AMG OIL LTD (Form: 20-F, Received: 09/04/2009 17:25:33)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR

[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended ____________________________
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR

[X] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: ______________

AMG OIL LTD.
(Exact name of Registrant as specified in its charter)

Not applicable
(Translation of Registrant’s name into English)

Canada
(Jurisdiction of incorporation or organization)

Suite 901, 30 St. Clair Avenue West
Toronto, Ontario, Canada, M4V 3A1
(Address of principal executive offices)

Alan Friedman
Suite 901, 30 St. Clair Avenue West
Toronto, Ontario, Canada, M4V 3A1
Telephone: +1 416 250 1955
Facsimile: +1 416 250 6330
E-mail: afriedman@adiraenergy.com
(Name, Telephone, Email and/or Facsimile number and Address of
Company Contact Person)

Securities registered or to be registered pursuant to section 12(b) of the Act:

Title of each Class	Name of each exchange on which registered
None	Not applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

N/A
(Title of Class)

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The number of outstanding shares of each of the issuer’s classes of capital or common stock as of September 1, 2009
was 62,240,001 common shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

If this report is an annual or a transition report, indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 .

Yes [ ] No [ ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in
this filing:

	International Financial Reporting Standards as issued by the
U.S. GAAP [ ]	International Accounting Standards Board [ ]	Other [X]

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.

Item 17 [X] Item 18 [ ]

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act ).

Yes [ ] No [ ] N/A

__________

TABLE OF CONTENTS

		Page No

GENERAL		- 4 -

NOTE REGARDING FORWARD LOOKING STATEMENTS		- 4 -

PART I		- 6 -

ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	- 6 -
ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	- 8 -
ITEM 3	KEY INFORMATION	- 8 -
ITEM 4	INFORMATION ON THE COMPANY	- 24 -
ITEM 4A	UNRESOLVED STAFF COMMENTS	- 32 -
ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	- 33 -
ITEM 6	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	- 38 -
ITEM 7	MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS	- 48 -
ITEM 8	FINANCIAL INFORMATION	- 51 -
ITEM 9	THE OFFER AND LISTING	- 52 -
ITEM 10	ADDITIONAL INFORMATION	- 54 -
ITEM 11	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	- 72 -
ITEM 12	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	- 73 -

PART II		- 73 -

ITEM 13	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	- 73 -
ITEM 14	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	- 73 -
ITEM 15	CONTROLS AND PROCEDURES	- 73 -
ITEM 16A	AUDIT COMMITTEE FINANCIAL EXPERTS	- 73 -
ITEM 16B	CODE OF ETHICS	- 73 -
ITEM 16C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	- 73 -
ITEM 16D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	- 74 -
ITEM 16E	PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	- 74 -

PART III		- 74 -

ITEM 17	FINANCIAL STATEMENTS	- 74 -
ITEM 18	FINANCIAL STATEMENTS	- 74 -
ITEM 19	EXHIBITS	- 75 -

__________

GENERAL

This Form 20-F is filed as a “Form 20-F Shell Company Report” report by AMG Oil Ltd. following the completion of the acquisition of Adira Energy Corp. on August 31, 2009, as a result of which AMG Oil ceased to be a “shell company”, as defined in Rule 12b-2 of the Exchange Act.

In this Form 20-F, references to:

“AMG” means AMG Oil Ltd., a Canadian federal corporation
“Adira” means Adira Energy together with its wholly owned subsidiaries Adira Israel and Adira Service
Adira Energy means Adira Energy Corp., an Ontario corporation
Adira Israel means Adira Energy Israel Ltd., an Israel corporation
Adira Service means Adira Israel Energy Service Ltd., an Israel corporation
“We”, “us”, “our”, and the “Company” mean AMG together with Adira Energy

AMG has historically used U.S. dollar as its reporting currency. Adira Energy has used Canadian dollars as its reporting currency. All references in this document to “dollars” or “$” are to United States dollars and all references to “CDN$” are to Canadian dollars, unless otherwise indicated.

Except as noted, the information set forth in this Form 20-F is as of September 1, 2009 and all information included in this document should only be considered correct as of such date.

NOTE REGARDING FORWARD LOOKING STATEMENTS

Much of the information included in this Form 20-F includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. These statements relate to future events or our future financial performance. In some cases you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue or the negative of those terms or other comparable terminology. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other forward looking statements involve various risks and uncertainties and other factors, including the risks in the section titled “Risk Factors” below, that may cause our actual results, levels of activities, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform those statements to actual results.

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The statements contained in Item 4.B. – the “Business Overview”, Item 5 – “Operating and Financial Review and Prospects” and Item 11 – “Quantitative and Qualitative Disclosures About Market Risk” are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly.

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PART I

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A. Directors and Senior Management

The names, business addresses and functions of our directors and senior management are:

Name and Business Address	Function
Dennis Bennie Suite 901 30 St. Clair Avenue West Toronto, Ontario M4V 3A1	Director (Chairman)
Daniel Bloch Suite 1800, 181 Bay Street Toronto, Ontario M5J 2T9	Secretary
Brook Cole Suite 901 30 St. Clair Avenue West Toronto, Ontario M4V 3A1	Interim Chief Financial Officer
Ilan Diamond Suite 901 30 St. Clair Avenue West Toronto, Ontario M4V 3A1	Chief Executive Officer and Director
Alan Friedman Suite 901 30 St. Clair Avenue West Toronto, Ontario M4V 3A1	Executive Vice-President and Director
Denny Johnson 1113 S. Range Avenue, Suite 110-163 Denham Springs, LA 70726 USA	Senior Vice-President, Exploration and Development
Colin Kinley 7285 West 132 Street Suite 240 Overland Park, KS 66213	Senior Vice-President, Operations
Glen Perry 6510 Abrams Road Dallas, TX 75231 USA	Chairman Technical Advisory Board

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B. Advisers

Not applicable.

C. Auditor

The names and addresses of our auditors for each of the three preceding years and their governing professional body memberships are:

Name and Address	Governing Professional Body	Audit Period
DeVisser Gray LLP Chartered Accountants 401-905 West Pender Street Vancouver, British Columbia, Canada, V6C 1L6	Institute of Chartered Accountants of British Columbia Registered with the Canadian Public Accountability Board (Canada) and the Public Company Accounting Oversight Board (US)	Period ended April 30, 2009 (with respect to Adira Energy Corp.)
Smythe Ratcliffe LLP Chartered Accountants 355 Burrard Street Vancouver, British Columbia, Canada, V6C 2G8	Institute of Chartered Accountants of British Columbia Registered with the Canadian Public Accountability Board (Canada) and the Public Company Accounting Oversight Board (US)	Years ended September 30, 2008, 2007 and 2006 (with respect to AMG Oil Ltd.)

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ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3 KEY INFORMATION

A. Selected Financial Data

AMG Oil Ltd.

The selected historical financial information presented in the table below for each of the fiscal years ended September 30, 2008, 2007, 2006, 2005 and 2004 is derived from the audited consolidated financial statements of the Company. The audited consolidated financial statements of AMG for the fiscal years ended September 30, 2008, 2007 and 2006 are included in AMG’s annual report on Form 20-F for the year ended September 30, 2008. The audited consolidated financial statements of AMG for the fiscal years ended September 30, 2005 and 2004 are included in previous filings. The selected financial information presented below should be read in conjunction with AMG’s audited consolidated financial statements and the notes thereto, and with the information appearing under the headings, “Information on the Company” and “Operating and Financial Review and Prospects”.

Under US GAAP (in US$)

	Year Ended September 30
	2008		2007		2006		2005		2004
	$		$		$		$		$
Balance Sheet Data
Cash and Cash Equivalents	1,104,364		1,318,132		1,348,282		14,526		22,407
Working Capital	1,062,473		1,307,442		1,332,922		10,138		28,911
Total Assets	1,104,471		1,318,282		1,348,282		15,760		35,049
Total Liabilities	41,998		10,690		15,360		5,622		6,138
Total Stockholders Equity	1,062,473		1,307,592		1,332,922		10,138		28,911

Operating Data
Revenues	Nil		Nil		Nil		Nil		Nil
Expenses	(258,180	)	(90,640	)	(68,046	)	(19,133	)	(64,468	)
Other Items
Net Loss from Continuing
Operations	(282,659	)	(25,330	)	(36,173	)	(18,773	)	(64,089	)
Net Loss from
Discontinued Operations	-		-		-		-		-
Net and Comprehensive
Loss	(282,659	)	(25,330	)	(36,173	)	(18,773	)	(64,089	)
Basic Loss per Share
- From Continuing
Operations	(0.01	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)
- From Discontinued
Operations	(0.00	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)

We have never declared or paid any cash or other dividends.

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Adira Energy Corp.

The selected historical financial information presented in the table below for the period ended April 30, 2009 is derived from the audited consolidated financial statements of Adira Energy included herein. The selected financial information presented below should be read in conjunction with the Adira Energy’s audited consolidated financial statements and the notes thereto, and with the information appearing under the headings, “Information on the Company” and “Operating and Financial Review and Prospects”.

Under US GAAP (in CDN $)

	April 30
	2009
	CDN $
Balance Sheet Data
Cash and Cash Equivalents	424,167
Working Capital	317,614
Total Assets	453,168
Total Liabilities	135,553
Total Stockholders Equity	317,615

Operating Data
Revenues	Nil
Expenses	(807,385	)
Net Loss	(807,385	)
Basic Loss per Share	(0.05	)
- From Continuing
Operations	(0.0	)
- From Discontinued
Operations	(0.00	)

Adira Energy has never declared or paid any cash or other dividends.

Exchange Rate

The exchange rate between the Canadian dollar and the U.S. dollar was CDN$1.1048 per US$1.00 (or US$0.9051 per CDN$1.00) as of September 2, 2009.

The average exchange rates for the financial years of the Company listed above (based on the average exchange rate for each period using the average of the exchange rates on the last day of each month during the period in accordance with the exchange rates provided by the Bank of Canada are as follows:

	2008	2007	2006	2005	2004
Year End (1)	1.2180	0.9913	1.1654	1.1630	1.2020
Average	1.0660	1.0748	1.1341	1.2116	1.3015
High (2)	1.3008	1.1878	1.1794	1.2734	1.4003
Low (2)	0.9711	0.9066	1.0948	1.1427	1.1746

The high and low exchange rates between the Canadian dollar and the U.S. dollar for the past six months (provided by the Bank of Canada) are as follows:

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Month	Exchange rate CDN$ per US$1.00
	High	Low
August 2009	1.1121	1.0670
July 2009	1.1725	1.0763
June 2009	1.1640	1.0789
May009	1.1954	1.0898
April 2009	1.2707	1.1875
March 2009	1.3066	1.2192

B. Capitalization and Indebtedness

Information regarding the capitalization and indebtedness will be provided by an amendment to this Form 20-F.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

An investment in our Securities is highly speculative and involves a high degree of risk. Our Company may face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict. Before investing in our Company's Securities Investors should carefully consider the following risks. If any of the following risks actually occurs, our Company's business, prospects, financial condition and results of operations could be materially adversely affected. In that case, investors may lose all or a part of their investment.

Risks Associated with the Company

Our independent auditors have referred to circumstances which might result in doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

Adira Energy incurred a net loss of CDN $807,385 for the period ended April 30, 2009. At April 30 2009, Adira Energy had an accumulated deficit of CDN $807,385. These circumstances raise doubt about our ability to continue as a going concern, as described in the Note 1 to our consolidated financial statements for the period ended April 30, 2009, which are included herein. Although our consolidated financial statements refer to circumstances which might raise doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business.

We are an early-stage oil and gas exploration company without revenues. Our ability to continue in business depends upon our continued ability to obtain significant financing from external sources and the success of our exploration efforts and any production efforts resulting therefrom, none of which can be assured.

We are an early-stage oil and gas exploration company without any revenues, and there can be no assurance of our ability to develop and operate our projects profitably. We have historically depended entirely upon capital infusion from the issuance of equity securities to provide the cash needed to fund our operations, but we cannot assure you that we will be able to continue to do so. Our ability to continue in

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business depends upon our continued ability to obtain significant financing from external sources and the success of our exploration efforts and any production efforts resulting therefrom. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and could have a significant negative effect on our business plans and operations, including our ability to continue our current exploration activities.

While we may in the future generate additional working capital through the development, operation, sale or possible syndication of our current property or any future properties, there is no assurance that our Company will be successful in generating positive cash flow, or if successful, that any such funds will be available for distribution to shareholders or to fund further exploration and development programs.

We have had negative cash flows from operations, and our current resources are not sufficient to fund our operations on an ongoing basis. Our business operations may fail if our actual cash requirements exceed our estimates and we are not able to obtain further financing.

We will require significant capital to complete our seismic surveys, drill test wells, and to build the necessary infrastructure to commence operations if our exploration activities result in the discovery of sufficient oil and gas reserves to justify their exploitation and development.

Our Company has had negative cash flows from operations. Since inception, we have not earned any revenues from operations, and due to the length of time between the discovery of oil and gas reserves and their exploitation and development, we do not anticipate earning revenues from operation in the near future. To date, we have incurred significant expenses. As at September 1, 2009, we had cash on hand of US$2.6 million. We have sufficient funds to complete preliminary exploration on our Hula property in Israel, as outline in the plan of operations described herein. However, we anticipate that we will have to seek additional financing to fund the advanced exploration on our property, if warranted. Further, we cannot assure you that our actual cash requirements will not exceed our estimates, and in any case we will require additional financing to bring our interests into commercial operation, finance working capital, meet our contractual minimum expenditures and pay for operating expenses and capital requirements until we achieve a positive cash flow. Additional capital also may be required in the event we incur any significant unanticipated expenses.

In light of our operating history, and under the current capital and credit market conditions, we may not be able to obtain additional equity or debt financing on acceptable terms if and when we need it. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements.

If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results, and compete effectively. More importantly, if we are unable to raise further financing when required, our planned exploration activities may have to be scaled down or even ceased, and our ability to generate revenues in the future would be negatively affected.

Our lack of diversification increases the risk of an investment in us, and our financial condition and results of operations may deteriorate if we fail to diversify.

Our business focus is on oil and gas exploration on a single property in Israel. As a result, we lack diversification, in terms of both the nature and geographic scope of our business. We will likely be impacted more acutely by factors affecting our industry or the regions in which we operate than we would if our business were more diversified. If we cannot diversify our operations, our financial condition and results of operations could deteriorate.

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We may not effectively manage the growth necessary to execute our business plan.

Our business plan anticipates a significant increase in the number of our contractors, strategic partners and equipment suppliers. This growth will place significant strain on our current personnel, systems and resources. We expect that we will be required to hire qualified consultants and employees to help us manage our growth effectively. We believe that we will also be required to improve our management, technical, information and accounting systems, controls and procedures. We may not be able to maintain the quality of our operations, control our costs, continue complying with all applicable regulations and expand our internal management, technical information and accounting systems to support our desired growth. If we fail to manage our anticipated growth effectively, our business could be adversely affected.

All of our assets and the majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or some of our directors or officers.

All of our assets are located outside the United States. In addition, the majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under United States federal securities laws against them.

As a holding company, our ability to make payments depends on the cash flows of our subsidiary.

The Company is a holding company that conducts substantially all of its operations through Adira Israel, a subsidiary incorporated outside North America. We have no direct operations and no significant assets other than the shares of Adira Israel. Therefore, we are dependent on the cash flows of Adira Israel to meet our obligations, including payment of principal and interest on any debt we incur. The ability of Adira Israel to provide us with payments may be constrained by the following factors:

the cash flows generated by operations, investment activities and financing activities;
the level of taxation, particularly corporate profits and withholding taxes, in Israel; and
the introduction of exchange controls and repatriation restrictions or the availability of hard currency to be repatriated.

If we are unable to receive sufficient cash from Adira Israel, we may be required to refinance any indebtedness we incur, raise funds in a public or private equity or debt offering or sell some or all of our assets. We can provide no assurances that an offering of our debt or equity or a refinancing of our debt can or will be completed on satisfactory terms or that it would be sufficient to enable us to make payment with respect to our debt. The foregoing events could have an adverse impact on our future cash flows, earnings, results of operations and financial condition.

We have agreed to indemnify our directors against liabilities incurred by them as directors.

We have agreed to indemnify our directors from and against all costs, charges and expenses reasonably incurred by them in respect of any civil, criminal or administrative action or proceeding to which they are made a party or with which they are threatened by reason of being or having been a director of the Company, provided that (i) they have acted honestly and in good faith with a view to the best interests of the Company; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a

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monetary penalty, they had reasonable grounds for believing that their conduct was lawful. This indemnity may reduce the likelihood of derivative litigation against our directors and may discourage or deter our shareholders from suing our directors.

The loss of certain key management employees could have a material adverse effect on our business.

Our ability to continue the development of our assets and business and to compete with other energy companies depends, in large part, on our ability to attract and maintain qualified key personnel. Competition for such personnel is intense, and we cannot assure you that we will be able to attract and retain them. Our development now and in the future will depend on the efforts of key management figures. The loss of any of these key people could have a material adverse effect on our business. We do not currently maintain key-man life insurance on any of our key employees.

We may be adversely affected by current global financial conditions.

Current global financial conditions have been characterized by increased volatility and several financial institutions have either gone into bankruptcy or have had to be rescued by governmental authorities. Access to public financing and bank credit has been negatively impacted by both the rapid decline in value of sub-prime mortgages and the liquidity crisis affecting the asset-backed commercial paper market. These and other factors may affect our ability to obtain equity or debt financing in the future on favourable terms. Additionally, these factors, as well as other related factors, may cause decreases in our asset values that may be other than temporary, which may result in impairment losses. If such increased levels of volatility and market turmoil continue, or if more extensive disruptions of the global financial markets occur, our operations could be adversely impacted and the market value of our Common Shares may be adversely affected.

Currency fluctuations could have an adverse effect on our business.

Our earnings and cash flow may also be affected by fluctuations in the exchange rate between the U.S. dollar and other currencies, such as the Israel shekel, the Canadian dollar and the Euro. Our consolidated financial statements are expressed in Canadian dollars. Our sales of oil and gas, if any, will be denominated in U.S. dollars, while production costs and corporate administration costs are, in part, denominated in Israel shekels and Canadian dollars.

Fluctuations in exchange rates between the U.S. dollar and other currencies may give rise to foreign exchange currency exposures, both favourable and unfavourable, which have materially impacted and in the future may materially impact our future financial results. We do not utilize a hedging program to limit the adverse effects of foreign exchange rate fluctuations.

Our financial reporting may be subject to weaknesses in internal controls.

Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. As an early-stage company, our internal controls may be weaker than those of more established corporations.

The Company cannot be certain that current expected expenditures and completion/testing programs will be realized.

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The Company believes that the costs used to prepare internal budgets are reasonable, however, there are assumptions, uncertainties, and risk that may cause the Company’s allocated funds on a per well basis to change as a result of having to alter certain activities from those originally proposed or programmed to reduce and mitigate uncertainties and risks. These assumptions, uncertainties, and risks are inherent in the completion and testing of wells and can include but are not limited to: pipe failure, casing collapse, unusual or unexpected formation pressure, environmental hazards, and other operating or production risk intrinsic in oil and or gas activities. Any of the above may cause a delay in the Company’s completion program and its ability to determine reserve potential.

Risks Associated with Our Business

We have not discovered any oil and gas reserves, and we cannot assure you that that we or our venture ever will.

We are in the business of exploring for oil and natural gas, and the development and exploitation of any significant reserves that are found. Oil and gas exploration involves a high degree of risk that the exploration will not yield positive results. These risks are more acute in the early stages of exploration. We have not discovered any reserves, and we cannot guarantee you that we ever will. Even if we succeed in discovering oil or gas reserves, these reserves may not be in commercially viable quantities or locations. Until we discover such reserves, we will not be able to generate any revenues from their exploitation and development. If we are unable to generate revenues from the development and exploitation of oil and gas reserves, we will be forced to change our business or cease operations.

The Company might incur additional debt in order to fund its exploration and development activities, which would continue to reduce its financial flexibility and could have a material adverse effect on the Company’s business, financial condition or results of operation.

It is possible that the Company might incur debt in order to fund its exploration and development activities, which would continue to reduce its financial flexibility and could have a material adverse effect on the Company’s business, operations and results of operations and financial condition. General economic conditions, oil and gas prices and financial , business and other factors affect the Company’s operations and future performance. Many of these factors are beyond the Company’s control. No assurances can be made that the Company will be able to generate sufficient cash flow to pay the interest on its debt or that future working capital, borrowings or equity financing will be available to pay or refinance such debt. Factors that will affect its ability to raise cash through an offering of Common Shares or other types of equity securities, or a refinancing of debt include financial market conditions, the value of its assets and performance at the time the Company needs capital. No assurances can be made that the Company will have sufficient funds to make such payments. If the Company does not have sufficient funds and is otherwise unable to negotiate renewals of its borrowings or arrange new financing, it might be required to sell significant assets. Any such sale could have a material adverse effect on the Company’s business, financial condition and results of operations.

Our assets and operations are subject to government regulation in Israel.

Our interests and operations in Israel may be affected in varying degrees by government regulations relating to the oil and gas industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company may adversely affect our business. Our operations may be affected in varying degrees by new government regulations and changes to existing regulations, including those with respect to restrictions on exploration and production, price controls, export controls, income taxes, employment, land use, water use, environmental legislation and safety regulations.

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Our future success depends upon our ability to find, develop and acquire additional oil and natural gas reserves that are economically recoverable.

In the event that we are able to find and develop oil and natural gas reserves which are economically recoverable, the rate of production from those reservoirs will decline as reserves are depleted. As a result, we must locate and develop or acquire new oil and natural gas reserves to replace those being depleted by production. We must do this even during periods of low oil and natural gas prices when it is difficult to raise the capital necessary to finance activities. Without successful exploration or acquisition activities, our reserves and revenues will decline. We may not be able to find and develop or acquire additional reserves at an acceptable cost or have necessary financing for these activities.

Oil and natural gas drilling is a high-risk activity.

Our future success will depend on the success of our exploration and drilling programs. In addition to the numerous operating risks described in more detail below, these activities involve the risk that no commercially productive oil or natural gas reservoirs will be discovered. In addition, we are uncertain as to the future cost or timing of drilling, completing and producing wells. Furthermore, our drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including, but not limited to, the following:

unexpected drilling conditions;
pressure or irregularities in formations;
equipment failures or accidents;
adverse weather conditions;
inability to comply with governmental requirements; and
shortages or delays in the availability of drilling rigs and the delivery of equipment.

If we experience any of these problems, our ability to conduct operations could be adversely affected.

The Company might not be able to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against them, which could cause the Company to incur losses .

Although the Company believes it has reviewed and evaluated the Israel Project in a manner consistent with industry practices, such review and evaluation might not necessarily reveal all existing or potential problems. This is also true for any future acquisitions made by the Company. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, a seller may be unwilling or unable to provide effective contractual protection against all or part of those problems, and the Company often assumes environmental and other risks and liabilities in connection with the acquired properties.

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You should not place undue reliance on reserve information because reserve information represents estimates, and our seismic surveying is still in the preliminary stages.

There are numerous uncertainties inherent in estimating quantities of proved reserves and cash flows from such reserves, including factors beyond our control and the control of engineers. Reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that can not be measured in an exact manner. The accuracy of an estimate of quantities of reserves, or of cash flows attributable to these reserves, is a function of many factors, including, but not limited to, the following:

available data;
assumptions regarding future oil and natural gas prices;
estimates of future production rates;
expenditures for future development and exploitation activities; and
engineering and geological interpretation and judgment.

Reserves and future cash flows may also be subject to material downward or upward revisions based upon production history, development and exploitation activities and oil and natural gas prices. Actual future production, revenue, taxes, development expenditures, operating expenses, quantities of recoverable reserves and value of cash flows from those reserves may vary significantly from the estimates. In addition, reserve engineers may make different estimates of reserves and cash flows based on the same available data.

The nature of oil and gas exploration makes the estimates of costs uncertain, and our operations may be adversely affected if we underestimate such costs.

It is difficult to project the costs of implementing an exploratory drilling program. Complicating factors include the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions, such as over-pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof. If we underestimate the costs of such programs, we may be required to seek additional funding, shift resources from other operations or abandon such programs.

Factors beyond our control affect our ability to market oil and gas.

Our ability to market oil and natural gas from our wells depends upon numerous factors beyond our control. These factors include, but are not limited to, the following:

the level of domestic production and imports of oil and gas;
the volatility of both oil and natural gas pricing;
the proximity of natural gas production to natural gas facilities, pipelines and other means of transportation;
the availability of pipeline capacity or other means of transportation;
the demand for oil and natural gas by utilities and other end users;

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the availability of alternate fuel sources;
the effect of inclement weather; and
government regulation of oil and natural gas marketing.

If these factors were to change dramatically, our ability to market oil and natural gas or obtain favorable prices for our oil and natural gas could be adversely affected.

Prices and markets for oil are unpredictable and tend to fluctuate significantly, which could reduce profitability, growth and the value of our business if we or our venture ever begin exploitation of reserves.

Our future financial condition, results of operations and the carrying value of our oil and natural gas properties depend primarily upon the prices we receive for our oil and natural gas production, if any. Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world economic conditions. Significant changes in long-term price outlooks for crude oil could by the time that we start exploiting oil and gas reserves, if we ever discover and exploit such reserves, could have a material adverse effect on revenues as well as the value of licenses or other assets.

Our future cash flow from operations, if any, will be highly dependent on the prices that we receive for oil and natural gas. This price volatility also affects the amount of our cash flow available for capital expenditures and our ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include:

the level of consumer demand for oil and natural gas;
the domestic and foreign supply of oil and natural gas;
the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
the price of foreign oil and natural gas;
the price and availability of alternative fuel sources;
governmental regulations;
weather conditions;
market uncertainty;
political conditions in oil and natural gas producing regions, including Israel and the Middle East;
war, or the threat of war, in oil producing regions; and
worldwide economic conditions.

These factors and the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Also, oil and natural gas prices do not necessarily move in tandem. Declines in oil and natural gas prices would not only reduce revenue, but

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could reduce the amount of oil and natural gas that we can produce economically and, as a result, could have a material adverse effect upon our financial condition, cash flows, results of operations, oil and natural gas reserves, the carrying values of our oil and natural gas properties and the amounts we can borrow under any bank credit facilities we may obtain in the future.

Even if we discover and then develop oil and gas reserves, we may have difficulty distributing our production.

If our exploration activities result in the discovery of oil and gas reserves, and if we are able to successfully develop and exploit such reserves, we will have to make arrangements for storage and distribution of oil and gas. We would have to rely on local infrastructure and the availability of transportation for storage and shipment of oil and gas products, but any readily available infrastructure and storage and transportation facilities may be insufficient or not available at commercially acceptable terms. The marketability of our production depends in part upon the availability, proximity, and capacity of oil and natural gas pipelines, crude oil trucking, natural gas gathering systems and processing facilities. This could be particularly problematic to the extent that operations are conducted in remote areas that are difficult to access, such as areas that are distant from shipping or pipeline facilities. Furthermore, weather conditions or natural disasters, actions by companies doing business in one or more of the areas in which we or our venture will operate, or labor disputes may impair the distribution of oil and gas. These factors may affect the ability to explore and develop properties and to store and transport oil and gas and may increase our expenses to a degree that has a material adverse effect on operations.

Our inability to obtain necessary facilities could hamper our operations.

Oil and gas exploration activities depend on the availability of equipment, transportation, power and technical support in the particular areas where these activities will be conducted, and our access to these facilities may be limited. Demand for such limited equipment and other facilities or access restrictions may affect the availability of such equipment to us and may delay exploration and development activities. The quality and reliability of necessary facilities may also be unpredictable and we may be required to make efforts to standardize our facilities, which may entail unanticipated costs and delays. Shortages or the unavailability of necessary equipment or other facilities will impair our activities, either by delaying our activities, increasing our costs or otherwise.

Our success depends on our ability to attract and retain qualified personnel

Recruiting and retaining qualified personnel is critical to our success. The number of persons skilled in the acquisition, exploration and development of oil and gas properties is limited and competition for such persons is intense. As our business activity grows, it will require additional key financial, administrative and mining personnel as well as additional operations staff. Although we believe that we will be successful in attracting, training and retaining qualified personnel, there can be no assurance of such success. If we are not successful in attracting and training qualified personnel, the efficiency of our operations could be affected, which could have an adverse impact on our future cash flows, earnings, results of operations and financial condition.

We face strong competition from other energy companies that may negatively affect our ability to carry on operations.

We operate in the highly competitive areas of oil and natural gas exploration, development and production. Factors which affect our ability to successfully compete in the marketplace include, but are not limited to, the following:

the availability of funds and information relating to a property;

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the standards established by us for the minimum projected return on investment;
the availability of alternate fuel sources; and
the intermediate transportation of gas.

Our competitors include major integrated oil companies, substantial independent energy companies, affiliates of major interstate and intrastate pipelines, and national and local natural gas gatherers. Many of these competitors possess greater financial and other resources than we do.

Operating hazards may adversely affect our ability to conduct business.

Our future operations, if any, will be subject to risks inherent in the oil and natural gas industry, including, but not limited to, the following:

blowouts;
cratering;
explosions;
uncontrollable flows of oil, natural gas or well fluids;
fires;
pollution; and
other environmental risks.

These risks could result in substantial losses to us from injury and loss of life, damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations. Governmental regulations may impose liability for pollution damage or result in the interruption or termination of operations.

Losses and liabilities arising from uninsured or under-insured hazards could have a material adverse effect on our business.

If we develop and exploit oil and gas reserves, those operations will be subject to the customary hazards of recovering, transporting and processing hydrocarbons, such as fires, explosions, gaseous leaks, migration of harmful substances, blowouts and oil spills. An accident or error arising from these hazards might result in the loss of equipment or life, as well as injury, property damage or other liability. We cannot assure you that we will obtain insurance on reasonable terms or that any insurance we may obtain will be sufficient to cover any such accident or error. Our operations could be interrupted by natural disasters or other events beyond our control. Losses and liabilities arising from uninsured or underinsured events could have a material adverse effect on our business, financial condition and results of operations.

Compliance with environmental and other government regulations could be costly and could negatively impact production.

All phases of the oil and gas business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of laws and regulations. Our operations are subject to laws

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and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. The recent trend toward stricter standards in environmental legislation and regulation is likely to continue. The enactment of stricter legislation or the adoption of stricter regulation could have a significant impact on our operating costs, as well as on the oil and natural gas industry in general.

Our existing property, and any future properties that we may acquire, may be subject to pre-existing environmental liabilities.

Pre-existing environmental liabilities may exist on the property in which we currently hold an interest or on properties that may be subsequently acquired by us which are unknown to the Company and which have been caused by previous or existing owners or operators of the properties. In such event, we may be required to remediate these properties and the costs of remediation could be substantial. Further, in such circumstances, we may not be able to claim indemnification or contribution from other parties. In the event we were required to undertake and fund significant remediation work, such event could have a material adverse effect upon the Company and the value of our common shares.

Our business will suffer if we cannot obtain or maintain necessary licenses.

Our operations require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities. Among other factors, our ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments. Our inability to obtain, maintain or acquire extensions for these licenses or permits could hamper our ability to produce revenues from operations. Other oil and gas companies may seek to acquire property leases and licenses that we will need to operate our business. This competition has become increasingly intense as the price of oil on the commodities markets has risen in recent years. This competition may prevent us from obtaining licenses we deem necessary for our business, or it may substantially increase the cost of obtaining these licenses.

Penalties we may incur could impair our business.

Failure to comply with government regulations could subject us to civil and criminal penalties, could require us or our venture to forfeit property rights or licenses, and may affect the value of our assets. We may also be required to take corrective actions, such as installing additional equipment, which could require substantial capital expenditures. We could also be required to indemnify our employees in connection with any expenses or liabilities that they may incur individually in connection with regulatory action against them. As a result, our future business prospects could deteriorate due to regulatory constraints, and our profitability could be impaired by our obligation to provide such indemnification to our employees.

Strategic relationships upon which we may rely are subject to change, which may diminish our ability to conduct our operations.

Our ability to successfully acquire additional licenses, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements depends on developing and maintaining close working relationships with industry participants and government officials and on our ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment. We may not be able to establish these strategic relationships, or if established, we may not be able to maintain them. In addition, the dynamics of our relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to undertake in order to fulfill our obligations to these partners or maintain our relationships. If our strategic relationships

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are not established or maintained, our business prospects may be limited, which could diminish our ability to conduct our operations.

Political instability or fundamental changes in the leadership or in the structure of the governments in the jurisdictions in which the Company operates could have a material negative impact on the Company .

The Company’s interests may be affected by political and economic upheavals. Although the Company currently operates in jurisdictions that welcome foreign investment and are generally stable, there is no assurance that the current economic and political situation in these jurisdictions will not change drastically in coming years. Local, regional and world events could cause the jurisdictions in which the Company operates to change the mining laws, tax laws, foreign investment laws, or to revise their policies in a manner that renders the Company’s current and future projects non-economic. Further, there is always the possibility of the governments in the jurisdictions in which the Company operates deciding to nationalize the oil and gas industry, or imposing such restrictions and penalties on foreign-owned entities that the Company’s current and future projects would become uneconomic, or the Company would be prevented from selling its assets or operating its business. The occurrence of any such fundamental change could have a materially adverse effect on the Company’s business, financial condition and results of operations.

AMG Oil Ltd. may enter into hedging agreements but may not be able to hedge against all such risks.

If the Company is able to discover commercially exploitable quantities of oil or gas and is able to enter into commercial production, trom time to time the Company may enter into agreements to receive fixed or a range of prices on its oil and natural gas production to offset the risk of revenue losses if commodity prices decline; however, if commodity prices increase beyond the levels set in such agreements, the Company will not benefit from such increases. Similarly, from time to time the Company may enter into agreements to fix the exchange rate of certain currencies to US dollars in order to offset the risk of revenue losses if the other currencies increase in value compared to the US dollar; however, if other currencies decline in value compared to the US dollar, the Company will not benefit from the fluctuating exchange rate. In addition to the potential of experiencing an opportunity cost, other potential costs or losses associated with hedging include the risk that the other party to a hedge transaction does not perform its obligations under a hedge agreement, the hedge is imperfect or our hedging policies and procedures are not followed.

AMG Oil Ltd. is incorporated in Canada .

The Company is a company incorporated federally and as such, its corporate structure, the rights and obligations of shareholders and its corporate bodies may be different from those of the home countries of international investors. Furthermore, non-Canadian residents may find it more difficult and costly to exercise shareholder rights. International investors may also find it costly and difficult to effect service of process and enforce their civil liabilities against the Company or some of its directors, controlling persons and officers.

To the extent that the Company establishes natural gas and oil reserves, it will be required to replace, maintain or expand its natural gas and oil reserves in order to prevent its reserves and production from declining, which could adversely affect cash flows and income.

In general, production from natural gas and oil properties declines over time as reserves are depleted, with the rate of decline depending on reservoir characteristics. If the Company establishes reserves, of which there is no assurance, and is not successful in its subsequent exploration and development activities or in subsequently acquiring properties containing proved reserves, its proved reserves will decline as reserves

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are produced. The Company’s future natural gas and oil production is highly dependent upon its ability to economically find, develop or acquire reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a decrease in prevailing production volume prices for natural gas and oil or an increase in finding and development costs, and external sources of capital become limited or unavailable, the Company’s ability to make the necessary capital investment to maintain or expand its asset base of natural gas and oil reserves would be impaired. Even with sufficient available capital, its future exploration and development activities may not result in additional proved reserves, and the Company might not be able to drill productive wells at acceptable costs.

Risks Associated with our Common Shares

We expect to be classed as a passive foreign investment company for United States tax purposes, which will have adverse tax consequences for all United States holders of our shares.

Due to our ownership of a currently non-operating business in Israel as our sole material asset, we expect to be classified for United States income tax purposes as a passive foreign investment company. This means that any dividends we pay you will be taxed as ordinary income and not at preferential qualifying dividend tax rates, and upon any sale of our Common Shares, any capital gain will be taxed as ordinary income and not at preferential capital gains rates. This will continue to be true even after we commence active operations.

The exercise of all or any number of outstanding warrants or stock options, the issuance of any annual bonus shares, the award of any additional options, bonus shares or other stock-based awards or any issuance of shares to raise funds or acquire a business may dilute your Common Shares.

We may in the future grant to some or all of our directors, officers, insiders, and key employees options to purchase our Common Shares, bonus shares and other stock based awards as non-cash incentives to those persons. We may grant these options and other stock based awards at exercise prices equal to or less than market prices, and we may grant them when the market for our securities is depressed. The issuance of any equity securities could, and the issuance of any additional shares will, cause our existing shareholders to experience dilution of their ownership interests.

Any additional issuance of shares or decision to enter into joint ventures with other parties to raise financing or acquire other businesses through the sale of equity securities, may dilute our investors' interests in the Company, and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. Such issuance may cause a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the price of our Common Shares or a change in the control of the Company.

We do not expect to pay dividends for the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their Common Shares, and shareholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our Common Shares. Prospective investors seeking or needing dividend income or liquidity should not purchase our Common Shares.

An investment in AMG Oil will likely be diluted.

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We may issue a substantial number of our common shares without investor approval to raise additional financing and we may consolidate the current outstanding common shares. Any such issuance or consolidation of our securities in the future could reduce an investor’s ownership percentage and voting rights in the Company and further dilute the value of your investment.

The value of securities issued by the Company might be affected by matters not related to the Company’s own operating performance for reasons that include the following :

general economic conditions in Canada, the US, Israel and globally;
industry conditions, including fluctuations in the price of oil and natural gas;
governmental regulation of the oil and gas industry, including environmental regulation;
fluctuation in foreign exchange or interest rates;
liabilities inherent in oil and natural gas operations;
geological, technical, drilling and processing problems;
unanticipated operating events which can reduce production or cause production to be shut-in or delayed;
failure to obtain industry partner and other third party consents and approvals, when required;
stock market volatility and market valuations;
competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel;
the need to obtain required approvals from regulatory authorities;
worldwide supplies and prices of and demand for natural gas and oil;
political conditions and developments in Israel, Canada, the US, and globally;
political conditions in natural gas and oil producing regions;
revenue and operating results failing to meet expectations in any particular period;
investor perception of the oil and gas industry;
limited trading volume of the Common Shares;
change in environmental and other governmental regulations;
announcements relating to the Company’s business or the business of its competitors;
the Company’s liquidity; and
the Company’s ability to raise additional funds.

In the past, companies that have experienced volatility in their value have been the subject of securities class action litigation. The Company might become involved in securities class action litigation in the future. Such litigation often results in substantial costs and diversion of management’s attention and resources and could have a material adverse effect on the Company’s business, financial condition and results of operation.

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ITEM 4 INFORMATION ON THE COMPANY

We are an oil and gas exploration company and from the State of Israel, through our wholly owned subsidiary and own petroleum License No.356/”EITAN” in the Hula Valley. We have also recently acquired License No. 378/ "Gabriella" offshore Israel, although this property is presently not material to our operations. Our business plan is to carry out exploration activities on Eitan in order to assess whether the property contains any commercially exploitable quantities of oil and gas. We presently do not produce any oil or gas and do not earn any revenues.

A. History and Development of the Company

Name

Our legal and commercial name is AMG Oil Ltd.

Principal Office

Our principal office is located at Suite 901, 30 St. Clair Avenue West, Toronto, Ontario, Canada, M4V 3A1. Our telephone number is (416) 250-6500.

Incorporation and Continuation

We are a Canadian corporation governed under the Canada Business Corporations Act (the “ CBCA ”).

We were incorporated on February 20, 1997 under the name “Trans New Zealand Oil Company” by filing our Articles of Incorporation with the Secretary of State of Nevada. We changed our name to “AMG Oil Ltd.” on July 27, 1998. Our fiscal year end is September 30.

On November 25, 2008, the Company’s shareholders approved the change of our jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the CBCA by way of continuation. The Company completed the filing of its Articles of Conversion with the Nevada Secretary of State on November 25, 2008, and the Company’s Articles of Continuance were accepted for filing by Industry Canada effective November 27, 2008. The effect of these filings was to transfer the jurisdiction of incorporation of the Company from the State of Nevada to the Canadian federal jurisdiction under the CBCA. Copies of the Articles of Conversion, Articles of Continuance, Certificate of Continuance and By-Laws, are incorporated by reference to this Form 20-F as exhibits.

The Company’s common shares remain registered under Section 12(g) of the Exchange Act after completion of the continuation as a result of the operation of Rule 12g-3 of the Exchange Act. The Company’s current trading symbol on the OTCBB is “AMGOF”.

Acquisition of Adira Energy

We completed the acquisition of Adira Energy Corp. (“ Adira Energy ”), a company incorporated in the Province of Ontario, on August 31, 2009. As a result of the completion of this acquisition, we are now the owner of all the issued and outstanding shares of Adira Energy and we have ceased to be a “shell company”, as defined in Rule 12b-2 of the Exchange Act. The acquisition was completed to a securities exchange agreement dated August 4, 2009 among the Company, Adira Energy and Dennis Bennie, Ilan Diamond and Alan Friedman, as principal shareholders, and concurrent securities exchange agreements among the Company, and each of the minority shareholders of Adira Energy.

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Immediately prior the acquisition, Adira completed a private placement (“ Private Placement ”) of 7,600,000 units (“ Units ”) at a price of U.S. $0.25 per Unit. Sandfire Securities Inc. acted as lead agent to Adira in connection with the Private Placement. Each Unit was comprised of one common share of Adira and one-half of one share purchase warrant. The common shares and share purchase warrants issued by Adira were exchanged concurrently with the closing of the Acquisition. Each resulting share purchase warrant entitles the holder to purchase one additional common share of the Company at the exercise price of U.S.$0.50 per share for a two year period following closing, expiring on August 31, 2011. In connection with the Private Placement, 455,770 compensation warrants were issued to agents which will entitle the holders thereof to purchase an equal amount of common shares of the Company at the exercise price of U.S. $0.25 per common share for a two year period following closing expiring on August 31, 2011.

As consideration for the outstanding common of Adira Energy, the Company has issued an aggregate of 39,040,001 common shares and now has an aggregate of 62,240,001 issued and outstanding common shares. Additionally, 3,334,000 options and 3,845,000 warrants of Adira were exchanged for options (the “ Options ”) and warrants of the Company on an equivalent basis.

Concurrent with the completion of the Acquisition, Michael Hart, Michael Murphy and John Campbell, resigned from the board of the Company and Dennis Bennie (Chair), Glen Perry, Alan Friedman and Ilan Diamond (CEO) were appointed as the new directors of the Company. It is contemplated that at the next shareholder’s meeting, subject to and upon receipt of shareholder approval, the Company will change its name to “Adira Energy Corp.”, will ratify our 2009 Adira Option Plan and ratify the previously granted Options.

Together with pre-existing cash on hand and after deducting commissions payable in connection with the Private Placement, AMG has a cash balance as of August 31, 2009 of approximately U.S.$2.6 million. The Company intends to use cash proceeds to immediately complete the purchase of a drill rig and to commence drilling operations on its Eitan License in Northern Israel.

Adira Energy is a natural resource gas exploration and development company which has been granted a Petroleum License covering approximately 31,000 acres (125,700 dunam) in the Hula Valley located in Northern Israel. Adira Energy aims to explore and, if warranted, develop the natural gas and coal bed methane (CBM) gas field, generate gas-powered electricity, and acquire additional exploration/development licenses in the region.

Prior Operations of AMG

We were previously engaged in the acquisition and, formerly, exploration of resource properties.

We had been inactive for approximately the last four years and were considered a “shell” company within the meaning assigned to that term in Rule 12b-2 of the Exchange Act prior to the acquisition of Adira Energy because we had no operations and our assets consisted solely of cash. In previous years, we had conducted oil and gas exploration activities in New Zealand but withdrew from the permit and assigned our interest to other participants in the permit during the 2003 fiscal year.

We do not receive any revenue from our discontinued oil and gas operations in New Zealand and had no significant assets, tangible or intangible except for cash on hand. We have no history of earnings and there is no assurance that our business will be profitable. As at September 30, 2008, AMG had an accumulated deficit of $3,169,899. We expect to continue incurring operating losses and accumulating deficits in future periods.

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Reporting Issuer Status under Canadian Securities Laws

On February 1, 2006, the British Columbia Securities Commission granted our application to be designated as a reporting issuer under the Securities Act (British Columbia). Accordingly, we and our insiders became subject to the continuous disclosure requirements under the securities laws of the Province of British Columbia, Canada.

Capital Expenditures and Divestitures

During the last three fiscal years ended September 30, 2009, AMG did not undertake any capital expenditures.

During the period ended April 30, 2009, Adira put a deposit of $29,000 down on the purchase of drilling equipment.

Our planned capital expenditures for the next twelve months are summarized below under “Plan of Operations. These anticipated expenditures relate to our drilling exploration program in connection with our Hula Valley property in Israel and the related purchase of drilling equipment.

Other than described above, we do not expect any significant purchases of plant and equipment or the hiring of employees within the next twelve months, unless acquired in connection with the acquisition of a business opportunity which may be identified.

Takeover Offers

We are not aware of any indication of any public takeover offers by third parties in respect of our common shares during our last and current financial years.

B. Business Overview

Petroleum License

Through our wholly owned subsidiary, Adira Energy Israel Ltd., we received a petroleum license No.356/”EITAN” from the State of Israel in the Hula Valley for a period of three years from December 15, 2008 to December 14, 2011. The area of this permit is approximately 125.7 square kilometres. The permit area is subject to 12.5% royalty payable to the government. During this period, Adira Israel is committed to a work program as follows:

	1.	Re-process all the seismic lines and submit a conclusive report within six months from date of grant.

	2.	Prepare a report of gas potential within 12 months from date of grant.

	3.	Re-enter at least three wells to the shallow and deep layers and examination thereof within 24 months from the date of grant.

	4.	Drill and test a new well to the depth of at least 900 metres within 30 months from the date of grant.

The Hula Valley area has experienced some minor shallow gas exploration but with no commercial discovery of any gas field. There is no seismic data available for this review. In terms of conventional gas, there is no well-defined prospect in the area at this time.

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Through our wholly owned subsidiary, Adira Energy Israel Ltd., we received a petroleum License No. 378/ "Gabriella" offshore Israel app. – 390 square kilometres). This property is presently not material to our operations. We are presently evaluating whether to conduct preliminary exploration on this property.

Recommended Exploration Program

The target of our exploration activities will be the Esther field which is located within the area covered by our petroleum license. The Esther field has identified shallow gas and coal-bed methane (CBM) from the prior drilling of a total of 14 wells. We have determined based on the recommendations of a technical report that we have received to pursue a re-entry program to work-over and test the shallow gas in two to three shallow gas wells. If the testing of the shallow gas is successful, we plan to then design a development program based on the local market demands for the gas. For the coal-bed methane, it is recommended to test the selected shallow coal seams from 445 to 489 metres in the Esther #2 well with a stimulation program (hydraulic fracture treatment using foam or water). If the testing of the coal bed methane (“CBM”) is successful, a development program can be designed in conjunction with the seismic data acquisition program in order to determine the areal extent of the coal-bed deposits in the area. We plan to undertake the plan of operations provided below in order to carry out these recommendations.

Plan of Operations

Over the next 12 months, our objective is to undertake a plan of operations that will include the commencement of drilling operations on the Eitan license in the Hula valley of Northern Israel, as described in further detail in the table below. We will complete the purchase of a drill rig which will be moved to location and refurbished. Following refurbishment a drilling program encompassing re-entry into 3 existing wells and the drilling of 2 new wells (1 cored deep well down to 1090m) will commence. We estimate that the program will start in November 2009 and run 2½ to 3 months. Processing of technical data, de-watering and monitoring of well progress is likely to take around 6 months. Once results start coming forth a plan of action will be set up and designed for a follow-on program, if further exploration is warranted.

In addition to the drilling program, and budget permitting, we intend to acquire an additional 7-11km of additional 2D seismic information. This seismic will be acquired on the western side of the license and will allow us to assess possible closure to various geologic structures.

We are also presently evaluating whether to commence initial exploration work on the Gabriella license. We anticipate that this initial work, if undertaken, would mostly related to re-processing and interpretation of data on the license area. In the event that limited exploration work justifies additional spend, we will seek to engage funding joint venture partners.

Our plan of operations for the next twelve months is summarized as follows:

Activity	Project Timeframe	Budget ($)
Re-location of drill rig	3 weeks	30,000
Refurbishment of drill rig	3-6 weeks	60,000 (Estimated)
Drilling program (3 re-entry’s & 2 new wells)	10-13 weeks	850,000 (based on AFE’s)

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Coring and then desorption testing and lab work	6 weeks (coring included above)	Included in drilling budget
Monitoring – including de- watering & assessment of results	6 months	Partly included above + 75,000
Seismic (7-11km)	2 weeks	100,000
Application for future license/s	Concurrent to above timeframe	25,000
Initial work on new license/s	Concurrent to above timeframe	100,000
Planning	Mostly concurrent	10,000 (Consultants)

Our plan of operations, including the projected timeframe and budgeted expenditures, are subject to change. Our board of directors may determine based on the results of exploration activities or other identified opportunities `1to change our plan of operations. In addition, the risks identified above under “Risk Factors” may result in delays and costs overruns, each of which could adversely impact on our ability to complete our plan of operations within the projected timeframes and within the projected budgets.

We plan to continue future exploration based on the results of our preliminary exploration efforts. Our future exploration plans will be designed based on the results of our preliminary exploration programs. We plan to obtain geological reports on our preliminary exploration programs, which we will review in the process of determining whether to conduct advanced exploration and the nature of any advanced exploration programs. We will conduct our business activities largely through external consultants that we will retain in order to carry out our plan of operations. These consultants will include geologists and engineers with expertise in oil and gas exploration. We will also engage drilling companies and other oil and gas service provides to enable us to carry out our plan of operations.

