agreement, unless the Employee has previously provided a written release of
any claims under this Agreement, and (ii) provide the trustee of the Trust with
a written direction to hold said amount and any investment return thereon in a
segregated account for the benefit of the Employee, and to follow the procedures
set forth in the next paragraph as to the payment of such amounts from the
Trust.

      At any time or from time to time following a Change in Control, the
Employee may provide the trustee of the Trust with a written schedule directing
that the trustee pay to the Employee the amounts designated in the schedule as
being payable pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail (return receipt requested). On the
fifth business day after mailing said notice to the Bank, the trustee of the
Trust shall pay the Employee the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to this Agreement, and the costs of such arbitration (including any attorneys'
fees incurred by the Employee) shall be paid by the Bank. The trustee shall
choose the arbitrator to settle the dispute, and such arbitrator shall be bound
by the rules of the American Arbitration Association in making his
determination. The parties and the trustee shall be bound by the results of the
arbitration and, within three days of the determination by the arbitrator, the
trustee shall pay from the Trust the amounts required to be paid to the Employee
and/or the Bank, and in no event shall the trustee be liable to either party for
making the payments as determined by the arbitrator.

      Upon the receipt of the Employee's written release of all claims under
this Agreement, the trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for the benefit of the
Employee. The Employee shall thereafter have no further interest in the Trust
pursuant to this Agreement.

                                       4
<PAGE>

      Section 8. Additional Benefits. The benefits and rights provided under
this Agreement are in addition to, and independent of, those rights and benefits
of the Employee provided under other agreements with the Bank, and shall not
affect, reduce or diminish the right of Employee to participate in any current
or future retirement plan or in any supplemental compensation arrangement.

      Section 9. No Contract of Employment. Nothing contained herein shall be
construed to be a contract of employment or as conferring upon the Employee the
right to continue to be employed by the Bank. It is expressly understood by the
parties hereto that this Agreement relates exclusively to additional
compensation for the Employee's services, payable after termination of his
employment with the Bank, and is not intended to be an employment agreement.

      Section 10. Claims and Review Procedures.

      A.    General. For the purposes of implementing a claims procedure under
            this Agreement as required by the Employee Retirement Income
            Security Act of 1974 ("ERISA") (but not for any other purpose), the
            Bank is hereby designated as the named fiduciary and Plan
            Administrator of this unfunded, nonqualified deferred compensation
            plan. If any person believes he is being denied any rights or
            benefits under the Agreement, such person may file a claim in
            writing with the Plan Administrator for resolution in accordance
            with the provisions of Paragraph B of this Section 10.

      B.    Claims Procedure. If any claim filed hereunder is wholly or
            partially denied, the Plan Administrator will notify the claimant of
            its decision in writing. Such notification will be written in a
            manner calculated to be understood by the claimant and will contain:

            (i)   specific reasons for the denial,

            (ii)  specific reference to pertinent provisions of the Agreement on
                  which the Plan Administrator based its denial,

            (iii) a description of any additional material or information
                  necessary for the claimant to perfect such claim and an
                  explanation of why such material or information is necessary,
                  and

            (iv)  information as to the steps to be taken if the claimant wishes
                  to submit a request for review.

            Such notification will be given within ninety (90) days after the
            claim is received by the Plan Administrator (or within 180 days, if
            special circumstances require an extension of time for processing
            the claim, and if written notice of such extension and circumstances
            is given to the claimant within the initial ninety (90) day period).
            If such notification is not given within such period, the claim will
            be considered denied as of the last day of such period and the
            claimant may request a review of his claim in accordance with
            Section 10.C. hereof.

                                       5
<PAGE>

      C.    Review Procedure. Within sixty (60) days after the date on which a
            claimant received a written notice of a denied claim (or, if
            applicable, within sixty (60) days after the date on which such
            denial is considered to have occurred) the claimant (or his duly
            authorized representative) may:

            (i)   file a written request with the Plan Administrator for a
                  review of his denied claim and of pertinent documents; and

            (ii)  submit written issues and comments to the Plan Administrator.

            The plan Administrator will notify the claimant of its decision in
            writing. Such notification will be written in a manner calculated to
            be understood by the claimant and will contain specific reasons for
            the decision as well as specific references to pertinent provisions
            of the Agreement. The decision on review will be made within sixty
            (60) days after the request for review is received by the Plan
            Administrator (or within one hundred twenty (120) days, if special
            circumstances require an extension of time for processing the
            request (such as an election by the Plan Administrator to hold a
            hearing), and if written notice of such extension and circumstances
            is given to the claimant within the initial sixty (60) day period.

      Section 11. Amendment. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

      Section 12. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of North Carolina.

      IN WITNESS WHEREOF, the parties have executed this Supplemental Plan
Agreement as of the day and year first written above.

                                                   FIRST SOUTH BANK

         Attest:                                   By: /s/ Thomas A. Van
                                                       -----------------
                                                   Thomas A. Vann
                                                   President and
         /s/ William L. Wall                       Chief Executive Officer
         -------------------
         William L. Wall
         Secretary
         {Corporate Seal}

                                                   EMPLOYEE:

                                                   /s/ Robert E. Branch
                                                   --------------------
                                                   Robert E. Branch

                                       6
<PAGE>

                                    EXHIBIT A
                                       TO
                       SUPPLEMENTAL INCOME PLAN AGREEMEENT
                                       FOR
                                ROBERT E. BRANCH

FULL YEARS OF EMPLOYMENT
AFTER EFFECTIVE DATE
--------------------
                  1
                  2
                  3
                  4
                  5
                  6
                  7
                  8
                  9
                  10

PERCENTAGE OF THE ANNUAL
INSTALLMENT PAYMENTS
STATED IN SECTION 1 OF THIS
AGREEMENT TO WHICH THE
EMPLOYEE IS ENTITLED
--------------------
                  10
                  20
                  30
                  40
                  50
                  60
                  70
                  80
                  90
                  100

                                       7

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