C. Organizational Structure

We operate:

•	in Canada through our wholly owned subsidiary Adira Energy Corp., an Ontario corporation incorporated on April 8, 2009; and

•	in Israel, through Adira Energy’s wholly owned subsidiaries, namely:

	o	Adira Energy Israel Ltd., an Israel corporation; and

	o	Adira Energy Israel Services, an Israel corporation.

D. Property, Plant and Equipment

Corporate Offices

Our executives offices are comprised of approximately 400 square feet at Suite 901, 30 St. Clair Avenue West, Toronto, Ontario, Canada, M4V 3A1. The lease cost is $400 per month.

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The following sets forth information relating to our Eitan petroleum license, which is presently our only material exploration property:

Eitan Petroleum License

Adira Israel received a petroleum license petroleum license No.356/”EITAN” from the State of Israel in the Hula Valley on December 15 ^th 2008 (the “ License ”). The original term of the License is three years; however, the term is may be extended for a further four years according to Israeli Petroleum Law, 5712 – 1952 (the “ Petroleum Law ”).

License Rights

Subject to the provisions of the Petroleum Law, the License confers upon Adira Israel the right:

to explore for petroleum in the licensed area;
the right to do exploration work outside the licensed area bearing on the petroleum prospects of the licensed area, to such extent and subject to such conditions as the Israeli Petroleum and Mining Commissioner (the “ Commissioner ”) may prescribe;
the exclusive right to conduct tests or development drilling in the licensed area and to produce petroleum there from; and
the right to obtain a lease after having made a discovery in the licensed area.

Under the Petroleum Law, Adira Israel, as the holder of a petroleum right, is entitled, subject to any other relevant law, to drill and search for water in the area of its petroleum right and to use the water discovered by it either by drilling for water or in any of its other operations and/ or to use any other water situated in the area of its petroleum right to the extent required for its operations, provided that it does not thereby prejudice any person’s right in such water or having the benefit thereof.

License Requirements

The License is subject to the following requirements:

Adira Israel shall commence petroleum exploration within four months from the day on which the License is granted and shall continue the same with due diligence as long as the License is in force.
Adira Israel shall commence test drilling on the date prescribed therefore in the conditions of the license and not later than two years following the grant of the license and shall continue such drilling with due diligence until he makes a discovery. The interval between the completion of the drilling of one well and the commencement of the drilling of another well shall not exceed four months.
Adira Israel shall submit to the Commissioner reports on the petroleum exploration carried out by him. Adira Energy may require that the information supplied in the report shall be kept secret to the extent that it relates to prospects of discovering petroleum. Furthermore, Adira Energy shall at the time of drilling, carry out tests and measurements and take samples and retain samples and forward them to the Commissioner as the Commissioner may demand, having regard to the other tests and measurements carried out by Adira Energy and to the damages which may be caused by complying with the demand.

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•	Within one month after the expiration of every three months period from the grant of the License onwards, Adira Israel is required to deliver to the Commissioner a report, in duplicate, on the exploration work done by him under the License during the three months, setting out:

	o	the nature, extent, location and results of the exploration work;

	o	particulars of the expenditure incurred in respect of the exploration work;

	o	results and evaluations of the geological, geophysical, engineering and technical work done and the basic data on which those results and evaluations are based;

	o	data, considerations and causes determining the location of petroleum drillings.

•	Adira Israel has submitted the first two quarterly reports.

•	As the holder of a petroleum right, Adira Israel shall, not later than fourteen days before commencing the drilling of any test, development or water well or further drilling and work at an old drill hole, notify the Commissioner in writing of his intention to do so and in the case of a new well shall notify the location of the proposed well by means of a spot map certified by a qualified surveyor, the well drilling plan (including the estimated stratigraphic sections and the water-bearing horizons) and the date on which drilling will begin.

•	After drilling has commenced, Adira Israel, as the holder of the petroleum right shall, within ten days after the end of each month, report to the Commissioner in writing the depth of the well at the end of the month and the geological horizon to which, according to the holder’s determination then, the well has penetrated.

•	Within fifteen days after the completion of a petroleum well, whether as a producing well or a dry hole, and within fifteen days after the completion of any further work at an old drill hole, Adira Israel, as the holder of the petroleum right, shall submit to the Commissioner a completion report showing:

	o	the depth and the casing and cementing record of the well;

	o	copies of all drillers’ daily reports, drilling time, sample, electro and other logs kept;

	o	the results of all well tests, including wellhead and bottom hole pressures obtained;

	o	all core analyses made and all interpretations thereof made by or for the holder;

	o	the completion record of the well if it was completed as a producing well; and

	o	the plugging and abandonment record of the well if it has been abandoned, such record being signed and certified by the person responsible for the plugging.

The report shall be accompanied by samples taken of strata penetrated and analyses of such samples and samples of all fluids entering the well with the depths and geological horizons at which they were found and analyses of all such fluids.

Rights in Land

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The licensed area is situated in the Hula valley in the upper Galilee in Israel and is land owned by the State of Israel. According to the Petroleum Law, where state land is reasonably required by the holder of a petroleum right for a petroleum purpose, he may make a demand from the Israel Lands Authority that the land or any right therein be leased to him on the conditions prescribed by the Petroleum Law and the regulations under the Petroleum Law.

The licensed area forms part of the lands on which kibbutz Naot Mordechai is situated (in terms of a long term lease agreement between the Kibbutz and the Israel Lands Authority). This is the area on which the Company anticipates focussing its work program for the next 18 months. The result of this situation is that Adira Israel will have to reach an agreement with Kibbutz in order to secure the access to the land in question. Negotiations have commenced in connection with securing this agreement.

Location of Hula Valley in Israel

The Hula Valley basin is located in Northern Israel near the head of the Jordan River Valley. The valley is bordered on the west by the Naftali Mountains, to the east by the Golan Heights, to the north by the Metulla High, and to the south by the Korazim High. The Hula Valley is some 25 km long and 6 km wide providing an area of 150 km2 (37,065 acres) at an elevation of approximately 60 meters to 70 meters above sea level. The subject permit area is 125.7 km2 and it covers roughly half of the valley.

Seismic Data

Adira Israel has reprocessed 142.9 km of seismic data. The seismic surveys were acquired over the potential hydrocarbon traps in the central and southern part of the Hula Valley Basin. The areas include the central valley in the Neot Mordechai (“NMB”) area where the Esther wells were drilled and the southern Agamon Natural Preserve (“ANB”) area where the Notera, Gonen, and Suzie wells were drilled.

Exploration History

The presence of gas was first reported in 1950 while exploring the valley for peat to be used for fuel. Early exploration focused on the lignite stringers. Twenty shallow boreholes were drilled ranging in depths from 72 metres (236 feet) to 175 metres (574 feet). The early exploration also defined three zones or levels: Shallow (surface to 200 metres (656 feet)), Medium (200 metres to 600 metres (656 to 1,968 feet)), and Deep (600 metres to 2,800 metres (1,968 feet to 9,186 feet)). These different levels were explored in four projects as follows:

1.	Notera Project between 1980 and 1982 - Notera-1 well, was drilled in 1980, and reached a depth of 505 metres (1,658 feet). Dry gas was discovered between 476 - 482 metres (1,562 – 1,581 feet) and the well was completed for production. The well was connected to Kibbutz Gonen in October, 1981 and 7 MMcf of gas were sold. Total production including testing and flaring was estimated to be 14.7 MMcf. The well died on September 7, 1982 probably due to the influx of water from what appeared to be a strong water drive confirmed by a constant bottom hole pressure of 674 psig throughout the life of the well. The Notera-2 well, also drilled in 1980, penetrated to a depth of 749 meters (2,457 feet). It discovered gas and the well tested in the interval 120 - 175 meters (394 –574 feet). After a long period of testing, it was considered non- commercial due to the large quantities of formation water produced. In 1981, Notera-3 well was drilled to a total depth of 2,786 metres (9,140 feet) but no gas was found. In 1982, Notera-6 well was drilled to a total depth of 560 metres (1,837 feet) but also found no commercial gas.

2.	Gonen Project in 1983 – 10 shallow wells were drilled based on the well data of Notera 6 because of the multi-stringers of sand between 450 and 550 metres (1,476 and 1,820 feet). None of these wells tested any commercial production rates.

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3.	Susie Project from 1985 – 1986 – Three shallow wells of less than 150 metres were drilled in this area. Additional two wells were drilled but no success in finding commercial gas.

4.	ABJAC Operations between 1990 and 2002. Two structural traps were identified resulting in the drilling of the prospect in the Lily 1 well with a total depth of 1,260 metres (4,133 feet) but no commercial gas discovery. The Esther 1 and 2 wells were drilled to a total depth of 1,293 metres (4,244 feet) and 525 meters (1,722 feet) respectively. Both Esther 1 and 2 wells encountered numerous coal seams. Cores were taken to determine reservoir evaluation. Subsequent to the two Esther wells, nine more wells were drilled but no commercial gas discovery but encountered coal seams at various depths.

Exploration Summary

Most of the wells drilled in this area encountered gas. These wells varied in depth from 146 metres (479 feet) in Esther-4 well to the deepest at 2,786 metres (9,140 feet) in Notera-3 well. During the Notera project, all drilled wells were electrically logged with also conducted composite logs. A total of 42 gas exploration wells have been drilled in the Hula Valley. In addition, 20 unlisted lignite test boreholes were drilled to an average depth of 150 metres (~500 feet) and Naphtha drilled three structural boreholes. There were no absolute open flow tests or any extended tests to indicate or support a commercial discovery. However, coal seams have been identified in some of the wells to provide some data for potential coal-bed methane potentials.

Esther Field Gas Prospect

Adira Israel has received a technical report which has identified the Esther field as a gas prospect. A total of 14 wells (1, 2, 3, 3A, 4, 4A, 5, 6, 7, 8, 8A, 11, 12 and 13) were drilled in the field with no commercial gas discovery in all depths. The gas potentials in the Esther field can be divided into three segments according to depths. The shallow depth is around 200 metres (650 feet) between the surface and the top of the Yarda Basalt. The middle depth is the coal beds between 400 and 1,000 metres (1,300 and 3,280 feet). The deep depth is the limestone and fracture basalts from 1,000 to 4,000 metres (3,280 and 13,000 feet). The most prospective is the gas from the coal beds between the 400 and 1,000 metres and will be discussed in the section later. Coal-bed methane (CBM) is seldom commercial below 1,000 metres.

To determine whether there is any potential of the shallow gas and as part of the committed work program, the technical report recommended the re-entry of the two to three shallow wells in the Esther field to test for commercial gas. The re-entry would require cleaning up the formation, stimulation if required and flow test the well for an extended period of time. We plan to undertake this exploration work as part of our plan of operations, as described above under “Plan of Operations”.

Equipment

The Company intends to complete the purchase of a drill rig in order to commence drilling operations on its Eitan License in Northern Israel as soon as possible.

ITEM 4A UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of the Company’s plan of operations and historical financial and operating results should be read in conjunction with:

the audited consolidated financial statements of the Company for the years ended September 30, 2008, 2007, and 2006, together with the notes related thereto, as filed with the Company’s Form 20-F for the year ended September 30, 2008,
the interim financial statements of the Company for the three and nine month periods ended June 30, 2009 and 2008, as furnished with the Company’s Form 6-K filed with the SEC on September 3, 2009,
the audited financial statements of Adira Energy for the period ended April 30, 2009, and
Item 4 - “Information on the Company”.

A. Operating Results

Summary

We completed the acquisition of Adira Energy on August 31, 2009. Our plan of operations is to carry out the exploration business of Adira Energy and to complete the plan of operations described above in Item 4.B under “Plan of Operations”.

Results of Operations

Adira Energy

Period ended April 30, 2009

Adira Energy has not earned any revenues from operations to date.

Operating expenses during the period from the incorporation of Adira Energy on April 8, 2009 to April 30, 2009 included the following:

Accounting and legal expenses in connection with our organization of CDN$27,586,
Consulting fees of CDN $82,000, including CDN$32,000 paid to a director under a consulting contract,
CDN$598,800 in share based compensation expense attributable to the purchase of 12,000,000 common shares of Adira Energy at a price of CDN$0.0001 per share by certain directors, and
Technical consulting fees in connection with the Company’s exploration property totalling CDN$82,706.

AMG Oil

AMG has not earned any revenues from operations to date.

Nine Months ended June 30, 2009 to Nine Months ended June 30, 2008

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AMG incurred a net loss for the second quarter of the 2009 fiscal year of $39,174 (0.00 per share) compared to a loss of $46,389 (0.00 per share) from the third quarter of last year. For the nine month period ended June 30, 2009, AMG recorded a net loss of $130,999 (0.00 per share) compared to a net loss of $172,921 for the same period last year.

AMG’s net loss for the third quarter of the 2009 fiscal year of $39,174 (nine months: $130,999) consisted solely of General and Administrative (“G&A”) as detailed below. G&A decreased when compared to the same period last year as a result of AMG’s efforts to change AMG Oil’s jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the Canada Business Corporations Act by way of continuation during the 2008 fiscal year. G&A costs were partially offset by interest income of $404 (nine months: $9,640) compared to $7,574 (nine months: $33,164) from the same period last year. Interest income decreased when compared to the same period last year as a result of the Company’s lower cash balances as well as a decrease in interest rates on the Company’s investments.

2008 Compared to 2007 and 2006

Total losses incurred by AMG since incorporation to the period ending September 30, 2008 were $3,169,899.

AMG had a net use of cash of $213,768 from operating activities for the year ending September 30, 2008 compared to a net use of cash of $30,150 for the comparable year ending September 30, 2007 (2006: $25,201), which is an increase resulting primarily from general and administrative (“G&A”) expenses. AMG’s increased G&A expenses were primarily the results of increased consulting and professional fee expenses. These costs were partially offset by interest income being received by us as detailed below.

AMG incurred a net loss for the 2008 fiscal year of $282,659 ($0.01 per share) compared to a loss of $25,330 ($0.00 per share) for the year ended September 30, 2007 (2006: $36,173, $0.00 per share), a difference resulting primarily from $285,180 in G&A expenses relating to AMG’s operations, compared to $90,640 for the year ended September 30, 2007 (2006: $68,046). AMG also recorded interest income of $40,061 in the 2008 fiscal year compared to $65,310 for the year ended September 30, 2007 (2006: $31,873).

B. Liquidity and Capital Resources

Liquidity

As at June 30, 2009, AMG had $946,128 in cash and cash equivalents and $931,474 in working capital. This compares to $1,104,364 in cash and cash equivalents and $1,062,473 in working capital as at September 30, 2008.

We acquired approximately $1.7 million in cash upon completion of the acquisition of Adira Energy, providing us with total cash of approximately $2.6 million as at September 1, 2009. The cash acquired was primarily attributable to the Private Placement completed by Adira Energy, as described in Item 4.A of this Form 20-F.

We presently believe that we have sufficient capital resources to fund our plan of operations for the next twelve months, as described in Item 4.B of this Form 20-F. However, we will require additional funds to continue advanced exploration of our existing exploration property or to acquire and undertake exploration of new properties that we may acquire.

Cash on hand is currently our only source of liquidity. We do not have any lending arrangements in place with banking or financial institutions and we do not anticipate that we will be able to secure these funding arrangements in the near future.

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The Company has historically maintained its liquidity and has funded its operations primarily from the sale of its common shares. The Company relies on its ability to raise additional capital through the issuance of common shares, which may have a dilutive effect on the Company’s shareholders, to fund its operations. If the Company chooses to raise additional funding, the Company cannot give assurance that it will be able to secure outside sources of capital in an amount that is sufficient for it to undertake its plan of operations. In the event that future equity financing cannot be raised or negotiations for joint venture funding are not successful, our activities may be curtailed and this may adversely affect our ability to carry out exploration of our existing property and to acquire any new exploration properties. There can be no assurance that additional financing, if required, will be available to the Company on acceptable terms or at all.

Cash Flows

Adira Energy

Adira completed the following share issuances during the period ended April 30, 2009:

12,000,000 common shares were issued at a price of CDN$0.0001 per share, and
10,500,000 common shares were issued at a price of CDN$0.05 per share.

Subsequent to April 30, 2009, Adira Energy completed the issuance of 7,600,000 units at a price of $0.25 per unit pursuant to the Private Placement described in Item 4.1 of this Form 20-F.

Adira Energy used CDN$29,000 in investing activities during the period ended April 30, 2009 in connection with a deposit on drilling equipment.

Adira Energy used cash in operating activities of CDN$73,033 during the period ended April 30, 2009.

AMG Oil

The Company did not conduct any financing activities for the years ended September 30, 2008 and September 30, 2007. During the 2006 fiscal year, financing activities provided cash of approximately $1,500,000 from the issuance of common shares.

AMG did not conduct any investing activities for the 2008, 2007 or 2006 fiscal years.

The net impact of all cash activities during the twelve months ended September 30, 2008 resulted in a net decrease in cash of $213,768, a net decrease in cash of $30,150 for the year ended September 30, 2007 and a net increase in cash of $1,333,756 for the year ended September 30, 2006.

Material Commitments for Capital Expenditures

As at the date of this Form 20-F, we plan to spend approximately $300,000 over the next twelve months on capital expenditures relating to the exploration of our Eitan petroleum license. We plan to fund this capital expenditure using our existing cash resources.

Inflation

Inflation has not had a material impact on our operations.

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Foreign Currency Fluctuations

Fluctuations in foreign currency have not had a material impact on our operations.

Government Regulation

There is no governmental regulation that the Company is aware of or that would affect us, other.

Critical Accounting Policies of Adira Energy

Foreign Currency Translation

The financial statements of Adira Energy are presented in Canadian dollars. Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the balance sheet dates. Non-monetary items are translated at historical exchange rates. Revenues and expenses are translated using average rates of exchange during the year. Exchange gains or losses arising from currency translation are included in the determination of net income.

Share-based Compensation

Compensation expense has been recorded for the issue of common shares where an intrinsic value in excess of cash consideration paid was determined at the date of issuance.

Oil and Gas Property

Adira Energy follows the full cost method of accounting for oil and gas properties whereby all costs relating to the acquisition, exploration, and development of oil and gas properties and equipment are capitalized and accumulated in cost centres by country. Such costs include lease acquisition costs, geological and geophysical expenditures, lease rentals, seismic and costs of drilling productive and non-productive wells, together with overhead expenses related to acquisition, exploration, development activities. The costs in cost centres from which there has been no commercial production are not subject to depletion until commercial production commences. Depletion is calculated using costs of acquisition, exploration, development, estimated future development as well as dismantlement and abandonment costs, net of salvage values using the unit-of production method. An assessment is performed at every reporting date to determine whether the aggregate net costs in each pre-development stage cost centre are recoverable. Costs which are unlikely to be recovered are written-off. Oil and gas properties for which there has been commercial production, are subject to a ceiling test in each reporting period to determine that the costs are recoverable and do not exceed the fair value of the properties. The costs are assessed to be recoverable if the sum of the undiscounted cash flows expected from the production of proved reserves and the lower of cost and market of unproved properties exceed the carrying values of the oil and gas properties. If the carrying value of the oil and gas properties is not assessed to be recoverable, an impairment loss is recognized to the extent that the carrying value exceeds an estimated fair value. The fair value estimate is normally based on the sum of the discounted cash flows expected from production of proved and probable reserves at a discount rate of 10% and the lower of cost and market of unproved properties. The cash flows are estimated using forecast product prices and costs with the forecast product pricing being a constant price utilizing the actual oil price posted at April 30, 2009 and discounted using a risk-free interest rate of 10%.

Sales of oil and gas properties, whether or not being amortized currently, shall be accounted for as adjustments of capitalized costs, with no gain or loss recognized unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre. Abandonments of oil and gas properties shall be accounted for as adjustments of capital cost with the costs of abandoned properties being charged to the cost centre and amortized.

C. Research and Development, Patents and Licences

Not applicable.

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D. Trend Information

The Company is not aware of any trends that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. For information on risks associated to the Company refer to Item 3.D – “Risk Factors”.

E. Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

F. Tabular Disclosure of Contractual Obligations

AMG Oil

The following table sets forth AMG’s contractual obligations as at September 30, 2008:

	Payments due by period
		Less than 1			More than 5
Contractual Obligations	Total	year	1-3 years	3-5 years	years
Long-Term Debt Obligations	-	-	-	-	-
Capital (Finance) Lease	-	-	-	-	-
Obligations
Operating Lease Obligations	-	-	-	-	-
Purchase obligations	-	-	-	-	-
Other Long-Term
Obligations (1)	$5,500	$5,500	-	-	-
Other Long-Term Liabilities
Reflected on the Company’s
Balance Sheet under the
GAAP of the primary
financial statements	-	-	-	-	-
Total (2)	$5,500	$5,500	-	-	-

	(1)	The Other Long Term Obligations that the Company has are in respect of the consulting agreement entered into with PCL to provide advisory services to the Company and the rental agreement with DLJ at September 30, 2008. The Company may choose to terminate the consulting agreement and/or the rental agreement where practical.

	(2)	The Company’s total commitments include those that are required to be incurred to maintain its consultant to provide advisory services and office for administrative purposes.

Adira Energy

The following table sets forth Adira Energy’s contractual obligations as at April 30, 2009:

	Payments due by period
		Less than 1			More than 5
Contractual Obligations	Total	year	1-3 years	3-5 years	years
Long-Term Debt Obligations	-	-	-	-	-
Capital (Finance) Lease	-	-	-	-	-
Obligations

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	Payments due by period
		Less than 1			More than 5
Contractual Obligations	Total	year	1-3 years	3-5 years	years
Operating Lease Obligations	-	-	-	-	-
Purchase obligations	$320,000	$320,000	-	-	-
Other Long-Term	-	-	-	-	-
Obligations (1)
Other Long-Term Liabilities
Reflected on the Company’s
Balance Sheet under the
GAAP of the primary
financial statements	-	-	-	-	-
Total (2)	$320,000	$320,000	-	-	-

G. Safe Harbor

The safe harbor provided in s. 27A of the Securities Act and s. 21E of the Exchange Act shall apply to forward-looking information provided pursuant to Item 5.E and F where applicable.

ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The size of our board of directors is currently set at 4. All of our directors are elected annually by the shareholders and hold office until our next annual general meeting or until their successors are duly elected and qualified, unless their office is earlier vacated in accordance with the CBCA and our articles of incorporation. All of our directors are residents of Canada.

The following table sets forth information relating to our directors and senior management as at the date of this Form 20-F:

Name (1)	Residence	Position
Dennis Bennie (2)	Toronto, ON, Canada	Director (Chairman)

Daniel Bloch	Toronto, ON, Canada	Secretary

Brook Cole	Bowmanville, ON, Canada	Interim Chief Financial Officer

Ilan Diamond	Morningside, South Africa	Chief Executive Officer and Director

Alan Friedman	Toronto, ON, Canada	Executive Vice-President,, and Director

Denny Johnson	Denham Springs, LA, USA	Senior Vice-President, Exploration and Development

Colin Kinley	Overland Park, Kansas, USA	Senior Vice-President, Operations

Glen Perry	Dallas, Texas, USA	Chairman Technical Advisory Board, Director and Officer

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(1)	Neither age nor date of birth of directors or senior managers is required to be reported in the Company’s home country (Canada) nor otherwise publicly disclosed.

(2)	Member of Audit Committee.

The following is biographical information on each of the persons listed above:

Mr. Alan Friedmanman, Executive Vice-President, and Director. Mr. Friedman became a director of the Company on August 31, 2009 prior to assuming his current post at AMG Oil Ltd. Mr. Friedman is a South African attorney and a Director of the Canada-South Africa Chamber of Business. He is the founder, President and CEO of Rivonia Capital Inc., a firm that identifies opportunities in emerging markets, and enhances value through combining quality assets, management and financial and marketing support for early stage companies in the resource sector. He was formerly the Executive Vice-President for a Canadian finance firm, through which he facilitated significant capital raising for a number of public companies.

Mr. Ilan Diamond, Chief Executive Officer and Director. Mr. Diamond became CEO and a director of the Company on August 31, 2009. Prior to becoming CEO and Director at AMG Oil Ltd., Mr. Diamond was a director at Stratus Capital LLP. Stratus Capital focused on trading of physical commodities (primarily copper and cobalt), mainly from Africa to the East. Mr. Diamond is also the former Chief Operating Officer of a large investment group with interests in resources, financial services, technology, media and consulting, and private equity specialist Buffet Investments.

Mr. Dennis Bennie, Director (Chairman). Mr. Bennie became a director of the Company on August 31, 2009. Mr. Bennie is a pioneer, entrepreneur and innovator in the Canadian technology industry. Over the past 20 years, Mr. Bennie’s entrepreneurial management has powered Mission Electronics, Ingram Canada and Delrina. Mr. Bennie entered the world of technology in 1979, when he co-founded Mission Electronics. He drove the expansion of this leading British audio equipment manufacturer to become a dominant force in the high-end stereo market. In 1997, he founded the XDL Venture Capital Fund, focusing on information technology opportunities. Mr. Bennie currently manages an experienced team investing in private equity opportunities as the XDL Capital Group. From 1988 to 1996, Mr. Bennie was CEO of Delrina Corporation, an independent software developer and publisher, which he founded, which forged the new software categories of electronic forms and PC fax communications.

Mr. Glen Perry, Chairman Technical Advisory Board, Director and Officer . Mr. Perry became a director of the Company on August 31, 2009. Mr. Perry has a Masters in Petroleum Engineering from the University of Texas. He is currently the Director, COO and President of Zion Oil and Gas Inc., an oil and gas company incorporated in Israel and listed on the NASDAQ, and formerly; consultant to Delek Drilling Ltd. (Manager), National Petroleum Limited (Officer and Director), Prairie Producing Company, Exxon Company USA (now ExxonMobil Corporation) and Energy Reserves Group (now BHP).

Mr. Brook Cole, Chief Financial Officer. Mr. Cole became a director of the Company on August 31, 2009. Mr. Cole is and has been a controller of XDL Capital Corp. since 2007. Prior to that, Mr. Cole was the president of The Gateshead Group Inc. consulting firm for eight years.

Mr. Denny Johnson, Senior Vice-President, Exploration and Development, and Officer. Mr. Johnson became a director of the Company on August 31, 2009. Mr. Johnson has been the President of Highlands Consulting group since 2008. Prior to that, he was a drilling engineer for Range Resources, a natural gas producer, and a petroleum field engineer for Schlumberger, an oilfield service provider, for 3 and 4 years respectively.

Mr. Colin Kinley, Senior VP, Operations and Officer. Mr. Kinley became a director of the Company on August 31, 2009. Mr. Kinley is responsible for the leadership and overall management of Kinley

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Exploration. Prior to Kinley Exploration, Mr. Kinley worked for Saber Energy as President and provided the project management skills necessary to prove up an unconventional gas field in the central Kalahari Desert in sub Saharan Africa. Prior to his employment with Saber, Mr. Kinley spent 26 years as an executive for Layne Christensen Company and its predecessor companies. He was responsible for the management of specialized engineered drilling and development projects, executive oversight of multiple service companies and exploration and production operations, both domestically and internationally.

Mr. Daniel Bloch, Secretary. Mr. Bloch became a director of the Company on August 31, 2009. Mr. Bloch is a partner at Aird & Berlis LLP in Toronto, and member of the firm's Corporate Finance Group and the Natural Resources Team. Mr. Bloch’s practice focuses on all areas of corporate finance, mergers and acquisitions and securities law. Mr. Bloch regularly represents and provides general corporate and securities law advice to publicly and privately held corporations in a wide variety of industries. He has developed a particular expertise in advising issuers and underwriters in connection with public and private financings.

No director or any member of senior management has any family relationships with any other director or manager. There is no arrangement with any major shareholder, customer, supplier or other party pursuant to which any person was selected as a director or member of senior management.

B. Compensation

AMG

The following table sets forth the aggregate compensation paid by AMG for services rendered during the last full fiscal year ended September 30, 2008:

		Compensation		Common Shares Under Option
Named and Principal Position	Year Ended	Salary ($)	Other Annual Compensation ($)	Number of Options	Exercise Price	Expiry Date
Michael Hart, President, Chief Executive Officer, Secretary, Treasurer and Director	2008	-	-	-	-	-
John Campbell , Director	2008	-	-	-	-	-
Dan Brown , Director (1)	2008	-	$9,421	-	-	-
Garth Johnson , Chief Financial Officer	2008	-	-	-	-	-

(1)	Mr. Brown was paid indirectly by us through DLJ for time spent directly on AMG Oil. DLJ invoices us on a cost recovery basis.

Adira Energy

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The following table sets forth the aggregate compensation paid by Adira Energy for services rendered during the period ended April 30, 2009:

		Compensation		Common Shares Under Option
Named and Principal Position	Year Ended	Salary ($)	Other Annual Compensation ($ )	Number of Options	Exercise Price	Expiry Date
Dennis Bennie Director (Chairman)	2009	Nil	Nil	-	-	-
Daniel Bloch Secretary	2009	Nil	Nil	-	-	-
Brook Cole Interim Chief Financial Officer	2009	Nil	Nil	-	-	-
Ilan Diamond Chief Executive Officer and Director	2009	$40,000	Nil	-	-	-
Alan Friedmanman Executive Vice- President and Director	2009	32,000 ⁽¹⁾	Nil	-	-	-
Denny Johnson Senior Vice- President, Exploration and Development	2009	Nil	Nil	-	-	-
Colin Kinley Senior VP, Operations	2009	Nil	Nil	-	-	-
Glen Perry Chairman Technical Advisory Board, Director and Officer	2009	Nil	Nil	-	-	-

⁽¹⁾ Paid to Rivonia Capital Inc.

Compensation of Directors

AMG has no arrangements, standard or otherwise, pursuant to which Directors are compensated by AMG for their services in their capacity as Directors, or for committee participation, involvement in special assignments or for services as consultant or expert during the most recently completed financial year or

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subsequently, up to and including the date of this Form 20-F, except the Rivonia Agreement described as Section 7.A Related Party Transactions.

Stock Options

AMG has a stock option plan for the granting of incentive stock options to the officers, employees, consultants and directors. See Item 6E “Share Ownership – Equity Compensation Plans” for more information.

No stock options were granted by AMG during the fiscal year ended September 30, 2008. No stock options were exercised by any of the directors or executive officers of AMG during the fiscal year ended September 30, 2008. AMG granted options to purchase 3,334,000 common shares on August 31, 2009 at an exercise price of $0.25 per share, subject to various vesting provisions, to the holders of the Adira Energy options and in exchange for the cancellation of their Adira Energy option agreements.

No stock options were granted by Adira Energy during the period ended April 30, 2009. No stock options were exercised by any of the directors or executive officers of Adira Energy during the period ended April 30, 2009. Adira Energy granted options to purchase 3,334,000 common shares in August 2009 at an exercise price of $0.25 per share, subject to various vesting provisions.

Long-Term Incentive Plan Awards

AMG did not make any long-term incentive plan awards during the fiscal year ended September 30, 2008.

Adira did not make any long-term incentive plan awards during the period ended April 30, 2009.

Pension, Retirement or Similar Benefits

We do not have any amounts set aside or accrued to provide for pension, retirement or similar benefits.

C. Board Practices

Our Directors have served in their respective capacities since their election or appointment and will serve until our next annual general meeting or until a successor is duly elected and qualified, unless their office is earlier vacated in accordance with the CBCA and our articles of incorporation. Our officers serve at the discretion of the board.

Term of Office

All directors have a term of office expiring at our next annual general meeting, unless a director’s office is earlier vacated in accordance with our Articles or the provisions of the CBCA. All officers serve at the discretion of the Board.

As of September 1, 2009:

Name	Position	Position Held Since
Dennis Bennie	Director (Chairman)	August 2009

Daniel Bloch	Secretary	August 2009

Brook Cole	Interim Chief Financial Officer	August 2009

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Ilan Diamond	Chief Executive Officer and Director	August 2009

Alan Friedman	Executive Vice-President, and Director	August 2009

Denny Johnson	Senior Vice-President, Exploration and Development	August 2009

Colin Kinley	Senior VP, Operations	August 2009

Glen Perry	Chairman Technical Advisory Board and Director	August 2009

Benefits on Termination of Employment

We do not have any employment contracts with any of our executive officers other than verbal agreements. Written employment agreements are currently under negotiation.

We have no compensatory plan, contract or arrangement where an executive officer is entitled to receive more than $100,000 to compensate such executive officers in the event of resignation, retirement or other termination, a change of control of the Company or a change in responsibilities following a change in control, other than as described in this Form 20-F.

Audit and Compensation Committees

The Company has an audit committee and audit committee charter. A copy of the Company’s audit committee charter was filed as an exhibit to the Company’s Form 10-KSB filed for the Company’s 2003 fiscal year. The function of the audit committee is to monitor the veracity of the financial and regulatory reports produced by the Company, and the controls that are in place to ensure the opportunities for fraud or material error in the financial statements of the Company are minimized. The current audit committee is comprised of Dennis Bennie. We anticipate appointing additional members to our audit committee as we increase the size of our board of directors.

The Board has determined that Mr. Bennie meets the SEC’s definition of an “audit committee financial expert”, as defined in Item 401(e)(2) of Regulation S-B. The Board has also determined that Mr. Bennie meets the definition of an “independent director”, as defined in Rule 121A of the American Stock Exchange Company Guide.

The Company does not have a compensation committee. Currently, any material commitments, inclusive of remuneration, are required to be pre-approved by the Board.

The Company has a disclosure committee and a disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us, and the accuracy, completeness and timeliness of our financial reports.

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D. Employees

As at September 1, 2009 the Company has one employee, and receives various consulting and advisory services from consultants.

In addition to the verbal agreement with Rivonia Capital Inc., a company controlled by Alan Friedman,, we have verbal contracts of employment with Ilan Diamond, and verbal consulting arrangements Highlands Consulting Group, Inc., Kinley Exploration LLC and Brook Cole. The other consulting agreements are through the Israeli subsidiary disclosed above.

E. Share Ownership

Shares

The shareholdings of our officers and directors are set forth below as of the date hereof.

Name and Position	Number of Common Shares	Percentage of Outstanding Common Shares Owned ⁽¹⁾
Dennis Bennie Director (Chairman)	5,947,068	9.55%
Daniel Bloch Secretary	Nil	Nil
Brook Cole Interim Chief Financial Officer	Nil	Nil
Ilan Diamond Chief Executive Officer and Director	4,569,883	7.34%

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Name and Position	Number of Common Shares	Percentage of Outstanding Common Shares Owned ⁽¹⁾
Alan Friedmanman Executive Vice-President and Director	5,838,267 (2)	9.38%
Denny Johnson Senior Vice-President, Exploration and Development	4,000	0.0%
Colin Kinley Senior VP, Operations	Nil	Nil
Glen Perry Chairman Technical Advisory Board, Director and Officer	Nil	Nil
Total:	16,359,218	26.27%

(1) Based on 62,240,001 common shares issued and outstanding as of September 1, 2009.
(2) Includes 88,667 held by spouce.

Options

Details of the stock options held by our officers and directors are set forth below as of the date hereof.

Name and Position	Grant Date	Expiry Date	Exercise Price	Total
Dennis Bennie Director (Chairman)	August 14, 2009	August 19, 2014	US$0.25	396,000 ⁽¹⁾
Daniel Bloch Secretary	August 14, 2009	August 19, 2014	US$0.25	75,000 ⁽²⁾
Brook Cole Interim Chief Financial Officer	August 14, 2009	August 19, 2014	US$0.25	60,000 ⁽³⁾
Ilan Diamond Chief Executive Officer and Director	August 14, 2009	August 19, 2014	US$0.25	781,000 ⁽¹⁾⁽³⁾

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Name and Position	Grant Date	Expiry Date	Exercise Price	Total
Alan Friedmanman Executive Vice-President and Director	August 14, 2009	August 19, 2014-	US$0.25	646,000 ⁽¹⁾⁽³⁾
Denny Johnson Senior Vice-President, Exploration and Development	August 14, 2009	August 19, 2014	US$0.25	150,000 ⁽³⁾
Colin Kinley Senior VP, Operations	August 14, 2009	August 19, 2014	US$0.25	400,000 ⁽²⁾
Glen Perry Chairman Technical Advisory Board, Director and Officer	N/A	N/A	Nil	Nil
Total:				2,508,000

Notes:

(1)	Options vest over 2 years, with 12.5% vesting at the end of each quarter.
(2)	Options vest 8.5% at the end of each quarter over two years and 8.0% at the end of each quarter thereafter.
(3)	Options vest over 4 years, with 6.25% vesting at the end of each quarter.

Each option may be exercised to purchase one of our common shares at the exercise price.

Warrants

Details of the share purchase warrants held by our officers and directors are set forth below as of the date hereof.

Name and Position	Grant Date	Expiry Date	Exercise Price	Total
Dennis Bennie Director (Chairman)	August 31, 2009	August 31, 2011	US$0.50	118,200
Daniel Bloch Secretary	N/A	N/A	Nil	Nil
Brook Cole Interim Chief Financial Officer	N/A	N/A	Nil	Nil
Ilan Diamond Chief Executive Officer and Director	N/A	N/A	Nil	Nil

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Name and Position	Grant Date	Expiry Date	Exercise Price	Total
Alan Friedmanman Executive Vice-President and Director	August 31, 2009	August 31, 2011	US$0.50	9,000
Denny Johnson Senior Vice-President, Exploration and Development	August 31, 2009	August 31, 2011	US$0.50	2,000
Colin Kinley Senior VP, Operations	N/A	N/A	Nil	Nil
Glen Perry Chairman Technical Advisory Board, Director and Officer	N/A	N/A	Nil	Nil
Total:				129,200

Each warrant may be exercised to purchase one of our common shares at the exercise price.

Equity Compensation Plans

The following table summarizes our compensation plans under which equity securities are authorized for issuance as at September 1, 2009.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column)
Equity compensation plans approved by securityholders	Nil	Nil	N/A
Equity compensation plans not approved by securityholders	3,334,000	$0.25	2,990,000
Total:	3,334,000	$0.25	2,990,000

(1)	The number of securities remaining available for future issuance under AMG’s 10% rolling stock option plan as at the end of AMG’s most recently completed financial year is calculated on the basis of 10% of AMG’s issued and outstanding shares as at such date (being 10% of 62,240,001 =6,224,000).

On August 31, 2009, our board of directors adopted a new 10% rolling stock option plan (the “ New Stock Option Plan ”) to replace the existing plan, subject to approval by the shareholders of the Company.

The purpose of the New Stock Option Plan continues to be to allow the Company to grant options to directors, officers, employees and consultants, as additional compensation, and as an opportunity to participate in the success of the Company. The granting of such options is intended to align the interests of such persons with that of the shareholders. Options will be exercisable over periods of up to ten years as determined by the Board of Directors of the Company and are required to have an exercise price no

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less than the fair market value of the Company’s common shares, as determined in accordance with the New Stock Option Plan. Pursuant to the New Stock Option Plan, the Board of Directors may from time to time authorize the issue of options to directors, officers, employees and consultants of the Company and its subsidiaries or employees of companies providing management or consulting services to the Company or its subsidiaries.

The maximum number of common shares which may be issued pursuant to options previously granted and those granted under the New Stock Option Plan will be a maximum of 10% of the issued and outstanding common shares at the time of the grant. In addition, the number of shares which may be reserved for issuance to any one individual may not exceed 5% of the issued shares on a yearly basis or 2% if the optionee is engaged in investor relations activities or is a consultant. The New Stock Option Plan contains no vesting requirements, but permits the Board of Directors to specify a vesting schedule in its discretion.

As of September 1, 2009, 3,334,000 options had been granted under the 2009 Stock Option Plan to the former holders of Adira Energy stock options, in exchange for previously outstanding Adira Energy options. All of the 3,334,000 options that have been granted are exercisable and will expire on August 19, 2014. A copy of the 2009 Stock Option Plan is included herewith.

ITEM 7 MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

Major Shareholders

We are a publicly-held corporation, with our shares held by residents of the United States, Canada and other countries. To the best of our knowledge, no person, corporation or other entity beneficially owns, directly or indirectly, or controls more than 5% of our common shares, except as follows:

Name and Municipality of Residence	Number of Common Shares Owned ⁽¹⁾	Percentage ⁽²⁾
Dennis Bennie Toronto, Canada	5,947,068	9.55%
Ilan Diamond Morningside, South Africa	4,569,883	7.34%
Alan Friedman Toronto, Canada	5,838,267 ⁽³⁾	9.38%
Robert Pollock, Toronto, Canada	8,600,000	13.82%
Rael Diamond, Toronto, Canada	4,077,849 ⁽⁴⁾	6.55%

(1)	Based on beneficial share ownership data as of the date hereof. For these purposes, “beneficial ownership” means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. Unless otherwise indicated, each shareholder listed has sole voting or dispositive power with respect to such common shares.
(2)	Based on 62,240,001 of our common shares issued and outstanding as of September 1, 2009.
(3)	Includes 884,667 held by spouce
(4)	Includes shares held by spouce

Each of our common shares entitles the holder thereof to one vote.

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Geographic Breakdown of Shareholders

As of September 1, 2009, our shareholder register indicates that our common shares are held as follows:

Location	Number of Shares	Percentage of Total Shares	Number of Registered Shareholders of Record
United States	7,627,400	12.25%	37
Canada	45,524,885	73.14%	93
Other	9,087,716	12.25%	13
Total	62,240,000	100%	143

Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing house was located.

Transfer Agent

Our securities are recorded in registered form on the books of our transfer agent, Computershare Trust Company of Canada, located at 3 ^rd Floor, 510 Burrard Street, Vancouver, BC V6C 3B9. However, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses (on behalf of their respective brokerage clients). We do not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries.

Control

To the best of our knowledge, we are not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person, severally or jointly.

Insider Reports under the British Columbia Securities Act

Under the British Columbia Securities Act, “insiders” (generally officers, directors and holders of 10% or more of our shares) were required to file insider reports of changes in their ownership in the first ten days of the month following a trade in our securities. Copies of such reports are available for public inspection at the offices of the British Columbia Securities Commission, 9 ^th Floor, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2 (telephone (604) 899-6500) or at the British Columbia Securities Commission website (www.bcsc.bc.ca). Since 2002, in British Columbia all insider reports must be filed electronically ten days following the date of the trade at www.sedi.ca. The public is able to access these reports at www.sedi.ca.

B. Related Party Transactions

AMG

No director or senior officer of AMG, and no associate or affiliate of the foregoing persons, and no insider has or has had any material interest, direct or indirect, in any transactions, or in any proposed transaction, which in either such case has materially affected or will materially affect us or our predecessors since the beginning of our last completed fiscal year except as follows:

(a)

During the 2008 fiscal year, the Company incurred $54,568 (2007: $46,304 and 2006: $12,255) of mainly G&A costs through DLJ, a wholly owned subsidiary of Trans-Orient. The amount represents costs incurred by DLJ on behalf of the Company for administrative and accounting services. At September 30, 2008, the Company owes DLJ $2,604 (2007: $2,535). Trans-Orient

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	was the controlling shareholder of the Company from March 4, 2003 to November 29, 2005 and is related to the Company through a director and officers, and DLJ employs a director of the Company. During the 2008 fiscal year, a director was paid $12,955 (2007: $9,421 and 2006: $5,553) indirectly through DLJ for time spent on the Company.

(b)	Mr. Hart, Mr. Campbell and Mr. Brown, who are the three directors of the Company, participated in the private placement financing completed on February 28, 2006, acquiring a total of 120,000 Units at a price of $0.25 per Unit. Each Unit consists of one common share and one share purchase warrant. For further detail see Item 4.A “History and Development of the Company” under the heading “Principal Operations, Capital Expenditures & Divestitures”.

Adira

No director or senior officer of Adira Energy, and no associate or affiliate of the foregoing persons, and no insider has or has had any material interest, direct or indirect, in any transactions, or in any proposed transaction, which in either such case has materially affected or will materially affect us or our predecessors since the beginning of our last completed fiscal year except as follows:

(a)	During the period ended April 30, 2009, a total of $32,000 in consisting fees were paid to a private company controlled by Alan Friedman and Adira Energy agreed to pay the private company a fee of $8,000 per month for consulting.

(b)	Dennis Bennie, Ilan Diamond and Alan Friedman purchased an aggregate of 9,736,167 common shares of Adira Energy (3,493,270, 2,670,589 and 3,572,308 common shares, respectively) at a price of $0.0001 per share, such amount being the approximate amount of personal expenses incurred primarily by the Dennis Bennie, Ilan Diamond, Alan Friedman in conducting the business prior to incorporation. An aggregate of 1,250,000 common shares of Adira Energy (625,000, 625,000 and 0 common shares, respectively) were subsequently directly and beneficially purchased at a price of $0.05 per share. The shares of Adira Energy were subsequently split resulting in these three individuals holding, beneficially and directly, 10,986,167 shares (4,118,270, 3,572,308 and 3,295,589 respectively). Post split, an aggregate of 236,400 common shares of Adira Energy (236,400, 0 and 0 common shares, respectively) were subsequently purchased at a price of $0.25 per share. These shares were subsequently exchanged for an equivalent number of shares of the Company on completion of the acquisition of Adira Energy pursuant to the Securities Exchange Agreement dated August 4, 2009 among the Company, Adira Energy, Dennis Bennie, Ilan Diamond and Alan Friedman.

C. Interests of Experts and Counsel

No applicable.

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ITEM 8 FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Financial Statements

The financial statements required as part of this Form 20-F are filed under Item 17 of this Form 20-F.

Legal Proceedings

We are not a party to any legal or arbitration proceedings nor, to our knowledge, are any such proceedings contemplated.

Dividends

We have not paid any dividends on our common shares since incorporation. Our management anticipates that we will retain all future earnings and other cash resources for the future operation and development of our business. We do not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at our board of directors discretion after taking into account many factors including our operating results, financial condition and current and anticipated cash needs.

B. Significant Changes

We have not experienced any significant changes since the date of the financial statements included with this Form 20-F except as disclosed in this Form 20-F.

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ITEM 9 THE OFFER AND LISTING

Common Shares

Our authorized capital consists of 100,000,000 common shares without par value, of which 62,240,001 common shares and are issued and outstanding as of September 1, 2009. All shares are initially issued in registered form. There are no restrictions on the transferability of our common shares imposed by our constituting documents.

The common shares entitle their holders to: (i) vote at all meetings of our shareholders except meetings at which only holders of specified classes of shares are entitled to vote, having one vote per common share, (ii) receive dividends at the discretion of our board of directors; and (iii) receive our remaining property on liquidation, dissolution or winding up.

A. Offer and Listing Details

Trading Markets

Our common shares are traded on the OTC Bulletin Board in the United States under the symbol AMGOF. The following table shows the progression in the high and low closing trading prices of our common shares on the OTC Bulletin Board for the periods listed.

	High (CDN$)	Low (CDN$)
Annual (fiscal year)
2008	0.50	0.11
2007	0.90	0.32
2006	1.41	0.125
2005	0.27	0.022
2004	0.07	0.01
Quarterly
Fiscal 2009
Second Quarter	0.38	0.06
First Quarter	0.10	0.05
Fiscal 2008	0.33	0.11
Fourth Quarter
Third Quarter	0.50	0.21
Second Quarter	0.39	0.21
First Quarter	$0.50	$0.27
Fiscal 2007
Fourth Quarter	0.65	0.33
Third Quarter	0.90	0.60
Second Quarter	0.80	0.45
First Quarter	$0.75	$0.32
Monthly
August 2009	0.30	0.21
July 2009	0.38	0.25
June 2009	0.38	0.29
May 2009	0.37	0.29
April 2009	0.35	0.06
March 2009	0.07	0.06

B. Plan of Distribution

Not applicable.

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C. Markets

Our common shares are traded in the United States on the OTC Bulletin Board.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

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ITEM 10 ADDITIONAL INFORMATION

A. Share Capital

Our authorized capital consists of 100,000,000 common shares without par value, of which 62,240,001 common shares are issued and outstanding as of September 1, 2009.

Our audited consolidated financial statements for the year ended September 30, 2008 provide details of all of our securities issuances and the issue price per share from incorporation to September 30, 2008. None of our shares are held by us or on behalf of us. A summary of our outstanding dilutive securities (convertible or exercisable into common shares) is as follows:

Stock Options

We have adopted our 2009 stock option plan, as more fully described in this Form 20-F in Item 6.B, upon the completion of the acquisition of Adira Energy. The following table shows changes to our outstanding options over the last three fiscal years and to September 1, 2009:

		Weighted Average
	Options Outstanding	Exercise Price
Balance September 30, 2006	396,000	$0.25
Options granted	Nil	N/A
Options exercised	Nil	N/A
Options cancelled	Nil	N/A
Balance September 30, 2007	396,000	$0.25
Options granted	Nil	N/A
Options exercised	Nil	N/A
Options cancelled	Nil	N/A
Balance September 30, 2008	396,000	$0.25
Options granted (August 31, 2009)	3,334,000	$0.25
Options cancelled	396,0000	$0.25
Options exercised	Nil	N/A
Balance September 1, 2009	3,334,000	$0.25

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The following table summarizes information about our stock options outstanding as of September 1, 2009:

Exercise Price	Options Outstanding	Options Exercisable	Expiry Date
$0.25	3,334,000	Nil	August 19, 2014

Warrants

Our outstanding common share purchase warrants as at September 1, 2009 are as follows:

Number of Shares	Exercise Price	Expiry Date
528,770	$0.25	August 31, 2011
3,800,000	$0.50	August 31, 2011

History of Share Capital

A summary of the changes to our share capital over the last three fiscal years and to September 1, 2009 are as follows:

	Shares #	Amount $	Contributed Surplus $
Balance, September 30, 2006	23,200,000	4,194,600	—
Balance, September 30, 2007	23,200,000	4,194,600	—
Balance, September 30, 2008	23,200,000	4,232,140	—
Issuance in connection with acquisition of Adira Energy Corp.	38,800,001
Issuance on August 31, 2009	240,000
Balance, September 1, 2009	62,240,001

Fully Diluted Share Capital

A summary of our diluted share capital is as follows:

	September 30, 2008	September 1, 2009
Issued	23,200,000	62,240,001
Options outstanding	396,000	3,340,000
Warrants outstanding	6,600,000	4,300,770
Fully diluted share position	30,196,000	65,580,001

B. Memorandum and Articles of Incorporation

We were incorporated on February 20, 1997 as “Trans New Zealand Oil Company” under the laws of the State of Nevada, USA. We changed our name to “AMG Oil Ltd.” on July 27, 1998. On November 27, 2008, we changed our jurisdiction of incorporation from Nevada to the Canadian federal jurisdiction under the Canada Business Corporation Act. Our corporate constituting documents are comprised of our

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Articles of Association ("Articles") and our By-Laws (“By-Laws”). A copy of the Articles and By-laws are incorporated by reference into this Form 20-F as exhibits (See Item 19).

The following is a summary of certain material provisions of our Articles and Bylaws and material provisions of the CBCA that apply to us:

1. Objects and Purposes

Our Articles do not specify objects or purposes. We are entitled under the CBCA to carry on all lawful businesses which can be carried on by a natural person.

2. Directors

Director's power to vote on a proposal, arrangement or contract in which the director is interested.

According to the CBCA, a director or an officer of a corporation shall disclose to the corporation, in writing or by requesting to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer

	(a)	is a party to the contract or transaction;

	(b)	is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or

	(c)	has a material interest in a party to the contract or transaction.

The CBCA requires that the above disclosure shall be made, in the case of a director,

	(a)	at the meeting at which a proposed contract or transaction is first considered;

	(b)	if the director was not, at the time of the meeting, interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested;

	(c)	if the director becomes interested after a contract or transaction is made, at the first meeting after he or she becomes so interested; or

	(d)	if an individual who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director.

Under the CBCA, if a material contract or transaction is one that, in the ordinary course of our business, would not require approval by the directors or shareholders, a director or officer shall disclose, in writing to us or request to have it entered into the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of his interest immediately after he or she becomes aware of the interest.

Under the CBCA, a general notice to the directors declaring that a director or officer is to be regarded as interested, for any of the following, is a sufficient declaration of interest:

(a)

the director or officer is a director or officer, or acting in a similar capacity, of a party to the contract or transaction, or has a material interest in a party to the contract or transaction;

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	(b)	the director or officer has a material interest in the party; or

	(c)	there has been a material change in the nature of the director’s or the officer ’s interest in the party.

The CBCA further provides that a director required to make the above disclosure shall not vote on any resolution to approve the contract or transaction unless the contract or transaction:

	1.	relates primarily to his or her remuneration as a director, officer, employee or agent of the corporation or an affiliate;

	2.	is for indemnity or insurance, as provided for in the CBCA; or

	3.	is with an affiliate.

The CBCA provides that if a director or an officer fails to comply with the provisions of the CBCA related to disclosure of interests, a court may set aside the contract or transaction on any terms that it thinks fit, or may require the director or officer to account to the corporation for any profit or gain realized on it.

Under the CBCA, a contract or transaction, for which disclosure is required, is not invalid, and the director or officer is not accountable for any profit realized, if the disclosure requirements of the CBCA are met, the directors approved the transaction and the contract or transaction was reasonable and fair to the corporation. Even if these requirements are not met the contract or transaction is not invalid, and the director or officer is not accountable for any profit realized, if the director or officer acted in good faith, the contract or transaction was reasonable and fair to the corporation, and after sufficient disclosure to the shareholders, the contract or transaction is approved or confirmed by special resolution at a meeting of the shareholders.

Directors' power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body.

Our By-Laws provide that, subject to any unanimous shareholder agreements, the directors shall be paid such remuneration for their services as the board may determine from time to time. The CBCA provides that directors of a corporation may fix the remuneration of the directors, officers and employees of the corporation.

Borrowing powers exercisable by the directors.

Under our By-Laws, our board may, from time to time:

	1.	borrow money upon our credit;

	2.	issue, reissue, sell, pledge or hypothecate bonds, debentures, notes or other evidence of indebtedness or guarantee of ours, whether secured or unsecured;

	3.	give a guarantee on our behalf to secure performance of an obligation of any person; and

	4.	mortgage, hypothecate, pledge or otherwise create a security interest in or charge upon all or any of our real or personal property, owned or subsequently acquired by way of mortgage, hypothec, pledge or otherwise, to secure payment of any such evidence of indebtedness or guarantee whether present or future of ours.

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Retirement and non-retirement of directors under an age limit requirement.

There are no such provisions applicable to us under our Articles or the CBCA.

Number of shares required for a director's qualification .

Directors need not own any of our shares in order to qualify as directors.

3. Rights, Preferences and Restrictions Attaching to Each Class of Shares

Dividends

Dividends may be declared by our Board and paid to our shareholders according to their respective rights and interests in us. The CBCA provides that no dividend may be declared or paid if we are, or would after the payment , be unable to pay our liabilities as they become due; or if the realizable value of our assets would thereby be less than the aggregate of our liabilities and stated capital of all classes.

Voting Rights

Each of our shares is entitled to one vote on matters to which common shares ordinarily vote including the annual election of directors, the appointment of auditors and the approval of corporate changes. Our directors are elected yearly to hold office until the close of the next annual meeting of shareholders. Where directors fail to be elected at any such meeting then the incumbent directors will continue in office until there successors are elected. We do not permit cumulative voting rights.

Rights to Profits and Liquidation Rights

All of our common shares participate rateably in any of our net profit or loss and shares participate rateably in any of our available assets in the event of a winding up or other liquidation.

Redemption

We currently have no redeemable securities authorized or issued.

Sinking Fund Provisions

We have no sinking fund provisions or similar obligations.

Shares Fully Paid

All of our shares must, by applicable law, be issued as fully paid for cash, property or services. They are therefore non-assessable and not subject to further calls for payment.

Pre-emptive Rights

We do not have any pre-emptive rights which provide a right to any person to participate in any equity or other securities offering.

With respect to the rights, preferences and restrictions attaching to our common shares, there are generally no significant differences between Canadian and United States law as the shareholders, or the applicable corporate statute, will determine the rights, preferences and restrictions attaching to each class of our shares.

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4. Changes to Rights and Restrictions to Shares

The CBCA provides that we may by a special resolution amend our articles to:

	(a)	change any maximum number of shares that we are authorized to issue;

	(b)	create new classes of shares;

	(c)	reduce or increase our stated capital, if our stated capital is set out in our Articles;

	(d)	change the designation of all or any of our shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of our shares, whether issued or unissued;

	(e)	change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;

	(f)	divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

	(g)	authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

	(h)	authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series.

The CBCA also provides that we may, with respect to any of our issued shares which remain outstanding and are held by more than one person, by special resolution, amend our articles to constrain:

(a)	the issue or transfer of shares of any class or series to persons who are not resident Canadians;

(b)	the issue or transfer of shares of any class or series to enable us or any of our affiliates or associates to qualify under any prescribed law of Canada or a province:

	(i)	to obtain a licence to carry on any business,

	(ii)	to become a publisher of a Canadian newspaper or periodical, or

	(iii)	to acquire shares of a financial intermediary as defined in the regulations;

(c)	the issue, transfer or ownership of shares of any class or series in order to assist us any of our affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control;

	(d)	the issue, transfer or ownership of shares of any class or series in order to assist us to comply with any prescribed law; or

	(e)	the issue, transfer or ownership of shares of any class or series to enable us to be a registered labour-sponsored venture capital corporation to meet certain requirements of the Income Tax Act.

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The CBCA provides that the holder of shares of a class or series are entitled to vote separately as a class or series on a proposal to amend the articles to increase or decrease the number of authorized shares of such class or a class having equal or superior privileges; reclassify or cancel all or part of such class; add, change, or remove the rights, privileges, restrictions of such class; increase the rights or privileges of a superior class of shares; create a new class of shares equal to or superior to such class; effect and exchange or create a right of exchange of all or part of the shares of another class into the shares of such class; or, constrain the issue, transfer or ownership of such class or remove such a constraint.

A special resolution is a resolution passed by not less than two thirds of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders who were entitled to vote on that resolution.

Generally, there are no significant differences between Canadian and United States law with respect to changing the rights of shareholders as most state corporation statutes require shareholder approval (usually a majority) for any such changes that affect the rights of shareholders.

5. Meetings of Shareholders

Our By-Laws provide that we must hold our annual general meeting not more than 15 months from our last annual general meeting, but not later than six months after the end of our preceding financial year. Our Board also has the power to call special meetings. Our By-Laws provide that meetings shall be held at our registered office, or elsewhere in Canada as our Board may, from time to time, determine. Meetings may also be held at a location outside Canada, if specified in the Articles or if all of the shareholders entitled to vote thereat agree that the meeting is to be held at that place. Shareholder meetings are governed by our Articles and our By-Laws but many important shareholder protections are also contained in provincial securities legislation and the CBCA. Our By-Laws provide that, if we are not a distributing corporation, we will provide at least 10 days notice of a shareholder meeting. If we are a distributing corporation the CBCA requires not less than 21 days and not more than 60 days notice of a shareholder meeting. Our directors may fix in advance a date, which is no fewer than 21 days prior to the date of the meeting for the purpose of determining shareholders entitled to receive notice of and to attend and vote at a general meeting.

The provincial securities legislation and the CBCA superimpose requirements that generally provide that shareholder meetings require not less than a 60 day notice period from initial public notice and that we make a thorough advanced search of intermediary and brokerage registered shareholdings to facilitate communication with beneficial shareholders so that meeting proxy and information materials can be sent via the brokerages to unregistered but beneficial shareholders. The form and content of information circulars, proxies and like matters are governed by provincial securities legislation and the CBCA. This legislation specifies the disclosure requirements for the proxy materials and various corporate actions, background information on the nominees for election for director, executive compensation paid in the previous year and full details of any unusual matters or related party transactions. We must hold an annual shareholders meeting open to all shareholders for personal attendance or by proxy at each shareholder's determination.

Most state corporation statutes in the United States require a public company to hold an annual meeting for the election of directors and for the consideration of other appropriate matters. The state statutes also include general provisions relating to shareholder voting and meetings. Apart from the timing of when an annual meeting must be held and the percentage of shareholders required to call an annual meeting, or an extraordinary meeting, there are generally no material differences between Canadian and United States law respecting annual meetings and extraordinary meetings.

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6. Rights to Own Securities

There are no limitations under our Articles or in the CBCA that address the right of persons who are not citizens of Canada to hold or vote common shares.

7. Restrictions on Changes in Control, Mergers, Acquisitions or Corporate Restructuring of the Company

Neither our Articles nor our By-Laws contain any provision that would have the effect of delaying, deferring or preventing a change of control. We have not implemented any shareholders' rights or other "poison pill" protections against possible take-overs and we do not have any agreements which are triggered by a take-over or other change of control. There are no provisions in our Articles triggered by or affected by a change in outstanding shares which gives rise to a change in control. There are no provisions in our material agreements giving special rights to any person on a change in control.

The CBCA does not contain any provision that would have the effect of delaying, deferring or preventing a change of control of a company.

Generally, there are no significant differences between Canadian and United States law in this regard, as many state corporation statutes also do not contain such provisions and only empower a company's board of directors to adopt such provisions.

8. Ownership Threshold Requiring Public Disclosure

Neither our Articles nor our By-Laws require disclosure of share ownership. Share ownership of director nominees must be reported annually in proxy materials sent to our shareholders. There are no requirements under Canadian corporate law to report ownership of shares but the provincial securities legislation requires disclosure of trading by insiders (generally officers, directors and holders of 10% of voting shares) within 10 days of a trade. Controlling shareholders (generally those in excess of 20% of outstanding shares) must provide seven days advance notice of share sales. All insider trading reports filed by our insiders pursuant to Canadian securities legislation are available on the Internet at www.sedi.ca.

Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. United States federal securities laws require a company that is subject to the reporting requirements of the Securities Exchange Act of 1934 to disclose, in its annual reports filed with the Securities and Exchange Commission those shareholders who own more than 5% of a corporation's issued and outstanding shares.

9. Differences in Law between the US and Canada

Differences in the law between the United States and Canada, where applicable, have been explained above within each category.

10. Changes in the Capital of the Company

There are no conditions imposed by our Articles which are more stringent than those required by the CBCA.

C. Material Contracts

The material contracts to which we are a party which were entered into during the last two years are as follows:

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Securities Exchange Agreement dated August 4, 2009 among the Company, Adira Energy, Alan Friedman, Dennis Bennie and Ilan Diamond.
Securities Exchange Agreement dated effective August 4, 2009 among the Company and the minority shareholders of Adira Energy
Agency Agreement between Adira Energy and Sandfire Securities Inc. dated August 31, 2009 pursuant to which Adira Enegy issued 7,600,000 Units in the Private Placement as described in Item 4.A of this Form 20-F.
Subscription Agreement entered into between Adira Energy and the subscribers for the 7,600,000 Unit Private Placement described in Item 4.A of this Form 20-F

D. Exchange Controls

There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares of the Company, other than withholding tax requirements. See “Taxation”.

There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (Canada) (the “Investment Act”).

The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire common shares of the Company. It is general only, it is not a substitute for independent legal advice from an investor’s own advisor, and it does not anticipate statutory or regulatory amendments.

The Investment Act is a federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures (each an “entity”). Investments by non-Canadians to acquire control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Act. If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Act, the Investment Act prohibits implementation of the investment unless after review the Director of Investments, who is appointed by the Minster of Industry, is satisfied that the investment is likely to be of net benefit to Canada.

A non-Canadian would acquire control of the Company for the purposes of the Investment Act through the acquisition of common shares if the non-Canadian acquired a majority of the common shares of the Company. Further, the acquisition of less than a majority but one third or more of the common shares of the Company would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership of common shares.

For a direct acquisition that would result in an acquisition of control of the Company, subject to the exception for “WTO-investors” that are controlled by persons who are resident in World Trade Organization (“WTO”) member nations, a proposed investment would be reviewable where the value of the acquired assets is CAD $5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada’s cultural heritage or national identity, regardless of the value of the assets of the Company.

For a proposed indirect acquisition that would result in an acquisition of control of the Company through the acquisition of a non-Canadian parent entity, the investment would be reviewable where (a) the value

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of the Canadian assets acquired in the transaction is CAD $50 million or more, or (b) the value of the Canadian assets is greater than 50% of the value of all of the assets acquired in the transaction and the value of the Canadian assets is CAD $5 million or more.

In the case of a direct acquisition by or from a “WTO investor”, the threshold is significantly higher, and is adjusted for inflation each year. The 2008 threshold was CAD$295 million. Other than the exception noted below, an indirect acquisition involving a WTO investor is not reviewable under the Investment Act.

The higher WTO threshold for direct investments and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on the following businesses that have been deemed to be sensitive: (i) the production of oil and gas and the ownership of an interest in a producing oil and gas property in Canada; (ii) the provision of any “financial service”; (iii) the provision of any “transportation service”; or (iv) a “cultural business”.

Certain transactions relating to common shares of the Company are exempt from the Investment Act, including

	(a)	acquisition of common shares of the Company by a person in the ordinary course of that person’s business as a trader or dealer in securities,

	(b)	acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the Investment Act, and

	(c)	acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged.

E. Taxation

Material Canadian Federal Income Tax Consequences for United States Residents

The following summarizes the material Canadian federal income tax consequences generally applicable to the holding and disposition of our shares by a holder (in this summary, a “U.S. Holder”) who, (a) for the purposes of the Income Tax Act (Canada) (the “Tax Act”) and at all relevant times, is not resident in Canada, deals at arm’s length with us, holds our shares as capital property and does not use or hold our shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention, 1980 (the “Treaty”) and at all relevant times, is a resident solely of the United States, has never been a resident of Canada, and has not held or used (and does not hold or use) our shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or any other holder in special circumstances.

This summary is based on the current provisions of the Tax Act including all regulations thereunder, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by the Government of Canada to the date hereof, and our understanding of the current administrative practice of the Canada Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, although no assurances can be given in these respects. The summary does not take into account Canadian provincial, U.S. federal (which follows further below), state or other foreign income tax law or practice. The tax consequences to any particular U.S. Holder will vary according

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to the status of that holder as an individual, trust, corporation, partnership or other entity, the jurisdictions in which that holder is subject to taxation, and generally according to that holder’s particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder. All U.S. Holders are advised to consult with their own tax advisors regarding their particular circumstances. The discussion below is qualified accordingly.

Dividends

Dividends paid or deemed to be paid to a U.S. Holder by us will be subject to Canadian withholding tax. The Tax Act requires a 25% withholding unless reduced under a tax treaty. Under the Treaty, provided that a holder can demonstrate that it is a qualifying U.S. Holder, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross amount of the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns at least 10% of our voting shares). We will be required to withhold the applicable withholding tax from any dividend and remit it to the Canadian government for the U.S. Holder’s account.

Disposition

For purposes of the following discussion, we have assumed that our shares will remain listed on the TSX. A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of our shares in the open market unless the shares are “taxable Canadian property” to the holder thereof and the U.S. Holder is not entitled to relief under the Treaty. Our shares will be taxable Canadian property to a U.S. Holder (a) if, at any time during the 60 months preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder did not deal at arm’s length alone or together owned 25% or more of our issued shares of any class or series, or (b) in other specific circumstances, including where shares were acquired for other securities in a tax-deferred transaction. If our shares constitute taxable Canadian property to the holder, the holder will (unless relieved under the Treaty) be subject to Canadian income tax on any gain. The taxpayer’s capital gain or loss from a disposition of the share is the amount, if any, by which the proceeds of disposition exceed (or are exceeded by) the aggregate of the adjusted cost base and reasonable expenses of disposition. One-half of the capital gain is included in income and one-half of the capital loss is deductible from capital gains realized in the same year. Unused capital losses may be carried back three taxation years or forward indefinitely and applied to reduce capital gains realized in those years.

A U.S. Holder whose shares do constitute taxable Canadian property should consult with the holder’s own tax advisors regarding any possible relief (if any) from Canadian tax under the Treaty based on applicable circumstances at the relevant time. Such Treaty relief should not be anticipated under current circumstances.

United States Tax Consequences

United States Federal Income Tax Consequences

The following is a discussion of all material United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of our common shares. This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. (See “Taxation - Canadian Federal Income Tax Consequences” above). Accordingly, we urge holders and prospective holders of our common shares to consult their own tax advisors about the specific federal, state, local and foreign tax consequences to them of purchasing, owning and disposing of our common shares, based upon their individual circumstances.

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The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used herein, a “U.S. Holder” means a holder of our common shares who is a citizen or individual resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or of any political subdivision thereof, an entity created or organized in or under the laws of the United States or of any political subdivision thereof which has elected to be treated as a corporation for United States federal income tax purposes (under Treasury Regulation Section 301.7701 -3), an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own our common shares as capital assets and who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 5% of the value of our total outstanding stock. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares. In addition, this summary does not address special rules applicable to United States persons (as defined in Section 7701(a)(30) of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.

Distribution on Our Common Shares

In general, U.S. Holders receiving dividend distributions (including constructive dividends) with respect to our common shares are required to include in gross income for United States federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that we have current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder’s federal taxable income by those who itemize deductions. (See more detailed discussion at “Foreign Tax Credit” below). To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the U.S. Holder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of property. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S.

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dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, provided that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on our common shares generally will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation and which owns shares representing at least 10% of our voting power and value may, under certain circumstances, be entitled to a 70% (or 80% if the U.S. Holder owns shares representing at least 20% of our voting power and value) deduction of the United States source portion of dividends received from us (unless we qualify as a “passive foreign investment company,” as defined below). We do not anticipate that we will earn any United States income, however, and therefore we do not anticipate that any U.S. Holder will be eligible for the dividends received deduction.

Under current Treasury Regulations, dividends paid on our common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of our common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 28% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as “passive income, “ “high withholding tax interest,” “financial services income,” “shipping income,” and certain other classifications of income. Dividends distributed by us will generally constitute “passive income” or, in the case of certain U.S. Holders, “financial services income” for these purposes. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of our common shares should consult their own tax advisors regarding their individual circumstances.

Disposition of Our Common Shares

In general, U.S. Holders will recognize gain or loss upon the sale of our common shares equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in our common shares. Preferential tax rates apply to long-term capital gains of U.S. Holders which are individuals, estates or trusts. In general, gain or loss on the sale of our

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common shares will be long-term capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders that are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

Set forth below are certain material exceptions to the above-described general rules describing the United States federal income tax consequences resulting from the holding and disposition of common shares:

Foreign Investment Company

If 50% or more of the combined voting power or total value of our outstanding shares is held, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and we are found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that we may be treated as a “foreign investment company” as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares to be treated as ordinary income rather than capital gain. We do not believe that we currently qualify as a foreign investment company. However, there can be no assurance that we will not be considered a foreign investment company for the current or any future taxable year.

Passive Foreign Investment Company

United States income tax law contains rules governing “passive foreign investment companies” (“PFIC”) which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States if, for any taxable year, either (i) 70% or more of its gross income is “passive income,” which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of “passive income” is 50% or more. We appear to have been a PFIC for the fiscal year ended August 31, 2006, and at least certain prior fiscal years. In addition, we expect to qualify as a PFIC for the fiscal year ending August 31, 2007 and we may also qualify as a PFIC in future fiscal years. Each of our U.S. Holders is urged to consult a tax advisor with respect to how the PFIC rules affect such U.S. Holder’s tax situation.

Each of our U.S. Holders who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of three alternative tax regimes at the election of such U.S. Holder. The following is a discussion of such alternative tax regimes applied to such U.S. Holders of our stock. In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a “controlled foreign corporation” (as defined below) and a U.S. Holder owns, actually or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (See more detailed discussion at “Controlled Foreign Corporation” below).

A U.S. Holder who elects to treat us as a qualified electing fund (“QEF”) will be subject, under Section 1293 of the Code, to current federal income tax for any taxable year to which the election applies in which we qualify as a PFIC on his pro rata share of our (i) “net capital gain” (the excess of net long-term

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capital gain over net short-term capital loss), which will be taxed as long-term capital gain, and (ii) “ordinary earnings” (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income, in each case, for the shareholder’s taxable year in which (or with which) our taxable year ends, regardless of whether such amounts are actually distributed. A U.S. Holder’s tax basis in the common shares will be increased by any such amount that is included in income but not distributed.

The procedure a U.S. Holder must comply with in making an effective QEF election, and the consequences of such election, will depend on whether the year of the election is the first year in the U.S. Holder’s holding period in which we are a PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a “timely” QEF election, then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files his tax return for such first year. If, however, we qualified as a PFIC in a prior year during the U.S. Holder’s holding period, then, in order to avoid the Section 1291 rules discussed below, in addition to filing documents, the U.S. Holder must elect to recognize under the rules of Section 1291 of the Code (discussed herein) (i) any gain that he would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if we are a controlled foreign corporation, the U.S. Holder’s pro rata share of our post-1986 earnings and profits as of the qualification date. The qualification date is the first day of our first tax year in which we qualified as a QEF with respect to such U.S. Holder. For purposes of this discussion, a U.S. Holder who makes (i) a timely QEF election or (ii) an untimely QEF election and either of the above-described gain-recognition elections under Section 1291 is referred to herein as an “Electing U.S. Holder”. A U.S. Holder who holds common shares at any time during a year in which we are a PFIC and who is not an Electing U.S. Holder (including a U.S. Holder who makes an untimely QEF election and makes neither of the above-described gain-recognition elections) is referred to herein as a “Non-Electing U.S. Holder”. An Electing U.S. Holder (i) generally treats any gain realized on the disposition of his common shares as capital gain and (ii) may either avoid interest charges resulting from PFIC status altogether or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of our annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the U.S. Holder is not a corporation, any interest charge imposed under the PFIC regime would be treated as “personal interest” that is not deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF election, we must provide certain information regarding our net capital gains and ordinary earnings and permit our books and records to be examined to verify such information. We intend to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to us. We urge each U.S. Holder to consult a tax advisor regarding the availability of, and procedure for making, the QEF election.

A QEF election, once made with respect to us, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to revocation of the election. If a QEF election is made by a U.S. Holder and we cease to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which we do not qualify as a PFIC. Therefore, if we again qualify as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax years in which we qualify as a PFIC. In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of his or its direct and indirect interest in our shares. Therefore, if such U.S. Holder reacquires an interest in us, that U.S. Holder will be subject to the rules described above for Electing U.S. Holders for each tax year in which we qualify as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his common shares and (ii) certain “excess distributions,” as defined in Section 1291(b), by us.

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A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of his common shares and all excess distributions on his common shares over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. Holder (excluding any portion of the holder’s period prior to the first day of the first year (i) which began after December 31, 1986, and (ii) for which we were a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as “personal interest” which, as discussed above, is wholly non-deductible. The balance, if any, of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance. In certain circumstances, the sum of the tax and the PFIC interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the U.S. Holder.

If we are a PFIC for any taxable year during which a Non-Electing U.S. Holder holds our common shares, then we will continue to be treated as a PFIC with respect to such common shares, even if we are no longer definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such common shares had been sold on the last day of the last taxable year for which we were a PFIC.

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold (actually or constructively) marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market annually (a “mark-to-market election”). If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However, if the mark-to-market election is made by a Non-Electing U.S. Holder after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to our common shares. A U.S. Holder who makes the mark-to-market election will include in income for each taxable year for which the election is in effect an amount equal to the excess, if any, of the fair market value of our common shares as of the close of such tax year over such U.S. Holder’s adjusted basis in such common shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder’s adjusted tax basis in the common shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for our common shares included by such U.S. Holder for prior tax years, including any amount which would have been treated as a mark-to-market gain for any prior tax year but for the Section 1291 rules discussed above with respect to Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years. A U.S. Holder’s adjusted tax basis in our common shares will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the taxable year in which the election is made and to each subsequent taxable year, unless our common shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. Because the IRS has not established procedures for making a mark-to-market election, U.S. Holders should consult their tax advisor regarding the manner of making such an election. No view is expressed regarding whether our common shares are marketable for these purposes or whether the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases the basis of our common shares in the hands of the transferee and the basis of any property received in the exchange for those common shares would be increased by the amount of gain recognized. Under the Proposed Treasury Regulations, an Electing U.S. Holder would

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not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferee’s basis in this case will depend on the manner of the transfer. In the case of a transfer by an Electing U.S. Holder upon death, for example, the transferee’s basis is generally equal to the fair market value of the Electing U.S. Holder’s common shares as of the date of death under Section 1014 of the Code. The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the common shares are transferred. Each U.S. Holder of our shares is urged to consult a tax advisor with respect to how the PFIC rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with respect to our common shares, certain adverse rules may apply in the event that we are a PFIC and any foreign corporation in which we directly or indirectly hold shares is a PFIC (a “lower-tier PFIC”). Pursuant to certain Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or its proportionate amount of any lower-tier PFIC shares, and generally would be subject to the PFIC rules with respect to such indirectly-held PFIC shares unless such U.S. Holder makes a timely QEF election with respect thereto. We do not currently have any subsidiaries. If we obtain any subsidiaries, we intend to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to each subsidiary of ours that is a PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does not make a timely QEF election with respect to a lower-tier PFIC generally would be subject to tax (and the PFIC interest charge) on (i) any excess distribution deemed to have been received with respect to his or its lower-tier PFIC shares and (ii) any gain deemed to arise from a so-called “indirect disposition” of such shares. For this purpose, an indirect disposition of lower-tier PFIC shares would generally include (i) a disposition by us (or an intermediate entity) of lower-tier PFIC shares, and (ii) any other transaction resulting in a diminution of the U.S. Holder’s proportionate ownership of the lower-tier PFIC, including an issuance of additional common shares by us (or an intermediate entity). Accordingly, each prospective U.S. Holder should be aware that he or it could be subject to tax even if such U.S. Holder receives no distributions from us and does not dispose of its common shares. We strongly urge each prospective U.S. Holder to consult a tax advisor with respect to the adverse rules applicable, under the Proposed Treasury Regulations, to U.S. Holders of lower-tier PFIC shares.

Certain special, generally adverse, rules will apply with respect to our common shares while we are a PFIC unless the U.S. Holder makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all our of shares entitled to vote or the total value of our shares is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), each of which own, actually or constructively, 10% or more of the total combined voting power of all of our classes of shares entitled to vote (each, a “United States Shareholder”), we could be treated as a controlled foreign corporation (“CFC”) under Subpart F of the Code. This classification would affect many complex results, one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC’s Subpart F income and are also subject to current U.S. tax on their pro rata shares of increases in the CFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares

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by a U.S. Holder of our common shares which is or was a United States Shareholder at any time during the five-year period ending on the date of the sale or exchange is treated as ordinary income to the extent of earnings and profits attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. Special rules apply to United States Shareholders who are subject to the special taxation rules under Section 1291 discussed above with respect to a PFIC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. We do not believe that we currently qualify as a CFC. However, there can be no assurance that we will not be considered a CFC for the current or any future taxable year.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Included with this Form 20-F are the following consents with respect the inclusion of, or reference to, their reports in this Form 20-F:

1.	Consent of Devisser Gray to the inclusion of their auditors’ report dated July 3, 2009 on Adira Energy’s financial statements for the period ended April 30, 2009.

H. Documents on Display

Exhibits attached to this Form 20-F are also available for viewing at our offices, Suite 901, 30 St. Clair Avenue West, Toronto, Ontario, Canada, M4V 3A1; or you may request them by calling our office at (416) 250-6500. Copies of our financial statements and other continuous disclosure documents required under securities rules are available for viewing on the internet at www.sedar.com.

I. Subsidiary Information

See Item 4.C of this Form 20-F.

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ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not subject to any material market risks.

a) Transaction Risk and Currency Risk Management

Our operations do not employ complex financial instruments or derivatives, and given that we keep our excess funds in high-grade short-term instruments, we do not have significant or unusual financial market risks. In the event we experience substantial growth in the future, our business and results of operations may be materially affected by changes in interest rates on new debt financings, the granting of credit options to our customers, and certain other credit risks associated with our operations.

b) Interest Rate Risk and Equity Price Risk

We are equity financed and do not have any debt which could be subject to significant interest rate change risks. We have raised equity funding through the sale of securities denominated in Canadian dollars, and will likely raise additional equity funding denominated in Canadian dollars in the future.

c) Exchange Rate Sensitivity

A significant portion of our administrative operations are in Canada. We typically hold most of our funds in U.S. dollars and Adira Energy reports the results of its operations in Canadian dollars. We incur most of our exploration expenditures in U.S. dollars.

d) Commodity Price Risk

While the value of our exploration properties can always be said to relate to the price of the commodity and the outlook for same, we do not have any operating mines nor economic ore and therefore do not have any hedging arrangements.

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ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depository Shares

Not applicable.

PART II

ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15 CONTROLS AND PROCEDURES

Not applicable.

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERTS

Not applicable.

ITEM 16B CODE OF ETHICS

Not applicable.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

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ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

PART III

ITEM 17 FINANCIAL STATEMENTS

The following attached financial statements are incorporated herein:

1.	Financial Statements of Adira Energy Corp. for the period ended April 30, 2009, comprised of the following:

	(a)	Balance Sheets as at April 30, 2009;

	(b)	Consolidated Statements of Operations, Comprehensive Loss and Deficit for the period from incorporation on April 8, 2009 to April 30, 2009;

	(c)	Consolidated Statements of Cash Flows for the period from incorporation on April 8, 2009 to April 30, 2009;

	(d)	Notes to Financial Statements.

Pro Forma Financial Statements will be filed by an amendment to this From 20-F

ITEM 18 FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 17.

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Adira Energy Corp.

Consolidated Financial Statements

For the period ended from incorporation on
April 8, 2009 to April 30, 2009

D E V I S S E R G R A Y L L P
CHARTERED ACCOUNTANTS

401 - 905 West Pender Street
Vancouver, BC Canada
V6C 1L6

Tel: (604) 687-5447
Fax: (604) 687-6737

AUDITORS’ REPORT

To the Shareholders of Adira Energy Corp.

We have audited the consolidated balance sheet of Adira Energy Corp. as at April 30, 2009 and the consolidated statements of operations, comprehensive loss and deficit, and cash flows for the period then ended from incorporation on April 8, 2009 to April 30, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards (“GAAS”) in Canada and the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2009 and the results of its operations and cash flows for the period then ended in accordance with Canadian generally accepted accounting principles.

CHARTERED ACCOUNTANTS

Vancouver, British Columbia
July 3, 2009

ADIRA ENERGY CORP.
Consolidated Balance Sheet
(Expressed in Canadian Dollars)
As at April 30, 2009

	$
A S S E T S
Current assets
Cash and cash equivalents	424,167

Equipment deposit (note 4)	29,000
Oil and gas licenses (note 5)	1
	453,168

L I A B I L I T I E S
Current liabilities
Accounts payable and accrued liabilities	103,553
Due to related party (note 6)	32,000
	135,553

S H A R E H O L D E R S' E Q U I T Y

Share capital (note 7(b))	526,200
Contributed surplus (Note 6)	598,800
Deficit	(807,385	)
	317,615
	453,168
Nature and continuance of operations (note 1)
Subsequent event (Note 13)

Approved by the Board of Directors:


Director		Director

See notes to the consolidated financial statements

ADIRA ENERGY CORP.
Consolidated Statement of Operations, Comprehensive Loss and Deficit
(Expressed in Canadian Dollars)
For the period from incorporation on April 8, 2009 to April 30, 2009

		$

Expenses

Accounting and legal		27,586
Bank charges		142
Consulting		82,000
Office and miscellaneous		3,246
Share-based compensation (note 6)		598,800
Technical consulting		92,706
Travel		2,905


Net loss and comprehensive loss for the period		(807,385	)
Deficit, beginning of the period		-
Deficit, end of the period		(807,385


Basic and diluted loss per share	$	(0.05	)
Weighted average number of common shares outstanding		15,818,182

See notes to the consolidated financial statements

ADIRA ENERGY CORP.
Consolidated Statement of Cash Flows
(Expressed in Canadian Dollars)
For the period from incorporation on April 8, 2009 to April 30, 2009

Cash Provided by (Used for):	$
Operating activities:
Net loss and comprehensive loss for the period	(807,385	)
Add: share-based compensation, a non-cash item	598,800
	208,585
Changes in non-cash working capital components:
Accounts payable and accrued liabilities	103,552	)
Due to related party	32,000
Net cash provided by operating activities	(73,033	)

Investing activity:
Deposit on drilling equipment	(29,000	)
Net cash used in investing activities	(29,000	)

Financing activity:
Issuance of common shares	526,200
Net cash provided by financing activities	526,200

Net cash provided during the period	424,167
Cash and cash equivalents, beginning of period	-
Cash and cash equivalents, end of period	424,167

See notes to the consolidated financial statements

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

1.	Nature and Continuance of Operations

	The Company was incorporated under the Ontario Business Corporations Act on April 8, 2009 and its business activity is the exploration and development of an oil and gas license in Israel. The Company has not yet commenced its activity as the Company has not yet secured sufficient funding to commence this business.

	These financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception. The ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate equity financing to develop its properties.

	There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the company be unable to continue as a going-concern, the net realizable values of its assets may be materially less than amounts recorded on the balance sheets.

	Refer to note 13.

2.	Significant Accounting Policies

	Basis of Accounting

	These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“GAAP”), and also are materially consistent with United States GAAP. Summarized below are those policies considered particularly significant to the Company.

	Principles of Consolidation

	These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Adira Energy Israel Ltd. of Israel.

	Use of Estimates

	The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses incurred during the periods. Actual results could differ from those estimated.

	Loss Per Share

	Loss per share has been calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share is not present because it is anti-dilutive.

	Financial Instruments and Financial Risk

	The Company’s financial instruments consist of current assets and liabilities, the fair values of which approximate their carrying values due to the short-term nature of these items.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

2.	Significant Accounting Policies (continued)

	Foreign Currency Translation

	The financial statements are presented in Canadian dollars. Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalent using foreign exchange rates at the balance sheet dates. Non- monetary items are translated at historical exchange rates. Revenues and expenses are translated using average rates of exchange during the year. Exchange gains or losses arising from currency translation are included in the determination of net income.

	Share-based Compensation

	Compensation expense has been recorded for the issue of common shares where an intrinsic value in excess of cash consideration paid was determined at the date of issuance.

	Income Taxes

	The Company accounts for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled. When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no net assets are recognized. Such an allowance has been applied to all potential income tax assets of the Company.

	Environmental Expenditures

	The operations of the Company have been, and may in the future be, affected from time to time in varying degree by changes in environmental regulations, including those for site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly from country to country and are not predictable.

	Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against operations as incurred or capitalized and amortized depending on their expected future economic benefit. Estimated future removal and site restoration costs are recognized when the ultimate liability is reasonably determinable, and are charged against operations over the estimated remaining life of the related business operations, net of expected recoveries.

	Asset Retirement Obligations

	The fair value of a liability for an asset retirement obligation is recognized on an undiscounted cash flow basis when a reasonable estimate of the fair value of the obligation can be made. The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related long-lived asset. Subsequently, the asset retirement cost is allocated to expense using a systematic and rational method and is adjusted to reflect period-to-period changes in the liability resulting from the passage of time and from revisions to either expected payment dates or the amounts comprising the original estimate of the obligation. As at April 30, 2009, the Company does not have any asset retirement obligations.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

2.	Significant Accounting Policies (continued)

	Oil and Gas Property

	The Company follows the full cost method of accounting for oil and gas properties whereby all costs relating to the acquisition, exploration, and development of oil and gas properties and equipment are capitalized and accumulated in cost centres by country. Such costs include lease acquisition costs, geological and geophysical expenditures, lease rentals, seismic and costs of drilling productive and non-productive wells, together with overhead expenses related to acquisition, exploration, development activities. The costs in cost centres from which there has been no commercial production are not subject to depletion until commercial production commences. Depletion is calculated using costs of acquisition, exploration, development, estimated future development as well as dismantlement and abandonment costs, net of salvage values using the unit-of production method. An assessment is performed at every reporting date to determine whether the aggregate net costs in each pre-development stage cost centre are recoverable. Costs which are unlikely to be recovered are written-off. Oil and gas properties for which there has been commercial production, are subject to a ceiling test in each reporting period to determine that the costs are recoverable and do not exceed the fair value of the properties. The costs are assessed to be recoverable if the sum of the undiscounted cash flows expected from the production of proved reserves and the lower of cost and market of unproved properties exceed the carrying values of the oil and gas properties. If the carrying value of the oil and gas properties is not assessed to be recoverable, an impairment loss is recognized to the extent that the carrying value exceeds an estimated fair value. The fair value estimate is normally based on the sum of the discounted cash flows expected from production of proved and probable reserves at a discount rate of 10% and the lower of cost and market of unproved properties. The cash flows are estimated using forecast product prices and costs with the forecast product pricing being a constant price utilizing the actual oil price posted at April 30, 2009 and discounted using a risk-free interest rate of 10%.

	Sales of oil and gas properties, whether or not being amortized currently, shall be accounted for as adjustments of capitalized costs, with no gain or loss recognized unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre. Abandonments of oil and gas properties shall be accounted for as adjustments of capital cost with the costs of abandoned properties being charged to the cost centre and amortized.

	Impairment of Long-Lived Assets

	Long-lived assets are assessed for impairment when events and circumstances warrant, when the carrying amounts of the assets exceeds its estimated undiscounted net cash flow from use or its fair value, at which time the impairment is charged to earnings.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

3.	Changes in Accounting Policies

	Capital Disclosures

	The Company has adopted new CICA Handbook section 1535 which requires disclosure of an entity’s objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non- compliance (Note 11).

	Financial Instruments - Disclosure and Presentation

	The Company has adopted new CICA Handbook sections 3862 and 3863 which replace CICA Handbook Section 3861, Financial Instruments - Disclosure and Presentation. These standards increase the disclosures currently required, which will enable users to evaluate the significance of financial instruments for an entity’s financial position and performance, including disclosures about fair value. In addition, disclosure is required of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk (note 10). The quantitative disclosures must provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity’s key management personnel.

	The Company’s financial instruments, at April 30, 2009, consist of cash, accounts payable and accrued liabilities and due to related party. Cash has been classified as available for sale and the carrying value approximates its fair value due to its short term nature. Accounts payable and accrued liabilities and due to related party are classified as other financial liabilities, measured at amortized cost using the effective interest rate method, however due to their short term nature, their carrying amounts approximate fair value.

	Going Concern – Amendments to Section 1400

	CICA 1400, General Standards of Financial Statement Presentation , was amended to include requirements to assess and disclose an entity’s ability to continue as a going concern taking into account all available information available for at least, but not limited to 12 months from the balance sheet date. The new requirements became effective for the Company on April 4, 2009. Disclosure is addressed in Note 1.

	FUTURE CHANGES IN ACCOUNTING POLICIES

	International Financial reporting Standards (“IFRS”)

	In February 2008 the Canadian Accounting Standards Board announced 2011 as the changeover date for publicly- listed companies to use IFRS, replacing Canada’s own generally accepted accounting principles. The specific implementation is set for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

4.	Equipment Deposit

	Equipment deposit consists of a deposit on the purchase of drilling equipment located in Israel. The Company is to pay US$320,000 plus Value Added Tax (“VAT”) (US$100,000 subsequently paid for a total of US$135,500 plus VAT to report date) by August 31, 2009 or the date title of all equipment is registered in the Company’s name.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

5.	Oil and Gas Licenses

	The Company’s subsidiary has a license to explore for oil and gas in Israel which comprises an area of approximately 31,012 acres and is effective for the period from December 15, 2008 to December 15, 2011. Costs to acquire this license were paid outside of the Company.

6.	Related Party Transactions

	During the current period, the Company incurred $32,000 in consulting fees to a director’s private company and has agreed to pay the company $8,000 per month for consulting.

	As at April 30, 2009, $32,000 is due to a director’s private company for consulting services. The amount is unsecured, does not bear interest and has no fixed terms of repayment.

	At the Company’s incorporation, 12,000,000 common shares were issued to certain directors for cash consideration of $0.0001 per share (the “Seed shares”). Subsequently, the Company issued non-flow through common shares by private placement for consideration of $0.05 per share. Accordingly, the Company has taken a non-cash charge of $598,800 ($0.0499 per share) to recognize an expense to the Company equal to the difference between the per share consideration paid for the seed shares and that paid for the shares subsequently issued by private placement at $0.05 per share. The credit portion of the transaction has been recorded in contributed surplus.

	All related party transactions were in the normal course of operations and are measured at fair value as determined by management.

7.	Share Capital

	(a)	Authorized

		Unlimited number of voting common shares without nominal or par value.

	(b)	Issued voting common shares:

	Number	Amount
		$

Private placements (1)	22,500,000	526,200	)

Balance, April 30, 2009	22,500,000	526,200	)

(1)

The Company issued 12,000,000 common shares for $1,200 on April 8, 2009 (Refer to note 6) and 10,500,000 shares for $525,000 on April 22, 2009.

	(c)	Stock Options

		As at April 30, 2009, the Company has approved an option plan to issue up to a maximum of 4,000,000 shares pursuant to such plan, the exercise price and vesting period of which, to be at the discretion of the Board of Directors.

		At April 30, 2009, the Company has no options outstanding.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

8.	Income Taxes

	No provision for recovery of income taxes was made in 2009 because of the uncertainty as to the utilization of the losses and costs for income tax purposes. At April 30, 2009 the Company has accumulated losses for tax purposes of approximately $207,600 which expire in 2029. The Company also has undeducted incorporation costs totalling $700 which are available for deduction against future Canadian taxable income.

9.	Proposed Share Purchase Transaction

	On April 21, 2009, the Company signed a letter of intent with AMG Oil Ltd (“AMG”). AMG will offer to purchase the Company by way of a share purchase transaction or other form of business combination (the “Proposed Transaction”), which will result in AMG purchasing all of the issued and outstanding securities of the Company. The Proposed Transaction is subject to, among other terms, the negotiation and execution of a formal agreement by June 30, 2009 (subsequently amended to September 30, 2009). Upon completion of the Proposed Transaction, the board of the resulting issuer will be comprised of five appointees of the Company, one appointee of AMG as approved by the Company and any other appointee as designated by the board of the resulting issuer.

	The Proposed Transaction is also subject to either AMG or the Company completing a private placement ("Private Placement") for minimum proceeds of US$2,000,000 by the issuance of 8,000,000 units at a price of US$0.25 per unit, or such lesser number of Adira units as approved by Adira. Each unit shall consist of one (1) common share and one half of one (1/2) warrant. Each full warrant shall entitle the holder to acquire an additional common share at a price of US$0.50 per common share for a period of 24 months from the closing of the Private Placement provided that the expiry date will be accelerated, if the closing price of common shares of the resulting issuer for any period of 20 consecutive trading days exceeds US$1.00 per common share (the "Acceleration Event"), to a period that is 30 days after the Acceleration Event.

	In part consideration for acquiring the outstanding shares of the Company, AMG will issue such number of common shares (the “Payment Shares”) that shall result in the Company’s current shareholders holding approximately 49.8% of the resulting issuer, post Private Placement. An aggregate of approximately 31.2 million Payment Shares will be issued to the Company’s shareholders on a pro rata basis, which will be in accordance with their holdings in the Company.

	The Proposed Transaction is subject to receipt of the necessary regulatory and shareholder approvals and a due diligence period.

	Refer to Note 13.

10.	Financial Instrument Risks

	The Company’s financial instruments are exposed to the following risks:

	Credit Risk

	The Company’s primary exposure to credit risk is the risk of illiquidity of cash amounting to $424,167 at April 30, 2009. As the Company’s policy is to limit cash holdings and short-term deposits to instruments issued by major Canadian banks, or investments of equivalent or better quality, the credit risk is considered by management to be negligible.

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

10.	Financial Instrument Risks (continued)

	Liquidity Risk

	Liquidity risk is the risk that the Company will not be able to pay financial instrument liabilities as they come due. The Company’s only liquidity risk from financial instruments is its need to meet operating accounts payable and related party requirements. The Company has maintained sufficient cash balances to meet these needs at April 30, 2009.

	Foreign Exchange Risk

	The Company has virtually no foreign exchange risk as at April 30, 2009 as virtually all of its financial assets and liabilities are denominated in Canadian dollars and located in Canada.

	Interest Rate Risk

	The Company has not been exposed to interest rate risk on its cash as at April 30, 2009.

	The Company maintained all of its cash balance on deposit in a chequing account with a major Canadian bank.

	Price Risk

	The Company is not exposed to price risk.

11.	Capital Management

	The Company’s objectives for the management of capital are to safeguard its ability to continue as a going concern including the preservation of capital, and to achieve reasonable returns on invested cash after satisfying the objective of preserving capital.

	The Company considers its cash to be its manageable capital. The Company’s policy is to maintain sufficient cash and deposit balances to cover operating and exploration costs over a reasonable future period, generally one to one and a half years. The Company accesses capital markets through equity issues as necessary and may also acquire additional funds where advantageous circumstances arise.

	The Company currently has no externally-imposed capital requirements.

12.	Segmented Information

		April 30,
		2009

Assets by geographic segment, at cost
Canada	$	424,167
Israel		29,001

	$	453,168

ADIRA ENERGY CORP.
Notes to Consolidated Financial Statements
Period Ended April 30, 2009
(Expressed in Canadian Dollars)

13.	Subsequent Event

	The Company engaged Sandfire Securities Inc. (“Sandfire”) to act as lead agent in a brokered offering for minimum proceeds of US$2,000,000 by the issuance of 8,000,000 units at a price of US$0.25 per Unit or such lesser number of Adira units as approved by Adira. Each unit shall consist of one (1) common share and one half of one (1/2) warrant. Completion of the offering is a condition to the closing of the Proposed Transaction. At report date the Company had received verbal commitments for the offering in full on terms as indicated in note 9. Sandfire and other selling group participants are to receive a cash commission equal to 7% of aggregate proceeds of the issue of Units and compensation options entitling the holder to purchase additional common shares of the resulting issuer equal to 7% of the aggregate number of Units sold in the offering at a price of US$0.25 per common share for two years after closing. Sandfire will also receive a success fee and compensation for certain expenses.

ITEM 19 EXHIBITS

The following exhibits are included in this Form 20-F:

Exhibit
Number	Description

1.1	Articles of Conversion (1)

1.2	Articles of Continuance (1)

1.3	By-Laws (1)

4.1	Securities Exchange Agreement among the Company, Adira Energy, Alan Friedman, Dennis Bennie and Ilan Diamond.

4.2	Form of Securities Exchange Agreement among the Company, Adira Energy and the Minority Shareholders of Adira Energy.

4.3	2009 Stock Option Plan

4.4	Agency Agreement between Adira Energy and Sandfire Securities Inc.

4.5	Form of Subscription Agreement for Adira Energy August 2009 Private Placement

15.1	Consent Letter of Devisser Gray, Chartered Accountants

(1) Herein incorporated by reference as previously included in our Form 8-K filed on December 2, 2008.

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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Form 20-F on its behalf.

AMG OIL LTD.


Per:	/s/ Ilan Diamond
Name:	Ilan Diamond
Title:	Chief Executive Officer



Date:	September 4, 2008

SECURITIES EXCHANGE AGREEMENT

AMONG

AMG OIL LTD.

AND

ADIRA ENERGY CORP.

AND

THE PRINCIPAL SHAREHOLDERS OF ADIRA ENERGY CORP.

August 4, 2009

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND INTERPRETATION	1

DEFINITIONS	1
INTERPRETATION	8
SCHEDULES	9

ARTICLE 2 SECURITIES EXCHANGE	9

PURCHASE AND SALE	9
MINORITY SHAREHOLDERS SHARE EXCHANGE AGREEMENTS	9
PRIVATE PLACEMENT	9
ADIRA STOCK OPTIONS	10
ADIRA WARRANTS	10
CLOSING	10
ESCROW AGREEMENTS	10
RESTRICTIONS UNDER THE U.S. SECURITIES ACT	11
AUTHORIZATION BY ADIRA SHAREHOLDERS	12

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AMG	12

REPRESENTATIONS AND WARRANTIES OF AMG	12
Incorporation, Organization and Authority of AMG	12
Subsidiaries	13
Necessary Proceedings	13
Valid and Binding Obligations	13
Share Capital of AMG	13
Rights to Acquire Securities	13
Title to AMG Assets	13
Reporting Issuer	14
Cease Trading	14
Financial Statements	14
Auditor	14
Business of AMG	14
Material Change	15
Liabilities of AMG	15
Indebtedness	15
Guarantees	15
Tax Matters	15
Absence of Other Agreements	15
Good Standing of Agreements	16
AMG Corporate Records	16
No Breach Caused by this Agreement	16
Public Disclosure	17
Litigation	17
Intellectual Property	17
Dividends	17
No Brokers	17
Approvals	17
Compliance with Laws	18
Shareholders’ Agreements, etc	18
No Bankruptcy	18
Transfer Agent and Registrar	18
No Bankruptcy	18
Obligations to Related Parties	18

- ii -

Omissions and Misrepresentations	18
SURVIVAL	18

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ADIRA	19

REPRESENTATIONS AND WARRANTIES OF ADIRA	19
Incorporation, Organization and Authority of Adira	19
Subsidiaries	19
Necessary Proceedings	19
Valid and Binding Obligation	19
Share Capital of Adira	20
Rights to Acquire Securities	20
Title to Adira Assets	20
Financial Statements	20
Auditors	21
Business of Adira	21
Liabilities of Adira	21
Indebtedness	21
Guarantees	21
Tax Matters	22
Absence of Other Agreements	22
Good Standing of Agreements	22
Adira Corporate Records	22
No Breach Caused by this Agreement	23
Litigation	23
No Brokers	23
Intellectual Property	23
Environmental Matters	24
Dividends	24
Approvals	24
Compliance with Laws	24
Knowledge of Adira	25
Shareholders’ Agreements, etc	25
No Bankruptcy	25
Obligations to Related Parties	25
Omissions and Misrepresentations	25
SURVIVAL	25

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF EACH OF THE ADIRA SHAREHOLDERS	26

REPRESENTATIONS AND WARRANTIES OF ADIRA SHAREHOLDERS	26
Ownership of Adira Shares	26
Capacity and Authority of the Adira Shareholders	26
Necessary Proceedings	26
Valid and Binding Obligation	26
Company Assets	27
Not a U.S. Person	27
No Offer in the United States	27
Sophisticated Purchaser	27
Acquisition for Investment	27
SURVIVAL	28

ARTICLE 6 COVENANTS OF ADIRA AND THE ADIRA SHAREHOLDERS	28

COVENANTS OF ADIRA	28
Necessary Consents	28
Private Placement	28
Audited Financial Statements	28

- iii -

COVENANTS OF THE ADIRA SHAREHOLDERS	29
ACCESS TO RECORDS	29

ARTICLE 7	29

COVENANTS OF AMG	29

Necessary Consents	30
Directors	30
Management	31
ACCESS TO RECORDS	31

ARTICLE 8 CONDITIONS PRECEDENT	31

MUTUAL CONDITIONS PRECEDENT	31
CONDITIONS FOR THE BENEFIT OF AMG	31
CONDITIONS FOR THE BENEFIT OF ADIRA	32

ARTICLE 9 CLOSING	34

TIME OF CLOSING	34
CLOSING DELIVERIES OF AMG	34
CLOSING DELIVERIES OF ADIRA AND THE ADIRA SHAREHOLDERS	35

ARTICLE 10 STANDSTILL	36

STANDSTILL	36

ARTICLE 11 CONFIDENTIAL INFORMATION	38

DEFINITIONS	38

ARTICLE 12 TERMINATION	40

TERMINATION RIGHTS	40
EFFECT OF TERMINATION	41

ARTICLE 13 INDEMNIFICATION	41

INDEMNIFICATION BY AMG	41
INDEMNIFICATION BY ADIRA	41
LIMITATION ON INDEMNIFICATION	41
PROCEDURE FOR INDEMNIFICATION	42

ARTICLE 14 GENERAL	43

PUBLIC ANNOUNCEMENT	43
EXPENSES	43
INDEPENDENT LEGAL ADVICE	43
ENTIRE AGREEMENT	43
FURTHER ASSURANCES	43
SEVERABILITY	43
APPLICABLE LAW	44
ATTORNMENT	44
SUCCESSORS AND ASSIGNS	44
TIME OF ESSENCE	44
NOTICES	44
WAIVER	45
AMENDMENTS	45
REMEDIES CUMULATIVE	46
COUNTERPARTS	47

EXECUTION COPY

SECURITIES EXCHANGE AGREEMENT

THIS AGREEMENT is dated as of the 4th day of August, 2009

AMONG:

AMG OIL LTD. , a corporation continued under the laws of Canada

(“ AMG ”)

AND:

ADIRA ENERGY CORP. , a corporation incorporated under the laws of the Province of Ontario

(“ Adira ”)

AND:

EACH OF THE PRINCIPAL SHAREHOLDERS OF ADIRA as set out in Schedule A attached hereto

(the “ Adira Shareholders ”)

WHEREAS:

(A) AMG is a corporation continued under the Canada Business Corporation Act whose shares are publicly traded in the United States of America on the OTC Bulletin Board;

(B) AMG and Adira intend to effect a business combination pursuant to which AMG will acquire all of the issued and outstanding shares of Adira and will continue to operate the business of Adira as a wholly-owned subsidiary of AMG following closing of the acquisition;

(D) The Adira Shareholders wish to exchange their shares of Adira for common shares of AMG on the terms and subject to the conditions of this agreement;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and agreements herein contained and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

Definitions

1.1	In this Agreement, the following terms have the meanings ascribed thereto as follows:

- 2 -

	(a)	“ Acquisition ” means the acquisition by AMG of all of the Adira Shares;

	(b)	“ Adira Assets ” means the property and assets of Adira and each Adira Subsidiary as a going concern, of every kind and description and wheresoever situated, including the Petroleum License;

	(c)	“ Adira Audited Financial Statements ” means audited Adira Financial Statements accompanied by the report of the Adira Auditor;

	(d)	“ Adira Auditor ” means DeVisser Gray LLP;

	(e)	“ Adira Financial Statements ” means Adira’s financial statements for the period from inception to April 30, 2009 prepared in accordance with Canadian GAAP with a reconciliation to U.S. GAAP in accordance with the requirements of SEC Form 20-F;

	(f)	“ Adira Minority Shareholders ” means those shareholders of Adira, other than the Adira Shareholders, as set forth in the minute book of Adira;

	(g)	“ Adira Minority Shares ” means those shares of Adira held by the Adira Minority Shareholders, as set forth in the minute book of Adira;

	(h)	“ Adira Private Placement Subscribers ” means the subscribers to the Private Placement;

	(i)	“ Adira Private Placement Warrant ” means a share purchase warrant of Adira comprising a portion of each Adira Unit, each of which will entitle the holder to purchase one common share of Adira at a price of US$0.50 per share for a period of 24 months following Closing;

	(j)	“ Adira Share Split ” means the sub-division of the Adira Shares into an aggregate of 31,200,000 common shares of Adira;

	(k)	“ Adira Shareholders ” means the principal shareholders of Adira who are party to this Agreement, each of whom is identified as a principal shareholder of Adira on Schedule A;

	(l)	“ Adira Shares ” means the common shares in the capital of Adira representing 22,500,000 common shares of Adira as of the date of this Agreement;

	(m)	“ Adira Stock Option Holder ” means each holder of Adira Stock Options, as set forth in Schedule A hereto;

	(n)	“ Adira Stock Option Plan ” means the stock option plan of Adira;

	(o)	“ Adira Stock Options ” means the options to purchase common shares of Adira pursuant to the Adira Stock Option Plan;

	(p)	“ Adira Subsidiary ” means each of Adira Energy Israel Ltd. and Adira Energy Israel Services Ltd., companies incorporated pursuant to the laws of Israel;

	(q)	“ Adira Unit ” means a unit comprised of one common share of Adira and one-half of one Adira Private Placement Warrant to be issued to the Private Placement Subscribers;

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	(r)	“ Adira Warrant ” means each common share purchase warrant of Adira held by each Adira Warrant Holder, as set forth in Schedule A;

	(s)	“ Adira Warrant Holder ” means each holder of warrants to acquire common shares of Adira, as set forth in Schedule A;

	(t)	“ Affiliate ” has the meaning specified in the Securities Act;

	(u)	“ Agreement ” means this securities exchange agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;

	(v)	“ AMG Financial Statements ” means the audited financial statements of AMG for the years ended September 30, 2008 and 2007 and the interim financial statements of AMG for the six months ended March 31, 2009, all prepared in accordance with U.S. GAAP;

	(w)	“ AMG Meeting Matters ” means the approval by the shareholders of AMG of the Consolidation, the Name Change, the Increase to the AMG Directors, the appointment of new directors, the AMG Stock Option Plan and the grant of the AMG Stock Options;

	(x)	“ AMG Meeting ” means a meeting of the shareholders of AMG to be held following Closing to, among other things, approve the AMG Meeting Matters;

	(y)	“ AMG Original Stock Option Plan ” means the 2000 non-qualifying stock stock option plan of AMG, as amended;

	(z)	“ AMG Private Placement Warrant ” means a share purchase warrant of AMG comprising a portion of each AMG Unit, each of which will entitle the holder to purchase one common share of AMG at a price of US$0.50 per share for a period of 24 months following closing of the Private Placement, provided that the expiry date will be accelerated, if the closing price of shares of AMG resulting from the Acquisition for any period of 20 consecutive trading days exceeds US$1.00 per share (the “ Acceleration Price ”), to a period that is 30 days after the acceleration event. In the event that AMG becomes and is at the time of computation listed on a stock exchange in Canada, the Acceleration Price will be computed in Canadian dollars based on US$1.00 per share multiplied by the exchange rate of Canadian dollars per U.S. dollar on the Closing Date;

	(aa)	“ AMG Shares ” means the common shares with no par value in the capital of AMG to be issued to the Adira Shareholders in exchange for their Adira Shares in accordance with Section 2.1 of this Agreement;

	(bb)	“ AMG Stock Option Plan ” means a stock option plan of AMG to be adopted by AMG concurrent with or following closing that will allow for the issuance of incentive stock options to purchase up to a maximum of 10% of the issued and outstanding common shares of AMG post-closing, as calculated on a rolling basis;

	(cc)	“ AMG Stock Options ” shall have the meaning set forth in Section 2.4 of this Agreement;

- 4 -

	(dd)	“ AMG Unit ” means a unit comprised of one common share of AMG and one-half of one AMG Private Placement Warrant to be issued on Closing to the holders of the Adira Units;

	(ee)	“ AMG Warrants ” shall have the meaning set forth in Section 2.5 of this Agreement;

	(ff)	“ AMG Voting Trust Shareholder ” means Robert Pollock;

	(gg)	“ Ancillary Agreements ” means all agreements, certificates and other instruments delivered or given pursuant to this Agreement, including, without limitation, the Escrow Agreements;

	(hh)	“ Business Day ” means any day, other than a Saturday, Sunday or statutory holiday in Vancouver, British Columbia;

	(ii)	“ Canadian GAAP ” means generally accepted accounting principles in Canada as in effect from time to time, consistently applied;

	(jj)	“ Claims ” means any suit, action, dispute, civil or criminal litigation, claim, arbitration or legal, administrative or other proceeding or governmental investigation, including appeals and applications for review;

	(kk)	“ Closing Date ” means the date of Closing as determined in accordance with Section 2.3 of this Agreement;

	(ll)	“ Closing ” means the completion of the transactions contemplated herein;

	(mm)	“ Consolidation ” means the proposed consolidation of AMG Shares on the basis of one new common share for each two existing common shares;

	(nn)	“ Disclosure Schedule ” means the schedule exceptions to the representations and warranties of AMG, Adira or the Adira Shareholders, as the case may be, attached as Schedule B to this Agreement;

	(oo)	“ Environmental Law ” means any applicable federal, provincial, state, local or foreign law (including common law), statute, code, rule, regulation, ordinance, or other legal requirement, guidelines, criteria or standards relating to the protection of occupational health or safety or the environment, including natural resources and the protection thereof and other similar guidelines, criteria and standards of Governmental Entities;

	(pp)	“ Environmental Permits ” means all permits, authorizations, consents and approvals required by Environmental Laws for the continued operation of the respective businesses of each Party and each of its Subsidiaries as currently conducted or as proposed to be conducted;

	(qq)	“ Environmental Reports ” means all environmental and health and safety assessments, audits and investigations relating to any party or any of its Subsidiaries or any real property currently or formerly owned, operated, controlled, managed or leased by any Party or any of its Subsidiaries;

- 5 -

	(rr)	“ Escrow Agent ” means the escrow agent appointed by AMG and Adira on closing to act as escrow agent pursuant to the Escrow Agreements;

	(ss)	“ Escrow Agreements ” means the escrow agreements to be entered into among AMG, each of the Adira Shareholders and the Escrow Agent on Closing containing the material terms set forth in Section 2.7 of this Agreement;

	(tt)	“ Exchange Ratio ” means a ratio of one AMG Share for each Adira Share, as such Adira Shares are outstanding following the Share Split;

	(uu)	“ Governmental Entity ” means any government, parliament, legislature, regulatory authority, governmental department, agency, commission, board, tribunal, crown corporation, court or other law, rule or regulation-making entity having jurisdiction or exercising executive, legislative, judicial, regulatory or administrative powers on behalf of any federation or nation, or any province, territory, state or other subdivision thereof or any municipality, district or other subdivision thereof;

	(vv)	“ Governmental Order ” means any order, writ, ruling, judgment, injunction, decree, stipulation, determination, award, directive or citation entered by or with any Governmental Entity;

	(ww)	“ Hazardous Substances ” means any substance, material or waste that is regulated by, or forms the basis of liability, now or hereafter, under any applicable Environmental Laws;

	(xx)	“ Increase to the AMG Directors ” means the increase to the number of AMG directors at the AMG Meeting to seven directors;

	(yy)	“ Intellectual Property ” means all (i) trademarks, service marks, trade names and other indications of origin of “Adira Energy Corp.” including all goodwill associated with all of the foregoing, and all applications, registrations and renewals in connection with all of the foregoing, in any jurisdiction; (ii) inventions, discoveries and ideas (whether patentable or unpatentable and whether or not reduced to practice), and all patents, applications for patents; (iii) trade secrets, know-how, confidential information, and other proprietary rights and information; (iv) copyrights and works of authorship, whether copyrightable or not, and all applications, registrations and renewals in connection therewith, in any jurisdiction; (v) Internet domain names; (vi) computer technology, equipment, devices, systems, hardware, software and databases; and (vii) other similar intellectual property or proprietary rights;

	(zz)	“ Introduction Fee ” means a fee of 240,000 common shares of AMG Oil that will be issued upon Closing to ABR International, Inc.;

	(aaa)	“ Laws ” means all statutes, codes, ordinance, regulations, statutory rules, published policies, published guidelines and terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity, and the term “applicable” with respect to such Laws, and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities (all references herein to a specific statute being deemed to include all applicable rules, regulations, rulings, orders and forms made or promulgated under such statute and the

- 6 -

		published policies and published guidelines of the Governmental Entity administering such statute);

	(bbb)	“ Lien ” means any mortgage, charge, pledge, hypothecation, security interest, assignment, lien (statutory or otherwise), charge, title retention agreement or arrangement, restrictive covenant or other encumbrance of any nature or any other arrangement or condition, which, in substance, secures payment, or performance of an obligation;

	(ccc)	“ Material Adverse Effect ” means, when used in connection with AMG or Adira, as applicable, any event, condition or change which individually or in the aggregate constitutes, or could reasonably be expected to have, a material adverse effect on their respective business assets, liabilities, condition (financial or otherwise) or results of operations taken as a whole on a consolidated basis; provided, however, that the determination of whether a material adverse effect has occurred shall be made ignoring any event, change, fact or effect resulting from: (i) any change in Canadian GAAP with respect to Adira or US GAAP with respect to AMG or any change in any Laws or interpretation thereof; (ii) any generally applicable change or development in economic, regulatory, business or financial market conditions; (iii) any acts of terrorism or war; (iv) the execution or announcement of this Agreement; (v) in respect of AMG, any breach of this Agreement by Adira or any Adira Shareholder; and (vi) in respect of Adira, any breach of this Agreement by AMG, provided, however, that with respect to paragraphs (i), (ii) and (iii), such matter does not have a disproportionate effect on AMG or Adira, as applicable, relative to other comparable companies or entities operating in the industry in which the party operates;

	(ddd)	“ Material Contracts ” means all contracts or other obligations or rights (and all amendments, modifications and supplements thereto to which any Party or any of its Subsidiaries is a party affecting the obligations of any party thereunder) to which a Party or its Subsidiaries is a party or by which any of their respective properties or assets are bound that are material to the business, properties or assets of a Party or its Subsidiaries taken as a whole;

	(eee)	“ material fact ” has the meaning ascribed thereto in the Securities Act;

	(fff)	“ Minority Shareholder Share Exchange Agreements ” means share exchange agreements to be entered into between AMG and each of the Adira Minority Shareholders pursuant to which AMG will agree to acquire the Adira Minority Shares held by the Adira Minority Shareholder concurrent with the closing of the Acquisition;

	(ggg)	“ misrepresentation ” has the meaning ascribed thereto in the Securities Act;

	(hhh)	“ Name Change ” means the name change of AMG to “Adira Energy Corp.” or such other name approved by the board of directors of AMG following closing;

	(iii)	“ Party ” means a party to this Agreement and “ Parties ” means all parties to this Agreement;

	(jjj)	“ Permits ” means in respect of a party, all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of the respective businesses of the Party or any of its Subsidiaries;

- 7 -

	(kkk)	“ Person ” means and includes an individual, firm, sole proprietorship, partnership, joint venture, venture capital or hedge fund, association, unincorporated association, unincorporated syndicate, unincorporated organization, estate, group, trust, body corporate (including a limited liability company and an unlimited liability company), a trustee, executor, administrator or other legal representative, Governmental Entity, syndicate or other entity, whether or not having legal status;

	(lll)	“ Petroleum License ” means petroleum license No. 356/ EYTAN (125,700 dunams) granted by the State of Israel, as more particularly described in Schedule C to this Agreement;

	(mmm)	“ Private Placement Agent’s Warrants ” means the share purchase warrants of Adira to be issued by Adira to an agent in connection with the Private Placement which will entitle the agent to purchase a number of common shares of Adira equal to 7% of the number of Adira Units issued in the Private Placement to investors introduced by the agent at a price of US$0.25 per share for a period of 24 months following closing of the Private Placement;

	(nnn)	“ Private Placement Subscriber ” means a subscriber for Adira Units in the Private Placement;

	(ooo)	“ Private Placement ” means the a private placement of at least 8,000,000 Adira Units at a price of US$0.25 per Adira Unit, or such lesser number of Adira Units as approved by Adira, to be undertaken by Adira and completed prior to Closing;

	(ppp)	“ Regulatory Approvals ” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that permits a transaction to be implemented if a prescribed time lapses following the giving of notice without an objection being made) of any applicable Governmental Entity;

	(qqq)	“ Securities Act ” means the Securities Act (British Columbia) and all Blanket Rulings, Policy Statements, Orders, Rules and Notices of the British Columbia Securities Commission;

	(rrr)	“ Share Split ” means the subdivision of the outstanding Adira Shares such that there are 31,200,000 common shares of Adira issued and outstanding prior to Closing, exclusive of any common shares of Adira that may be issued as part of the Private Placement;

	(sss)	“ Subscription Agreements ” means the subscription agreements to be entered into between Adira and the Private Placement Subscribers in connection with the Private Placement;

	(ttt)	“ Subsidiary ” means, with respect to a specified body corporate, a body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the directors thereof, whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency, are at the time owned, directly or indirectly, by such specified body corporate, and includes a body corporate in like relation to a subsidiary;

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	(uuu)	“ Tax Returns ” means all returns, declarations, reports, information returns and statements filed or required to be filed with any taxing authority relating to Taxes;

	(vvv)	“ Taxes ” means all present and future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Entity in the nature of a tax, including any interest, additions to tax and penalties applicable thereto;

	(www)	“ U.S. Exchange Act ” means the United States Securities Exchange Act of 1934, as amended;

	(xxx)	“ U.S. GAAP ” means generally accepted accounting principles in Canada as in effect from time to time, consistently applied;

	(yyy)	“ U.S. Securities Act ” shall mean the United States Securities Act of 1933, as amended; and

	(zzz)	“ Voting Trust Agreements ” shall mean the voting trust agreements to be delivered on closing by the AMG Voting Trust Shareholder whereby the AMG Voting Trust Shareholder will have agreed to vote in favour of the AGM Meeting Matters at the AMG Meeting to be held following Closing.

Interpretation

1.2		For the purposes of this Agreement, except as otherwise expressly provided:

	(a)	a reference to an Article is to an Article of this Agreement, and the symbol § followed by a number or some combination of numbers and letters refers to the section, subsection, paragraph, subparagraph, clause or subclause of this Agreement so designated;

	(b)	the captions, § numbers and Article numbers appearing in this Agreement are inserted for convenience of reference only and shall in no way define, limit, construe or describe the scope or intent of this Agreement nor in any way affect this Agreement;

	(c)	the word “including”, when following any general statement or term, is not to be construed as limiting the general statement or term to the specific items or matters set forth or to similar items or matters, but rather as permitting the general statement or term to refer to all other items or matters that could reasonably fall within its broadest possible scope;

	(d)	if any date on which any action is required to be taken hereunder by any of the parties is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day;

	(e)	a reference to a statute includes all regulations made thereunder, all amendments to the statute or regulation in force from time to time, and every statute or regulation that supplements or supersedes such statute or regulation;

	(f)	words importing the masculine gender include the feminine or neuter, words in the singular include the plural, a word importing a corporate entity includes an individual, and vice versa;

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	(g)	all dollars amounts, unless otherwise specified, are in Canadian dollars; and

	(h)	where any matter is stated to be “to the knowledge” or “to the best of the knowledge” of Adira or words to like effect in this Agreement, it shall mean the actual knowledge of any of the senior officers of Adira after due inquiry. Where any matter is stated to be “to the knowledge” or “to the best of the knowledge” of AMG or words to like effect in this Agreement, it shall mean the actual knowledge of any of the senior officers of AMG after due inquiry.

Schedules

1.3		The following schedules attached hereto form part of this Agreement:

	(a)	Schedule A – List of Adira Shareholders, Adira Stock Option Holders and Adira Warrant Holders;

	(b)	Schedule B – Disclosure Schedule; and

	(c)	Schedule C – Description of Petroleum License.

ARTICLE 2

SECURITIES EXCHANGE

Purchase and Sale

2.1 Subject to the terms and conditions hereof and based upon the mutual representations, warranties, terms and conditions herein contained, each of the Adira Shareholders agrees to assign, sell and transfer to AMG on the Closing Date all its right, title and interest in and to its respective Adira Shares and AMG agrees to purchase all of the Adira Shares from the Adira Shareholders in exchange for the issuance of the AMG Shares to the Adira Shareholders on the basis of the Exchange Ratio, each in accordance with and as set out in the List of Adira Shareholders attached as Schedule A hereto.

Minority Shareholders Share Exchange Agreements

2.2 This Agreement is executed concurrently with the Minority Shareholders’ Share Exchange Agreements and each Party acknowledges that the completion of the Acquisition will be subject to and contingent upon the concurrent completion by AMG of the acquisition of the Adira Minority Shares from the Adira Minority Shareholders on the terms and conditions of the Minority Shareholders’ Share Exchange Agreements.

Private Placement

2.3 The obligations of each Party to complete the Acquisition will be subject to the completion of the Private Placement by Adira prior to the Acquisition. On closing of the Acquisition, the Adira Units will be exchanged for AMG Units on a one-for-one basis. Each Subscription Agreement will include the agreement of the Private Placement Subscriber to the exchange of their Adira Units for AMG Units on Closing without any further action on the part of the Private Placement Subscriber. Further, the Private Placement Agent Warrants will be exchanged on Closing for share purchase warrants of AMG which will entitle the agent to purchase a number of common shares of AMG equal to 7% of the number of Adira Units issued in the Private Placement at a price of US$0.25 per share for a period of 24 months

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following closing of the Private Placement. The number of Adira Private Placement Subscribers will be such that the total number of shareholders of Adira immediately prior to the completion of the Acquisition will be such that AMG may rely on the exemption from the takeover bid requirements set forth in Section 4.2 of MI 62-104 and OSC Rule 62-504.

Adira Stock Options

2.4 The obligations of each Party to complete the Acquisition will be subject to each Adira Stock Option Holder agreeing to exchange their Adira Stock Options for options to purchase an equivalent number of common shares of AMG at the equivalent stock option exercise price and for the same term as the Adira Stock Options (the “ AMG Stock Options ”), which options will be granted by AMG pursuant to the AMG Stock Option Plan on Closing and which options will not be exercisable until such time as the AMG Stock Option Plan shall have been approved by the shareholders of AMG. Each party shall use its best efforts to secure the agreement of each Adira Stock Option Holder as contemplated herein. AMG hereby consents to the adoption of the Adira Stock Option Plan and the grant of options to purchase up to 3,334,000 common shares of Adira at a price of US$0.25 per share in accordance with the Adira Stock Option Plan during the period between execution of this Agreement and Closing.

Adira Warrants

2.5 The obligations of each Party to complete the Acquisition will be subject to each Adira Warrant Holder agreeing to exchange their Adira Warrants, as set forth in Schedule A hereto, for warrants to purchase an equivalent number of common shares of AMG at the equivalent exercise price and for the same term as the Adira Warrants (the “ AMG Warrants ”), which warrants will be issued by AMG on Closing. Each party shall use its best efforts to secure the agreement of each Adira Warrant Holder as contemplated herein.

Closing

2.6 The Closing will take place on a date (the “ Closing Date ”) no later than five business days after the satisfaction of the later of the following conditions precedent to closing to occur, provided that in no event will the Closing Date be later than September 30, 2009 and subject to the satisfaction or waiver of the conditions precedent to closing set forth in Article 8 of this Agreement:

	(a)	Adira will have delivered to AMG the Adira Audited Financial Statements and AMG will have confirmed to Adira the acceptability of the Adira Audited Financial Statements; and

	(b)	Adira will have delivered to AMG notice that it has received executed Subscription Agreements that will enable Adira to complete the Private Placement prior to Closing.

AMG will review and advise on the acceptability of the Adira Audited Financial Statements no later than 2 business days following delivery by Adira to AMG of the Adira Audited Financial Statements.

Escrow Agreements

2.7 The AMG Shares issued to the Adira Shareholders on Closing will be delivered into escrow and held in accordance with the terms and conditions of the Escrow Agreements following Closing. Each Adira Shareholder agrees to execute and deliver on Closing an Escrow Agreement with respect to the AMG Shares to be issued to them on Closing. Under the Escrow Agreements, the AMG Shares shall be released to the Adira Shareholders as follows:

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	(a)	12.5% will be released on the completion of the Acquisition;

	(b)	12.5% will be released on the date which is six months following the completion of the Acquisition;

	(c)	25% will be released on the date which is twelve months following the completion of the Acquisition; and

	(d)	the remaining escrowed securities will be released on the date which is 18 months following the completion of the Acquisition.

In addition and notwithstanding the above release schedule, the AMG Shares will be released to the Adira Shareholders upon the occurrence of a “change of control”, as defined as follows:

“ Change of Control ” means, and is effective upon: (i) the acquisition by any person or groups of persons acting jointly or in concert, directly or indirectly, in a single transaction or a series of related transactions, of voting securities of AMG giving such person beneficial ownership, voting control or direction over more than 50.1% of the aggregate voting rights attached to AMG’s voting securities; (ii) the acquisition by any person (other than AMG or any of its subsidiaries) or one or more members of a group of persons acting jointly or in concert (other than a group consisting solely of two or more of AMG and any of its subsidiaries), directly or indirectly, in a single transaction or a series of related transactions, of all or substantially all of the assets of AMG and its subsidiaries, taken as a whole; or (iii) the completion of a merger, amalgamation, arrangement or similar transaction which results in holders of the voting rights attached to the Common Shares prior to the completion of the transaction holding less than 50.1% of the voting securities of the resulting entity (as measured by voting power and not by number of securities) after the completion of the transaction.

The parties agree to negotiate in good faith the form of Escrow Agreements to be executed and delivered on Closing, which Escrow Agreements will include the material terms set forth in this Section 2.7.

Restrictions under the U.S. Securities Act

2.8 Each of the Adira Shareholders acknowledges and agrees that the AMG Shares will be offered and sold to the Adira Shareholder without such offer and sale being registered under the U.S. Securities Act and will be issued to each Adira Shareholder in an offshore transaction outside of the United States in accordance with a safe harbour from the registration requirements of the U.S. Securities Act provided by Rule 903 of Regulation S of the U.S. Securities Act based on the representations and warranties of the Adira Shareholder in this Agreement. As such, each Adira Shareholder acknowledges that the AMG Shares may not be offered, resold, pledged or otherwise transferred except through an exemption from registration under the U.S. Securities Act or pursuant to an effective registration statement under the U.S. Securities Act and in accordance with all applicable state securities laws and the laws of any other jurisdiction. Each Adira Shareholder agrees to resell the AMG Shares only in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration pursuant to the U.S. Securities Act. Each Adira Shareholder agrees that AMG may refuse to register any transfer of the AMG Shares not made in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, pursuant to an available exemption from registration. Each Adira Shareholder agrees that AMG may require the opinion of legal counsel reasonably acceptable to

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AMG in the event of any offer, sale, pledge or transfer of any of the AMG Shares by the Adira Shareholder pursuant to an exemption from registration under the U.S. Securities Act. Each Adira Shareholder acknowledges that AMG has not obligation to register the resale of any of the AMG Shares by the Adira Shareholder pursuant to the U.S. Securities Act. Each of the Adira Shareholders acknowledges and agrees that AMG is a “shell company” as defined under the U.S. Securities Act and, as a consequence, the Adira Shareholders will not be entitled to resell any of the AMG Shares issued to them on Closing in the United States within the period of one year following the date that AMG files “Form 10 Information”, as defined in Rule 144 under the U.S. Securities Act, with the United States Securities and Exchange Commission.

Authorization by Adira Shareholders

2.9 Each Adira Shareholder by execution of this Agreement hereby irrevocably authorizes Adira:

	(a)	to act as its representative at the Closing and to execute in its name and on its behalf all closing receipts and documents required;

	(b)	to complete or correct any errors or omissions in or to make non-material amendments, modifications or supplements to any form or document, including this Agreement, provided by the Adira Shareholder;

	(c)	to receive on its behalf certificates representing the AMG Shares under this Agreement;

	(d)	to approve any opinions, certificates or other documents addressed to the Adira Shareholder;

	(e)	to waive, in whole or in part, any representations, warranties, covenants or conditions for the benefit of the Adira Shareholder and contained in this Agreement; and

	(f)	to exercise any rights of termination contained in this Agreement or any of the Ancillary Agreements to which it is a party.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF AMG

Representations and Warranties of AMG

3.1 AMG hereby represents and warrants to Adira and each of the Adira Shareholders as follows and acknowledges that Adira and each of the Adira Shareholders are relying on such representations and warranties in connection with the transactions contemplated hereby:

Incorporation, Organization and Authority of AMG

(a)

AMG is a corporation duly continued and validly subsisting and in good standing under the Canada Business Corporations Act , and has all the requisite corporate capacity and authority to enter into this Agreement and to perform its obligations hereunder and to carry on its business and to own, lease and operate its assets.

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Subsidiaries

(b)

AMG does not own or have any interest in any Subsidiaries.

Necessary Proceedings

(c)

All necessary and required corporate measures, proceedings and actions of the directors and shareholders of AMG have been taken to authorize and enable AMG to enter into and deliver this Agreement and the Ancillary Agreements to which AMG is a party and to perform its obligations hereunder and thereunder, to issue the AMG Shares to the Adira Shareholders on Closing and to issue the AMG Units to the Adira Private Placement Subscribers concurrent with Closing.

Valid and Binding Obligations

(d)	This Agreement and each of the Ancillary Agreements to which AMG is a party have been duly executed and delivered by AMG and constitute, or when duly executed and delivered will constitute, valid and binding obligations of AMG, enforceable against it in accordance with their respective terms subject only to:

	(i)	any limitation under applicable Laws relating to bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors’ rights generally; and

	(ii)	the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court.

Share Capital of AMG

(e)

The authorized share capital of AMG consists of 100,000,000 common shares without par value, of which 23,200,000 common shares are issued and outstanding as of the date of this Agreement.

Rights to Acquire Securities

(f)

No Persons, other than as set out in the AMG Financial Statements or pursuant to the terms hereof, have any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase, subscription or issuance of any shares or other securities of AMG or securities convertible into, exchangeable for, or which carry the right to purchase common shares or other securities of AMG.

Title to AMG Assets

(g)

AMG has good and marketable title to all assets of AMG disclosed in the AMG Financial Statements free and clear of any actual, pending or, to the knowledge or belief of AMG, threatened claims, Liens or set-offs whatsoever, including without limitation any action, proceeding or investigation affecting title to such assets, at law or in equity, before any court, administrative agency or Governmental Entity.

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Exchange Act Reports

(h)

AMG’s common shares are registered under Section 12(g) of the Exchange Act and AMG has completed all filings with the SEC in accordance with its reporting obligations under the Exchange Act for the past twelve months. AMG has delivered or made available to the Vendor complete and accurate copies of (a) AMG’s annual report on Form 20-F for the year ended September 30, 2008; and (b) AMG’s reports on Form 6-K filed subsequent to the filing of the annual report on Form 20-F for the year ended September 30, 2008 (together, the “ AMG SEC Filings ”). As of their respective dates, or as subsequently amended before the date hereof, to AMG’s knowledge, each of AMG’s SEC Filings (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) complied as to form in all material respects with the applicable rules and regulations of the SEC.

Reporting Issuer

(i)

AMG is a reporting issuer under the Securities Act and AMG’s name does not appear on a list of defaulting reporting issuers maintained by the British Columbia Securities Commission. AMG is in compliance and up to date with all filings under applicable corporate and securities rules and regulations.

Cease Trading

(j)

No order ceasing or suspending trading in securities of AMG or prohibiting the sale of securities by AMG or AMG Shareholders is currently in effect and to AMG’s knowledge, no proceedings for this purpose have been instituted, are pending, contemplated or threatened.

Financial Statements

(k)

The AMG Financial Statements have been prepared in accordance with U.S. GAAP and present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of AMG as of the respective dates thereof and the results of operations and cash flows of AMG for the respective financial periods covered thereby.

Auditor

(l)

The auditor of AMG is a “participating audit firm” with the Canadian Public Accountability Board within the meaning of NI 52-108 – “Auditor Oversight”.

Business of AMG

(m)

AMG has conducted and is conducting its business in all material respects in full compliance with all applicable Laws, rules and regulations of each jurisdiction in which the business is carried on and hold all necessary licenses, permits, approvals, consents, certificates, registrations and authorizations, whether governmental, regulatory or otherwise, to enable the business to be carried on as it is currently conducted and the property and assets to be owned, leased and operated, and the same are validly existing and in good standing and none of such licenses, permits, approvals, consents, certificates, registrations and authorizations contains any burdensome term, provision, condition or

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limitation, save and except in any case which would not have a Materially Adverse Effect.

Material Change

(n)

There are no material facts which exist, and there has been no material change in the capital, business, assets, liabilities, obligations (absolute, accrued, contingent or otherwise), operations, condition (financial or otherwise), results of operations, financial position, affairs or prospects of AMG since the date of the AMG Financial Statements, which have not been disclosed in the manner required by the Securities Act.

Liabilities of AMG

(o)	There are no known liabilities (whether accrued, absolute, contingent or otherwise) of AMG of any kind whatsoever, and, to the best of the knowledge of AMG, there is no basis for assertion against AMG of any liabilities of any kind, other than:

	(i)	liabilities disclosed or reflected in or provided for in the AMG Financial Statements; or

	(ii)	liabilities incurred since the date of the AMG Financial Statements which were incurred in the ordinary course of the routine daily affairs of AMG’s business and which, in the aggregate, are not materially adverse to its business.

Indebtedness

(p)

Except as disclosed in the AMG Financial Statements and liabilities incurred in the ordinary course of business following the date of such AMG Financial Statements, AMG has no bonds, debentures, mortgages, promissory notes or other indebtedness, and nor is under any obligation to create or issue any bonds, debentures, mortgages, promissory notes or other indebtedness.

Guarantees

(q)

AMG is not a party to, or bound by, any agreement of guarantee, indemnification, assumption or endorsement or any like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other Person.

Tax Matters

(r)

AMG is not in arrears or in default in respect of the filing of any required federal, provincial or municipal tax or other tax return; and (i) all taxes, filing fees and other assessments due and payable or collectible from AMG shall have been paid or collected prior to the Closing Date, (ii) no claim for additional taxes, filing fees or other amounts and assessments due and payable or collectible from AMG has been made which has not been collected, and (iii) to the best of the knowledge of AMG, no such return contains any misstatement or conceals any statement that should have been included therein.

Absence of Other Agreements

(s)

Other than as disclosed in the Disclosure Schedule, AMG:

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	(i)	is not a party to any material contract;

	(ii)	is not bound by any outstanding contract or commitment except those entered into in the ordinary course of business nor in default under any material contract by which it is bound or under which it is entitled to benefits and advantages, save and except in any case which would not have a Material Adverse Effect on AMG.

Good Standing of Agreements

(t)

AMG is not in default or breach of any of its obligations under any one or more contracts, agreements (written or oral), commitments, indentures or other instruments to which it is a party or by which it is bound save and except in any case which would not have a Material Adverse Effect on AMG and there exists no state of facts which, to the best of the knowledge of AMG, after notice or lapse of time or both, would constitute such a default or breach. All such contracts, agreements, commitments, indentures and other instruments have been duly authorized, executed and delivered and are now in good standing and in full force and effect without amendment thereto, AMG is entitled to all benefits thereunder and, to the best of the knowledge of AMG, the other parties to such contracts, agreements, commitments, indentures and other instruments are not in default or breach of any of their obligations thereunder save and except in any case which would not have a Material Adverse Effect on AMG.

AMG Corporate Records

(u)

The corporate records and minute books of AMG contain substantially complete and accurate minutes of all meetings of the directors and shareholders of AMG held since its incorporation, all such meetings having been duly called and held, and signed copies of all resolutions duly passed or confirmed by the directors or shareholders of AMG other than at a meeting. The share certificate books, register of security holders, register of transfers and register of directors and any similar corporate records of AMG are complete and accurate. All eligible security transfer tax or similar tax payable in connection with the transfer of any securities of AMG has been paid.

No Breach Caused by this Agreement

(v)

The execution, delivery and performance by AMG of its obligations under this Agreement and any Ancillary Documents and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with or result in a violation or breach of any provision of any applicable Laws or any license, approval, consent or authorization held by AMG, (ii) require any notice or consent or other action by any Person under, contravene, conflict with, violate, breach or constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which AMG is entitled under, or give rise to any rights of first refusal or trigger any change in control provisions or any restriction under, any provision of any Material Contract or other instrument binding upon AMG or affecting any of its assets or (iii) result in the creation or imposition of any Lien on any asset of AMG, with such exceptions, in the case of each of clauses (ii) and (iii), as do not have or would not have, or be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on AMG.

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Public Disclosure

(w)

None of the materials filed by, or on behalf of, AMG with the applicable securities regulators contained a misrepresentation or omitted to state a material fact as at the date of such filing, which has not been corrected.

Litigation

(x)

To the best of the knowledge of AMG, there are no claims, demands, disputes, actions, suits, proceedings or investigations pending or threatened against or, directly or indirectly, affecting AMG (including without limitation, restraining or preventing AMG from issuing AMG Shares in accordance with this Agreement), at law or in equity or before or by any federal, provincial, municipal or other local court or Governmental Entity, domestic or foreign, nor is AMG subject to any presently effective adverse order, writ, injunction or decree of any such body.

Intellectual Property

	(y)	(i) AMG now owns or has the valid rights to use all of the Intellectual Property that is material to the conduct of the business of AMG as currently conducted or as currently proposed to be conducted (and had all rights necessary to carry out its former activities at such time such activities were being conducted) and AMG has a valid and enforceable right to use all third party Intellectual Property used or held for use in the business of AMG.

		(ii) To AMG’s knowledge, the conduct of the business of AMG as currently conducted does not infringe or otherwise impair or conflict with (collectively, “ Infringe ”) any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and the Intellectual Property of AMG and its Subsidiaries which is material to the conduct of the business of AMG as currently conducted or as currently proposed to be conducted is not, to AMG’s knowledge, being Infringed by any third party.

Dividends

(z)

AMG has not, directly or indirectly, declared or paid any dividend or declared or made any other distribution on any of its shares or securities or, directly or indirectly, redeemed, purchased or otherwise acquired any of its shares or securities or agreed to do any of the foregoing.

No Brokers

(aa)

Other than with respect to the Introduction Fee, AMG has not entered into any agreement which would entitle any Person to any valid claim against AMG, any Adira Shareholder or Adira or their Subsidiaries for a broker’s commission, finder’s fee or any like payment in respect of any matters contemplated by this Agreement.

Approvals

(bb)

No approval of, registration, declaration or filing by AMG with any Governmental Entity is necessary to authorize the execution and delivery of this Agreement, or any and all of

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the documents and instruments to be delivered under this Agreement, by AMG or the consummation by AMG of the transactions contemplated herein, other than compliance with any applicable Laws.

Compliance with Laws

(cc)

AMG is not in violation of any federal, provincial, municipal or other law, regulation or order of any Government Entity, domestic or foreign, save and except in any case which would not have a Material Adverse Effect on AMG.

Shareholders’ Agreements, etc.

(dd)

To the knowledge of AMG, there are no shareholders’ agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of AMG Shares.

No Bankruptcy

(ee)

No proceedings have been taken, are pending or authorized by AMG or by any other person in respect of the bankruptcy, insolvency, liquidation or winding up of AMG.

Transfer Agent and Registrar

(ff)

Computershare Investors Services Inc. at its offices in Vancouver, British Columbia, has been duly appointed as the transfer agent and registrar for all of the outstanding AMG Shares.

No Bankruptcy

(gg)

No proceedings have been taken, are pending or authorized by AMG or by any other person in respect of the bankruptcy, insolvency, liquidation or winding up of AMG.

Obligations to Related Parties

(hh)

Except as set forth in the AMG Financial Statements, (i) there are no obligations of AMG or indebtedness or other amounts owing to any of the officers, directors, shareholders or employees of AMG, and (ii) no officer, director or material shareholder of AMG, or any member of their immediate families, is, directly or indirectly, interested in any material contract with AMG.

Omissions and Misrepresentations

(ii)

None of the foregoing representations, warranties and statements of fact contains any untrue statement of material fact or omits to state any material fact necessary to make any such statement, warranty or representation not misleading to Adira in seeking full information as to AMG and its properties, business and affairs.

Survival

3.2 The representations and warranties of AMG contained in this Agreement will survive the Closing and continue in full force and effect for a period of 12 months after the Closing Date, provided

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that any claim that is based upon an intentional misrepresentation or fraud by AMG may be brought at any time.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF ADIRA

Representations and Warranties of Adira

4.1 Adira hereby represents and warrants to AMG as follows and acknowledge that AMG is relying on such representations and warranties in connection with the transactions contemplated hereby:

Incorporation, Organization and Authority of Adira

(a)

Adira is a corporation duly incorporated and validly subsisting and in good standing under the laws of the Province of Ontario, and has all the requisite corporate capacity and authority to enter into this Agreement and to perform its obligations hereunder and to carry on its business and to own, lease and operate Adira Assets.

Subsidiaries

(b)

Each Subsidiary of Adira is duly incorporated and validly subsisting under the laws of the jurisdiction set opposite its name below:

Name of Subsidiary	Jurisdiction of Incorporation
Adira Energy Israel Ltd.	Israel
Adira Energy Israel Services Ltd.	Israel

Adira owns all of the issued and outstanding securities thereof and no Person has any right to acquire any securities thereof.

Necessary Proceedings

(c)	All necessary or required corporate measures, proceedings and actions of the directors and shareholders of Adira have been taken to:

	(i)	authorize and enable Adira to enter into and deliver this Agreement and the Ancillary Agreements to which Adira is a party and to perform its obligations hereunder and thereunder, and

	(ii)	authorize the transfer of Adira Shares by the Adira Shareholders to AMG as contemplated by this Agreement.

Valid and Binding Obligation

(d)

This Agreement and each of the Ancillary Agreements to which Adira is a party have been duly executed and delivered by Adira and constitute, or when duly executed and

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delivered will constitute, a legal, valid and binding obligation of Adira, enforceable against it in accordance with their respective terms subject only to:

	(i)	any limitation under applicable Laws relating to bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors’ rights generally; and

	(ii)	the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court.

Share Capital of Adira

(e)

The authorized share capital of Adira consists of an unlimited number of common shares without par value of which 22,500,000 common shares are issued and outstanding as of the date of this Agreement and prior to the completion of the Share Split. The issued and outstanding Adira Shares are beneficially owned and registered in the names of the Adira Shareholders as set out in the minute book of Adira.

Rights to Acquire Securities

(f)

Other than as set forth in Schedule A with respect to the Adira Stock Option Holders and the Adira Warrant Holders, no persons have any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase, subscription or issuance from treasury of any shares or other securities of Adira or securities convertible into, exchangeable for, or which carry the right to purchase shares or other securities of Adira, other than with respect to the Adira Private Placement Subscribers under the Private Placement. Schedule A sets forth the name of each holder of options to purchase common shares of Adira, together with the number of common shares of Adira subject to option, the option exercise price and the expiry date of the options.

Title to Adira Assets

(g)

Other than as set forth in Schedule B, Adira or each Subsidiary has good and marketable title to the Adira Assets free and clear of any actual, pending or, to the knowledge or belief of Adira, threatened claims, Liens or set-offs whatsoever, including without limitation any action, proceeding or investigation affecting title to Adira Assets, at law or in equity, before any court, administrative agency or Governmental Entity.

Financial Statements

(h)

The Adira Financial Statements have been prepared in accordance with Canadian GAAP, and will include a reconciliation to U.S. GAAP in accordance with the requirements of SEC Form 20-F, and present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of Adira and its Subsidiaries as of the respective dates thereof and the consolidated sales, income and results of operations of Adira and its Subsidiaries for the respective financial periods covered thereby.

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Auditors

(i)

The Adira Auditors who will complete the audit of the Adira Financial Statements will be a “participating audit firm” with the Canadian Public Accountability Board within the meaning of NI 52-108 – “Auditor Oversight” and will be registered with the Public Company Accounting Oversight Board in the United States.

Business of Adira

(j)

Other than as set forth in Schedule B, Adira and its Subsidiaries have conducted and are conducting their business in all material respects in full compliance with all applicable Laws, rules and regulations of each jurisdiction in which the business is carried on and hold all necessary licenses, permits, approvals, consents, certificates, registrations and authorizations, whether governmental, regulatory or otherwise, to enable the business to be carried on as it is currently conducted and the property and assets to be owned, leased and operated, and the same are validly existing and in good standing and none of such licenses, permits, approvals, consents, certificates, registrations and authorizations contains any burdensome term, provision, condition or limitation, save and except in any case which would not have a Materially Adverse Effect.

Liabilities of Adira

(k)	Other than as set forth in Schedule B, there are no known liabilities (whether accrued, absolute, contingent or otherwise) of Adira or a Subsidiary of any kind whatsoever, and, to the best of the knowledge of Adira, there is no basis for assertion against Adira or a Subsidiary of any liabilities of any kind, other than:

	(i)	liabilities disclosed or reflected in or provided for in the Adira Financial Statements; or

	(ii)	liabilities incurred since the date of the Adira Financial Statements which were incurred in the ordinary course of the routine daily affairs of Adira’s business or, in the aggregate, are not, individually or in the aggregate, materially adverse to the business.

Indebtedness

(l)

Except as disclosed in the Adira Financial Statements, neither Adira nor a Subsidiary has any bonds, debentures, mortgages, promissory notes or other indebtedness, and nor is under any obligation to create or issue any bonds, debentures, mortgages, promissory notes or other indebtedness.

Guarantees

(m)

Neither Adira nor a Subsidiary is a party to, or bound by, any agreement of guarantee, indemnification, assumption or endorsement or any like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other Person.

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Tax Matters

(n)

Other than as set forth in Schedule B, neither Adira nor any Subsidiary is in arrears or in default in respect of the filing of any required federal, provincial or municipal tax or other tax return; and (i) all taxes, filing fees and other assessments due and payable or collectible from Adira or any Subsidiary shall have been paid or collected prior to the Closing Date, (ii) no claim for additional taxes, filing fees or other amounts and assessments due and payable or collectible from Adira or any Subsidiary has been made or threatened which has not been collected, and (iii) to the best of the knowledge of Adira, no such return contains any misstatement or conceals any statement that should have been included therein.

Absence of Other Agreements

(o)	Other than as set forth in Schedule B hereto, neither Adira nor any Subsidiary of Adira:

	(i)	is a party to any material contract; or

	(ii)	is bound by any outstanding contract or commitment except those entered into in the ordinary course of business or is in default under any material contract by which it is bound or under which it is entitled to benefits and advantages, save and except in any case which would not have a Material Adverse Effect on Adira.

Good Standing of Agreements

(p)

Other than as set forth in Schedule B, neither Adira nor a Subsidiary is in default or breach of any of its obligations under any one or more contracts, agreements (written or oral), commitments, indentures or other instruments to which it is a party or by which it is bound save and except in any case which would not have a Material Adverse Effect on Adira and there exists no state of facts which, to the best of the knowledge of Adira, after notice or lapse of time or both, would constitute such a default or breach. All such contracts, agreements, commitments, indentures and other instruments have been duly authorized, executed and delivered and are now in good standing and in full force and effect without amendment thereto; Adira or the applicable Subsidiary is entitled to all benefits thereunder; and, to the best of the knowledge of Adira, the other parties to such contracts, agreements, commitments, indentures and other instruments are not in default or breach of any of their obligations thereunder save and except in any case which would not have a Material Adverse Effect on Adira.

Adira Corporate Records

(q)

The corporate records and minute books of Adira contain substantially complete and accurate minutes of all meetings of the directors and shareholders thereof held since its incorporation, all such meetings having been duly called and held, and signed copies of all resolutions and by-laws duly passed or confirmed by the directors or shareholders thereof other than at a meeting. The share certificate books, register of security holders, register of transfers and register of directors and any similar corporate records of Adira and each Subsidiary are complete and accurate. All eligible security transfer tax or similar tax payable in connection with the transfer of any securities of Adira and each Subsidiary has been paid.

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No Breach Caused by this Agreement

(r)

The execution, delivery and performance by Adira of its obligations under this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with or result in a violation or breach of any provision of any applicable Laws or any license, approval, consent or authorization held by Adira, (ii) require any notice or consent or other action by any Person under, contravene, conflict with, violate, breach or constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Adira is entitled under, or give rise to any rights of first refusal or trigger any change in control provisions or any restriction under, any provision of any Material Contract or other instrument binding upon Adira or affecting any of its assets or (iii) result in the creation or imposition of any Lien on any asset of Adira, with such exceptions, in the case of each of clauses (ii) and (iii), as do not have or would not have, or be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on Adira.

Litigation

(s)

To the best of the knowledge of Adira, there are no claims, demands, disputes, actions, suits, proceedings or investigations pending or threatened against or directly or indirectly affecting Adira or any Subsidiary, at law or in equity or before or by any federal, provincial, municipal or other governmental court, department or Governmental Entity, domestic or foreign, nor is Adira or a Subsidiary subject to any presently effective adverse order, writ, injunction or decree of any such body.

No Brokers

(t)

Except with respect to the Introduction Fee, neither Adira nor any Adira Subsidiary has entered into any agreement which would entitle any Person to any valid claim against AMG or Adira or any Adira Subsidiary for a broker’s commission, finder’s fee or any like payment in respect of any matters contemplated by this Agreement.

Intellectual Property

	(u)	(i) Adira or any Adira Subsidiary now own or have the valid rights to use all of the Intellectual Property that is material to the conduct of the business of Adira as currently conducted or as currently proposed to be conducted (and had all rights necessary to carry out its former activities at such time such activities were being conducted) and Adira or any Adira Subsidiary has a valid and enforceable right to use all third party Intellectual Property used or held for use in the business of Adira.

		(ii) To Adira’s knowledge, the conduct of the business of Adira and its Subsidiaries as currently conducted does not infringe or otherwise impair or conflict with (collectively, “ Infringe ”) any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and the Intellectual Property of Adira and its Subsidiaries which is material to the conduct of the business of Adira and its Subsidiaries as currently conducted or as currently proposed to be conducted is not, to Adira’s knowledge, being Infringed by any third party.

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Environmental Matters

	(v)	(i) To the best knowledge of Adira, Adira and each Adira Subsidiary carries on its business and operates and maintains the properties and assets used in its business in compliance with all applicable Environmental Law in all material respects and, to the knowledge of Adira, there are no facts at the date hereof that will give rise to a notice of non-compliance by Adira or any Adira Subsidiary with any applicable Environmental Law.

		(ii) To the best knowledge of Adira, Adira and each Adira Subsidiary has all materialEnvironmental Permits required for it to operate its business and to own, use and operate the properties and assets used in such business, except in any case where the failure to hold an Environmental Permit would not have a Material Adverse Effect.

		(iii) To the best knowledge of Adira, neither Adira nor any Adira Subsidiary has used any of the facilities or real property owned, leased, occupied or used by it (including any real property previously owned, leased, occupied or used by it) (for the purposes of this section, the “ Real Property ”), or permitted them to be used, to refine, treat, dispose, produce or process Hazardous Substances except in material compliance with all Environmental Law and Environmental Permits held by Adira or the Adira Subsidiary.

		(iv) To the best knowledge of Adira, neither Adira nor any Adira Subsidiary has received written notice, nor does Adira have knowledge of any facts that could give rise to any notice, that Adira or such Adira Subsidiary is potentially responsible for any remedial or other corrective action or any work, repairs, construction or capital expenditures to be made under any Environmental Law with respect to its business or the Real Property.

Dividends

(w)

Adira has not, directly or indirectly, declared or paid any dividend or declared or made any other distribution on any of its shares or securities or, directly or indirectly, redeemed, purchased or otherwise acquired any of its shares or securities or agreed to do any of the foregoing.

Approvals

(x)

No approval of, registration, declaration or filing with any federal, provincial or local court or Governmental Entity is necessary to authorize the execution and delivery of this Agreement, or any and all of the documents and instruments to be detailed under this Agreement by Adira or the consummation by Adira of the transactions contemplated herein, other than compliance with any applicable Laws.

Compliance with Laws

(y)

Neither Adira nor any Adira Subsidiary is in violation of any federal, provincial, municipal or other law, regulation or order of any Government Entity, domestic or foreign, save and except in any case which would not have a Material Adverse Effect on Adira or such Subsidiary.

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Knowledge of Adira

(z)

Adira does not have any information or knowledge of any material facts relating to the business of Adira or any Adira Subsidiary that, if known to AMG, might reasonably be expected to deter AMG from completing the purchase and sale contemplated herein, or the consummation by AMG of the other transactions contemplated herein.

Shareholders’ Agreements, etc.

(aa)

Other than as set forth in Schedule B, there are no shareholders’ agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the Adira Shares.

No Bankruptcy

(bb)

No proceedings have been taken, are pending or authorized by Adira or a Subsidiary or by any other person in respect of the bankruptcy, insolvency, liquidation or winding up of Adira or any Adira Subsidiary.

Obligations to Related Parties

(cc)

Except as set forth in the Adira Financial Statements, there are no obligations of Adira or its Subsidiaries or indebtedness or other amounts owing to any of the officers, directors, shareholders or employees of Adira or its Subsidiaries. Except as disclosed in the Disclosure Schedule, no officer, director or material shareholder of Adira or its Subsidiaries, or any member of their immediate families, is, directly or indirectly, interested in any material contract with Adira or any of its Subsidiaries.

Omissions and Misrepresentations

(dd)

None of the foregoing representations, warranties and statements of fact contains any untrue statement of material fact or omits to state any material fact necessary to make any such statement, warranty or representation not misleading to AMG in seeking full information as to Adira, its Subsidiaries and their properties, business and affairs.

Survival

4.2 The representations and warranties of Adira contained in this Agreement will survive the Closing and continue in full force and effect for a period of 12 months after the Closing Date, provided that any claim that is based upon an intentional misrepresentation or fraud by Adira may be brought at any time.

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF
EACH OF THE ADIRA SHAREHOLDERS

Representations and Warranties of Adira Shareholders

5.1 Each Adira Shareholder hereby severally represents and warrants to AMG as follows and acknowledges that AMG is relying on such representations and warranties in connection with the transactions contemplated hereby:

Ownership of Adira Shares

(a)

The Adira Shareholder is the registered legal and beneficial holder of the number of Adira Shares as set beside his name in List of Adira Shareholders attached as Schedule A hereto as of the date of this Agreement with good and marketable title thereto, free and clear of all Liens.

No Other Agreements

(b)

No Person (other than AMG) has any agreement, option or right, present or future, contingent, absolute or capable of becoming an agreement, option or right, or which with the passage of time or the occurrence of any event could become an agreement, option or right, to require the Adira Shareholder to, sell, transfer, assign or otherwise dispose of any of the Adira Shares owned by the Adira Shareholder.

Capacity and Authority of the Adira Shareholders

(c)

The Adira Shareholder has good right, full power and absolute authority to assign, sell and transfer its respective Adira Shares to AMG in accordance with the terms of this Agreement, free of all Liens.

Necessary Proceedings

(d)

All necessary or required measures, proceedings and actions of the Adira Shareholder have been taken to authorize and enable it to enter into and deliver this Agreement and to perform its obligations hereunder.

Valid and Binding Obligation

(e)	This Agreement has been duly executed and delivered by the Adira Shareholder and constitutes a legal, valid and binding obligation of the Adira Shareholder, enforceable against it in accordance with their respective terms subject only to:

	(i)	any limitation under applicable Laws relating to bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors’ rights generally; and

	(ii)	the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court.

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Company Assets

(f)

The Adira Shareholder does not own or have any right or interest in or to any of the Adira Assets, other than its rights it may have as a shareholder of Adira.

No Shareholder Loans

(g)

Other than as disclosed in Schedule B, there are no shareholder loans or other liabilities or indebtedness owed by Adira to the Adira Shareholder, except as set forth in the Adira Financial Statements.

No Related Party Agreements

(h)

Other than as disclosed in Schedule B, the Adira Shareholder is not party to any agreement with Adira, except as set forth in the Adira Financial Statements.

Not a U.S. Person

(i)

The Adira Shareholder is not a “U.S. Person” as defined by Regulation S of the Securities Act, as set forth below, and is not acquiring the Adira Shares for the account or benefit of a U.S. Person. A “U.S. Person” is defined by Regulation S of the Act to be any person who is (a) any natural person resident in the United States; (b) any partnership or corporation organized or incorporated under the laws of the United States; (c) any estate of which any executor or administrator is a U.S. person; (d) any trust of which any trustee is a U.S. person; (e) any agency or branch of a foreign entity located in the United States; (f) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporate, or (if an individual) resident in the United States; and (g) any partnership or corporation if (i) organized or incorporated under the laws of any foreign jurisdiction; and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited Subscribers as defined in Section 230.501(a) of the Act who are not natural persons, estates or trusts.

No Offer in the United States

(j)

The Adira Shareholder was not in the United States at the time the offer to exchange the Adira Shares for AMG Shares was received or at the time this Agreement was executed.

Sophisticated Purchaser

(k)

The Adira Shareholder has such knowledge, sophistication and experience in business and financial matters such that it is capable of evaluating the merits and risks of the investment in the AMG Shares.

Acquisition for Investment

(l)

The AMG Shares to be issued to the Adira Shareholder will be acquired by the Adira Shareholder for investment for the Adira Shareholder’s own account, not as a nominee or agent, and not with a view to the resale or distribution.

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Survival

5.2 The representations and warranties of the Adira Shareholder contained in this Agreement will survive the Closing and continue in full force and effect for a period of 12 months after the Closing Date, provided that representations and warranties contained in Section 5.1(a), which will have no time limitation and any claim that is based upon an intentional misrepresentation or fraud by the Adira Shareholder may be brought at any time.

ARTICLE 6

COVENANTS OF ADIRA AND THE ADIRA SHAREHOLDERS

Covenants of Adira

6.1 Adira covenants and agrees with AMG that until the Closing Date or termination of this Agreement, except as otherwise contemplated in this Agreement or agreed to in writing by AMG, Adira will:

Necessary Consents

(a) to use its commercially reasonable best efforts to obtain from its directors, shareholders and all appropriate Governmental Entities such approvals or consents as are required (if any) to complete the transactions contemplated herein;

Private Placement

(b) to use its best efforts to complete the Private Placement;

Audited Financial Statements

(c) to complete the preparation of the Audited Adira Financial Statements and deliver to AMG the audited Adira Financial Statements forthwith upon completion;

Conduct Business in Ordinary and Normal Course

(d) to conduct its business in the ordinary and normal course thereof, including the payment of all current liabilities and accounts in the ordinary and normal course, and not negotiate or execute any new Material Contracts or terminate, cancel or modify in any material respect any existing Material Contracts, provided that (i) Adira may purchase drilling equipment in the amount of US$325,000 for use in connection with the exploration of the Petroleum License, and (ii) Adira may enter into the Subscription Agreements, an agency agreement and other agreements reasonably required in connection with the Private Placement;

No Breach

(e) not to take any action which would constitute or cause a breach of any representation, warranty, covenant or other obligation of Adira contained in this Agreement;

No Share Issuances

(f) not to issue, authorize or propose the issuance of:

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	a.	any shares of capital stock of any class;

	b.	any securities convertible into, rights, warrants or options to acquire, any such shares;

	c.	other convertible securities,

except (i) the issuance of common shares upon the exercise of currently issued and outstanding stock options or share purchase warrants as disclosed in the Adira Financial Statements, and (ii) the issuance of the Adira Units and Private Placement Agent’s Warrants in connection with the Private Placement;

No Dividends

(g) not to declare or pay any dividend on or distributed any shares of its capital stock or redeem or repurchase any issued shares; and

Preserve Business and Assets

(h) to preserve intact the Adira Assets and the business, operations and affairs of Adira and carry on the businesses and the affairs of Adira; and

Necessary Steps

(i) to take all actions, steps and proceedings that are necessary or desirable to approve or authorize, or to validly and effectively undertake, the execution, delivery and performance of this Agreement and the completion of the transactions contemplated by this Agreement.

Covenants of the Adira Shareholders

6.2 Each Adira Shareholder covenants and agree with AMG that until the Closing Date or termination of this Agreement, except as otherwise contemplated in this Agreement or agreed to in writing by AMG, it will vote its Adira Shares in favour of and consent to resolutions of the shareholders of Adira as required to enable Adira to perform and fulfill its obligations under this Agreement.

Access to Records

6.3 In order to permit AMG to complete due diligence, Adira will permit AMG’s professional representatives to have reasonable access to all books, accounts, records and other data of Adira, including all corporate, accounting, tax and business records and any electronic or computer accessed data and will provide such data upon reasonable request.

ARTICLE 7

COVENANTS OF AMG

7.1 AMG covenants and agrees with Adira and the Adira Shareholders that until the Closing Date or termination of this Agreement, except as otherwise contemplated in this Agreement or agreed to in writing by Adira, it will:

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Necessary Consents

(b) AMG shall use its commercially reasonable best efforts to obtain from its directors, shareholders and all appropriate Governmental Entities such approvals or consents as are required (if any) to complete the transactions contemplated herein.

Conduct Business in Ordinary and Normal Course

(c) to conduct its business in the ordinary and normal course thereof, including the payment of all current liabilities and accounts in the ordinary and normal course, and not negotiate or execute any new Material Contracts or terminate, cancel or modify in any material respect any existing Material Contracts;

No Breach

(d) not to take any action which would constitute or cause a breach of any representation, warranty, covenant or other obligation of AMG contained in this Agreement;

Issuance of Shares

(e)	not to issue, authorize or propose the issuance of:

	a.	any shares of capital stock of any class;

	b.	any securities convertible into, rights, warrants or options to acquire, any such shares;

	c.	other convertible securities,

except the issuance of common shares upon the exercise of currently issued and outstanding stock options or share purchase warrants as disclosed in the AMG Financial Statements;

Dividends

(f) not to declare or pay any dividend on or distributed any shares of its capital stock or redeem or repurchase any issued shares.

Necessary Steps

(g) to take all actions, steps and proceedings that are necessary or desirable to approve or authorize, or to validly and effectively undertake, the execution, delivery and performance of this Agreement and the completion of the transactions contemplated by this Agreement.

Directors

(h) AMG shall take all required action to appoint new directors of AMG so that the board of directors following Closing shall consist of Dennis Bennie (Chairman), Alan Friedman, Ilan Diamond and Glen Perry, and these directors shall hold office until the next meeting of the AMG shareholders or until their successors are elected or appointed in accordance with the provisions of AMG’s Articles of Continuance.

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Management

(i) AMG shall take all required action to appoint the management of AMG as set forth below or such other persons as Adira may direct:

	Office	Name

	Chief Executive Officer	Ilan Diamond

	Chief Financial Officer	To be determined and appointed by the board of directors of AMG following Closing

	Vice-President, Corporate Development	Alan Friedman

	Corporate Secretary	Daniel Bloch

Access to Records

7.2 In order to permit Adira to complete due diligence, AMG will permit Adira’s professional representatives to have reasonable access to all books, accounts, records and other data of Adira, including all corporate, accounting, tax and business records and any electronic or computer accessed data and will provide such data upon reasonable request.

ARTICLE 8

CONDITIONS PRECEDENT

Mutual Conditions Precedent

8.1 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the mutual benefit of both AMG and Adira and may be waived by AMG and Adira, jointly, in writing:

	(a)	the Private Placement shall have completed;

	(b)	there shall not exist any prohibition or law against the completion of the Acquisition and there shall not be enacted, promulgated or applied any Governmental Order to enjoin, prohibit or impose any material limitations or conditions on the Acquisition.

Conditions for the Benefit of AMG

8.2 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the exclusive benefit of AMG and may be waived, in whole or in part, by AMG in its sole discretion:

(a)

Adira shall have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement and in any Ancillary Agreement to be fulfilled or complied with by Adira at or prior to the Closing Date;

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	(b)	the representations and warranties of Adira and the Adira Shareholders contained herein shall be true and correct in all material respects as at the Closing Date with the same effect as if made on the Closing Date;

	(c)	all required approvals, consents and authorizations of third parties in respect of the transactions contemplated herein, including without limitation all necessary Regulatory Approvals, shall have been obtained on terms acceptable to AMG acting reasonably;

	(d)	all proceedings, including all necessary corporate proceedings, to be taken in connection with the transactions contemplated in this Agreement and any Ancillary Agreement shall be satisfactory in form and substance to AMG, acting reasonably, and AMG shall have received copies of all instruments and other evidence as it may reasonably request in order to establish the closing of such transactions and the taking of all necessary proceedings in connection therewith;

	(e)	no action or proceeding shall be pending or threatened by any Person (other than AMG) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of Adira to conduct its business after the Closing Date on substantially the same basis as operated immediately prior to the date hereof and no action, suit or legal proceeding shall have been taken before or by any Governmental Entity or by any Person that would, if successful, have a Material Adverse Effect on Adira;

	(f)	since the date of this Agreement, there shall have been no Material Adverse Effect with respect to Adira, or any event, occurrence or development, including the commencement of any action, suit or other legal proceeding which would reasonably be expected to have a Material Adverse Effect on Adira;

	(g)	Adira will have delivered to AMG the Adira Audited Financial Statements, which audited statements will not contain any material differences from the unaudited Adira Financial Statements;

	(h)	AMG will have completed the acquisition of all of the Adira Minority Shares from the Adira Minority Shareholders pursuant to the Minority Shareholders’ Securities Exchange Agreements, provided that this acquisition may complete concurrently with the Acquisition;

	(i)	each Adira Stock Option Holder will have agreed to exchange their Adira Stock Options for options to purchase common shares of AMG pursuant to the AMG Stock Option Plan in the manner contemplated by Section 2.4 of this Agreement; and

	(j)	Adira and the Adira Shareholders will have completed the closing deliveries required by Section 9.3 of this Agreement.

Conditions for the Benefit of Adira

8.3 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the exclusive benefit of Adira and the Adira Shareholders and may be waived, in whole or in part, by Adira and/or the Adira Shareholders in their sole discretion:

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	(a)	AMG shall have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement and in any Ancillary Agreement to be fulfilled or complied with by AMG at or prior to the Closing Date;

	(b)	the representations and warranties of AMG contained herein shall be true and correct in all material respects as at the Closing Date with the same effect as if made on the Closing Date

	(c)	all required approvals, consents and authorizations of third parties in respect of the transactions contemplated herein, including without limitation all necessary Regulatory Approvals, shall have been obtained on terms acceptable to Adira acting reasonably;

	(d)	all proceedings, including all necessary corporate proceedings, to be taken in connection with the transactions contemplated in this Agreement and any Ancillary Agreement shall be satisfactory in form and substance to Adira, acting reasonably, and Adira shall have received copies of all instruments and other evidence as it may reasonably request in order to establish the closing of such transactions and the taking of all necessary proceedings in connection therewith;

	(e)	no action or proceeding shall be pending or threatened by any Person (other than Adira) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of AMG to conduct its business after the Closing Date on substantially the same basis as operated immediately prior to the date hereof and no action, suit or legal proceeding shall have been taken before or by any Governmental Entity or by any Person that would, if successful, have a Material Adverse Effect on AMG;

	(f)	since the date of this Agreement, there shall have been no Material Adverse Effect with respect to AMG, or any event, occurrence or development, including the commencement of any action, suit or other legal proceeding which would reasonably be expected to have a Material Adverse Effect on AMG;

	(g)	AMG will have cash as of the Closing Date equal to not less than US$870,000;

	(h)	the liabilities of AMG as of the Closing Date will be comprised solely of liabilities incurred in the ordinary course of business of AMG since March 31, 2009, including costs attributable to the negotiation of this Agreement and the completion of the Acquisition, which liabilities will not exceed US$20,000;

	(i)	AMG will have terminated the AMG Original Stock Option Plan; and

	(j)	AMG will have completed the closing deliveries required by Section 9.2 of this Agreement.

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ARTICLE 9

CLOSING

Time of Closing

9.1 The Closing of the Acquisition will be completed at the offices of Aird & Berlis LLP, Suite 1800, 181 Bay Street, Toronto, Ontario, M5J 2T9, at 4:00 p.m. (Toronto time) on the Closing Date, or at such other time and place as may be mutually agreed upon by the Parties hereto.

Closing Deliveries of AMG

9.2 On or before the Closing Date, AMG will deliver, or cause to be delivered the following closing documents against delivery by Adira and the Adira Shareholders of the closing documents specified in Section 9.3 of this Agreement:

(a)	share certificates representing the AMG Shares in the names of the Adira Shareholders, each in accordance with the List of Adira Shareholders attached as Schedule B hereto;

(b)	certified copies of resolutions of the directors of AMG:

	(i)	authorizing the entering into of this Agreement by AMG and the completion of the Acquisition,

	(ii)	approving the issuance of the AMG Shares to the Adira Shareholders and the delivery of share certificates representing the AMG Shares in the names of the Adira Shareholders;

	(iii)	approving the grant and issuance of the AMG Options to the Adira Option Holders and the delivery of option agreements in favour of the Adira Option Holders;

	(iv)	approving the issuance of the AMG Warrants to the Adira Warrant Holders and the delivery of warrant certificates representing the AMG Warrants in the names of the Adira Warrant Holders;

	(v)	approving the issuance of the AMG Units to the Private Placement Subscribers in exchange for their Adira Units and the delivery of certificates representing the AMG Units to the Private Placement Subscribers; and

	(vi)	approving the appointment of Alan Friedman, Ilan Diamond, Dennis Bennie and Glen Perry as directors of AMG; and

	(vii)	terminating the AMG Original Stock Option Plan;

(c)	a legal opinion, in form and substance satisfactory to Adira, acting reasonably, from one or more solicitors as to the following matters, subject to such certificates and qualifications as may be reasonably required by the solicitor delivering the opinion:

	(i)	the validity of the incorporation and the good standing of AMG,

	(ii)	the authorized capital of AMG,

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	(iii)	the issuance of the AMG Shares to the Adira Shareholders,

	(iv)	the due authorization, execution and delivery of this Agreement by AMG,

	(v)	the valid and binding nature of this Agreement;

	(d)	a certificate of AMG addressed to Adira and the Adira Shareholders and dated the Closing Date, signed on behalf of AMG by a senior executive officer of AMG, confirming that, to the best of their knowledge after reasonable inquiry, the conditions in Sections 8.3(a), (b), (c) and (d) have been satisfied;

	(e)	resignations of Michael Hart, Michael Murphy and John Campbell as directors of the Company;

	(f)	the resignation of Michael Hart as president and chief executive officer of the Company;

	(g)	the resignation of Michael Murphy as chief financial officer of the Company;

	(h)	the Voting Trust Agreement, executed by the AMG Voting Trust Shareholder;

	(i)	the Escrow Agreements, executed by AMG and the transfer agent;

	(j)	such other documents and instruments, other than those set out above, as may be reasonably requested by the solicitors advising Adira in order to complete the transactions set out in this Agreement.

Closing Deliveries of Adira and the Adira Shareholders

9.3 On or before the Closing Date, Adira and the Adira Shareholders will deliver, or cause to be delivered the following closing documents against delivery by AMG of the closing documents specified in Section 9.2 of this Agreement:

(a)	the share certificates representing the Adira Shares held by each Adira Shareholder duly endorsed by transfer to AMG;

(b)	certified copies of resolutions of the directors of Adira:

	(i)	authorizing the entering into of this Agreement by Adira, and

	(ii)	approving the transfer of the Adira Shares by the Adira Shareholders to AMG;

	(iii)	issuance of a certificate representing the Adira Shares in the name of AMG;

(c)	a share certificate registered in the name of AMG representing all of the issued and outstanding shares of Adira;

(d)	a certified copy of the securities register of Adira showing AMG as the registered owner of all of the outstanding shares of Adira;

(e)	consents to act as director for each of the persons to be appointed as a director of AMG on Closing;

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(f)	a legal opinion, in form and substance satisfactory to AMG, acting reasonably, from Canadian legal counsel to Adira as to the following matters, subject to such certificates and qualifications as may be reasonably required by the solicitor delivering the opinion:

	(i)	the validity of the incorporation and the good standing of Adira,

	(ii)	the authorized and issued capital of Adira,

	(iii)	the title to the shares of Adira,

	(iv)	the due authorization, execution and delivery of this Agreement by Adira, and

	(v)	the valid and binding nature of this Agreement;

(g)	a legal opinion, in form and substance satisfactory to AMG, acting reasonably, from Israeli legal counsel to Adira as to the following matters, subject to such certificates and qualifications as may be reasonably required by the solicitor delivering the opinion:

	(i)	the validity of the incorporation and the good standing of each Adira Subsidiary,

	(ii)	the authorized and issued capital of each Adira Subsidiary,

	(iii)	the title to the shares of each Adira Subsidiary, and

	(iv)	the ownership by the Adira Subsidiary of the Petroleum License;

(h)	a certificate of Adira addressed to AMG and dated the Closing Date, signed on behalf of Adira by a senior executive officer of Adira, confirming that, to the best of their knowledge after reasonable inquiry, that (i) the conditions in Sections 8.2(a), (b), (c) and

	(d)	have been satisfied, and (ii) the Private Placement has been completed prior to

	Closing;

(i)	the Escrow Agreements executed by each Adira Shareholder,

(k)	such other documents and instruments, other than those set out above, as may be reasonably requested by the solicitors advising AMG in order to complete the transactions set out in this Agreement.

ARTICLE 10

STANDSTILL

Standstill

10.1 During the period commencing on the date of this Agreement and terminating upon the earlier of:

	(a)	the Closing;

	(b)	September 30, 2009;

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	(c)	date upon which this Agreement is terminated as a result of non-fulfilment of the conditions precedent as per Article 8 above;

	(d)	the date that any statute, rule, policy or regulation currently in existence or which shall have been proposed, enacted, promulgated or entered by any regulatory or administrative authority having jurisdiction, in the judgment of the parties (acting reasonably), makes the transactions set forth herein illegal or unduly delays the closing of the Acquisition;

AMG or Adira, as the case may be, will not, nor shall any of its Representatives directly or indirectly, alone or jointly or in concert with any other person (unless in any such case specifically approved by the board of directors of the other parties as described below):

	(a)	acquire or agree to acquire, or make any proposal or make any offer to acquire, in any manner, either directly or indirectly, any assets or securities of the other parties or any subsidiary thereof, including, without limitation, commencing any “exempt offer” or “take-over-bid” (as such terms are defined in the Business Corporations Act (British Columbia)) or any “take-over bid” or “exempt take-over bid” (as such terms are defined in the Securities Act (British Columbia)) for any securities of the other parties (provided that the provisions hereof shall not be interpreted to prohibit the parties or their Affiliates from continuing to conduct business with the other parties in the ordinary course and consistent with past practice);

	(b)	solicit proxies from, or otherwise attempt to influence the conduct of, holders of securities of the other parties;

	(c)	form, join or in any way participate as a “control person” as such term is defined in the Securities Act (British Columbia) with respect to the equity of the other parties; or

	(d)	engage in any discussions or negotiations or enter into any agreement, commitment or understanding, or otherwise act jointly or in concert with any third party to propose or effect any business combination, equity or asset transaction of any nature or kind with respect to the other parties or its Affiliates, or to influence the conduct of the other parties, its Affiliates or its directors

Alternate Transactions

10.2 During the period commencing on the date of this Agreement and terminating upon the earlier of:

	(a)	the Closing;

	(b)	September 30, 2009;

	(c)	date upon which this Agreement is terminated as a result of non-fulfilment of the conditions precedent as per Article 8 above;

	(d)	the date that any statute, rule, policy or regulation currently in existence or which shall have been proposed, enacted, promulgated or entered by any regulatory or administrative authority having jurisdiction, in the judgment of the parties (acting reasonably), makes the transactions set forth herein illegal or unduly delays the closing of the Acquisition;

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AMG or Adira, as the case may be, will not provide any information with respect to itself, or (directly or indirectly) solicit, initiate, entertain or consider any offer, negotiation or expression of intent or in any manner encourage, recommend or agree to any proposal or offer of any other potential transaction or otherwise cooperate with, assist or participate in, facilitate or encourage any effort or attempt with respect to:

	(a)	the sale or issuance of any treasury shares or securities convertible into treasury shares of the party or its subsidiaries other than as herein otherwise contemplated, pursuant to the exercise of presently outstanding stock options or share purchase warrants) without the prior written consent of the other parties;

	(b)	any sale, disposition or exchange of assets of the party or its subsidiaries outside the ordinary course of business without the prior written consent of the other parties; or

	(c)	entering into any material agreement or understanding outside the ordinary course of business of the party, without the prior written consent of the other parties;

provided, however, that nothing contained herewith shall prohibit a party from completing the Acquisition or making another proposal to the board of directors of the other parties relating to a business combination, equity or asset transaction between the parties, so long as such proposal is made with the consent of the other parties to any such proposal being made and, provided however, that the foregoing shall not prevent the board of directors of the parties from responding as required by law to any unsolicited submission or proposal regarding any acquisition or disposition of assets, an unsolicited take-over bid or proposal to amalgamate, merge or effect an arrangement or any unsolicited acquisition proposal generally or make any disclosure required to its shareholders with respect thereto which in the judgment of the board of directors acting reasonably or upon the advice of counsel, is required under applicable law. Each of the parties acknowledges that any such procedures will not be contested by the other parties whether by way of judicial or regulatory process or otherwise and provided further that nothing contained herein shall prevent a party from engaging in discussions with financial institutions or investment bankers concerning financing of the Acquisition between the parties, subject to the confidentiality hereof.

ARTICLE 11

CONFIDENTIAL INFORMATION

Definitions

11.1	In this Article 11, the following terms will have the meanings ascribed thereto as follows:

(a)

“ Confidential Information ” refers to any and all information acquired by or made available to a Disclosee or its Representatives by a Disclosing Party or its Representatives in the course of a Disclosee’s Review, which shall include, without limiting the generality of the foregoing, all information (written, oral or in electronic form) furnished by or on behalf of a Disclosing Party to, or otherwise obtained by, a Disclosee or its Representatives which is or would reasonably be considered to be confidential or proprietary in nature, including but not limited to all financial information, plans, legal opinions, names of shareholders, private investors, joint venture partners and limited partners and arrangements which information is or may be either applicable to or related in any way to the assets, business or affairs of a Disclosing Party, together with all analyses, compilations, notes, data, studies or other material or documents prepared by or

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		on behalf of a Disclosee or its Representatives containing or based upon, in whole or in part, information acquired by a Disclosee or its Representatives during the course of its Review, and Confidential Information shall not include Non-proprietary Information;

	(b)	“ Disclosee ” means the party which receives Confidential Information;

	(c)	“ Disclosing Party ” means the party which furnishes Confidential Information;

	(d)	“ Representatives ” means the shareholders, directors, officers, employees, agents, Affiliates, lawyers, engineers (including independent engineers), accountants (including independent auditors), consultants, advisors and independent contractors (and any shareholders, directors, officers, employees, agents, Affiliates, lawyers, engineers, accountants, consultants, advisors and independent contractors thereof) of a party;

	(e)	“ Review ” means each parties review of the Confidential Information and the Non- proprietary Information relating to the other parties for the purposes hereof.

Confidentiality and Use of Confidential Information

11.2 The Disclosee shall, in respect of Confidential Information provided to it by or on behalf of the other party:

	(a)	ensure that the Confidential Information is kept in strict confidence and is not used for any purpose whatsoever other than for the purpose of conducting the Review and completion of the Acquisition and all documents related thereto;

	(b)	ensure that the Confidential Information or the fact that Confidential Information has been provided, is not disclosed to any person other than to its Representatives who have a need to know the same and the Disclosee shall be responsible for any breach hereof by any of its Representatives; in addition, the Disclosee shall, at its sole expense, take all reasonable measures (including but not limited to court proceedings) to restrain its Representatives from prohibited or unauthorized disclosure or use of the Confidential Information; if the Confidential Information is disclosed to any of its Representatives, such person shall be informed at the time of disclosure of its confidential nature and the terms of this agreement and shall agree to be bound by its terms; the Disclosee shall keep a list of all of its Representatives (but excluding its directors, officers and employees) to whom any Confidential Information has been delivered and shall provide the Disclosing Party with that list immediately upon request;

	(c)	not disclose the terms, conditions or existence of the terms hereof or any Confidential Information to any person other than in accordance with the terms hereof, except in the event that the Disclosee or its Representatives is required by law or applicable regulatory or stock exchange requirements to disclose the terms, conditions or existence of the terms hereof or any Confidential Information; prior to any such disclosure, however, the Disclosee or its Representatives shall immediately provide to the Disclosing Party written notice thereof so that the Disclosing Party may seek a protective order or other appropriate remedy or waive compliance by the Disclosee or its Representatives with the provisions of this clause; in the event that any court, administrative body or stock exchange requires such disclosure, or that the Disclosing Party waives compliance with any provisions of this clause, then the Disclosee or its Representatives will furnish only the terms, conditions or the existence hereof or that portion of the Confidential

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		Information which is required to comply with the foregoing law or requirements (or over which a waiver is received) and, further, each shall exercise its best efforts to obtain reasonable assurances that confidential treatment will be accorded such furnished information;

	(d)	at the request of the Disclosing Party, promptly return all documents and material provided to the Disclosee or its Representatives, as well as all notes, summaries or copies of such material, or at a Disclosing Party’s direction certify in writing that all such documents or materials were destroyed, provided that the Disclosee shall have the option to destroy rather than to return any notes, notations or summaries of Confidential Information made by it or its Representatives which may contain information of a confidential nature to the Disclosee; and

	(e)	take all such action as is reasonably necessary to safeguard the Confidential Information from disclosure to any person other than as permitted herein.

Disclosee Acknowledgements and Covenants

11.3		The Disclosee acknowledges and agrees with the Disclosing Party that:

	(a)	the Confidential Information is provided to it to acquaint it with the Disclosing Party and its business and assets and the provision of the Confidential Information to other persons does not render such Confidential Information as non-proprietary information;

	(b)	the Confidential Information is not represented by the Disclosing Party to be full and complete;

	(c)	it will rely upon its own investigations, due diligence and analysis in evaluating and in satisfying itself as to all matters relating to the Disclosing Party and its business and assets; and

	(d)	this Agreement shall not be construed as granting expressly or by implication during its term or thereafter any rights in favour of the Disclosee or its Representatives with respect to any Confidential Information.

ARTICLE 12

TERMINATION

Termination Rights

12.1 This Agreement may, by notice in writing given prior to or on the Closing Date, be terminated:

	(a)	by mutual consent of AMG and Adira;

	(b)	by either AMG or Adira if any of the conditions set forth herein for its benefit has not been fulfilled or waived at or prior to Closing Date; or

	(c)	by either AMG or Adira if the Acquisition is not consummated by September 30, 2009 or such other date as may be agreed to by AMG and Adira; and, in such event, each

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Party shall be released from all obligations under this Agreement, save and except for its obligations, if any, under Articles 11, 12 and 13, which shall survive.

Effect of Termination

12.2 Each Party’s right of termination under this Article 12 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. Nothing in Article 12 shall limit or affect any other rights or causes of action the Parties may have with respect to the representations, warranties, covenants and indemnities in its favour contained in this Agreement. If a Party waives compliance with any of the conditions, obligations or covenants contained in this Agreement, the waiver will be without prejudice to any of its rights of termination in the event of non-fulfillment, non-observance or non-performance of any other condition, obligation or covenant in whole or in part.

12.3 If this Agreement is terminated pursuant to any provision of this Article 12, all obligations of the Parties under this Agreement will terminate, except if this Agreement is terminated by a Party because of a breach of this Agreement by the another Party or because a condition for the benefit of the terminating Party has not been satisfied because the other Party has failed to perform any of its obligations or covenants under this Agreement which are reasonably capable of being performed or caused to be performed by such Party, and the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE 13

INDEMNIFICATION

Indemnification by AMG

13.1 Subject to §13.3 AMG hereby covenants and agrees with Adira and each Adira Shareholder to indemnify and save harmless Adira or the Adira Shareholder from and against any claims which may be made or brought against such Party or which it may suffer or incur as a result of, or arising out of any non-fulfillment of any covenant or agreement on the part of AMG under this Agreement or any Ancillary Agreement to which AMG is a party or any incorrectness in or breach of any representation or warranty of AMG contained in this Agreement or any Ancillary Agreement to which AMG is a party.

Indemnification by Adira

13.2 Subject to §13.3, Adira hereby covenants and agrees with AMG to indemnify and save harmless AMG from and against any claims which may be made or brought against it or which it may suffer or incur as a result of, or arising out of non-fulfillment of any covenant or agreement on the part of Adira under this Agreement or any Ancillary Agreement or any incorrectness in or breach of any representation or warranty of Adira or the Adira Shareholders contained in this Agreement or any Ancillary Agreement.

Limitation on Indemnification

13.3 The indemnification obligations of each of the Parties pursuant to this Agreement shall be subject to the following:

(a)

the applicable limitations respecting the survival of the representations and warranties; and

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(b)

an Indemnifying Party shall not be required to indemnify an Indemnified Party until the aggregate claims sustained by that Indemnified Party exceeds a value of $20,000, in which case, the Indemnifying Party shall be obligated to the Indemnified Party for all claims.

Procedure for Indemnification

13.4 The Party or other indemnified person making a claim for indemnification under this Article is referred to as the “Indemnified Party “ and the Party providing indemnification is referred to as the “Indemnifying Party” for the purposes of this Article. The following provisions shall apply to any Claims for which an Indemnifying Party may be obligated to indemnify an Indemnified Party pursuant to this Agreement:

	(a)	upon receipt from a third party by the Indemnified Party of notice of a claim or the Indemnified Party becoming aware of a claim in respect of which the Indemnified Party proposes to demand indemnification from the Indemnifying Party, the Indemnified Party shall give notice to that effect to the Indemnifying Party with reasonable promptness, provided that failure to give such notice shall not relieve the Indemnifying Party from any liability it may have to the Indemnified Party except to the extent that the Indemnifying Party is prejudiced thereby;

	(b)	in the case of Claims arising from third parties, the Indemnifying Party shall have the right by notice to the Indemnified Party not later than 30 days after receipt of the notice described in §(a) above to assume the control of the defence, compromise or settlement of the claims, provided that such assumption shall, by its terms, be without costs to the Indemnified Party and the Indemnifying Party shall at the Indemnified Party’s request furnish it with reasonable security against any costs or other liabilities to which it may be or become exposed by reason of such defence, compromise or settlement;

	(c)	upon the assumption of control by the Indemnifying Party as aforesaid, the Indemnifying Party shall diligently proceed with the defence, compromise or settlement of the claims at its sole expense, including employment of counsel reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified Party shall co-operate fully, but at the expense of the Indemnifying Party, to make available to the Indemnifying Party all pertinent information and witnesses under the Indemnified Party’s control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are necessary to enable the Indemnifying Party to conduct such defence; provided always that the Indemnified Party shall be entitled to reasonable security from the Indemnifying Party for any expense, costs or other liabilities to which it may be or may become exposed by reason of such co-operation;

	(d)	the final determination of any such claims arising from third parties, including all related costs and expenses, will be binding and conclusive upon the Parties as to the validity or invalidity, as the case may be, of such claims against the Indemnifying Party hereunder; and

	(e)	should the Indemnifying Party fail to give notice to the Indemnified Party as provided in §(b) above, the Indemnified Party shall be entitled to make such settlement of the claims as in its sole discretion may appear reasonably advisable, and such settlement or any other final determination of the claims shall be binding upon the Indemnifying Party.

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ARTICLE 14

GENERAL

Public Announcement

14.1 Immediately after the execution of this Agreement, Adira and AMG shall issue a joint public announcement, announcing the entering into of this Agreement, which announcement shall address all matters required by applicable Laws and shall be in form and substance acceptable to each of them, acting in a commercially reasonable manner. No Party shall issue any news release or public statements inconsistent with such public announcement.

Expenses

14.2 Each Party shall be responsible for its own legal and audit fees and other charges incurred in connection with the preparation of this Agreement, all negotiations between the Parties and the consummation of the transactions contemplated hereby.

Independent Legal Advice

14.3 Each of the Parties acknowledges that he has read, understands and agrees with all of the provisions of this Agreement and acknowledges that he has had the opportunity to obtain independent legal advice with respect thereto.

Entire Agreement

14.4 This Agreement constitutes the entire agreement among the Parties hereto and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof. None of the Parties hereto shall be bound or charged with any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings not specifically set forth in this Agreement or in the schedules, documents and instruments to be delivered on the Closing Date pursuant to this Agreement. The Parties hereto further acknowledge and agree that, in entering into this Agreement and in delivering the schedules, documents and instruments to be delivered on the Closing Date, they have not in any way relied, and will not in any way rely, upon any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings, express or implied, not specifically set forth in this Agreement or in such schedules, documents or instruments.

Further Assurances

14.5 Each of the Parties hereto will from time to time after the Closing Date at the other’s request and expense and without further consideration, execute and deliver such other instruments of transfer, conveyance and assignment and take such further action as the other may reasonably require to give effect to any matter provided for herein.

Severability

14.6 In the event that any provision or part of this Agreement is determined by any court or other judicial or administrative body to be illegal, null, void, invalid or unenforceable, that provision shall be severed to the extent that it is so declared and the other provisions of this Agreement shall continue in full force and effect.

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Applicable Law

14.7 This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

Attornment

14.8 The Parties hereby irrevocably and unconditionally consent to and submit to the exclusive jurisdiction of the courts of the Province of British Columbia for any actions, suits or proceedings arising out of or relating to this Agreement or the matters contemplated hereby. The Parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the matters contemplated hereby in the courts of the Province of British Columbia and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such applicable courts, as the case may be, that any such action, suit or proceeding so brought has been brought in an inconvenient forum.

Successors and Assigns

14.9 This Agreement shall accrue to the benefit of and be binding upon each of the Parties hereto and their respective heirs, executors, administrators and assigns, provided that this Agreement shall not be assigned by any one of the Parties without the prior written consent of the other Party.

Time of Essence

14.10 Time shall be of the essence hereof.

Notices

14.11 Any notice required or permitted to be given hereunder shall be in writing and shall be effectively given if (i) delivered personally, (ii) sent prepaid courier service or mail, or (iii) sent prepaid by facsimile transmission or other similar means of electronic communication (confirmed on the same or following day by prepaid mail) addressed as follows:

	(a)	in the case of notice to AMG:

		AMG Oil Ltd.
		Suite 2901 – 1050 Burrard Street Vancouver, British Columbia V6Z 2S3;

		With a copy to:

		Lang Michener LLP
		1500 – 1055 West Georgia Street Vancouver, British Columbia V6E 4N7

		Attention: Michael H. Taylor

		Tel: (604) 691-7410 Fax: (604) 893-2669

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	(b)	in the case of notice to Adira or to Adira Shareholders:

		c/o ADIRA ENERGY CORP.
		Suite 901, 30 St. Claire Avenue West Toronto, Ontario M4V 3A1

		with a copy to:

		Aird & Berlis LLP
		Suite 1800, 181 Bay Street Toronto, Ontario M5J 2T9

		Attention: Daniel N. Bloch

		Tel: (416) 865-4739 Fax: (416) 863-1515

Any notice, designation, communication, request, demand or other document given or sent or delivered as aforesaid shall:

	(a)	if delivered as aforesaid, be deemed to have been given, sent, delivered and received on the date of delivery;

	(b)	if sent by mail as aforesaid, be deemed to have been given, sent, delivered and received (but not actually received) on the fourth Business Day following the date of mailing, unless at any time between the date of mailing and the fourth Business Day thereafter there is a discontinuance or interruption of regular postal service, whether due to strike or lockout or work slowdown, affecting postal service at the point of dispatch or delivery or any intermediate point, in which case the same shall be deemed to have been given, sent, delivered and received in the ordinary course of the mail, allowing for such discontinuance or interruption of regular postal service; and

	(c)	if sent by facsimile machine, be deemed to have been given, sent, delivered and received on the date the sender receives the facsimile machine answer back confirming receipt by the recipient.

Waiver

14.12 Any Party hereto which is entitled to the benefits of this Agreement may, and has the right to, unless otherwise provided, waive any term or condition hereof at any time on or prior to the Closing Date, provided however that such waiver shall be evidenced by written instrument duly executed on behalf of such Party.

Amendments

14.13 No amendment, modification or supplement to this Agreement shall be effective unless provided in writing and signed by all the Parties hereto and approved by all necessary governmental regulatory authorities.

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Remedies Cumulative

14.14 The rights and remedies of the Parties under this Agreement are cumulative and in addition to and not in substitution for any rights or remedies provided by law. Any single or partial exercise by any Party hereto of any right or remedy for default or breach of any term, covenant or condition of this Agreement does not waive, alter, affect or prejudice any other right or remedy to which such Party may be lawfully entitled for the same default or breach.

[Remainder of page left intentionally blank.]

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Counterparts

14.15 This Agreement may be executed in several counterparts (by original or facsimile signature), each of which when so executed shall be deemed to be an original and each of such counterparts, if executed by each of the Parties, shall constitute a valid and enforceable agreement among the Parties.

IN WITNESS WHEREOF this agreement has been executed by the Parties hereto as of the date first above written.

AMG OIL LTD.


Per:	/s/ Michael Murphy
	Authorized Signatory


Per:
	Print Name and Title



ADIRA ENERGY CORP.


Per:	/s/ Alan Friedman
	Authorized Signatory


Per:
	Print Name and Title

THE PRINCIPAL SHAREHOLDERS:

/s/ Alan Friedman		/s/ Dennis Bennie
ALAN FRIEDMAN		DENNIS BENNIE



/s/ Ilan Diamond
ILAN DIAMOND

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SCHEDULE C

DESCRIPTION OF PETROLEUM LICENSE

EXECUTION COPY

SECURITIES EXCHANGE AGREEMENT

(Minority Shareholders)

THIS AGREEMENT is dated as of the 4th day of August, 2009

AMONG:

AMG OIL LTD. , a corporation continued under the laws of Canada

(“ AMG ”)

AND:

THE UNDERSIGNED SHAREHOLDER OF ADIRA ENERGY CORP.

(the “ Adira Shareholder ”)

WHEREAS:

(A) AMG is a corporation continued under the Canada Business Corporation Act whose shares are publicly traded in the United States of America on the OTC Bulletin Board;

(B) AMG and Adira Energy Corp., an Ontario corporation (“ Adira ”) intend to effect a business combination pursuant to which AMG will acquire all of the issued and outstanding shares of Adira and will continue to operate the business of Adira as a wholly-owned subsidiary of AMG following closing of the acquisition;

(C) AMG has concurrently with the execution of this Agreement entered into a securities exchange agreement among AMG, Adira and the principal shareholders of Adira (the “ Adira Principal Shareholders ”) whereby the Adira Principal Shareholders have agreed to exchange the common shares of Adira held by the Adira Principal Shareholders (the “ Adira Principal Shares ”) for common shares of AMG (the “ Principal Shareholders’ Securities Exchange Agreement ”);

(D) It is a condition of the execution of the Principal Shareholders’ Securities Exchange Agreement by AMG that AMG shall concurrently enter into securities exchange agreements with each of shareholders of Adira other than the Adira Principal Shareholders (the “ Adira Minority Shareholders ”) pursuant to which each Adira Minority Shareholder will agree to exchange its common shares of Adira (the “ Adira Minority Shares ”) for common shares of AMG (the “ Minority Shareholders’ Securities Exchange Agreements ”); and

(E) The Adira Shareholder is an Adira Minority Shareholder and wishes to exchange its common shares of Adira for common shares of AMG on the terms and subject to the conditions of this agreement;

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ARTICLE 1

DEFINITIONS AND INTERPRETATION

Definitions

1.1	In this Agreement, the following terms have the meanings ascribed thereto as follows:

	(a)	“ Acquisition ” means the acquisition by AMG of all of the Adira Shares held by the Adira Shareholder;

	(b)	“ Adira Minority Shareholders ” has the meaning set forth in the recitals hereto;

	(c)	“ Adira Minority Shares ” has the meaning set forth in the recitals hereto;

	(d)	“ Adira Principal Shareholders ” has the meaning set forth in the recitals hereto;

	(e)	“ Adira Principal Shares ” has the meaning set forth in the recitals hereto;

	(f)	“ Adira Shares ” means the common shares in the capital of Adira held by the Adira Shareholder, as set forth in Schedule A;

	(g)	“ Adira Unit ” means a unit comprised of one common share of Adira and one-half of one Adira Warrant to be issued to the Private Placement Subscribers;

	(h)	“ Adira Warrant ” means a share purchase warrant of Adira comprising a portion of each Adira Unit, each of which will entitle the holder to purchase one common share of Adira at a price of US$0.50 per share for a period of 24 months following Closing;

	(i)	“ Agreement ” means this securities exchange agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;

	(j)	“ AMG Shares ” means the common shares with no par value in the capital of AMG, to be issued to the Adira Shareholder in exchange for the Adira Shares in accordance with Section 2.1 of this Agreement;

	(k)	“ Business Day ” means any day, other than a Saturday, Sunday or statutory holiday in Vancouver, British Columbia;

	(l)	“ Closing Date ” means the date of Closing as determined in accordance with Section 2.3 of this Agreement;

	(m)	“ Closing ” means the completion of the Acquisition;

	(n)	“ Escrow Agent ” means the escrow agent appointed by AMG and Adira on closing to act as escrow agent pursuant to the Escrow Agreements;

	(o)	“ Escrow Agreements ” means the escrow agreements to be entered into among AMG, the Adira Shareholders and the Escrow Agent on Closing;

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	(p)	“ Exchange Ratio ” means a ratio of one AMG Share for each Adira Share, as such Adira Shares are outstanding following the Share Split;

	(q)	“ Lien ” means any mortgage, charge, pledge, hypothecation, security interest, assignment, lien (statutory or otherwise), charge, title retention agreement or arrangement, restrictive covenant or other encumbrance of any nature or any other arrangement or condition, which, in substance, secures payment, or performance of an obligation;

	(r)	“ Minority Shareholders’ Securities Exchange Agreements ” has the meaning set forth in the recitals hereto;

	(s)	“ Party ” means a party to this Agreement and “ Parties ” means all parties to this Agreement;

	(t)	“ Person ” means and includes an individual, firm, sole proprietorship, partnership, joint venture, venture capital or hedge fund, association, unincorporated association, unincorporated syndicate, unincorporated organization, estate, group, trust, body corporate (including a limited liability company and an unlimited liability company), a trustee, executor, administrator or other legal representative, Governmental Entity, syndicate or other entity, whether or not having legal status;

	(u)	“ Principal Shareholders Securities Exchange Agreement ” has the meaning set forth in the recitals hereto;

	(v)	“ Private Placement ” means the a private placement of 8,000,000 Adira Units at a price of US$0.25 per Adira Unit, or such lesser number of Adira Units as approved by Adira, to be undertaken by Adira and completed prior to Closing;

	(w)	“ Share Split ” means the subdivision of the outstanding common shares of Adira such that there are 31,200,000 common shares of Adira issued and outstanding prior to Closing, exclusive of any common shares of Adira that may be issued as part of the Private Placement;

	(x)	“ U.S. Exchange Act ” means the United States Securities Exchange Act of 1934, as amended; and

	(y)	“ U.S. Securities Act ” shall mean the United States Securities Act of 1933, as amended.

Schedules

1.2 The following schedule attached hereto form part of this Agreement:

(a)

Schedule A – List of Adira Shareholders

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ARTICLE 2

SECURITIES EXCHANGE

Purchase and Sale

2.1 Subject to the terms and conditions hereof and based upon the mutual representations, warranties, terms and conditions herein contained, the Adira Shareholder agrees to assign, sell and transfer to AMG on the Closing Date all its right, title and interest in and to the Adira Shares and AMG agrees to purchase the Adira Shares from the Adira Shareholder in exchange for the issuance of the AMG Shares to the Adira Shareholder on the basis of the Exchange Ratio, each in accordance with and as set out in Schedule A hereto.

Principal Shareholders’ Share Exchange Agreement

2.2 This Agreement is executed concurrently with the Principal Shareholders’ Share Exchange Agreement and Minority Shareholders’ Share Exchange Agreements with each of the other Adira Minority Shareholders. Each Party acknowledges that the completion of the Acquisition will be subject to and contingent upon the concurrent completion by AMG of:

	(a)	the acquisition of the Adira Principal Shares from the Adira Principal Shareholders on the terms and conditions of the Principal Shareholders’ Share Exchange Agreement; and

	(b)	the acquisition of the Adira Minority Shares from each of the other Adira Minority Shareholders on the terms and conditions of the Minority Shareholders’ Share Exchange Agreements.

Closing

2.3 The Closing will take place on a date specified by AMG (the “ Closing Date ”), which date will be no later than five business days after the satisfaction of the conditions precedent to set forth in Section 2.3 of the Principal Shareholders’ Securities Exchange Agreement, provided that in no event will the Closing Date be later than September 30, 2009.

Escrow Agreements

2.4 The AMG Shares issued to the Adira Shareholder on Closing will be delivered into escrow and held in accordance with the terms and conditions of the Escrow Agreement following Closing. The Adira Shareholder agrees to execute and deliver on Closing an Escrow Agreement with respect to the AMG Shares to be issued to the Adira Shareholder on Closing. Under the Escrow Agreement, the AMG Shares shall be released to the Adira Shareholder as follows:

	(a)	12.5% will be released on the completion of the Acquisition;

	(b)	12.5% will be released on the date which is six months following the completion of the Acquisition;

	(c)	25% will be released on the date which is twelve months following the completion of the Acquisition; and

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(d)

the remaining escrowed securities will be released on the date which is 18 months following the completion of the Acquisition.

In addition and notwithstanding the above release schedule, the AMG Shares will be released to the Adira Shareholders upon the occurrence of a “change of control”, as defined as follows:

Restrictions under the U.S. Securities Act

2.5 The Adira Shareholder acknowledges and agrees that the AMG Shares will be offered and sold to the Adira Shareholder without such offer and sale being registered under the U.S. Securities Act and will be issued to the Adira Shareholder in an offshore transaction outside of the United States in accordance with a safe harbour from the registration requirements of the U.S. Securities Act provided by Rule 903 of Regulation S of the U.S. Securities Act based on the representations and warranties of the Adira Shareholder in this Agreement. As such, the Adira Shareholder acknowledges that the AMG Shares may not be offered, resold, pledged or otherwise transferred except through an exemption from registration under the U.S. Securities Act or pursuant to an effective registration statement under the U.S. Securities Act and in accordance with all applicable state securities laws and the laws of any other jurisdiction. The Adira Shareholder agrees to resell the AMG Shares only in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration pursuant to the U.S. Securities Act. The Adira Shareholder agrees that AMG may refuse to register any transfer of the AMG Shares not made in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, pursuant to an available exemption from registration. The Adira Shareholder agrees that AMG may require the opinion of legal counsel reasonably acceptable to AMG in the event of any offer, sale, pledge or transfer of any of the AMG Shares by the Adira Shareholder pursuant to an exemption from registration under the U.S. Securities Act. The Adira Shareholder acknowledges that AMG has no obligation to register the resale of any of the AMG Shares by the Adira Shareholder pursuant to the U.S. Securities Act. The Adira Shareholder acknowledges and agrees that AMG is a “shell company” as defined under the U.S. Securities Act and, as a consequence, the Adira Shareholder will not be entitled to resell any of the AMG Shares issued on Closing in the United States within the period of one year following the date that AMG files “Form 10 Information”, as defined in Rule 144 under the U.S. Securities Act, with the United States Securities and Exchange Commission.

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Authorization by Adira Shareholder

2.6 The Adira Shareholder by execution of this Agreement hereby irrevocably authorizes Adira:

	(a)	to act as its representative at the Closing and to execute in its name and on its behalf all closing receipts and documents required;

	(b)	to complete or correct any errors or omissions in or to make non-material amendments, modifications or supplements to any form or document, including this Agreement, provided by the Adira Shareholder;

	(c)	to receive on its behalf certificates representing the AMG Shares under this Agreement;

	(d)	to approve any opinions, certificates or other documents addressed to the Adira Shareholder;

	(e)	to waive, in whole or in part, any representations, warranties, covenants or conditions for the benefit of the Adira Shareholder and contained in this Agreement; and

	(f)	to exercise any rights of termination contained in this Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF AMG

Representations and Warranties of AMG

3.1 AMG hereby provides to the Adira Shareholder the benefit of the representation and warranties of AMG as set forth in Article 3 of the Securities Exchange Agreement and acknowledges the Adira Shareholder is relying on such representations and warranties in connection with the transactions contemplated hereby.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF
THE ADIRA SHAREHOLDER

Representations and Warranties of Adira Shareholder

4.1 The Adira Shareholder hereby severally represents and warrants to AMG as follows and acknowledges that AMG is relying on such representations and warranties in connection with the transactions contemplated hereby:

Ownership of Adira Shares

(a)

The Adira Shareholder is the registered legal and beneficial holder of the number of Adira Shares as set beside the name of the Adira Shareholder in List of Adira Shareholders attached as Schedule A hereto as of the date of this Agreement with good and marketable title thereto, free and clear of all Liens.

Principal Shareholders’ Securities Exchange Agreement

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(b)

The Adira Shareholder has had the opportunity to review the Principal Shareholders’ Securities Exchange Agreement prior to execution of this Agreement.

No Other Agreements

(c)

Capacity and Authority of the Adira Shareholder

(d)

Necessary Proceedings

(e)

Valid and Binding Obligation

(f)	This Agreement has been duly executed and delivered by the Adira Shareholder and constitutes a legal, valid and binding obligation of the Adira Shareholder, enforceable against it in accordance with their respective terms subject only to:

	(i)	any limitation under applicable laws relating to bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors’ rights generally; and

	(ii)	the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court.

Company Assets

(g)

The Adira Shareholder does not own or have any right or interest in or to any of the assets of Adira, other than its rights it may have as a shareholder of Adira.

No Shareholder Loans

(h)

There are no shareholder loans or other liabilities or indebtedness owed by Adira to the Adira Shareholder, except as set forth in the Adira Financial Statements.

No Related Party Agreements

(i)

The Adira Shareholder is not party to any agreement with Adira, except as set forth in the Adira Financial Statements, as such term is defined in the Principal Shareholders’ Securities Exchange Agreement.

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Not a U.S. Person

(j)

No Offer in the United States

(k)

The Adira Shareholder was not in the United States at the time the offer to exchange the Adira Shares for AMG Shares was received or at the time this Agreement was executed.

Sophisticated Purchaser

(l)

Acquisition for Investment

(m)

Survival

4.2 The representations and warranties of the Adira Shareholder contained in this Agreement will survive the Closing and continue in full force and effect for a period of 12 months after the Closing Date, provided that representations and warranties contained in Section 4.1(a), which will have no time limitation and any claim that is based upon an intentional misrepresentation or fraud by the Adira Shareholder may be brought at any time.

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ARTICLE 5

COVENANTS OF THE ADIRA SHAREHOLDER

Covenants of the Adira Shareholder

5.1 The Adira Shareholder covenants and agrees with AMG that until the Closing Date or termination of this Agreement, except as otherwise contemplated in this Agreement or agreed to in writing by AMG, it will:

No Breach

(a) not to take any action which would constitute or cause a breach of any representation, warranty, covenant or other obligation of the Adira Shareholder contained in this Agreement; and

Necessary Steps

(b) to take all actions, steps and proceedings that are necessary or desirable to approve or authorize, or to validly and effectively undertake, the execution, delivery and performance of this Agreement and the completion of the transactions contemplated by this Agreement.

ARTICLE 6

COVENANTS OF AMG

6.1 AMG covenants and agrees with the Adira Shareholder that until the Closing Date or termination of this Agreement, except as otherwise contemplated in this Agreement or agreed to in writing by the Adira Shareholder, it will:

No Breach

(a) not take any action which would constitute or cause a breach of any representation, warranty, covenant or other obligation of AMG contained in this Agreement;

Necessary Steps

ARTICLE 7

CONDITIONS PRECEDENT

Mutual Conditions Precedent

7.1 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the mutual benefit of both AMG and the Adira Shareholder and may be waived by AMG and the Adira Shareholder, jointly, in writing:

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	(a)	the Private Placement shall have completed, provided that the Private Placement may complete concurrently with the Acquisition;

	(a)	AMG will have completed the acquisition of all of the Adira Principal Shares from the Adira Principal Shareholders pursuant to the Principal Shareholders’ Securities Exchange Agreement, provided that this acquisition may complete concurrently with the Acquisition;

	(b)	AMG will have completed the acquisition of all of the Adira Minority Shares from each of the other Adira Minority Shareholders pursuant to the Minority Shareholders’ Securities Exchange Agreements, provided that this acquisition may complete concurrently with the Acquisition; and

	(c)	there shall not exist any prohibition or law against the completion of the Acquisition and there shall not be enacted, promulgated or applied any Governmental Order to enjoin, prohibit or impose any material limitations or conditions on the Acquisition.

Conditions for the Benefit of AMG

7.2 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the exclusive benefit of AMG and may be waived, in whole or in part, by AMG in its sole discretion:

	(b)	the Adira Shareholder shall have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by the Adira Shareholder at or prior to the Closing Date;

	(c)	the representations and warranties of the Adira Shareholder contained herein shall be true and correct in all material respects as at the Closing Date with the same effect as if made on the Closing Date;

	(d)	all proceedings, including all necessary corporate proceedings, to be taken in connection with the transactions contemplated in this Agreement shall be satisfactory in form and substance to AMG, acting reasonably, and AMG shall have received copies of all instruments and other evidence as it may reasonably request in order to establish the closing of such transactions and the taking of all necessary proceedings in connection therewith; and

	(e)	the Adira Shareholder will have completed the closing deliveries required by Section 8.3 of this Agreement.

Conditions for the Benefit of the Adira Shareholder

7.3 The transactions contemplated herein are subject to the following conditions to be fulfilled or performed on or prior to the Closing Date, which conditions are for the exclusive benefit of the Adira Shareholder and may be waived, in whole or in part, by the Adira Shareholder in its sole discretion:

(a)

AMG shall have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by AMG at or prior to the Closing Date;

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	(b)	the representations and warranties of AMG contained herein shall be true and correct in all material respects as at the Closing Date with the same effect as if made on the Closing Date; and

	(c)	AMG will have completed the closing deliveries required by Section 8.2 of this Agreement.

ARTICLE 8

CLOSING

Time of Closing

8.1 The Closing of the Acquisition will be completed at the offices of Aird & Berlis LLP, Suite 1800, 181 Bay Street, Toronto, Ontario, M5J 2T9, at 4:00 p.m. (Toronto time) on the Closing Date, or at such other time and place as may be mutually agreed upon by the Parties hereto.

Closing Deliveries of AMG

8.2 On or before the Closing Date, AMG will deliver, or cause to be delivered the following closing documents against delivery by the Adira Shareholder of the closing documents specified in Section 8.3 of this Agreement:

	(a)	share certificates representing the AMG Shares in the name of the Adira Shareholder in accordance with Schedule A hereto;

	(b)	a certificate of an officer of AMG addressed to the Adira Shareholder confirming that to the best of its knowledge, the representations and warranties of AMG in this Agreement are true and correct as of the Closing Date;

	(c)	the Escrow Agreement, executed by AMG and the transfer agent;

	(d)	such other documents and instruments, other than those set out above, as may be reasonably requested by the solicitors advising Adira in order to complete the transactions set out in this Agreement.

Closing Deliveries of the Adira Shareholder

8.3 On or before the Closing Date, the Adira Shareholder will deliver, or cause to be delivered the following closing documents against delivery by AMG of the closing documents specified in Section 8.2 of this Agreement:

	(a)	the share certificates representing the Adira Shares held by the Adira Shareholder duly endorsed by transfer to AMG;

	(b)	a certificate of the Adira Shareholder addressed to AMG confirming that its representations and warranties in this Agreement are true and correct as of the Closing Date;

	(c)	the Escrow Agreement executed by the Adira Shareholder and Adira,

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(d)

such other documents and instruments, other than those set out above, as may be reasonably requested by the solicitors advising AMG in order to complete the transactions set out in this Agreement.

ARTICLE 9

TERMINATION

Termination Rights

9.1 This Agreement may, by notice in writing given prior to or on the Closing Date, be terminated:

	(a)	by mutual consent of AMG and the Adira Shareholder;

	(b)	by either AMG or the Adira Shareholder if the Principal Shareholders’ Securities Exchange Agreement is terminated for any reason;

	(c)	by either AMG or the Adira Shareholder if any of the conditions set forth herein for its benefit has not been fulfilled or waived at or prior to Closing Date; or

	(d)	by either AMG or the Adira Shareholder if the Acquisition is not consummated by September 30, 2009 or such other date as may be agreed to by AMG and the Adira Shareholder; and, in such event, each Party shall be released from all obligations under this Agreement.

Effect of Termination

9.2 Each Party’s right of termination under this Article 9 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. Nothing in Article 9 shall limit or affect any other rights or causes of action the Parties may have with respect to the representations, warranties, covenants and indemnities in its favour contained in this Agreement. If a Party waives compliance with any of the conditions, obligations or covenants contained in this Agreement, the waiver will be without prejudice to any of its rights of termination in the event of non-fulfillment, non-observance or non-performance of any other condition, obligation or covenant in whole or in part.

9.3 If this Agreement is terminated pursuant to any provision of this Article 9, all obligations of the Parties under this Agreement will terminate, except if this Agreement is terminated by a Party because of a breach of this Agreement by the another Party or because a condition for the benefit of the terminating Party has not been satisfied because the other Party has failed to perform any of its obligations or covenants under this Agreement which are reasonably capable of being performed or caused to be performed by such Party, and the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired.

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ARTICLE 10

GENERAL

Expenses

10.1 Each Party shall be responsible for its own legal and audit fees and other charges incurred in connection with the preparation of this Agreement, all negotiations between the Parties and the consummation of the transactions contemplated hereby.

Independent Legal Advice

10.2 Each of the Parties acknowledges that he has read, understands and agrees with all of the provisions of this Agreement and acknowledges that he has had the opportunity to obtain independent legal advice with respect thereto.

Entire Agreement

10.3 This Agreement constitutes the entire agreement among the Parties hereto and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof. None of the Parties hereto shall be bound or charged with any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings not specifically set forth in this Agreement or in the schedules, documents and instruments to be delivered on the Closing Date pursuant to this Agreement. The Parties hereto further acknowledge and agree that, in entering into this Agreement and in delivering the schedules, documents and instruments to be delivered on the Closing Date, they have not in any way relied, and will not in any way rely, upon any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings, express or implied, not specifically set forth in this Agreement or in such schedules, documents or instruments.

Further Assurances

10.4 Each of the Parties hereto will from time to time after the Closing Date at the other’s request and expense and without further consideration, execute and deliver such other instruments of transfer, conveyance and assignment and take such further action as the other may reasonably require to give effect to any matter provided for herein.

Severability

10.5 In the event that any provision or part of this Agreement is determined by any court or other judicial or administrative body to be illegal, null, void, invalid or unenforceable, that provision shall be severed to the extent that it is so declared and the other provisions of this Agreement shall continue in full force and effect.

Applicable Law

10.6 This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

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Adornment

10.7 The Parties hereby irrevocably and unconditionally consent to and submit to the exclusive jurisdiction of the courts of the Province of British Columbia for any actions, suits or proceedings arising out of or relating to this Agreement or the matters contemplated hereby. The Parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the matters contemplated hereby in the courts of the Province of British Columbia and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such applicable courts, as the case may be, that any such action, suit or proceeding so brought has been brought in an inconvenient forum.

Successors and Assigns

10.8 This Agreement shall accrue to the benefit of and be binding upon each of the Parties hereto and their respective heirs, executors, administrators and assigns, provided that this Agreement shall not be assigned by any one of the Parties without the prior written consent of the other Party.

Time of Essence

10.9 Time shall be of the essence hereof.

Notices

10.10 Any notice required or permitted to be given hereunder shall be in writing and shall be effectively given if (i) delivered personally, (ii) sent prepaid courier service or mail, or (iii) sent prepaid by facsimile transmission or other similar means of electronic communication (confirmed on the same or following day by prepaid mail) addressed as follows:

	(a)	in the case of notice to AMG:

		AMG Oil Ltd.
		Suite 2901 – 1050 Burrard Street Vancouver, British Columbia V6Z 2S3;

		With a copy to:

		Lang Michener LLP
		1500 – 1055 West Georgia Street Vancouver, British Columbia V6E 4N7

		Attention: Michael H. Taylor

		Tel: (604) 691-7410 Fax: (604) 893-2669

	(b)	in the case of notice to the Adira Shareholder:

		c/o ADIRA ENERGY CORP.
		Suite 901, 30 St. Claire Avenue West

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Toronto, Ontario
M4V 3A1

with a copy to:

Aird & Berlis LLP
Suite 1800, 181 Bay Street
Toronto, Ontario
M5J 2T9

Attention: Daniel N. Bloch

Tel: (416) 865-4739
Fax: (416) 863-1515

Any notice, designation, communication, request, demand or other document given or sent or delivered as aforesaid shall:

	(a)	if delivered as aforesaid, be deemed to have been given, sent, delivered and received on the date of delivery;

	(b)	if sent by mail as aforesaid, be deemed to have been given, sent, delivered and received (but not actually received) on the fourth Business Day following the date of mailing, unless at any time between the date of mailing and the fourth Business Day thereafter there is a discontinuance or interruption of regular postal service, whether due to strike or lockout or work slowdown, affecting postal service at the point of dispatch or delivery or any intermediate point, in which case the same shall be deemed to have been given, sent, delivered and received in the ordinary course of the mail, allowing for such discontinuance or interruption of regular postal service; and

	(c)	if sent by facsimile machine, be deemed to have been given, sent, delivered and received on the date the sender receives the facsimile machine answer back confirming receipt by the recipient.

Waiver

10.11 Any Party hereto which is entitled to the benefits of this Agreement may, and has the right to, unless otherwise provided, waive any term or condition hereof at any time on or prior to the Closing Date, provided however that such waiver shall be evidenced by written instrument duly executed on behalf of such Party.

Amendments

10.12 No amendment, modification or supplement to this Agreement shall be effective unless provided in writing and signed by all the Parties hereto and approved by all necessary governmental regulatory authorities.

Remedies Cumulative

10.13 The rights and remedies of the Parties under this Agreement are cumulative and in addition to and not in substitution for any rights or remedies provided by law. Any single or partial

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exercise by any Party hereto of any right or remedy for default or breach of any term, covenant or condition of this Agreement does not waive, alter, affect or prejudice any other right or remedy to which such Party may be lawfully entitled for the same default or breach.

[Remainder of this page left intentionally blank]

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Counterparts

10.14 This Agreement may be executed in several counterparts (by original or facsimile signature), each of which when so executed shall be deemed to be an original and each of such counterparts, if executed by each of the Parties, shall constitute a valid and enforceable agreement among the Parties.

IN WITNESS WHEREOF this agreement has been executed by the Parties hereto as of the date first above written.

AMG OIL LTD.


Per:
	Authorized Signatory


Per:
	Print Name and Title

MINORITY SHAREHOLDER

Signature of Minority Shareholder (or authorized signatory):

Name of Minority Shareholders:

Name of Authorized Signatory (if applicable):

AMG OIL LTD.

STOCK OPTION PLAN

August 31, 2009

TABLE OF CONTENTS

1.	PURPOSE		1

	1.1	Purpose	1

2.	INTERPRETATION		1

	2.1	Definitions	1
	2.2	Interpretation	6

3.	ADMINISTRATION		6

	3.1	Administration	6
	3.2	Shares Reserved	8
	3.3	Eligibility	8

4.	OPTIONS		8

	4.1	Grants	8
	4.2	Exercise Price	9
	4.3	Term of Options	10
	4.4	Vesting of Options	10
	4.5	Option Agreements	10
	4.6	Exercise of Option and Payment of Exercise Price	10
	4.7	Assumption Agreement and Power of Attorney	11
	4.8	Deposit of Share Certificates with Corporation	11
	4.9	Prohibition on Transfer of Options and Shares	11
	4.10	Death, Disability or Retirement of Optionee	12
	4.11	Termination of Employment or Services by reason other than Death, Disability or Retirement	13
	4.12	Discretion to Permit Exercise	14
	4.13	Change of Control	14

5.	GENERAL		16

	5.1	Capital Adjustments	17
	5.2	Conditions of Exercise	17
	5.3	Amendment and Termination	18
	5.4	Status as Shareholder	18
	5.5	Withholding Taxes	18
	5.6	Non-Exclusivity and Corporate Action	19
	5.7	Employment and Board of Directors Position Non-Contractual	18
	5.8	Indemnification	19
	5.9	Notices	19
	5.10	Governing Law	20
	5.11	Effective Date	19

EXHIBITS

Exhibit “A”	–	Option Agreement
Exhibit “B”	–	Notice of Exercise
Exhibit “C”	–	Deposit Receipt
Exhibit “D”	–	Notice of Transfer
Exhibit “E”	–	Power of Attorney

AMG OIL LTD.

STOCK OPTION PLAN

August 31, 2009

1.	PURPOSE

	1.1	Purpose

	The purpose of the Plan is to advance the interests of the Corporation by attracting, retaining and motivating persons as directors, officers, key employees and consultants of the Corporation and its Affiliated Corporations and providing them with a greater incentive to develop and promote the growth and success of the Corporation by granting to them options to purchase shares in the capital of the Corporation.

2.	INTERPRETATION

	2.1	Definitions

	For the purposes of the Plan, unless they are otherwise defined elsewhere herein, the following terms have the following meanings, respectively:

	(a)	“ Affiliate ” has the meaning set forth in the Securities Act (Ontario), as amended from time to time;

	(b)	“ Affiliated Corporation ” is a corporation which is an “affiliate” (as such term is defined in the Securities Act (Ontario), as amended from time to time) of the Corporation;

	(c)	“ Applicable Law ” means the requirements relating to the administration of stock option plans under the applicable corporate and securities laws of Ontario and Canada, any stock exchange or quotation system on which the Shares are listed or quoted and the applicable laws of any foreign country or jurisdiction which apply to Options granted under the Plan;

	(d)	“ Associate ” has the meaning set forth in the Securities Act (Ontario), as amended from time to time;

	(e)	“ Board ” means the board of directors of the Corporation;

	(f)	“ Business Day ” means a day that is not a Saturday, a Sunday or a statutory or legal holiday in Toronto, Ontario;

	(g)	“ Cause ” means any act or omission by the Optionee which would in law permit an employer to, without notice or payment in lieu of notice, terminate the Optionee’s employment or services, and shall include, without limitation, the meaning attributed thereto in the employment agreement or consulting agreement, as may be applicable, of such Optionee;

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(h)	“Change of Control” has the meaning set forth in Subsection 4.13(a) hereof;

(i)	“Change of Control Price” has the meaning set forth in Subsection 4.13(a) hereof;

(j)	“ Committee ” has the meaning set forth in Subsection 3.1(c) hereof;

(k)	“Consultant Optionee” means an individual, other than an Employee Optionee or an Executive Optionee, that:

	(i)	is engaged to provide on an ongoing bona fide basis consulting, technical, management or other services to the Corporation or to an Affiliated Corporation, other than services provided in relation to a distribution;

	(ii)	provides the services under a written contract between the Corporation or an Affiliated Corporation and the individual or a Consultant Company or Consultant Partnership of the individual;

	(iii)	in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or an Affiliated Corporation; and

	(iv)	has a relationship with the Corporation or an Affiliated Corporation that enables the Consultant to be knowledgeable about the business and affairs of the Corporation.

(l)	“ Consultant Company ” means, for an individual consultant, a company of which the individual consultant is an employee or shareholder;

(m)	“Consultant Partnership ” means, for an individual consultant, a partnership of which the individual consultant is an employee or partner;

(n)	“ Corporation ” means AMG Oil Ltd. and includes any successor corporation thereto;

(o)	“Date of Grant” means, for any Option, the date specified by the Board at the time it grants the Option or, if no such date is specified, the date upon which the Option was granted;

(p)	“ Deposit Receipt ” means a receipt given to an Optionee pursuant to the Plan evidencing the Optionee’s interest in Shares, substantially in the form attached hereto as Exhibit “C” ;

(q)	“ Disability ” means the mental or physical state of the Optionee such that, as a result of illness, disease, mental or physical disability or similar cause, the Optionee has been unable to fulfil his or her obligations as an employee or consultant of the Corporation or an Affiliated Corporation either for any consecutive six-month period or for any period of twelve months (whether or not consecutive) in any consecutive 12-month period, provided that, where the Optionee has entered into a written employment or consulting agreement with the

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	Corporation or an Affiliated Corporation, “ Disability ” will have the meaning attributed to that term, or the term equivalent in concept, contained in that employment or consulting agreement;

(r)	“ Eligible Person ” means a bona fide Consultant Optionee, Employee Optionee or Executive Optionee;

(s)	“ Eligible Transferee ” means, in respect of a particular Optionee, such of the following as have specifically been designated by the Board as an Eligible Transferee of such Optionee: (i) a registered retirement savings plan or a registered retirement investment fund, of which the Optionee is the beneficiary;

	(ii)	the spouse, child, or grandchild of the Optionee; (ii) a Holding Company; and

	(iv)	a trust, the beneficiaries of which are the Optionee and/or the spouse, children, grandchildren or and/or other direct lineal descendants of the Optionee;

(t)	“Employee Optionee” means a current full-time or part-time employee or contract employee of the Corporation or of an Affiliated Corporation and shall include, other than for the purposes of Sections 4.10 and 4.11, any registered retirement savings plans or registered income funds established by or for the employee (or under which such employee is the beneficiary) and a Holding Company of such individual;

(u)	“ Exchange ” means the stock exchange or quotation system and, where the context permits, includes all other stock exchanges and quotation systems designated by the Board, on which the Shares are or may be listed or quoted from time to time (provided that if, for the purposes of the Plan it is necessary to have reference to a single Exchange, then such Exchange shall be any stock exchange or quotation system on which the Shares are then listed or quoted as designated by the Board);

(v)	“Executive Optionee” means a current director or an officer of the Corporation or of an Affiliated Corporation and shall include, other than for the purposes of Sections 4.10 and 4.11, any registered retirement savings plans or registered retirement income funds established by or for the individual director or officer (or under which such director or officer is the beneficiary) and a Holding Company of such individual;

(w)	“ Exercise Price ” has the meaning set forth in Section 4.2 hereof;

(x)	“ Fair Market Value ” means, at any date in respect of Shares,

(i)

in the event such Shares are not listed or quoted for trading on any stock exchange or quotation system, an amount, determined by the Board in its sole discretion, to be reflective of the cash price which would be obtained as at the relevant date if the Shares which are the subject of a transaction of purchase and sale were sold without compulsion to a willing and knowledgeable purchaser acting at arm’s length (as such term is defined in the Income Tax Act (Canada)); or

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(ii)

the closing price of such Shares on the Exchange on the last Business Day preceding such date (less the applicable discount). In the event that such Shares did not trade on such Business Day, the Fair Market Value shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such date or such other price determined by the Board, acting reasonably;

	(y)	“ Holding Company ” means a corporation wholly-owned and controlled by an Optionee;

	(z)	“ Insider ” has meaning ascribed thereto in the Securities Act (Ontario);

	(aa)	“ Option ” means a right granted to an Eligible Person to purchase Shares on the terms of the Plan;

	(bb)	“Optionee” means the Eligible Person to whom an Option has been granted and includes, other than for the purposes of Sections 4.10 and 4.11 hereof, any Eligible Transferee to whom an Optionee has transferred an Option in accordance with the terms of the Plan;

	(cc)	“ Option Agreement ” has the meaning set forth in Section 4.5 hereof;

	(dd)	“ Person ” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association or organization, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

	(ee)	“ Plan ” means this stock option plan of the Corporation (as the same may be amended or varied from time to time);

	(ff)	“Power of Attorney” has the meaning set forth in Section 4.7 hereof.

	(gg)	“ Public Company ” means a corporation, including the Corporation, any portion of the shares of which is freely tradeable to and between members of the public without the requirement of filing a prospectus or similar document and the shares of which are traded on a published market (being any market on which shares are traded or quoted for trading if the prices at which they have been traded or quoted on that market are regularly published in a newspaper or business or financial publication of general and regular paid circulation), including a corporation meeting such requirements as a result of a Change of Control;

	(hh)	“Retirement” means retirement from active employment with the Corporation or an Affiliated Corporation at or after the age of 65 or, with the consent for the purposes of the Plan of such officer of the Corporation or an Affiliated Corporation as may be designated by the Board, at or after such earlier age and upon the completion of such years of service as the Board may specify;

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(ii)	“ Shares ” means the common shares in the capital of the Corporation as constituted from time to time or, in the event of an adjustment contemplated by Section 5.1 hereof, such other shares or securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment;

(jj)	“Termination Date” means:

	(i)	in the case of an Employee Optionee or Executive Optionee whose employment or term of office with the Corporation or an Affiliated Corporation, as the case may be, terminates in the circumstances set out in Sections 4.10 or 4.11 hereof, the date that is designated by the Corporation or an Affiliated Corporation, as the case may be, as the last day of the Optionee’s employment or term of office with the Corporation or an Affiliated Corporation, as the case may be, and “Termination Date” specifically does not mean the date on which any period of contractual or reasonable notice that the Corporation or an Affiliated Corporation, as the case may be, may be required by contract or at law to provide to the Optionee would expire;

	(ii)	in the case of an Executive Optionee who received Options in his or her capacity as a director of the Corporation or an Affiliated Corporation, the date which is the earliest of: (A) the date that such Executive Optionee resigns as a director of the Corporation or an Affiliated Corporation; (B) the date that such Executive Optionee is not re-elected as a director; and (C) the date that such Executive Optionee is removed from the board of directors of the Corporation or an Affiliated Corporation; and

	(iii)	in the case of a Consultant Optionee whose consulting agreement or arrangement with the Corporation or an Affiliated Corporation, as the case may be, terminates in the circumstances set out in Sections 4.10 or 4.11 hereof, the date that is designated by the Corporation or an Affiliated Corporation, as the case may be, as the date on which the Optionee’s consulting agreement or arrangement is terminated, and “Termination Date” specifically does not mean the date on which any period of notice of termination that the Corporation or an Affiliated Corporation, as the case may be, may be required to provide to the Optionee under the terms of the consulting agreement or arrangement would expire;

		or such later date as may be determined by the Board in the case of Options granted to a specific Optionee;

(kk)	“ Transfer ” includes any sale, exchange, assignment, gift, bequest, disposition, hypothecation, mortgage, charge, pledge, encumbrance, grant of security interest or other arrangement by which possession, legal title or beneficial ownership passes from one Person to another, or to the same Person in a different capacity, whether or not voluntary and whether or not for value, and any agreement to effect any of the foregoing; and the words “Transferred” , “Transferring” and similar words have corresponding meanings; and

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(ll)

“ Vesting Schedule ” has the meaning set forth in Section 4.4 hereof.

2.2

Interpretation

	(a)	Whenever the Board or, where applicable, the Committee is to exercise discretion in the administration of the terms and conditions of the Plan, the term “discretion” means the sole and absolute discretion of the Board or the Committee, as the case may be.

	(b)	As used herein, the terms “Article”, “Section”, “Subsection” and paragraph” mean and refer to the specified Article, Section, Subsection and paragraph hereof, respectively.

	(c)	Words importing the singular number only include the plural and vice versa, and words indicating gender include all genders.

	(d)	In the Plan, a Person is considered to be “controlled” by a Person if:

(i)

in the case of a corporation or similar entity,

(A) voting securities of the first-mentioned Person carrying more than 50% of the votes ordinarily exercisable at meetings of shareholders of the corporation are held, otherwise than by way of security only, by or for the benefit of the other Person; and

(B) the votes carried by such securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned Person;

	(ii)	in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned Person holds more than 50% of the interests in the partnership; or

	(iii)	in the case of a limited partnership, the general partner is the second- mentioned Person.

3.	ADMINISTRATION

3.1

Administration

	(a)	If the Shares are listed or quoted for trading on the Exchange, the Plan shall be administered by the Board in accordance with the rules and policies of the Exchange in respect of employee stock option plans. The Board shall receive recommendations of management and shall determine and designate from time to time those Eligible Persons to whom an Option should be granted, the number of Shares which will be optioned from time to time to any Eligible Person and the terms and conditions of the Option.

	(b)	Subject to Applicable Law, Subsection 3.1(c) hereof and the limitations of the Plan, the Plan will be administered by the Board and the Board has the sole and complete authority, in its discretion, to:

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	(i)	grant Options to Eligible Persons;

	(ii)	determine the terms, limitations, restrictions and conditions upon such grants;

	(iii)	interpret and construe the terms and conditions of the Plan and the Options;

	(iv)	adopt, amend and rescind such administrative guidelines and other rules relating to the Plan as the Board may from time to time deem advisable; and

	(v)	make all other determinations and to take all other actions in connection with the implementation and administration of the Plan as the Board may deem necessary or advisable.

The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for Persons who are residing in, or subject to, the taxes of, any jurisdiction outside of Canada (including, without limitation, countries, states, provinces and localities) to comply with applicable tax, and securities and other laws and may impose any limitations and restrictions that it deems necessary to comply with the applicable tax, securities and other laws of such jurisdiction outside of Canada.

Any decision, interpretation or other action made or taken in good faith by or at the direction of the Corporation, the Board or the Committee or any of its members arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Corporation, Optionees and their respective heirs, executors, administrators, successors and permitted assigns.

The Board’s interpretation, construction or determination of its guidelines and rules will be conclusive and binding upon all parties concerned. The day-to-day administration of the Plan may be delegated to such officers and employees of the Corporation or of an Affiliated Corporation as the Board may in its sole discretion determine.

(c)

To the extent permitted by Applicable Law, the Board may, from time to time, delegate to a committee (the “ Committee ”) of the Board all or any of the powers conferred on the Board under the Plan. In such event, the Committee will exercise the powers delegated to it by the Board in the manner and on the terms authorized by the Board. Any decision made or action taken by the Committee arising out of or in connection with the administration or interpretation of the Plan in this context is final and conclusive. If the Committee is appointed, the Board shall designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the by-laws of the Corporation, at such times and places as it shall deem advisable; including, without limitation, by

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telephone conference or by written consent to the extent permitted by Applicable Law. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all the Committee members in accordance with the by-laws of the Corporation, shall be fully as effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

3.2 Shares Reserved

	(a)	Options may be granted in respect of authorized and unissued Shares. Subject to an increase by the Board in its sole and absolute discretion, Applicable Law and any shareholder or other approval which may be required, and subject further to any adjustments pursuant to Section 5.1, the maximum aggregate number of Shares which may be reserved by the Corporation for issuance under the Plan will be such number of Shares as is equal to 10% of the aggregate number of outstanding Shares from time to time, provided the Corporation is a Public Company.

	(b)	Any Shares subject to an Option which has been granted under the Plan and which is cancelled or terminated for any reason without having been exercised will be added back to the number of Shares reserved for issuance under the Plan and such Shares will again be available for grant under the Plan. No fractional Shares may be issued, and the Board may determine the manner in which any fractional Share value will be treated.

3.3

Eligibility

	Participation in the Plan shall be limited to Eligible Persons. Participation shall be voluntary and the extent to which any Eligible Person shall be entitled to participate in the Plan shall be, subject to the terms of the Plan and Applicable Law, determined in the sole and absolute discretion of the Board. Eligibility to participate does not confer upon any Optionee any right to be granted Options pursuant to the Plan.

4.	OPTIONS

4.1

Grants

	(a)	The Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Board may prescribe, grant Options to any Eligible Person.

	(b)	Subject to the Plan, the Board may impose limitations, restrictions and conditions, in addition to those set out in the Plan, that are applicable to the exercise of an Option, including, without limitation, the nature and duration of any restrictions applicable to a sale or other disposition of Shares acquired upon exercise of an Option and the nature of events, if any, that may cause any Optionee’s rights in

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respect of Shares acquired upon exercise of an Option to be forfeited and the duration of the period of such forfeiture.

(c)	An Eligible Person may receive Options on more than one occasion under the Plan and may receive separate Options on any one occasion.

(d)	Additionally, if the Corporation is a Public Company then the Corporation shall not grant Options:

	(i)	to any one person in any 12 month period which could, when exercised, result in the issuance of Shares exceeding five percent (5%) of the issued and outstanding Shares of the Corporation unless disinterested shareholder approval is obtained; or

	(ii)	to any one Consultant which could, when exercised, in any 12 month period result in the issuance of Shares exceeding two percent (2%) of the issued and outstanding Shares of the Corporation;

	(iii)	to all persons employed by the Corporation who perform investor relations activities which could, when exercised, in any 12 month period result in the issuance of Shares exceeding two percent (2%) of the issued and outstanding Shares of the Corporation nor shall more than 1/4 of any such Options vest in any three month period;

	(iv)	if the aggregate number of Shares issuable pursuant to Options granted to Insiders pursuant to the Plan and other security based compensation arrangements would exceed 10% of the Corporation’s total issued and outstanding Common Shares unless disinterested shareholder approval is obtained; or

	(v)	if the aggregate number of Shares issued to Insiders pursuant to the Plan and other security based compensation arrangements within any one-year period would exceed 10% of the Corporation’s total issued and outstanding Shares, unless disinterested shareholder approval is obtained.

4.2 Exercise Price

	(a)	Subject to Applicable Law and to adjustment from time to time in accordance with Section 5.1 hereof, the exercise price (the “ Exercise Price ”) of an Option granted pursuant to the Plan will be as determined by the Board but in any event, unless otherwise determined by the Board, shall not be less than the Fair Market Value of the Shares on the Business Day immediately prior to the Date of Grant.

	(b)	Furthermore, if the Corporation is a Public Company, disinterested shareholder approval is required in order to reduce the exercise price of an Optionee that is an Insider of the Corporation at the time of the proposed amendment.

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4.3 Term of Options

Subject to any accelerated termination as set forth in the Plan, Options must expire no later than ten (10) years after the Date of Grant or such lesser period as applicable regulatory authorities or Applicable Law may require.

4.4 Vesting of Options

	(a)	The Board may determine, in its sole discretion, in respect of an Option, when an Option will become exercisable and the extent to which an Option will vest or will be exercisable in instalments (the “Vesting Schedule” ) and such Vesting Schedule shall be set forth in the applicable Option Agreement. For example, the Board may, in its sole discretion, provide that the vesting of an Option be dependent on the passage of time and/or on the achievement of specified milestones or thresholds.

	(b)	Notwithstanding Subparagraph 4.4(a), if the Corporation is a Public Company then any Options issued to a Consultant Optionee must vest in stages over at least a 12 month period with no more than ¼ of such Options vesting in any three (3) month period.

	(c)	Once a portion of an Option vests and becomes exercisable, it shall remain exercisable until expiration or termination of such Option, unless otherwise specified by the Board in connection with the grant of such Option or pursuant to Section 4.13 hereof with respect to a Change of Control. Each Option or portion thereof may be exercised at any time or from time to time, in whole or in part, for up to the total number of Shares with respect to which it is then exercisable.

4.5 Option Agreements

Each Option must be confirmed by an agreement (an “ Option Agreement ”), in the form of the option agreement attached hereto as Exhibit “A” (as may be amended by the Board from time to time, and with such changes thereto as may be necessary for any particular Option to a particular Optionee), signed by the Corporation and by the Optionee. In the event an Option is Transferred in accordance with the terms of the Plan, it shall be a condition to the effectiveness of such Transfer that the Eligible Transferee enter into an Option Agreement on the same terms and conditions.

4.6 Exercise of Option and Payment of Exercise Price

The Optionee may, from time to time and at any time after the vesting of an Option and prior to the expiry of such Option, elect to purchase all or a portion of the Shares available for purchase by lump sum payment by delivering to the Corporation at its registered office (or other office designated in writing by the Corporation to the Optionee), a completed Notice of Exercise substantially in the form attached hereto as Exhibit “B” . Such notice shall specify the number of Shares the Optionee desires to purchase and shall be accompanied by payment in full of the Exercise Price for such Shares. Subject to the provisions of the immediately following sentence, payment may be made by bank draft or certified cheque payable to the order of the Corporation at the

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time of exercise. Upon receipt of payment in full or, in the discretion of the Board, upon the determination that the fair value of property or past services provided by the Optionee is equal to or greater than the Exercise Price if the Shares had been issued for money, and in any event, subject to the terms of the Plan, the number of Shares in respect of which the Option is exercised will be duly issued as fully paid and non-assessable.

4.7 Power of Attorney

Every Optionee who acquires Shares pursuant to the exercise of Options will, while the Corporation is not a Public Company and as a pre-condition to the issuance of such Shares, execute and deliver to the Corporation an irrevocable power of attorney (the “ Power of Attorney ”), in the form attached hereto as Exhibit “E” (subject to such amendments thereto as the Board may require from time to time).

4.8 Deposit of Share Certificates with Corporation

While the Corporation is not a Public Company, any certificate evidencing a Share purchased by an Optionee upon the exercise of an Option may be held by the Corporation on behalf of the Optionee. By the exercise of an Option, the Optionee shall be deemed to have irrevocably appointed the Secretary of the Corporation (or failing him, any other officer of the Corporation designated by it) his attorney to endorse in blank for transfer any certificates issued by the Corporation representing any Shares issued on the exercise of an Option. Upon the exercise of an Option, the Corporation will issue to each Optionee a Deposit Receipt (which shall be signed by the Optionee as a pre-condition to the issuance of the Shares issuable on the exercise of the Option):

	(i)	indicating the number of Shares the Corporation is holding as a result of the exercise of such Option; and

	(ii)	acknowledging that the Corporation is holding the certificate in respect of such Shares on behalf of the Optionee,

all subject to the terms of the Plan. The Shares will not be, and cannot be required to be, unless the Board determines otherwise, released to the Optionee until the Corporation is a Public Company.

4.9 Prohibition on Transfer of Options and Shares

(a)

Subject to the other provisions of this Section 4.9 and Section 4.10, an Option is personal to the Optionee and is non-assignable, other than by will or laws of descent and distribution, and such Option shall be exercisable during the Optionee’s lifetime only by the Optionee to which such Option has been granted. No Optionee may deal with any Option or any interest in it or Transfer any Option now or hereafter held by the Optionee except in accordance with the Plan. If an Optionee’s Holding Company ceases to be wholly-owned by the Optionee, the Holding Company will be deemed to have Transferred any Options held by such Holding Company to the Optionee. A purported Transfer of any Option in violation of the Plan will not be valid and the Corporation will not be required to issue any Shares upon the attempted exercise of an improperly Transferred

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Option. Nothing contained herein shall permit any Optionee to transfer any Option, whether to an Eligible Transferee or otherwise, without the prior written consent of the Board. Subject to Applicable Law and subject to the prior written consent of the Board, an Option may be transferred to and from the Optionee and an Eligible Transferee provided that the transferor delivers to the Corporation at its registered office a completed Notice of Transfer substantially in the form attached hereto as “Exhibit D” .

(b)

Options and Shares issued upon exercise thereof are subject to transfer and resale restrictions pursuant to the constating documents of the Corporation and Applicable Law. The Optionee is responsible for obtaining such legal advice as may be appropriate in connection with any transfer or resale of Options and Shares issued upon the exercise thereof.

4.10 Death, Disability or Retirement of Optionee

If,

	(a)	an Employee Optionee or an Executive Optionee dies or becomes Disabled while an employee, director or officer of the Corporation or an Affiliated Corporation, as the case may be;

	(b)	a Consultant Optionee’s consulting agreement or arrangement with the Corporation or an Affiliated Corporation, as the case may be, is terminated by reason of the death or Disability of such Optionee; or

	(c)	the employment or term of office of an Employee Optionee or an Executive Optionee with the Corporation or an Affiliated Corporation, as the case may be, terminates due to Retirement,

then

(d)	the executor, administrator or other legal representative of such Optionee’s estate or such Optionee, as the case may be, may exercise any Options granted to such Optionee to the extent that such Options were exercisable at the date of such death, Disability or Retirement and the right to exercise such Options shall terminate on the earlier of:

	(i)	the date that is 180 days from the date of such Optionee’s death, Disability or Retirement; and

	(ii)	the date of expiration specified in the Option Agreement or in the resolution of the Board granting such Option, as the case may be,

		provided that any Options granted to such Optionee that were not exercisable at the date of the death, Disability or Retirement shall immediately expire and be cancelled on such date; and

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(e)

such Optionee’s eligibility to receive further grants of Options under the Plan shall cease as of the date of such Optionee’s death, Disability or Retirement, as the case may be.

4.11 Termination of Employment or Services by reason other than Death, Disability or Retirement

(a)	Where, in the case of an Employee Optionee or Executive Optionee, an Optionee’s employment or term of office with the Corporation or an Affiliated Company ceases by reason of the Optionee’s death, Disability or Retirement, then the provisions of Section 4.10 hereof shall apply.

(b)	Where, in the case of an Employee Optionee or Executive Optionee, an Optionee’s employment or term of office with the Corporation or an Affiliated Corporation terminates by reason of:

	(i)	termination by the Corporation or an Affiliated Corporation without Cause (whether such termination occurs with or without any or adequate reasonable notice, or with or without any or adequate compensation in lieu of such reasonable notice);

	(ii)	voluntary resignation by such Optionee; or

	(iii)	in the case of an Executive Optionee who received Options in his or her capacity as a director of the Corporation or an Affiliated Corporation, the failure of such Executive Optionee to be re-elected as a director or the removal of such Executive Optionee from the board of directors of the Corporation or an Affiliated Corporation,

	then any Options granted to such Optionee that are exercisable at the Termination Date shall continue to be exercisable until the earlier of: (A) the date that is 30 days following the Termination Date; and (B) the date of expiration specified in the Option Agreement or in the resolution of the Board granting such Option, as the case may be. Any Options granted to such Optionee that are not exercisable at the Termination Date shall immediately expire and be cancelled on the Termination Date.

(c)	Where, in the case of an Employee Optionee or Executive Optionee, such Optionee’s employment or term of office with the Corporation or an Affiliated Corporation is terminated by the Corporation or Affiliated Corporation for Cause then any Options granted to such Optionee, whether or not exercisable at the Termination Date, shall immediately expire and be cancelled on the Termination Date contemporaneously with such termination.

(d)	Where, in the case of a Consultant Optionee, such Optionee’s consulting agreement or arrangement terminates by reason of:

	(i)	termination by the Corporation or an Affiliated Corporation for any reason other than for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any

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termination provisions contained in such Optionee’s consulting agreement or arrangement); or

(ii) voluntary termination by such Optionee,

then any Options granted to such Optionee that are exercisable at the Termination Date shall continue to be exercisable until the earlier of: (A) the date that is 30 days following the Termination Date; and (B) the date of expiration specified in the Option Agreement or in the resolution of the Board granting such Option, as the case may be. Any Options granted to such Optionee that are not exercisable at the Termination Date shall immediately expire and be cancelled on such date.

	(e)	Where, in the case of a Consultant Optionee, such Optionee’s consulting agreement or arrangement is terminated by the Corporation or an Affiliated Corporation for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in such Optionee’s consulting agreement or arrangement), then any Options granted to such Optionee, whether or not such Options are exercisable at the Termination Date, shall immediately expire and be cancelled on the Termination Date contemporaneously with such termination.

	(f)	Unless the Board, in its discretion, otherwise determines at any time and from time to time, Options shall not be affected by any change of employment or consulting arrangement within or among the Corporation or an Affiliated Corporation for so long as an Employee Optionee continues to be an employee of the Corporation or an Affiliated Corporation, or for so long as the Executive Optionee continues to be a director or officer of the Corporation or an Affiliated Corporation, or for so long as the Consultant Optionee continues to be engaged as a consultant to the Corporation or an Affiliated Corporation, as the case may be. For greater certainty, if an Optionee ceases to be an Executive Optionee but remains an Employee Optionee, the Options granted to such Optionee shall not be affected by such change.

4.12 Discretion to Permit Exercise

Notwithstanding the provisions of Sections 4.10 and 4.11 hereof, the Board may, in its discretion, at any time prior to or following the events contemplated in such Sections, permit the exercise of any or all Options held by an Optionee in the manner and on the terms authorized by the Board, provided that the Board shall not, in any case, authorize the exercise of an Option pursuant to this Section beyond the date of expiration specified in the Option Agreement or in the resolution of the Board granting such Option, as the case may be.

4.13 Change of Control

(a)	For the purposes of the Plan,

	(i)	“ Change of Control ” shall mean the happening of any of the following events: (A) any transaction pursuant to which the Corporation goes out of

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existence; (B) any transaction pursuant to which any Person or any Associate or Affiliate of such Person and any Person acting jointly or in concert with such Person (within the meaning of the Securities Act (Ontario)) (other than the Corporation, a subsidiary of the Corporation or an employee benefit plan of the Corporation (including any trustee of such plan acting as trustee)), hereafter acquires the direct or indirect “beneficial ownership” (as such term is defined in the Business Corporations Act (Ontario)) of securities of the Corporation representing 50% or more of the aggregate votes of all of the Corporation’s then issued and outstanding securities; (C) the sale of all or substantially all of the Corporation’s assets to a Person other than a Person that is an Affiliated Corporation; (D) the dissolution or liquidation of the Corporation except in connection with the distribution of assets of the Corporation to one or more Persons which were Affiliated Corporations prior to such event; or (E) the occurrence of a transaction requiring approval of the Corporation’s shareholders involving the acquisition of the Corporation by an entity through purchase of assets, by amalgamation or otherwise; and

(ii)

“ Change of Control Price ” shall mean the highest price per Share paid in any transaction related to a Change of Control.

(b)	Notwithstanding anything else in the Plan or contained in any Option Agreement, unless otherwise determined by the Board, outstanding Options shall be converted or exchanged into or for options, rights or other securities in any entity participating in or resulting from a Change of Control, (each such Option hereinafter called an “ Alternative Option” ) and any such Alternative Option must meet the following criteria:

	(i)	the Alternative Option must be based on stock which is traded on an established securities market, or which will be so traded within 30 days of the Change of Control;

	(ii)	the Alternative Option must provide such Optionee with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Option, including, but not limited to, an identical or better exercise schedule; and

	(iii)	the Alternative Option must have economic value substantially equivalent to the value of such Option (determined at the time of the Change of Control) (having regard to such factors as the Board shall reasonably consider applicable).

(c)	The Board may, in its sole discretion, accelerate the vesting of any or all outstanding Options to provide that, notwithstanding the Vesting Schedule or any Option Agreement, such outstanding Options shall be fully vested and conditionally exercisable upon (or prior to) the completion of the Change of Control, provided, however, that the Board shall not, in any case, authorize the exercise of Options pursuant to this Section beyond the date of expiration specified in the Option Agreement or resolution of the Board granting such

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Options, as the case may be. If the Board elects to accelerate the vesting of the Options, and if any of such Options are not exercised within five Business Day following the giving of notice of such acceleration, such unexercised Options shall terminate and expire upon the completion of the proposed Change of Control. If, for any reason, the Change of Control does not occur within the contemplated time period, the acceleration of the vesting of the Options shall be retracted and vesting shall instead revert to the manner provided in the Vesting Schedule or Option Agreement.

	(d)	The Board, in its sole discretion, may provide for the purchase of any Option by the Corporation or an Affiliate or other Person upon (or prior to) the completion of the Change of Control for an amount equal to: (i) the Change of Control Price of each Share underlying an Option multiplied by the Shares underlying such Options, less (ii) the aggregate Exercise Price of such Options.

	(i)	If, in connection with a Change of Control, the shareholders of the Corporation are to receive consideration other than consideration consisting solely of cash, then the Board may determine, prior to the occurrence of the Change of Control, that upon the exercise of any Options after the Change of Control, that the Optionees shall be entitled to receive that consideration which they would have received had they exercised their Options immediately prior to the Change of Control and sold their Shares on the same terms and conditions as the shareholders of the Corporation who sold their Shares in connection with the Change of Control.

5.	GENERAL

	5.1 Capital Adjustments

	(a)	The existence of any Options shall not affect in any way the right and power of the Corporation or its shareholders to make, authorize or determine any adjustment, recapitalization, reorganization, or any other change in the Corporation’s capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Corporation, to create or issue any bonds, debentures, Shares or other securities of the Corporation or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Corporation or any sale or transfer of all or any part of its assets or business, or to effect any other corporate act or proceeding, whether of a similar character or otherwise, whether or not any such action referred to in this Subsection 5.1(a) would have an adverse effect on the Plan or any Option granted hereunder.

	(b)	If there is any change in the outstanding Shares by reason of a stock dividend or split, recapitalization, consolidation, combination or exchange of shares or other similar corporate change, other than a Change of Control, subject to any prior approval required of applicable regulatory authorities, the Board may make appropriate substitution or adjustment in:

(i)

the Exercise Price of unexercised Options;

- 17 -

	(ii)	the number or kind of shares or other securities reserved for issuance pursuant to the Plan; and

	(iii)	the number and kind of shares subject to unexercised Options theretofore granted and in the Exercise Price of those shares,

provided, however, that no substitution or adjustment will obligate the Corporation to issue or sell fractional shares. The determination of the Board as to any adjustment, or as to there being no need for adjustment, will be final and binding on all parties concerned.

5.2 Conditions of Exercise

The Plan and Options are subject to the requirement that if at any time the Board determines that: (a) the listing, registration or qualification of the Shares subject to such Option upon any stock exchange or quotation system or under any provincial, state or federal law, or that the consent or approval of any governmental body, stock exchange or quotation system or of the holders of the Shares generally, is necessary or desirable, as a condition of, or in connection with the granting of such Option or the issuance of Shares upon the exercise thereof; or (b) the grant of an Option or the issuance of Shares upon the exercise thereof is in conflict with or is inconsistent with Applicable Law, no such Option may be granted or exercised in whole or in part unless such listing, registration, qualification, consent or approval has been effected or obtained or such conflict or inconsistency is no longer outstanding, each free of any conditions not acceptable to the Board. The Optionees shall, to the extent applicable, co-operate with the Corporation in relation to such registration, qualification or other approval and shall have no claim or cause of action against the Corporation or any of its officers or directors as a result of any failure by the Corporation to obtain or to take any steps to obtain any such registration, qualification, or approval.

5.3 Amendment and Termination

	(a)	The Board may amend, suspend or terminate the Plan or any portion of it at any time in accordance with Applicable Law and subject to any required regulatory, Exchange or shareholder approval. However, subject to the terms hereof, unless consent is obtained from the Optionee affected, no amendment, suspension or termination may alter or impair any Options, or any rights related to Options, that were granted to that Optionee prior to the amendment, suspension or termination.

	(b)	If the Plan is terminated, the provisions of the Plan and any administrative guidelines and other rules adopted by the Board and in force at the time of termination of the Plan will continue in effect as long as any Option remains outstanding. However, notwithstanding the termination of the Plan, the Board may make any amendments to the Plan or to any outstanding Option that the Board would have been entitled to make if the Plan were still in effect.

	(c)	Subject to Applicable Law and to any necessary prior approval of applicable regulatory authorities and with the consent of the affected Optionee, the Board may amend or modify any outstanding Option in any manner, including, without

- 18 -

limitation, by changing the date or dates as of which, or the price at which, an Option becomes exercisable, so long as the Board would have had the authority to grant initially the Option as so modified or amended.

5.4 Status as Shareholder

Optionees shall not have any rights as a shareholder with respect to Shares until:

	(a)	full payment of the Exercise Price for the Shares has been made to the Corporation;

	(b)	a Deposit Receipt with respect to such Shares shall have been duly issued; and

	(c)	the Optionee executes and delivers to the Corporation the Power of Attorney (only if the Corporation is not a Public Company).

Upon becoming a shareholder of the Corporation, an Optionee may only transfer Shares in accordance with and subject to Applicable Law, the constating documents of the Corporation and the terms of the Power of Attorney.

5.5 Withholding Taxes

The exercise of each Option granted under the Plan is subject to the condition that if at any time the Corporation determines, in its discretion, that the satisfaction of withholding tax or other withholding liabilities is necessary or desirable in respect of such exercise, such exercise is not effective unless such withholding has been effected to the satisfaction of the Corporation. In such circumstances, the Corporation may require that an Optionee pay to the Corporation, in addition to and in the same manner as the Exercise Price for the Shares, such amount as the Corporation is obliged to remit to the relevant taxing authority in respect of the exercise of the Option. Any such additional payment is due no later than the date as of which any amount with respect to the Option exercised first becomes includable in the gross income of the Optionee for tax purposes.

5.6 Non-Exclusivity and Corporate Action

	(a)	Subject to any required regulatory or shareholder approval, nothing contained herein will prevent the Board from adopting other additional compensation arrangements for the benefit of any Optionee.

	(b)	Nothing contained in the Plan or in the Options shall be construed so as to prevent the Corporation or any subsidiary of the Corporation from taking corporate action which is deemed by the Corporation or the subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan.

5.7 Employment and Board of Directors Position Non-Contractual

The granting of an Option to an Optionee under the Plan does not confer upon the Optionee any right to continue in the employment of the Corporation or any Affiliated Corporation or as a member of the Board, as the case may be, nor does it interfere in any way with the rights of the Optionee or of the Corporation’s rights to terminate the

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Optionee's employment or consulting arrangements at any time or of the shareholders' right to elect one or more directors of the Corporation.

5.8 Indemnification

Every member of the Board will at all times be indemnified and saved harmless by the Corporation from and against all costs, charges and expenses whatsoever including any income tax liability arising from any such indemnification, that such Board member may sustain or incur by reason of any action, suit or proceeding, taken or threatened against the Board member, otherwise by the Corporation, for or in respect of any act done or omitted by the Board member in respect of the Plan, such costs, charges and expenses to include any amount paid to settle such action, suite or proceeding or in satisfaction of any judgement rendered therein.

5.9 Notices

All written notices to be delivered by the Optionee to the Corporation may be delivered personally, by facsimile or by registered mail, postage prepaid, addressed as follows:

AMG Oil Ltd.
30 St. Clair Avenue West
Toronto, Ontario
M4V 3A1

Attention: Alan Friedman, President
Facsimile No.: (416) 250-6330

Any notice delivered by the Optionee pursuant to the terms of the Option shall not be effective until actually received by the Corporation at the above address. Any notice to be delivered to the Optionee shall be effective when delivered personally (effective at the time of delivery), by facsimile transmission (effective one day after transmission) or by postage prepaid mail to the last address of the Optionee on the records of the Corporation (which shall be deemed effective the first Business Day after mailing).

5.10 Governing Law

This Plan is created under and is to be governed by and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

5.11 Effective Date

This Plan will become effective as of August 31, 2009 upon its adoption by resolution of the Board.

EXHIBIT “A”

OPTION AGREEMENT

Optionee:
	(Name)





	(Address)

Grant:
	Maximum Number of Shares

Option Exercise Price:	$ __________________________ per Share

Date of Grant:	_________________________________________, 20 ___

Expiry Date:	_________________________________________, 20 ___

Vesting Schedule:

Instalment	Date of Vesting (Milestone)	Number of Optioned Shares Vested	Cumulative Number of Optioned Shares Vested
1
2
3
4

This Option Agreement is made under and is subject in all respects to the Stock Option Plan dated August 31, 2009 (as may be supplemented and amended from time to time) (the “ Plan ”) of AMG Oil Ltd. (the “ Corporation ”) , and the Plan is deemed to be incorporated in and to be part of this Option Agreement. The Optionee is deemed to have notice of and to be bound by all of the terms and provisions of the Plan as if the Plan was set forth in full herein (including the restrictions on transfer of the Options and the Shares issuable upon exercise thereof). Without limiting the foregoing, the Optionee acknowledges and agrees that it shall be a condition of exercise of the Options that the Optionee must agree to be bound by the terms and provisions of the Assumption Agreement and the Power of Attorney (as such terms are defined in the Plan) and must first evidence such consent in writing as set out in the Plan. In the event of any inconsistency between the terms of this Option Agreement and the Plan, the terms of this Option Agreement shall prevail. The Plan contains provisions respecting termination and/or voiding of the Plan or the Option.

A - 2-

This Option Agreement evidences that the Optionee named above is entitled, subject to and in accordance with the Plan, to purchase up to but not more than the maximum number of Shares set out above at the option Exercise Price set out above upon delivery of an exercise form as annexed hereto duly completed and accompanied by certified cheque or bank draft for the aggregate Exercise Price.

The Optionee hereby agrees that: (a) any rule, regulation or determination, including the interpretation by the Board of the Plan, the Option granted hereunder and the exercise thereof, is final and conclusive for all purposes and binding on all Persons including the Corporation or Affiliated Corporation, as the case may be, and the Optionee; and (b) the grant of the Option does not affect in any way the right of the Corporation or any Affiliated Corporation to terminate the employment of the Optionee.

This Option Agreement has been made in and is to be construed under and in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

This Option Agreement is not effective until countersigned by the Corporation and accepted by the Optionee.

Dated:____________________________ , 20____

	AMG OIL LTD.



	By:
		Name:
		Title:
		Authorized Signing Officer

I have read the foregoing Option Agreement and hereby accept the Option to purchase Shares in accordance with and subject to the terms and conditions of such Option Agreement and the Plan. I understand that I may review the complete Plan by contacting the Secretary of the Corporation. I agree to be bound by the terms and conditions of the Plan governing the option.

Accepted: _________________________, 20 ____

________________________________________
Signature of Optionee

EXHIBIT “B”

NOTICE OF EXERCISE

To Exercise the Option, Complete and Return this Form

(a)	Number of Options to be Exercised:	__________________________________

(b)	Option Exercise Price per Share:	$ _________________________________

(c)	Aggregate Purchase Price

	*[ (a) multiplied by (b) ]* :	$ _________________________________

and hereby tenders a certified cheque or bank draft for such aggregate Exercise Price, and directs such Shares to be issued and registered in the name of the undersigned and that a Deposit Receipt therefor be issued as directed in the Plan, all subject to and in accordance with the Plan. Unless otherwise defined herein, any capitalized terms used herein shall have the meaning ascribed to such terms in the Plan.

Dated: ____________________________, 20 ____

	)
	)
	)	Name of Optionee
	)
	)
	)
Witness to the Signature of:	)	Signature of Optionee




Address of Optionee

EXHIBIT “C”
DEPOSIT RECEIPT

Optionee:
	Name






	Address

No. of Shares ______________________________________ (the “ Shares ”)

This Deposit Receipt will confirm that the Optionee is the registered owner of the Shares and that the Corporation is holding the share certificate evidencing the Shares on behalf of the Optionee in accordance with Section 4.8 of the Stock Option Plan dated August 31, 2009 (as the same may be supplemented and amended from time to time) (the “ Plan ”) of AMG Oil Ltd. (the “ Corporation ”). The Corporation hereby confirms that the Optionee is entitled to receive any dividends or other distributions paid on the Shares. Unless they are otherwise defined herein, any capitalized terms used herein shall have the meaning ascribed to such terms in the Plan.

This Deposit Receipt is not effective until countersigned on behalf of the Corporation and accepted by the Optionee. This Deposit Receipt is to serve only as confirmation of the registered ownership of the Shares and has no legally binding effect.

Dated: ______________________, 20 ____

	AMG OIL LTD.



	By:
		Name:
		Title:
		Authorized Signing Officer

Accepted: ____________________, 20 ____

____________________________________
Signature of Optionee

EXHIBIT “D”

NOTICE OF TRANSFER

To Request Permission to Transfer an Option, Complete and Return This Form Along
with the Original Option Agreement

The undersigned Optionee (or his or her legal representative(s) permitted under the Stock Option Plan dated August 31, 2009 (as the same may be supplemented and amended from time to time) (the “ Plan ”) of AMG Oil Ltd.) hereby irrevocably requests permission to transfer the Option evidenced by the attached Option Agreement to the undersigned Person(s), each of whom the Optionee hereby certifies is an Eligible Transferee in accordance with Sections 4.5 and 4.10 of the Plan:

Direction as to Registration :
	Name of Registered Holder(s)




	Address of Registered Holder(s)

The undersigned Optionee hereby directs such Option(s) to be registered in the name(s) of such Eligible Transferee(s). Unless they are otherwise defined herein, any defined terms used herein shall have the meaning ascribed to such terms in the Plan.

Dated: ________________________________, 20 ____


	)
	)
	)
	)
Witness to the Signature of:	)	Name of Optionee

EXHIBIT “E”

POWER OF ATTORNEY

The undersigned holder of common shares (the “ Common Shares” ) in the capital of AMG Oil Ltd. (the “ Corporation” ) hereby irrevocably appoints the chief executive officer of the Corporation (the “Attorney” ), from time to time, as the sole and exclusive attorney of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting, consent and similar rights of the undersigned, in a manner consistent with all resolutions passed, consents given or recommendations made by the board of directors of the Corporation, with respect to all of the Common Shares that now are or hereafter registered in the name of, and/or beneficially owned by, the undersigned, and any and all other shares or securities of the Corporation issued or issuable on or after the date hereof (collectively, the “ Shares” ) in accordance with the terms of this Power of Attorney.

Upon the undersigned’s execution of this Power of Attorney, any and all prior powers of attorney and proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent powers of attorney or proxies with respect to the Shares. This Power of Attorney may be exercised during any subsequent legal incapacity on the undersigned’s part.

This Power of Attorney is coupled with an interest and is granted pursuant to the stock option plan of the Corporation dated August 31, 2009, as may be amended from time to time (the “ Stock Option Plan ”), and is granted in consideration of the Corporation issuing to the undersigned Common Shares upon the exercise of previously granted stock options.

The undersigned hereby agrees that the Attorney will have no liability or responsibility whatsoever by reason of any loss or damage to the undersigned arising out of or in consequence of any mistake or error of law or fact on any matter or thing done or omitted to be done in connection with the exercise of the rights granted hereunder.

Any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, successors and assigns of the undersigned.

This Power of Attorney shall terminate, and be of no further force and effect, upon the earlier of: (i) the undersigned ceasing to be a security holder of the Corporation; and (ii) upon the Corporation becoming a Public Company (as such term is defined in the Stock Option Plan).

DATED the day of , 20 .

SIGNED, SEALED and DELIVERED	)
in the presence of:	)
	)
	)
Witness	)	Signature of Shareholder

5582335.6

FINAL

AGENCY AGREEMENT

THIS AGREEMENT dated the 31 ^st day of August, 2009, is made

BETWEEN

ADIRA ENERGY CORP.

(the “Corporation”);

AND

SANDFIRE SECURITIES INC.

(“Sandfire”).

WHEREAS:

The Corporation wishes to privately place with purchasers Units having an aggregate principal amount of at least $2,000,000 or such lesser amount as approved by the Corporation;

The Corporation wishes to appoint the Agent to distribute the Units, and the Agent is willing to accept such appointment on the terms and conditions of this Agreement;

The Corporation has entered into a securities exchange agreement (the “Acquisition Agreement”) with AMG Oil Ltd. (“AMG”) dated August 4, 2009, whereby AMG will acquire all of the issued and outstanding shares in the capital of the Corporation (referred to herein as the “Acquisition”);

THE PARTIES to this Agreement therefore agree as follows:

1.	Definitions, Interpretation and Schedules

	(a)	Definitions : Whenever used in this Agreement:

		(i)	“Acceleration Date” has the meaning defined in 5(e) of this Agreement;

		(ii)	“Acquisition” means the acquisition of all of the issued and outstanding shares in the capital of the Corporation by AMG pursuant to the Acquisition Agreement;

		(iii)	“Acquisition Agreement” means the securities exchange agreement between the Corporation and AMG dated August 4, 2009, whereby AMG will acquire all of the issued and outstanding shares in the capital of the Corporation;

		(iv)	“Adira Properties” means the approximately 125.7 km ² in the Hula Valley located in Northern Israel subject to the License;

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	(v)	“Agent” means Sandfire and any other member of the selling group that may be formed for the Offering;

	(vi)	“Agent’s Fee” means the fee payable pursuant to subsection 8(a) of this Agreement by the Corporation to the Agent equal to 7% of the aggregate Purchase Price for the Offered Securities sold by the Agent in the Offering;

	(vii)	“Agreement” means this agreement, including the schedules attached hereto, as amended or supplemented from time to time;

	(viii)	“AMG” means AMG Oil Ltd., a corporation existing under the laws of Canada and includes any successor corporation thereto;

	(ix)	“Ancillary Documents” means all agreements, indentures, certificates and documents executed and delivered, or to be executed and delivered, by the Corporation or AMG, as the case may be, in connection with the transactions contemplated by this Agreement, the Acquisition Agreement or the Subscription Agreements and includes the Subscription Agreements;

	(x)	“Broker Shares” means the Common Shares which will be issued upon the exercise of the Broker Warrants;

	(xi)	“Broker Warrants” means the warrants which will entitle the Agent to subscribe for a number of Common Shares equal to 7% of the number of Offered Securities sold by the Agent, each Broker Warrant entitling the holder to acquire one Common Share at a price of $0.25 per Common Share for a period of twenty four months following the Closing Date;

	(xii)	“Business Day” means a day which is not a Saturday, Sunday or a statutory or civic holiday in the City of Toronto, Ontario;

	(xiii)	“Closing” means the closing of the Offering, which shall occur immediately before the closing of the Acquisition;

	(xiv)	“Closing Date” means August 31, 2009 or such other date as the Corporation and the Agent may mutually agree upon;

	(xv)	“Closing Time” means 1:30 p.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Corporation and the Agent may mutually agree upon;

	(xvi)	“Common Shares” means the common shares which the Corporation is authorized to issue as constituted on the date hereof;

	(xvii)	“Corporation” means Adira Energy Corp., a corporation existing under the laws of Ontario and includes any successor corporation thereto;

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	(xviii)	“Escrow Agent” means Aird & Berlis, LLP, counsel to the Corporation;

	(xix)	“Escrowed Certificates” means the certificates representing the Offered Securities and Broker Warrants;

	(xx)	“Information” means all information regarding the Corporation prepared by the Corporation and provided or accessible to the Agent, if any, and includes but is not limited to, all press releases and corporate information of the Corporation;

	(xxi)	“License” means the “Eitan” Petroleum License covering the Adira Properties issued by the Israeli Ministry of National Infrastructures to the Corporation in December 2008;

	(xxii)	“Net Proceeds” has the meaning defined in subsection 5(a) of this Agreement;

	(xxiii)	“Offered Securities” means at least 8,000,000 Units or such lesser amount as approved by the Corporation, the Corporation is offering for sale through the Agent;

	(xxiv)	“Offering” means the offering for sale by the Corporation on a private placement basis of the Offered Securities;

	(xxv)	“Offering Jurisdictions” means the provinces of British Columbia, Alberta and Ontario;

	(xxvi)	“Ontario Act” means the Securities Act (Ontario) and the regulations thereunder, together with the instruments, policies, rules, orders, codes, notices and interpretation notes of the Ontario Securities Commission, as amended, supplemented or replaced from time to time;

	(xxvii)	“OTCBB” means the Over-The-Counter Bulletin Board a regulated electronic trading service in the United States offered by the National Association of Securities Dealers that shows real-time quotes, last-sale prices and volume information for over-the-counter equity securities;

	(xxviii)	“Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;

	(xxix)	“Purchase Price” means the price to be paid by the Purchasers for each Offered Security under the Offering, being $0.25 per Offered Security;

	(xxx)	“Purchasers” means the purchasers of the Offered Securities collectively;

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	(xxxi)	“Sandfire” means Sandfire Securities Inc.;

	(xxxii)	“SEC” means the U.S. Securities and Exchange Commission;

	(xxxiii)	“Securities Laws” means the securities legislation and regulations of, and the instruments, policies, rules, orders, codes, notices and interpretation notes of the securities regulatory authorities of, the applicable jurisdiction or jurisdictions collectively;

	(xxxiv)	“Subscription Agreements” means the subscription agreement to be entered into between the Corporation and each of the Purchasers with respect to the purchase of the Offered Securities, collectively; and

	(xxxv)	“Success Fee” means the CAD$10,000 payable to Sandfire on Closing pursuant to subsection 8(c) of this Agreement;

	(xxxvi)	“Successor” means AMG or the successor entity entity resulting from the Acquisition;

	(xxxvii)	“Successor Broker Warrants” has the meaning defined in subsection 5(f) of this Agreement;

	(xxxviii)	“Successor Common Shares” has the meaning defined in subsection 5(e) of this Agreement;

	(xxxix)	“Successor Units” has the meaning defined in subsection 5(e) of this Agreement;

	(xl)	“Successor Warrants” has the meaning defined in subsection 5(e) of this Agreement;

	(xli)	“Unit” means one Common Share and one half of one Warrant;

	(xlii)	“U.S.” or “United States” means the United States of America;

	(xliii)	“U.S. Securities Act” means the United States Securities Act of 1933 , as amended;

	(xliv)	“Warrant” means a common share purchase warrant exercisable into one Common Share at an exercise price of $0.50 per Common Share for a period of two years from the Closing Date.

(b)

Other Defined Terms : Whenever used in this Agreement, the words and terms “affiliate”, “associate”, “material fact”, “material change”, “misrepresentation”, “officer” and “subsidiary” shall have the meaning given to such word or term in the Ontario Act unless specifically provided otherwise herein.

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	(c)	Plural and Gender : Whenever used in this Agreement, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and neuter.

	(d)	Currency : All references to monetary amounts in this Agreement are to lawful money of the United States.

2.	The Offering

	The Offering is for at least 8,000,000 Units or such lesser amount as approved by the Corporation.

3.	The Agent

	(a)	Sale on Exempt Basis : The Agent shall offer for sale and sell the Offered Securities in the Offering Jurisdictions and, subject to applicable law, outside Canada (other than the United States) in compliance with the Securities Laws and only to such Persons and in such manner so that, pursuant to the provisions of the Securities Laws, no prospectus or offering memorandum or other similar document need be filed with, or delivered to, any securities commission of the Offering Jurisdictions or other similar regulatory authority in connection therewith. The Agent shall notify the Corporation with respect to the identity and jurisdiction of residence of each Purchaser as soon as practicable and in any event not later than one Business Day prior to the Closing Date.

	(b)	Selling Group : The Corporation agrees that, subject to the consent of the Corporation, such consent not to be unreasonably withheld, Sandfire has the right to invite one or more securities dealers to form a selling group to participate in finding purchasers for the Offered Securities. The Corporation grants all of the rights and benefits of this Agreement to any securities dealer who is a member of any selling group and appoints Sandfire as trustee of such rights and benefits for all such securities dealers, and Sandfire hereby accepts such trust and agrees to hold such rights and benefits for and on behalf of all such securities dealers. Sandfire shall ensure that any securities dealer who is a member of any selling group formed pursuant to the provisions of this subsection 3(b) or with whom Sandfire has a contractual relationship with respect to the Offering, if any, agrees with Sandfire to comply with the covenants and obligations given by the Agent herein.

	(c)	Covenants, Representations and Warranties of the Agent : The Agent covenants with the Corporation that (i) it will comply with the Securities Laws of the Offering Jurisdictions in which it solicits or procures subscriptions for Offered Securities in connection with the Offering, (ii) it will not solicit or procure subscriptions for Offered Securities so as to require the registration thereof or the filing of a prospectus with respect thereto under the laws of any jurisdiction, (iii) it will obtain from each Purchaser an executed Subscription Agreement in a form acceptable to the Corporation and the Agent, acting reasonably, and (iv) it is

- 6 -

acquiring any securities of the Corporation which it is entitled to, or may elect to, receive hereunder as principal and is an “accredited investor” as defined in National Instrument 45-106 of the Canadian Securities Administrators. The Agent represents and warrants that: (i) it is, and, to the best of its knowledge, all members of any selling group formed by it are, qualified to so act in the Offering Jurisdictions in which it solicited or procured subscriptions for the Offered Securities; (ii) it, and to the best of its knowledge after due enquiry, each member of any such selling group, is registered under the Ontario Act and is registered or exempt from registration under the securities legislation in any jurisdiction in which it solicited or procured subscriptions, as applicable, as a dealer in an appropriate category; and (iii) it, and to the best of its knowledge after due inquiry, each member of any selling group, has not engaged in or authorized, and will not engage in or authorized, any form of general solicitation or general advertising in connection with or in respect of the offering in any newspaper, magazine, private media of general and regular paid circulation or any similar medium, or broadcast over the radio or television or by means of the internet or otherwise or conducted any seminar or meeting concerning the offering whose attendees have been invited by any general solicitation or general advertising.

	(d)	Filings : The Corporation undertakes to file or cause to be filed all forms and undertakings required to be filed by the Corporation in connection with the Offering so that the distribution of the Offered Securities may lawfully occur in the Offering Jurisdictions without the necessity of filing a prospectus or an offering memorandum in Canada and the Agent undertakes to use its commercially reasonable efforts to cause the Purchasers of the Offered Securities to complete (and it shall be a condition of closing in favour of the Corporation that the Purchasers complete and deliver to the Corporation) any forms and undertakings required by the Securities Laws of the Offering Jurisdictions. All fees payable in connection with such filings shall be at the expense of the Corporation.

	(e)	No Offering Memorandum : Neither the Corporation nor the Agent shall (i) provide to prospective purchasers of Offered Securities any document or other material that would constitute an offering memorandum within the meaning of the Securities Laws of the Offering Jurisdictions or (ii) engage in any form of general solicitation or general advertising in connection with the offer and sale of the Offered Securities, including but not limited to, causing the sale of the Offered Securities to be advertised in any newspaper, magazine, printed public media, printed media or similar medium of general and regular paid circulation, broadcast over radio, television or telecommunications, including electronic display or the Internet, or otherwise, or conduct any seminar or meeting relating to any offer and sale of the Offered Securities whose attendees have been invited by a general solicitation or general advertising.

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4.	Due Diligence

	The Corporation hereby represents and warrants, to the best of its knowledge, that the Information and all documentation, correspondence and information provided directly to Sandfire by the Corporation and its legal counsel, advisors and agents in the course of Sandfire’s due diligence investigation of the Corporation are true, accurate and contain no misstatements of any material fact or omit any information required to make such materials not misleading and no material information has been omitted from the disclosure provided to Sandfire by the Corporation.

5.	Escrow & Exchange

	(a)	On the Closing Date, the Agent will deliver the gross proceeds from the sale of the Units less the Agent’s Fee, the Success Fee, in the case of Sandfire, and expenses payable under subsection 13 of this Agreement (the “Net Proceeds”) to the Escrow Agent and the Corporation will deliver the Escrow Certificates to the Escrow Agent.

	(b)	The Escrow Agent will hold the Net Proceeds and the Escrow Certificates until it receives the direction from the Agent pursuant to subsection 5(c) of this Agreement.

	(c)	The Agent will provide a direction to the Escrow Agent to release the Net Proceeds upon receipt by the Agent of confirmation of fulfillment of all of the conditions to the closing of the Acquisition.

	(d)	Upon receipt of the direction of the Agent as described in subsection 5(c), the Escrow Agent will release to the Corporation the Escrow Certificates and the Net Proceeds held in escrow.

	(e)	The Units will then be exchanged for units (the “Successor Units”) in AMG, concurrent with the closing of the Acquisition. Each subscriber will receive one Successor Unit for each Unit purchased in the Offering. The Successor Units will be comprised of one common share in capital of the Successor (“Successor Common Share”) and one half of one warrant to purchase Successor Common Shares (each whole warrant a “Successor Warrant”). Each Successor Warrant shall be exercisable into one Successor Common Share at an exercise price of $0.50 per Successor Common Share for a period of two years from the Closing Date. The Successor Warrants shall contain acceleration provisions such that, in the event that the weighted average trading price of the shares of the Successor listed on an exchange exceeds $1.00 per Successor Common Share for a period of 20 consecutive trading days (the 20th day of such trading period, the “Acceleration Date”) the expiry date of the Successor Warrants shall be accelerated to that date which is 30 days after the Acceleration Date.

	(f)	The Broker Warrants will also be exchanged for warrants to acquire common shares in the Successor upon completion of the Acquisition on the same terms and conditions as the Broker Warrants (the “Successor Broker Warrants”).

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6.	Deliveries By Closing Time

	By the Closing Time:

	(a)	all actions required to be taken by or on behalf of the Corporation including, without limitation, the passing of all required resolutions of the directors, including committees of the directors, and shareholders of the Corporation, shall have occurred in order to complete the transactions contemplated by this Agreement, including, without limitation, to execute and perform its obligations under the Acquisition Agreement, to issue the Offered Securities sold in the Offering, to create and issue the Broker Warrants and to allot and reserve the Common Shares issuable upon exercise of the Broker Warrants, and a certified copy of all such resolutions shall have been delivered by the Corporation to the Agent;

	(b)	the Corporation shall have delivered or caused to be delivered to the Agent:

		(i)	a favourable legal opinion dated the Closing Date of counsel to the Corporation, who may rely on opinions of local counsel acceptable to the Agent, addressed to, among others, the Agent and the Purchasers satisfactory in form and substance to counsel to the Agent, acting reasonably, to the effect that:

			(A)	the Corporation is a corporation existing under the laws of its jurisdiction of incorporation and has not been dissolved;

			(B)	the Corporation has all requisite corporate capacity, power and authority to own and operate its property and assets and to carry on its business as now conducted by it;

			(C)	the Corporation has all requisite corporate capacity, power and authority to make the Offering and to execute and deliver this Agreement, the Acquisition Agreement and the Ancillary Documents, including the certificates representing the Broker Warrants, and to perform all of its obligations contemplated thereunder, including the issue of the Common Shares issuable upon the exercise of the Broker Warrants;

			(D)	as at the Closing Date, immediately prior to the completion of the Offering, the authorized capital of the Corporation consists of an unlimited number of Common Shares, of which, 31,200,001 Common Shares were issued and outstanding;

			(E)	the execution and delivery of this Agreement and the Ancillary Documents, including the certificate representing the Broker Warrants and the performance by the Corporation of its obligations thereunder, including the issue of the Common Shares issuable upon the exercise of the Broker Shares do not and will not result in

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a breach of, and do not and will not conflict with, any of the terms, conditions or provisions of the constating documents of the Corporation or the resolutions of the directors or shareholders of the Corporation;

	(F)	all necessary corporate action has been taken by the Corporation to authorize the execution and delivery of this Agreement and each of the Ancillary Documents, including the certificates representing the Broker Warrants and the completion of the Offering and this Agreement and each of the Ancillary Documents, including the certificate representing the Broker Warrants has been duly authorized, executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of the Corporation, enforceable in accordance with its terms (subject to the usual qualifications);

	(G)	all necessary corporate action has been taken by the Corporation to authorize the allotment and issue of the Offered Securities the creation, allotment and issue of the Broker Warrants and the Common Shares issuable upon the due exercise of the Broker Warrants have been allotted and reserved for issuance by the Corporation and, when issued in accordance with the due exercise of the Broker Warrants, such Common Shares shall be issued as fully-paid and non-assessable shares of the Corporation;

	(H)	the offering, issuance and sale of the Offered Securities and the Broker Warrants have been effected in such a manner as to be exempt, either by statute or regulation or order, from the prospectus and, if applicable, registration requirements of the Offering Jurisdictions, and no documents are required to be filed, proceedings taken or approvals, permits, consents or authorizations of regulatory authorities obtained under applicable securities legislation in connection therewith (subject to advice with respect to filing private placement forms and paying requisite filing fees);

	(I)	no prospectus or registration will be required and no documents are required to be filed, proceedings taken or approvals, permits, consents or authorizations of regulatory authorities obtained under applicable securities legislation in connection with the issuance of the Common Shares upon the exercise of the Broker Warrants (subject to the usual filings, if any);

	(J)	the Offered Securities, the Broker Warrants and the Common Shares issuable upon exercise of the Broker Warrants will be subject to a statutory hold period in Canada of four months and one day commencing from the date that the Corporation becomes a

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reporting issuer in any province or territory of Canada (subject to the usual qualifications);

	(K)	the certificates representing the Common Shares, Warrants and the Broker Warrants have been approved by the directors of the Corporation and comply with applicable law, including any necessary legends; and

	(L)	such other matters as the Agent or counsel for the Agent may reasonably require;

	(ii)	a favourable legal opinion dated the Closing Date of counsel to the Corporation, addressed to the Agent, in form and substance satisfactory to the Agent and its counsel, acting reasonably with respect to title to the Adira Properties;

	(iii)	a certificate dated the Closing Date signed by an appropriate officer of the Corporation and addressed to, among others, the Agent with respect to the articles and by-laws of the Corporation, the resolutions of the directors and shareholders, if any, of the Corporation and any other corporate action taken relating to this Agreement, the Acquisition Agreement and the Ancillary Documents and with respect to such other matters as the Agent may reasonably request and including specimen signatures of the signing officers of the Corporation;

	(iv)	a technical report covering the Adira Properties, however, such technical report need not be prepared in compliance with National Instrument 51- 101 – Standards of Disclosure for Oil & Gas Activities of the Canadian Securities Administrators;

	(v)	definitive certificates representing the Offered Securities registered in the names of the Purchasers or in such other name or names as the Purchasers or the Agent may direct;

	(vi)	a definitive certificate representing the Broker Warrants registered in the name of the Agent or in such other name as the Agent may direct; and

	(vii)	such further documents as may be contemplated by this Agreement or as the Agent may reasonably require;

all in form and substance satisfactory to the Agent; and

(c)	the Corporation shall have caused to be delivered to the Agent:

	(i)	a favourable legal opinion dated the Closing Date of counsel to AMG, who may rely on opinions of local counsel acceptable to the Agent, addressed to, among others, the Agent and the Purchasers satisfactory in

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form and substance to counsel to the Agent, acting reasonably, to the effect that:

	(A)	AMG is a corporation existing under the laws of its jurisdiction of incorporation and has not been dissolved;

	(B)	as at the Closing Date, immediately prior to the completion of the Acquisition, the authorized capital of AMG consists of 100,000,000 common shares, of which, 23,200,000 common shares were issued and outstanding;

	(C)	all necessary corporate action has been taken by AMG to authorize the execution and delivery of the Acquisition Agreement and the Acquisition Agreement has been duly authorized, executed and delivered by AMG and constitutes a legal, valid and binding obligation of AMG, enforceable in accordance with its terms (subject to the usual qualifications);

	(D)	all necessary corporate action has been taken by AMG to authorize the allotment and issue of the Successor Units the creation, allotment and issue of the Successor Broker Warrants and the Successor Common Shares issuable upon the due exercise of the Successor Broker Warrants have been allotted and reserved for issuance by AMG and, when issued in accordance with the due exercise of the Successor Broker Warrants, such Successor Common Shares shall be issued as fully-paid and non-assessable shares of the Successor; and

	(E)	such other matters as the Agent or counsel for the Agent may reasonably require;

	(ii)	a certificate dated the Closing Date signed by an appropriate officer of AMG with respect to the resolutions of the directors and shareholders, if any, of AMG and any other corporate action taken relating to this Agreement, the Acquisition Agreement and the Ancillary Documents and with respect to such other matters as the Agent may reasonably request;

	(iii)	definitive certificates representing the Successor Common Shares and Successor Warrants registered in the names of the Purchasers or in such other name or names as the Purchasers or the Agent may direct;

	(iv)	a definitive certificate representing the Successor Broker Warrants registered in the name of the Agent or in such other name as the Agent may direct; and

	(v)	such further documents as may be contemplated by this Agreement or as the Agent may reasonably require;

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all in form and substance satisfactory to the Agent; and

(d)	the Agent shall have delivered or cause to be delivered to the Corporation.

	(i)	payment of the aggregate gross Purchase Price for the Offered Securities sold in the Offering less (i) the Agent’s Fee as provided in section 8 of this Agreement, (ii) the Success Fee as provided in section 8 of this Agreement and (iii) the expenses (including legal expenses) payable by the Corporation to the Agent as provided in section 13 of this Agreement, by certified cheque or bank draft payable to the Corporation or as the Corporation may otherwise direct in writing against delivery by the Corporation to the Agent of a receipt for the net proceeds of the Offering; and

	(ii)	such further documents as may be contemplated by this Agreement or as the Corporation may reasonably require;

	all in form and substance satisfactory to the Corporation.

7.	Closing

	(a)	Closing : The Closing shall be completed immediately before the closing of the Acquisition at the offices of counsel for the Corporation at the Closing Time on the Closing Date.

	(b)	Conditions of Closing : The following are conditions precedent to the obligation of the Agent to complete the Closing, which conditions the Corporation hereby covenants and agrees to use its best efforts to fulfill within the time set out herein therefor, and which conditions may be waived in writing in whole or in part by the Agent:

		(i)	the Corporation and AMG shall each have received all necessary approvals and consents, including all necessary regulatory approvals and consents required for the completion of the transaction contemplated by this Agreement and the Acquisiton Agreement, all in a form satisfactory to the Agent;

		(ii)	receipt by the Agent of the documents set forth in section 6 of this Agreement to be delivered to the Agent;

		(iii)	the representations and warranties of the Corporation contained herein being true and correct as of the Closing Time with the same force and effect as if made at and as of the Closing Time after giving effect to the transactions contemplated hereby;

		(iv)	the Corporation having complied with all covenants, and satisfied all terms and conditions, contained herein to be complied with and satisfied by the Corporation at or prior to the Closing Time; and

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(v)

the Agent not having previously terminated the obligations thereof pursuant to this Agreement.

8.	Fee

	(a)	Commission : In consideration of the Agent agreeing to act as Agent of the Corporation in respect of the Offering, and in consideration of the services performed and to be performed by the Agent in connection therewith, the Corporation shall pay to the Agent or as the Agent may otherwise direct at the Closing Time against receipt of payment of the purchase price for the Offered Securities sold by the Agent in the Offering, the Agent’s Fee equal to 7% of the aggregate Purchase Price for such Offered Securities. .

	(b)	Broker Warrants : In addition to the Agent’s Fee payable to the Agent pursuant to subsection 8(a) above, as additional consideration for the services performed and to be performed by the Agent hereunder, the Corporation shall issue to the Agent or as the Agent may otherwise direct at the Closing Time the Broker Warrants, in form and substance satisfactory to the Agent.

	(c)	Success Fee : At the Closing Time, the Corporation shall also pay to Sandfire, or as Sandfire may otherwise direct at the Closing Time, a Success Fee of CAD$10,000.

9.	Representations and Warranties

	The Corporation hereby represents and warrants to the Agent and the Pruchasers, and acknowledges that the Agent and the Purchasers are relying upon these representations and warranties in completing the Closing, as follows:

	(a)	The execution of this Agreement and the offering for sale and distribution by the Agent of the Offered Securities in accordance with the terms of this Agreement and the Subscription Agreement will be exempt from the prospectus requirements of the Securities Laws of the Offering Jurisdictions.

	(b)	All necessary corporate action has been taken, or prior to the Closing Date will have been taken, to authorize the allotment, issue and sale of, and the delivery of certificates representing, the Offered Securities and, upon payment of the requisite consideration therefor, the Offered Securities will be validly issued as fully paid and non-assessable.

	(c)	The Corporation has all requisite corporate power and authority to create and issue the Broker Warrants and to enter into, execute and deliver and to carry out the obligations thereof under the certificate representing the Broker Warrants. All necessary corporate action has been taken by the Corporation to authorize the

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issue of the Broker Warrants in accordance with the terms and conditions hereof and, when issued, the Broker Warrants will be validly issued. The certificate representing the Broker Warrants will constitute a valid and legally binding obligation of the Corporation enforceable against the Corporation in accordance with the terms thereof.

(d)

The Agent and the Purchasers shall be entitled to rely on the representations, warranties and covenants made by the Corporation to AMG and AMG to the Corporation in the Acquisition Agreement and shall survive the Closing and shall continue in full force and effect for the benefit of the Agent and the Purchasers in accordance with the terms of the Acquisition Agreement. The representations, warranties and covenants made by the Corporation to AMG and AMG to the Corporation in the Acquisition Agreement are hereby incorporated by reference such that they form an integral part of this Agreement.

10.	Covenants of the Corporation

	(a)	Consents and Approvals : The Corporation covenants and agrees with the Agent, and acknowledges that such covenants are also being provided for the benefit of the Purchasers, that the Corporation and AMG will:

		(i)	obtain, to the extent necessary, regulatory consents for the Offering and Acquisition on such terms as are mutually acceptable to the Agent, the Corporation and AMG, acting reasonably; and

		(ii)	make all necessary filings and obtain all other necessary regulatory and other consents and approvals required in connection with the transactions contemplated by this Agreement and the Acquisition Agreement.

	(b)	The Corporation : The Corporation hereby covenants and agrees with the Agent, and acknowledges that such covenants are also being provided for the benefit of the Purchasers, that the Corporation will:

		(i)	fulfill all legal requirements to permit the issue, offering and sale of the Offered Securities and the issue of the Broker Warrants, including, without limitation, compliance with the Securities Laws of the Offering Jurisdictions to enable the Offered Securities to be offered for sale and sold without the necessity of filing a prospectus in the Offering Jurisdictions; and

		(ii)	in a timely manner following the Closing Date, file such documents as may be required under the Securities Laws of the Offering Jurisdictions relating to the offering of the Offered Securities which, without limiting the generality of the foregoing, shall include a Form 45-106F1 as prescribed by National Instrument 45-106 – Prospectus and Registration Exemptions of the Canadian Securities Administrators.

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	(iii)	cause AMG to fulfill all legal requirements to permit the Acquisition and the issue of the Successor Broker Warrants, including, without limitation, compliance with the Securities Laws of the United States to enable the Successor Units and Successor Broker Warrants to be distributed without the necessity of filing a prospectus, registration statement or similar documents with the SEC; and

	(iv)	in a timely manner following the Closing Date, file such documents as may be required under the Securities Laws of the United States relating to the Acquisition which, without limiting the generality of the foregoing, shall include a Form 20F as prescribed by the U.S. Securities Act.

11.	Termination

	(a)	The Corporation agrees that all terms and conditions in this Agreement to be fulfilled at or prior to the Closing Time shall be construed as conditions and complied with so far as the same relate to acts to be performed or caused to be performed by it, that it will use its best efforts to cause such conditions to be complied with, and any breach or failure by the Corporation to comply with any of such conditions shall entitle the Agent, at its option, to terminate its obligations under this Agreement (and the obligations of any Purchasers arranged by it to purchase Offered Secuirities whether or not they have executed Subscription Agreements) by notice to that effect given to the Corporation at or prior to the Closing Time. The Agent may waive, in whole or in part, or extend the time for compliance with, any terms and conditions of this Agreement without prejudice to their rights in respect of any other of such terms and conditions or any other or subsequent breach or non-compliance, provided that any such waiver or extension shall be binding upon the Agent only if the same is in writing.

	(b)	If at any time prior to the Closing Time there shall occur any material adverse change in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or control of the Corporation (referred to in this section 11 as the “Condition of the Corporation”), or the Agent becomes aware of any undisclosed material adverse information relating to the Corporation, or other adverse material development which, in the opinion of the Agent, acting reasonably, would have a material adverse effect on the market price of the Successor Common Shares or the marketability of the Offered Securities, then the Agent shall be entitled, at its option, to terminate its obligations under this Agreement by written notice to that effect given to the Corporation at or prior to the Closing Time.

	(c)	If at any time prior to the Closing Time there should develop, occur or come into effect or existence any event, action, state, condition or occurrence of national or international consequence, including any act of terrorism, war or like event, or any law or regulation, which in the opinion of the Agent, acting reasonably, seriously adversely affects, or would seriously adversely affect the Canadian, United States or international financial markets, the Condition of the Corporation,

- 16 -

the market price of the Successor Common Shares or the marketability of the Offered Securities, the Agent shall be entitled, at its option, to terminate its obligations under this Agreement by written notice to that effect given to the Corporation at or prior to the Closing Time.

	(d)	If at any time prior to the Closing Time there shall occur any change in any of the Securities Laws, or if any enquiry, action, suit, investigation or other proceeding, whether formal or informal, in relation to the Corporation or the distribution of the Offered Securities should be instituted or any order under or pursuant to any laws or regulations of any of the Offering Jurisdictions or any other regulatory or Governmental Authority should be made or issued (except for any such order based upon the activities or alleged activities of the Agent and not of the Corporation) which, in the reasonable opinion of the Agent, operates to prevent or restrict the trading of the Successor Common Shares or the distribution of the Offered Securities or seriously adversely affects or will seriously adversely affect the market price of the Successor Common Shares or the marketability of the Offered Securities, the Agent shall be entitled, at its option, to terminate its obligations under this Agreement by written notice to that effect given to the Corporation at or prior to the Closing Time.

	(e)	Any termination by the Agent pursuant to the provisions hereof shall be effected by notice in writing delivered or sent via facsimile to the Corporation at its address as herein set forth. The rights of termination contained in subsections 11(a), (b), (c) or (d) above are in addition to any other rights or remedies the Agent may have in respect of any default, misrepresentation, act or failure to act of the Corporation in respect of any matters contemplated by this Agreement. In the event of any such termination, there shall be no further liability on the part of the Corporation or the Agent except for any liability provided for in sections 12 and 13 hereof.

12.	Indemnity and Contribution

	(a)	Indemnity : The Corporation (the “Indemnifier”), covenants and agrees to protect, indemnify and save harmless the Agent and each securities dealer which is a member of any selling group formed by the Agent in connection with the Offering, each of the associates and affiliates of each of them and the respective directors, officers, employees, shareholders, partners, advisors and agents of each of the Agent and each securities dealer which is a member of any selling group formed by the Agent in connection with the Offering and of each of the associates and affiliates of each of them (in this section 12 each an “Indemnified Person” and collectively the “Indemnified Persons”) from and against all losses (other than a loss of profits), claims, damages, payments, liabilities, costs, fines, penalties and expenses (including the amount paid in settlement of any claim, action, suit or proceeding and the fees and expenses of counsel on a solicitor and his own client basis incurred obtaining advice in respect of, or in defending or settling, any such claim, action, suit or proceeding), joint or several, of whatsoever nature or kind to which an Indemnified Person may become subject or

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otherwise involved in any capacity under statute or common law or otherwise caused or incurred by reason of or in any way arising, directly or indirectly, from, by virtue of, or related to, enforcing the provisions of this Agreement, or:

	(i)	the Agent having acted as Agent in respect of the Offering or the selling group members having acted as selling group members in respect of the Offering (other than by reason of the negligence, willful misconduct or bad faith of the Agent or the selling group members, provided that this exception shall only apply to the applicable Agent or selling group member or selling group members which have been negligent, committed willful misconduct or exercised bad faith);

	(ii)	any statement or information contained in the Information which at the time and in light of the circumstances under which it was made containing or being alleged to contain a misrepresentation or being or being alleged to be untrue, false or misleading;

	(iii)	the omission or alleged omission to state in the Information any material fact required to be stated therein or necessary to make any statement therein not misleading in light of the circumstances under which it was made;

	(iv)	any order made or inquiry, investigation or proceeding commenced or threatened by any officer or official of any securities commission or authority or any other competent authority, not based upon the activities or the alleged activities of the Agent or any member of any selling group formed by the Agent in connection with the Offering;

	(v)	the non-compliance or alleged non-compliance by the Indemnifier with any of the Securities Laws of the Offering Jurisdictions or any other applicable law in connection with the transactions contemplated herein;

	(vi)	any negligence or willful misconduct by the Indemnifier relating to or connected with the sale by the Corporation of the Offered Securities or the Exchange pursuant to the Acquisition;

	(vii)	any misrepresentation or alleged misrepresentation (except any made by the Agent or selling group members and for which the Agent did not rely on any information provided by the Indemnifier or anyone acting on its behalf, provided that this exception shall apply to the applicable Agent or selling group member or selling group members who have made such misrepresentation or alleged misrepresentation) relating to the Offering, the Offered Securities, the Acquisition or the Successor Units, whether oral or written and whether made during and in connection with the Offering or Acquisition or after the completion of the Offering and Acquisition where such misrepresentation or alleged misrepresentation may give or gives rise to any other liability under any statute in any

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jurisdiction which is in force on the date of this Agreement or which comes into force after that date; or

(viii)

the breach of, or default under, any term, condition, covenant or agreement of the Indemnifier made or contained herein or in any other document of the Indemnifier delivered pursuant hereto or made by the Indemnifier in connection with the sale of the Offered Securities or any representation or warranty of the Indemnifier made or contained herein or in any other document of the Indemnifier delivered pursuant hereto or in connection with the sale of the Offered Securities or the Acquisition being or being alleged to be untrue, false or misleading.

If any matter or thing contemplated by this section 12 shall be asserted against any Indemnified Person in respect of which indemnification is or might reasonably be considered to be provided hereunder, such Indemnified Person shall notify the Indemnifier as soon as possible of the nature of such claim and the Indemnifier shall be entitled, but not required, to assume the defence of any action, suit or proceeding brought to enforce such claim; provided, however, that the defence shall be through legal counsel reasonably acceptable to the Indemnified Person and that no settlement may be made by the Indemnifier or the Indemnified Person without the prior written consent of the other of them and the Indemnifier shall not be liable for any settlement of any such claim unless it has consented in writing to such settlement.

(b)	Counsel: In any claim referred to in section 12 hereof, the Indemnified Person shall have the right to retain separate legal counsel to act on behalf of such Indemnified Person provided that the fees and disbursements of such separate legal counsel shall be paid by the Indemnified Person unless:

	(i)	the Indemnifier fails to assume the defence of such claim on behalf of the Indemnified Person within ten days of receiving notice of such claim;

	(ii)	the Indemnifier and the Indemnified Person shall have mutually agreed to the retention of such separate legal counsel; or

	(iii)	the named parties to such claim (including any added, third or impleaded parties) include both the Indemnifier and the Indemnified Person and the Indemnified Person has been advised by legal counsel that representation of both the Indemnifier and the Indemnified Person by the same legal counsel would be inappropriate due to actual or potential differing interests between them;

	in which event or events the fees and disbursements of such separate legal counsel shall be paid by the Indemnifier subject as hereinafter provided. Where more than one Indemnified Person is entitled to retain separate counsel in the circumstances described in this subsection 12(b), all Indemnified Persons shall be represented by

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one separate legal counsel and the fees and disbursements of only one separate legal counsel for all Indemnified Persons shall be paid by the Indemnifier, unless:

	(iv)	the Indemnifier and the Indemnified Persons have mutually agreed to the retention of more than one legal counsel for the Indemnified Persons; or

	(v)	the Indemnified Persons have or any of them has been advised in writing by legal counsel that representation of all of the Indemnified Persons by the same legal counsel would be inappropriate due to actual or potential differing interests between them.

(c)	Waiver of Right : The Indemnifier hereby waives its rights to recover contribution from the Agent and the other Indemnified Persons with respect to any liability of the Indemnifier by reason of or arising out of the indemnity provided by the Indemnifier in this section 12; provided, however, that such waiver shall not apply in respect of the Agent for any liability directly caused or incurred by reason or arising out of any information or statements relating solely to, and provided by, the Agent or any failure by the Agent in connection with the Offering to provide to Purchasers any document which the Indemnifier is required to provide to the Purchasers and which the Indemnifier has provided or made available to the Agent to forward to the Purchasers.

(d)	Contribution :

	(i)	In order to provide for just and equitable contribution in circumstances in which the indemnity contained in this section 12 is, for any reason of policy or otherwise, held to be unavailable to or unenforceable by, in whole or in part, an Indemnified Person other than in accordance with the provisions of this section 12, the Indemnifier shall contribute forthwith to the aggregate losses (other than a loss of profit), claims, damages, payments, liabilities, costs, fines, penalties and expenses (including the amount paid in settlement of any claim, action, suit or proceeding and the fees and expenses of counsel on a solicitor and his own client basis incurred obtaining advice in respect of, or in defending or settling, any such claim, action, suit or proceeding) of the nature contemplated by such indemnity incurred or paid by the Indemnified Person in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifier on the one hand and the Indemnified Person on the other hand in connection with the Offering and Acquisition but also the relative fault of the Indemnifier on the one hand and the Indemnified Person on the other hand in connection with the matters, things and actions which resulted in such losses, claims, damages, payments, liabilities, costs, fines, penalties or expenses as well as any other relevant equitable considerations or, if such allocation is not permitted by applicable law, in such proportion so that the Indemnified Person shall be responsible for the proportion represented by the percentage that the Agent’s Fee per Offered Security bears to the Purchase Price and Indemnifier shall be responsible

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for the balance, whether or not they are a party to the same or separate claims; provided, however, that no Person who has engaged in any dishonesty, fraud, fraudulent misrepresentation, negligence or wilful default shall be entitled to contribution from any Person who has not engaged in any dishonesty, fraud, fraudulent misrepresentation, negligence or wilful default and further provided that in no event shall the Agent be responsible for any amount in excess of the Agent’s Fee, however paid, actually received from the Corporation under this Agreement and retained by the Agent. For purposes of this subsection 12(d), relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact relates to information supplied by the Indemnifier on the one hand or the Agent on the other hand and the relevant intent, knowledge, access to information and opportunity to correct or prevent any such untrue statement or omission of the Indemnifier and the Indemnified Person.

(ii)	In the event that the Indemnifier is held to be entitled to contribution from the Agent under the provisions of any statute or law, the Indemnifier shall be limited to such contribution in an amount not exceeding the lesser of:

	(A)	the portion of the amount of the loss or liability giving rise to such contribution for which the Agent is responsible as determined in accordance with subsection 12(d)(i) above; and

	(B)	the amount of the Agent’s Fee actually received from the Corporation under this Agreement and retained by the Agent.

(iii)	For purposes of this subsection 12(d), each party hereto shall give prompt notice to the other parties hereto of any claim, action, suit or proceeding threatened or commenced in respect of which a claim for contribution may be made under this subsection 12(d).

	(e)	Held in Trust : To the extent that the indemnity contained in subsection 12(a) hereof is given in favour of a Person who is not a party to this Agreement, the Indemnifier hereby constitutes the Agent as trustee for such Person for such indemnity and the covenants given by the Indemnifier to such Person in this Agreement. The Agent hereby accepts such trust and holds such indemnity and covenants for the benefit of such Persons. The benefit of such indemnity and covenants shall be held by the Agent in trust for the Persons in favour of whom such indemnities and covenants are given and may be enforced directly by such Persons.

	(f)	Indemnity re Investigations : The Indemnifier agrees that, in case any investigation is commenced in respect of the Indemnifier and/or an Indemnified Person and an Indemnified Person or its personnel are required to testify in connection therewith or shall be required to respond to procedures designed to

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discover information regarding, in connection with or by reason of the Offering or Acquisition, the Indemnified Person shall have the right to employ its own counsel in connection therewith, and the reasonable fees and expenses of such counsel as well as the reasonable costs (including an amount to reimburse the Indemnified Person for time spent by its personnel in connection therewith at their normal per diem rates together with such disbursements and out-of-pocket expenses incurred by the personnel in connection therewith) shall be paid by the Indemnifier as they occur.

13.	Expenses

	Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, all expenses of or incidental to the issue, sale, distribution and delivery of the Offered Securities and of or incidental to all matters in connection with the transactions herein set out shall be borne by the Corporation, including the reasonable fees of legal counsel for the Agent up to a maximum of CAD$10,000, plus disbursements (including applicable taxes), and the reasonable out-of-pocket expenses (including applicable taxes) of the Agent, up to a maximum of CAD$5,000, provided that such expenses have been previously approved by the Corporation.

14.	Notices

	Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be personally delivered or sent by facsimile on a Business Day to the following addresses:

	(a)	in the case of the Corporation:

		Adira Energy Corp.
		30 St. Clair Avenue West,
		Suite 901
		Toronto, Ontario M4V 3A1

		Attention: President Facsimile: (416) 250-6330

	(b)	in the case of the Agent:

		Sanfire Securities Inc.
		33 Yonge Street
		Suite 820
		Toronto, Ontario M5E 1G4

		Attention: Yaron Conforti Fascimile: (416) 216-0149

Either the Corporation or the Agent may change its address for notice by notice given in the manner aforesaid. Any such notice or other communication shall be in writing, and

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unless delivered to a responsible officer of the addressee, shall be given by facsimile, and shall be deemed to have been given on the day on which it was delivered or sent by facsimile.

15.	Public Announcements and Press Releases

	Any public announcement or press release of the Corporation relating to the Offering will be provided in advance to Sandfire. The Corporation will agree to the form and content thereof with Sandfire prior to the release thereof and any such press release shall state that Sandfire is acting or has acted as “Lead Agent”.

16.	Miscellaneous

	(a)	Agent’s Obligations : The Agent and the Corporation agree that the obligations of Sandfire and any other Agent or member of any syndicate or selling group relating to the Offering shall be several and not joint.

	(b)	Governing Law : This Agreement shall be governed by and be interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and the parties hereto irrevocably attorn to the jurisdiction of the courts of such province.

	(c)	Time of Essence : Time shall be of the essence of this Agreement.

	(d)	Survival : All representations, warranties, covenants and agreements of the Corporation herein contained or contained in any documents contemplated by, or delivered pursuant to, this Agreement or in connection with the purchase and sale of the Offered Securities shall survive the purchase and sale of the Offered Securities and the termination of this Agreement and shall continue in full force and effect for the benefit of the Agent for a period of two years from the Closing Date, regardless of any subsequent disposition of Offered Securities or any investigation by or on behalf of the Agent with respect thereto.

	(e)	Counterparts : This Agreement may be executed by any one or more of the parties to this Agreement by facsimile or in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

	(f)	Entire Agreement : This Agreement constitutes the entire agreement between the Corporation and the Agent in connection with the issue and sale of the Offered Securities by the Corporation and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, including, but not limited to, the engagement letter dated June 16, 2009 relating to the Offering between the Corporation and the Agent.

	(g)	Severability : If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the

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validity of any other provision of this Agreement and such void or unenforceable provision shall be severed from this Agreement.

[SIGNATURE PAGE FOLLOWS]

- 24 -

Each of the parties has executed and delivered this Agreement as of the _______ day of August, 2009.

	SANDFIRE SECURITIES INC.


	By:	/s/ Yaron Conforti
		Name: Yaron Conforti
		Title:


	ADIRA ENERGY CORP.


	By:	/s/ Alan Friedman
		Name: Alan Friedman
		Title:

ADIRA ENERGY CORP.
SUBSCRIPTION AGREEMENT

TO: Adira Energy Corp. (the “Corporation” )

The undersigned (hereinafter referred to as the “ Subscriber ”) hereby irrevocably subscribes for and agrees to purchase the number of units (“ Units ”) of the Corporation set forth below for the aggregate subscription price set forth below, representing a subscription price of US$0.25 per Unit, upon and subject to the terms and conditions set forth in “Terms and Conditions of Subscription” attached hereto (together with this page and the attached Schedules, the “ Subscription Agreement ”). The undersigned acknowledges and agrees that the issue and sale of the Units is taking place in contemplation of all of the issued and outstanding common shares and share purchase warrants of the Corporation, including those being offered pursuant to the Subscription Agreement, being acquired (the “ Acquisition ”) by AMG Oil Ltd. (“ AMG ”). The Units are part of an offering of a minimum of 8,000,000 Units (the “ Offering ”), subject to reduction at the Corporation’s sole discretion. Each Unit consists of one common share (“ Common Share ”) in the capital of the Corporation and one half of one transferable Common Share purchase warrant (each whole such purchase warrant a “ Warrant ”). Each whole Warrant shall be exercisable into one additional Common Share of the Corporation (“ Warrant Share ”) at an exercise price of US$0.50 per Warrant Share for a period of two years from the Closing (defined herein). The Acquisition will be completed pursuant to a securities exchange agreement (the “ Securities Exchange Agreement ”) to be entered into among the Corporation, the principal shareholders of the Corporation and AMG.

The Subscriber agrees to be bound by the “Terms and Conditions of Subscription” attached hereto and agrees that the Corporation may rely upon the covenants, representations and warranties contained in the Subscription Agreement. In addition to the face page, the Subscriber must also complete all applicable schedules attached hereto. All dollar values referred to in this Subscription Agreement are Canadian dollars unless otherwise indicated.

Name and Address of Subscriber:

Details of Subscriber:

		Number of Units: ________________________

(Name of Subscriber - please print)


By: ________________________________________________		Aggregate Subscription Price: ________________
(Authorized Signature)		(the “Subscription Price”)

		Details of Beneficial Purchaser (if not the same as
(Official Capacity or Title - please print)		Subscriber):


(Please print name of individual whose signature		(Name of Beneficial Purchaser)
appears above if different than the name of the
Subscriber printed above.)
		(Beneficial Purchaser’s Address)

(Subscriber’s Address)
		(Beneficial Purchaser’s Telephone Number)

(Telephone Number)


(E-Mail Address)

Register the Units as set forth below:		Deliver the Units as set forth below:


(Name)		(Name)


(Account reference, if applicable)		(Account reference, if applicable)


(Address)		(Contact Name)


(Address		(Address)


		(Address)

ACCEPTANCE: The undersigned hereby accepts the above subscription on the terms and conditions contained in the Subscription Agreement.

ADIRA ENERGY CORP.

Per: _____________________________________________ Date: ___________________________________________________

Authorized Signatory

Terms and Conditions of Subscription

Subscription

1.	The Subscriber hereby irrevocably subscribes for and agrees to purchase the number of Units set on the cover page hereof. The Subscriber acknowledges and agrees that the issue and sale of the Units is conditional upon: (a) the acceptance of this Subscription Agreement by the Corporation; and (b) the fulfillment of all of the conditions to closing of the Acquisition as will be set forth in the Securities Exchange Agreement, save and except the condition that the Offering will have completed (the “ Acquisition Conditions to Closing ”).

2.	The Subscriber tenders herewith the Subscription Price payable to “Aird & Berlis LLP in trust” by certified cheque or wire transfer (payment instructions are included in Schedule “C” hereto). The Subscriber acknowledges that the Subscription Price shall be held by Aird & Berlis LLP in escrow until the closing of the Offering (the “ Closing ”).

3.	The Subscriber acknowledges that Closing and issuance of the Common Shares and Warrants shall take place immediately prior to the closing of the Acquisition upon fulfillment of the Acquisition Conditions to Closing.

4.	The Subscriber agrees that this subscription is given for valuable consideration and may not be withdrawn or revoked by the Subscriber. It is understood and agreed that this Subscription Agreement and the Subscription Price shall be returned without interest or deduction to the Subscriber at the address indicated above if:

	(a)	the subscription is not accepted by the Corporation; or

	(b)	the Closing of the Offering is not completed by September 30, 2009.

		If the subscription is accepted only in part, that portion of the Subscription Price which is not accepted will be returned to the Subscriber without interest or deduction. If the Acquisition is not completed by September 30, 2009, the Subscription Price shall be returned to the Subscriber.

Terms of Exchange upon Acquisition

5.	The Subscriber hereby agrees to sell, transfer, assign and convey to AMG or any successor issuer resulting from the Acquisition (the “ Successor ”) the Units in exchange (the “ Exchange ”) for units (“ Successor Units ”) in the Successor. The Successor Units will be comprised of common shares in the Successor (“ Successor Shares ”) and warrants to purchase the Successor Shares (“ Successor Warrants ”). The Exchange shall take place concurrently with the completion of the Acquisition in the manner set out in the Securities Exchange Agreement.

6.	Pursuant to the terms of the Exchange, the Common Shares will be purchased by the Successor in consideration for the issuance of the same number of Successor Shares as Common Shares subscribed for under this Subscription Agreement. The Warrants will be cancelled and the same number of Successor Warrants as Warrants acquired under this Subscription Agreement will be issued to the Subscriber. Each Successor Warrant shall be exercisable into one Successor Share (each a “ Successor Warrant Share ”) at an exercise price of US$0.50 per Successor Warrant Share for a period of two years from the Closing (the “ Initial Successor Warrant Expiry Date ”). In the event that the weighted average trading price of the Successor Shares listed on an exchange exceeds US$1.00 per Successor Share for a period of 20 consecutive trading days (the 20th day of such trading period, the “ Acceleration Date ”) the Initial Successor Warrant Expiry Date shall be accelerated to that date which is 30 days after the Acceleration Date. In the event the exchange the Successor is listed on is Canadian, the Successor Share price with respect to the Acceleration Date shall be in Canadian dollars. The exchange rate shall be the Canadian dollar equivalent of US$1.00 on the Closing.

7.	The Subscriber hereby irrevocably constitutes and appoints the President of Adira to carry out the actions necessary to complete the Exchange with full power of substitution in its place, particularly authorizing the President of Adira:

	(a)	to act as its representative at the Closing and to execute in its name and on its behalf all closing receipts and documents required;

	(b)	to endorse the certificates representing the Common Shares and Warrants issued to the Subscriber for transfer to AMG in order to give effect to the Exchange;

	(c)	to complete or correct any errors or omissions in or to make non-material amendments, modifications or supplements to any form or document, including this Subscription Agreement, if necessary;

	(d)	to receive on its behalf certificates representing the Successor Shares and Successor Warrants;

	(e)	to approve any opinions, certificates or other documents addressed to the Subscriber;

	(f)	to waive, in whole or in part, any representations, warranties, covenants or conditions for the benefit of the Subscriber and contained in the Securities Exchange Agreement;

	(g)	to exercise any rights of termination contained in the Securities Exchange Agreement or any of the ancillary agreements thereto; and

	(h)	perform any other act required to complete the transactions set out in the Securities Exchange Agreement.

Representations and Warranties of the Subscriber

8.	The Subscriber represents and warrants to the Corporation as follows and acknowledges that the Corporation is relying on such representations and warranties in accepting this subscription:

	(a)	the Subscriber is purchasing the Units as principal for its own account and not for the benefit of any other person or is deemed under securities laws of Canada to be purchasing as principal, and in either case, is purchasing the Units for investment only and not with a view to resale or distribution;

	(b)	this Subscription Agreement has been duly authorized, executed and delivered by the Subscriber and constitutes a legal, valid, binding and enforceable obligation of the Subscriber;

	(c)	if an individual, the Subscriber has obtained the age of majority and is legally competent to execute this Subscription Agreement and complete the subscription for Units hereunder;

	(d)	if not an individual, (i) the Subscriber is a valid and existing entity, has, full power, necessary capacity and absolute authority to execute this Subscription Agreement and to observe and perform its covenants and obligations hereunder and has taken all necessary action in respect thereof; (ii) all necessary approvals have been given to authorize it to execute this Subscription Agreement; (iii) the Subscriber agrees to deliver to the Corporation such evidence of such authority may be reasonably required; (iv) the execution of this Subscription Agreement and the transactions contemplated hereby will not result in the violation of any terms or provisions of any law applicable to or the constating documents of the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which it is or may be bound;

	(e)	the Subscriber has not received any document purporting to describe the business and affairs of the Corporation that has been prepared primarily for delivery to and review by prospective

	investors so as to assist those investors to make an investment decision in respect of the Units being sold;

(f)	the Subscriber has had opportunity to review the filings made by AMG under the United States Securities Exchange Act of 1934, as amended, which filings may be viewed at the web site of the United States Securities Exchange Commission at www.sec.gov and at www.sedar.com;

(g)	all prior agreements between Corporation and the Subscriber, including any prior subscription agreements, shareholders’ agreements or other documents, are hereby terminated, superseded and replaced by this Subscription Agreement;

(h)	if the Subscriber is a resident in a province or territory of Canada, the Subscriber has completed and duly executed a copy of the Accredited Investor Certificate, which is attached to this Subscription Agreement as Schedule “A”;

(i)	the Subscriber hereby acknowledges the volatile nature of investments in the junior oil and gas exploration sector and the consequent potential that the entire investment in the Corporation could be lost as a result of the inherent risks associated with such investments as well as the uncertainty in procuring adequate and ongoing funding required by the Corporation to bring any project to profitable production. The Subscriber further hereby acknowledges and agrees that it has not relied in any manner upon the information and/or advice given by the Corporation or Adira Energy Israel Ltd. in the preparation, negotiation and/or implementation of this subscription and has taken all reasonable actions to satisfy itself as to the consequences of entering into this subscription and any decision taken by it to invest in the Corporation is as a result of its own investigations of the information provided by the Corporation and from no other source;

(j)	the Subscriber confirms that:

	(i)	the Subscriber is not resident in the United States or a “U.S. Person” as defined in Regulation S under the United States Securities Act of 1933 , as amended (the “ U.S. Securities Act ”);

	(ii)	the Subscriber was not offered the Units in the United States;

	(iii)	the structure of this transaction is not a scheme to avoid the registration requirements of the U.S. Securities Act;

	(iv)	the Subscriber has no intention to distribute either directly or indirectly the Units in the United States, except in compliance with U.S. Securities Act;

	(v)	the Subscriber did not execute or deliver this Subscription Agreement in the United States; and

	(vi)	the authorized representative of the Subscriber that originated the buy order on the Subscriber’s behalf was not in the United States when the buy order was originated;

(k)	the Subscriber acknowledges that the offer and sale of the Units has not been registered under the U.S. Securities Act or the securities laws of any state of the United States, that the Units may not be offered or sold, directly or indirectly, in the United States except pursuant to registration under the U.S. Securities Act and the securities laws of all applicable states or available exemptions therefrom and the Corporation has no obligation or present intention of filing a registration statement under the U.S. Securities Act or any state securities laws in respect of any of the Units;

(l)	if the Subscriber is not a resident of Canada and is not a resident of the United States, or otherwise not subject to the securities laws of any of the provinces of Canada, the Subscriber has completed and duly executed a copy of the International Subscriber Certificate, which is attached to this Subscription Agreement as Schedule “B”;

(m)	every Subscriber that is not a resident of Canada or the United States represents and warrants the following:

	(i)	it is resident and located outside of Canada and the United States;

	(ii)	all acts of solicitation, conduct or negotiations directly or indirectly in furtherance of the purchase of the Units occurred outside of Canada and the United States and no offer was made to the Subscriber in Canada or the United States and the buy order in respect of the subscription was not placed from within Canada or the United States;

	(iii)	is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulatory authorities (the “Authorities” ) having application in the jurisdiction in which the Subscriber is resident (the “International Jurisdiction” ) which would apply to the acquisition of the Subscriber’s Units;

	(iv)	the Subscriber is purchasing the Units pursuant to exemptions from all prospectus and registration requirements, or equivalent requirements, under applicable securities laws or the Subscriber is permitted to purchase the Units under the applicable securities laws of the Authorities in the International Jurisdiction without the need to rely on any exemptions;

	(v)	the applicable securities laws of the Authorities in the International Jurisdiction do not require the Corporation to make any filings or seek any approvals of any kind whatsoever from any Authority of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Units; and

	(vi)	the purchase of the Units by the Subscriber does not trigger:

		(A)	any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or

		(B)	any continuous disclosure reporting obligation of the Corporation in the International Jurisdiction; and

		(C)	the Subscriber will, if requested by the Corporation, deliver to the Corporation a certificate or opinion of local counsel from the International Jurisdiction which will confirm certain of the matters referred to in the subparagraphs above to the satisfaction of the Corporation and the Agents (as hereinafter defined), acting reasonably.

(n)	the Subscriber has not made its decisions to purchase the Units through or as a result of any general solicitation or general advertising, including articles, notices, investor presentations or other communications published in a newspaper, magazine or similar media or any seminar or meeting whose attendees have been invited by general solicitation or general advertising and the distribution of the Units has not been accompanied by any advertisement, including, without limitation, in printed public media, radio, television or telecommunications, including electronic display or as part of a general solicitation;

(o)	no person has made any written or oral representations:

	(i)	that any person will resell or repurchase the Units;

	(ii)	that any person will refund the Subscription Price; or

	(iii)	as to the future price or value of the Units; and

(p)	None of the funds being used to purchase the Units are, to the Subscriber’s knowledge, proceeds obtained or derived, directly or indirectly, as a result of illegal activities.

By accepting the Units, the Subscriber shall be representing and warranting that the foregoing representations and warranties are true and correct as at the time of completion of the subscription for Units on the date of acceptance of this Subscription by the Corporation, with the same force and effect as if they had been made by the Subscriber at such time and shall in each case survive the closing of the transactions contemplated hereby notwithstanding any subsequent disposition by the Subscriber of the Units.

Representations, Warranties and Covenants of the Corporation

9.	The Corporation represents and warrants to the Subscriber as follows and acknowledges that the Subscriber is relying on such representations and warranties in accepting this subscription:

	(a)	the Corporation has been incorporated and is validly subsisting and is in good standing under the laws of its jurisdiction of incorporation;

	(b)	the Corporation has full power and authority to execute, deliver and perform each of its obligations under this Subscription Agreement, including the issue of the Common Shares and Warrants;

	(c)	this Subscription Agreement, when accepted by the Corporation, and the Share Exchange Agreement, when executed, will constitute valid and binding obligations of the Corporation, enforceable in accordance with their terms;

	(d)	the Corporation will promptly comply with all filing and other requirements under all applicable securities laws and the issuance and sale of the Common Shares and Warrants shall be carried out in compliance with all applicable securities legislation relating to the issue and sale of the Common Shares and Warrants;

	(e)	the Corporation will have taken all necessary steps to duly and validly create the Common Shares and Warrants for issuance before the Closing; and

	(f)	the Corporation will use commercially reasonable efforts to effect the closing of the Acquisition before September 30, 2009.

Acknowledgments and Covenants of the Subscriber

10.	The Subscriber acknowledges and covenants that:

	(a)	the Common Shares, Warrants and Warrant Shares are subject to transfer and resale restrictions pursuant to the constating documents of the Corporation, the Securities Act (Ontario) and the regulation, rules, orders, instruments and published policy statements applicable thereunder, including National Instrument 45-102 Resale of Securities and the restrictions set out in section 11 hereof;

	(b)	the Subscriber shall not knowingly transfer his, her or its Common Shares, Warrants or Warrant Shares in whole or in part to a person who is not able to make the representations, warranties and covenants contained in this Subscription Agreement or otherwise requested by the Corporation;

	(c)	the Corporation is not, and will not be as at the Closing, a “reporting issuer” (as that term is defined in the Securities Act (Ontario)) and there is no assurance that the Corporation will ever become a “reporting issuer” in the future;

	(d)	the certificates representing the Common Shares, Warrants and Warrant Shares, will bear, as of the Closing, a legend substantially in the following form and with the necessary information inserted:

		“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) [INSERT THE CLOSING DATE]; AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

	(e)	The Successor Units may be subject to British Columbia Instrument 51-509 - Issuers Quoted in the U.S. Over-the-Counter Markets (“ BC Instrument 51-509 ”) if the securities are to be sold in or from British Columbia and in addition, may therefore need to be endorsed with the following legend contemplated by BC Instrument 51-509:

		“ Unless otherwise permitted under securities legislation, the holder of this security must not trade the security in or from British Columbia unless the conditions in section 12 (2) of BC Instrument 51-509 Issuers Quoted in the U.S. Over-the-Counter Market are met ”;

	(f)	the Units subscribed for by the Subscriber form part of an offering of a larger number of Units;

	(g)	the Subscriber is responsible for obtaining such legal advice as the Subscriber considers appropriate in connection with the execution, delivery and performance of this Subscription Agreement and any subsequent transfer or resale of the Common Shares, Warrants or Warrant Shares;

	(h)	the Subscriber has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the investment in the Corporation and is able to bear the economic risk of loss of such investment. The Subscriber acknowledges and agrees that it is responsible for obtaining such legal, investment, accounting and tax advice as the Subscriber considers appropriate in connection with the execution, delivery and performance by it of this Subscription Agreement and the transactions contemplated hereunder;

	(i)	the Subscriber understands that (i) there is no right to demand any distribution from the Corporation, (ii) it is not anticipated that there will be any public market for the Common Shares, Warrants or Warrant Shares and (iii) it may not be possible to sell or dispose of the Common Shares, Warrants or Warrant Shares; and

	(j)	the Subscriber agrees to comply with all applicable laws of its jurisdiction of incorporation/residence in connection with this Subscription Agreement and the issuance of the Common Shares, Warrants and Warrant Shares hereunder.

Restrictions under the U.S. Securities Act

11.

The Subscriber acknowledges and agrees that the Successor Shares, Successor Warrants, and Successor Warrant Shares will not be offered and sold to the Subscriber without such offer and sale being registered under the U.S. Securities Act and will be issued to the Subscriber in an offshore transaction outside of the United States in accordance with a safe harbour from the registration requirements of the U.S. Securities Act provided by Rule 903 of Regulation S of the U.S. Securities Act based on the representations and warranties of the Subscriber in this Agreement. As such, the Subscriber acknowledges that the Successor Shares, Successor Warrants, and Successor Warrant Shares may not be offered, resold, pledged or otherwise transferred except through an exemption from registration under the U.S. Securities Act or pursuant to an effective registration statement under the U.S. Securities Act and in accordance with all applicable state securities laws and the laws of any other jurisdiction. Further, the Subscriber acknowledges that the Successor Warrants cannot be exercised unless pursuant to the provisions of Regulation S of the U.S. Securities Act, pursuant to an exemption from registration under the U.S. Securities Act or pursuant to an effective registration statement under the U.S. Securities Act, and in each case in accordance with all applicable state securities laws and the laws of any other jurisdiction. The Subscriber agrees to resell the Successor Shares, Successor Warrants, and Successor Warrant Shares only

in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration pursuant to the U.S. Securities Act. The Subscriber agrees that the Successor may refuse to register any transfer of the Successor Shares, Successor Warrants, and Successor Warrant Shares not made in accordance with the provisions of Regulation S of the U.S. Securities Act, pursuant to registration under the U.S. Securities Act, pursuant to an available exemption from registration. The Subscriber agrees that Successor may require the opinion of legal counsel reasonably acceptable to the purchaser in the event of any offer, sale, pledge or transfer of any of the Successor Shares, Successor Warrants, and Successor Warrant Shares by Subscriber pursuant to an exemption from registration under the U.S. Securities Act. The Subscriber acknowledges that the purchaser has no obligation to register the resale of any of the Successor Shares, Successor Warrants, and Successor Warrant Shares by the Subscriber pursuant to the U.S. Securities Act. The Subscriber acknowledges and agrees that the Successor will be a “shell company” as defined under the U.S. Securities Act and, as a consequence, the Subscriber will not be entitled to resell any of the Successor Shares, Successor Warrants, and Successor Warrant Shares issued to them on the Closing in the United States within the period of one year following the date that the Successor files “Form 10 Information”, as defined in Rule 144 under the U.S. Securities Act, with the United States Securities and Exchange Commission.

Compensation of Agent.

12.	The Subscriber understands that, in connection with the issue and sale of Units pursuant to the Offering, the Corporation has engaged Sandfire Securities Inc. (“ Sandfire ”) and may engage certain other persons to aid in the sale of the Units (each an “ Agent ”), and the Agent will receive from the Corporation on Closing:

	(a)	a cash commission equal to 7% of the aggregate gross proceeds of the Offering raised by the Agent; and

	(b)	Agent compensation warrants (each a “ Agent Warrant ”) equal to 7% of the aggregate number of Units sold by the Agent pursuant to the Offering, each Agent Warrant entitling the Agent to purchase for a period of two years from the Closing, at an exercise price of US$0.25 per Agent Warrant, one Common Share. The Agent Warrants will be exchanged for warrants to acquire common shares in the Successor (“ Successor Agent Warrants ”) upon completion of the Acquisition. The Successor Agent Warrants shall be exercisable for a period of two years from the Closing at an exercise price of US$0.25 per Successor Agent Warrant, for one Successor Share.

In addition, Sandfire shall receive:

	(a)	a success fee of $10,000 payable upon Closing; and

	(b)	the fees, expenses and disbursements of the Agent in connection with the Offering up to a maximum of $5,000 (plus GST if applicable) in addition to legal fees up to a maximum of $10,000 (plus GST if applicable).

No other commission is payable by the Corporation in connection with the completion of the Offering.

Collection of Personal Information .

13.

The Subscriber acknowledges and consents to the fact that the Corporation is collecting the Subscriber’s personal information for the purpose of fulfilling this Subscription Agreement and completing the Offering. The Subscriber’s personal information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) may be disclosed by the Corporation to (a) stock exchanges or securities regulatory authorities (including the Ontario Securities Commission as referred to below), (b) the Corporation’s registrar and transfer agent, (c) Canadian tax authorities, (d) authorities pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and (e) any of the other

parties involved in the Offering, including legal counsel, and may be included in record books in connection with the Offering. By executing this Subscription Agreement, the Subscriber is deemed to be consenting to the foregoing collection, use and disclosure of the Subscriber’s personal information (and, if applicable, the personal information of those on whose behalf the Subscriber is contracting hereunder) and to the retention of such personal information for as long as permitted or required by law or business practice. Notwithstanding that the Subscriber may be purchasing Units as agent on behalf of an undisclosed principal, the Subscriber agrees to provide, on request, particulars as to the identity of such undisclosed principal as may be required by the Corporation in order to comply with the foregoing.

Furthermore, the Subscriber is hereby notified that:

	(a)	the Corporation may deliver to the Ontario Securities Commission certain personal information pertaining to the Subscriber, including such Subscriber’s full name, residential address and telephone number, the number of Units purchased by the Subscriber and the total purchase price paid for such Units, the prospectus exemption relied on by the Corporation and the date of distribution of the Units,

	(b)	such information is being collected indirectly by the Ontario Securities Commission under the authority granted to it in securities legislation,

	(c)	such information is being collected for the purposes of the administration and enforcement of the securities legislation of Ontario, and

	(d)	the Subscriber may contact the following public official in Ontario with respect to questions about the Ontario Securities Commission’s indirect collection of such information at the following address and telephone number:

Administrative Assistant to the Director of Corporate Finance
Ontario Securities Commission
Suite 1903, Box 55, 20 Queen Street West
Toronto, Ontario, M5H 3S8
Telephone: (416) 593-8086

Indemnity

14.

The Subscriber agrees to indemnify the Corporation against all losses, claims, costs, expenses and damages or liabilities which they may suffer or incur or cause arising from the reliance on the representations, certifications, warranties, covenants and acknowledgements of the Subscriber to the Corporation, as the case may be.

Confidentiality

15.

The Subscriber hereby agrees to keep confidential all information which may be provided to the Subscriber relating to the business and affairs of the Corporation upon becoming a shareholder of the Corporation, and not to distribute or otherwise make available any such information to any other person or otherwise exploit any such information.

General Provisions

16.	The Subscriber shall execute and deliver such additional instruments, certificates and other documents as may be required or requested by the Corporation, acting reasonably, to permit the purchase of the Units or otherwise to carry out the provisions and intent of this Subscription Agreement.

17.	The Subscriber hereby authorizes the Corporation to correct any minor errors in, or complete any information missing from any part of this Subscription Agreement.

18.	No rights or obligations of the Subscriber hereunder may be assigned without the prior written consent of the Corporation.

19.	This Subscription Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Subscriber irrevocably attorns to the non-exclusive jurisdiction of the courts of Ontario with respect to any matters arising out of this Subscription Agreement.

20.	The Corporation shall be entitled to rely on delivery by facsimile or email of an executed copy of this Subscription Agreement and acceptance by the Corporation of that delivery shall be legally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms of this Subscription Agreement.

21.	This Subscription Agreement shall be read with such changes in number and gender as the context or the reference to parties may require.

22.	Time shall be of the essence in this Subscription Agreement and every part hereof and no extension or variation of this Subscription Agreement shall operate as a waiver of this provision.

23.	This Subscription Agreement constitutes the only agreement between the Corporation and the Subscriber with respect to the subject matter hereof and shall supercede any and all prior negotiations and understandings and there are no representations, warranties, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein or therein.

24.	This Subscription Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, legal personal representatives, successors and permitted assigns.

25.	The terms of this Subscription Agreement may only be amended in writing.

26.	The parties hereto confirm their express wish that this Subscription Agreement and all documents and agreements directly or indirectly relating thereto be drawn up in the English language. Les parties reconnaissent leur volonté expresse que la présente ainsi que tous les documents et contrats s’y rattachant directement ou indirectement soient rédigés en anglais.

SCHEDULE “A”

REPRESENTATION LETTER

TO BE COMPLETED BY CANADIAN SUBSCRIBERS

TO: Adira Energy Corp. (the “Corporation”)

In connection with the purchase of Units of the Corporation by the undersigned subscriber (the “ Subscriber ”, for the purposes of this Schedule “A”) on or about ______________________, 2009, the Subscriber hereby represents, warrants, covenants and certifies (by completing and signing this certificate) on behalf of itself and, if applicable, the person on whose behalf the Subscriber is contracting, to the Corporation and its counsel (which representations, warranties and certifications shall survive the closing of the purchase of the Units for a period of two years, notwithstanding the completion of the purchase of the Units), acknowledging that the Corporation and its counsel are relying thereon, that:

(a)	it is (the clause checked below applies):

	(i)	[ ] purchasing the securities as principal; or

	(ii)	[ ] deemed to be purchasing as principal under applicable securities laws, in accordance with the following statutory provisions:

(b)	an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within the category of an “accredited investor” reproduced in the Exhibit to this Representation Letter beside which the undersigned has marked his initials; and

(c)	upon execution of this Schedule “A” by the Subscriber, this Schedule “A” shall be incorporated into and form a part of the Subscription Agreement and all capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Subscription Agreement.

	Name of Subscriber (please print)

	By: ___________________________________________
	Authorized Signature


	Official Title or Capacity (please print)


	Name of Signatory (please print name of individual whose signature appears above different than name of Subscriber)

DATED at _________________________ this _______ day of ______________, 2009.

IMPORTANT

PLEASE COMPLETE THE EXHIBIT TO THIS REPRESENTATION LETTER BY MARKING
YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG

EXHIBIT TO SCHEDULE “A”

TO BE COMPLETED BY CANADIAN SUBSCRIBERS

PLEASE MARK YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG

Please complete the Representation Letter to the Corporation by marking your initials beside the category of “accredited investor” to which you belong:

[ ] 1.	Canadian financial institution, or a Schedule III bank.

[ ] 2.	The Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada).

[ ] 3.	A subsidiary of any person referred to in paragraphs (1) or (2), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary.

[ ] 4.	A person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the S ecurities Act (Ontario) or the Se curities Act (Newfoundland and Labrador).

[ ] 5.	An individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (4).

[ ] 6.	Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada.

[ ] 7.	Municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec.

[ ] 8.	Any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government.

[ ] 9.	A pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada.

[ ] 10.	An individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000.

[ ] 11.	An individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year.

[ ] 12.	An individual who, either alone or with a spouse, has net assets of at least $5,000,000.

[ ] 13.	A person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.

[ ] 14.	An investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [ Minimum amount investment ] of National Instrument 45-106, and 2.19 [ Additional investment in investment funds ] of National Instrument 45-106, or (iii) a person

	described in (i) or (ii) that acquires or acquired securities under section 2.18 [ Investment fund reinvestment ] of National Instrument 45-106.

[ ] 15.	An investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt.

[ ] 16.	A trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be.

[ ] 17.	A person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund.

[ ] 18.	A registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded.

[ ] 19.	An entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (1) to (4) or paragraph (9) in form and function.

[ ] 20.	A person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors.

[ ] 21.	An investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser.

[ ] 22.	A person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or British Columbia.

Interpretative Aids

The following definitions relate to certain of the categories of NI 45-106 - Accredited Investor set forth above:

(a)	“bank” means a bank named in Schedule I or II of the Bank Act (Canada);

(b)	“Canadian financial institution” means

	(i)	an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

	(ii)	a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(c)	“control person” has the same meaning as in securities legislation except in Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island and Quebéc where control person means any person that holds or is one of a combination of persons that holds

	(i)	a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or

	(ii)	more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of the issuer;

(d)	“director” means:

	(i)	a member of the board of directors of a company or an individual who performs similar functions for a company, and

	(ii)	with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company;

(e)	“eligibility adviser” means

	(i)	a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed, and

	(ii)	in Saskatchewan and Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not

		A.	have a professional, business or personal relationship with the issuer, or any of its directors, executive officer, founders, or control persons, and

		B.	have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months;

(f)	“executive officer” means, for an issuer, an individual who is

	(i)	a chair, vice-chair or president,

	(ii)	a vice-president in charge of a principal business unit, division or function including sales, finance or production,

	(iii)	an officer of the issuer or any of its subsidiaries and who performs a policy-making function in respect of the issuer, or

	(iv)	performing a policy-making function in respect of the issuer;

(g)	“financial assets” means cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation.;

(h)	“founder” means, in respect of an issuer, a person who,

	(i)	acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and

	(ii)	at the time of the trade is actively involved in the business of the issuer;

(i)	“foreign jurisdiction” means a country other than Canada or a political subdivision of a country other than Canada;

(j)	“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;

(k)	“investment fund” has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure;

(l)	“jurisdiction” means a province or territory of Canada except when used in the term foreign jurisdiction;

(m)	“non-redeemable investment fund” means an issuer,

	(i)	where contributions of securityholders are pooled for investment,

	(ii)	where securityholders do not have day-to-day control over the management and investment decisions of the issuer, whether or not they have the right to be consulted or to give directions, and

	(iii)	whose securities do not entitle the securityholder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the issuer;

(n)	“person” includes

	(i)	an individual,

	(ii)	a corporation,

	(iii)	a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

	(iv)	an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

(o)	“regulator” means, for the local jurisdiction, the Executive Director as defined under securities legislation of the local jurisdiction;

(p)	“related liabilities” means

	(i)	Liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

	(ii)	Liabilities that are secured by financial assets;

(q)	“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

(r)	“spouse” means, an individual who,

	(i)	is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

	(ii)	is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

	(iii)	in Alberta, is an individual referred to in paragraph (i) or (ii) above, or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta);

(s)	“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary;

(t)	An issuer is an affiliate of another issuer if:

	(i)	one of them is the subsidiary of the other, or

	(ii)	each of them is controlled by the same person, and

(u)	A person (first person) is considered to control another person (second person) if:

	(i)	the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation,

	(ii)	the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interest of the partnership, or

	(iii)	the second person is a limited partnership and the general partner of the limited partnership is the first person.

All monetary references are in Canadian dollars.

SCHEDULE “B”

REPRESENTATION LETTER

TO BE COMPLETED BY INTERNATIONAL SUBSCRIBERS

TO: Adira Energy Corp. (the “Corporation”)

In connection with the purchase of Units of the Corporation by the undersigned subscriber (the “ Subscriber ”, for the purposes of this Schedule “B”) on or about ______________________, 2009, the Subscriber hereby represents, warrants, covenants and certifies (by completing and signing this certificate) on behalf of itself and, if applicable, the person on whose behalf the Subscriber is contracting to the Corporation and its counsel (which representations, warranties and certifications shall survive the closing of the purchase of the Units for a period of two years, notwithstanding the completion of the purchase of the Units) and acknowledges that the Corporation and its counsel are relying thereon that:

(a)	it is (the clause checked below applies):

	(i)	[ ]	purchasing the securities as principal; or

	(ii)	[ ]	deemed to be purchasing as principal under applicable securities laws, in accordance with the following statutory provisions:



(b)	it is located outside of Canada and the United States;

(c)	all acts of solicitation, conduct or negotiations directly or indirectly in furtherance of the purchase of the securities occurred outside of Canada and the United States;

(d)	the securities laws of the jurisdiction in which it is resident as set out on the cover page of the Subscription Agreement, govern its subscription, and the issuance of the Common Shares, Warrants and Warrant Shares to it may be effected by the Corporation without the necessity of filing any document with or obtaining any approval from or effecting any registration with any governmental entity or similar regulatory authority having jurisdiction over the Subscriber and the Subscriber complies with the requirements of all applicable laws in the jurisdiction of its residence, and will provide such evidence of compliance with all such matters as the Corporation may request;

(e)	it is an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within the category of an “accredited investor” reproduced in the Exhibit to this Representation Letter beside which the undersigned has marked his initials; and

(f)

upon execution of this Schedule “B” by the Subscriber, this Schedule “B” shall be incorporated into and form a part of the Subscription Agreement and all capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Subscription Agreement.

	Name of Subscriber (please print)

	By: ___________________________________________________
	Authorized Signature


	Official Title or Capacity (please print)


	Name of Signatory (please print name of individual whose signature appears above different than name of Subscriber)

DATED at _________________________ this _______day of ______________, 2009.

IMPORTANT

PLEASE COMPLETE THE EXHIBIT TO THIS REPRESENTATION LETTER BY MARKING
YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG

EXHIBIT TO SCHEDULE “B”

TO BE COMPLETED BY INTERNATIONAL SUBSCRIBERS

PLEASE MARK YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG

Please complete the Representation Letter to the Corporation by marking your initials beside the category of “accredited investor” to which you belong:

[ ] 1.	Canadian financial institution, or a Schedule III bank.

[ ] 2.	The Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada).

[ ] 3.	A subsidiary of any person referred to in paragraphs (1) or (2), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary.

[ ] 4.	A person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the S ecurities Act (Ontario) or the Se curities Act (Newfoundland and Labrador).

[ ] 5.	An individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (4).

[ ] 6.	Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada.

[ ] 7.	Municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec.

[ ] 8.	Any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government.

[ ] 9.	A pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada.

[ ] 10.	An individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000.

[ ] 11.	An individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year.

[ ] 12.	An individual who, either alone or with a spouse, has net assets of at least $5,000,000.

[ ] 13.	A person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.

[ ] 14.	An investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [ Minimum amount investment ] of National Instrument 45-106, and 2.19 [ Additional investment in investment funds ] of National Instrument 45-106, or (iii) a person

	described in (i) or (ii) that acquires or acquired securities under section 2.18 [ Investment fund reinvestment ] of National Instrument 45-106.

[ ] 15.	An investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt.

[ ] 16.	A trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be.

[ ] 17.	A person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund.

[ ] 18.	A registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded.

[ ] 19.	An entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (1) to (4) or paragraph (9) in form and function.

[ ] 20.	A person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors.

[ ] 21.	An investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser.

[ ] 22.	A person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or British Columbia.

Interpretative Aids

The following definitions relate to certain of the categories of NI 45-106 - Accredited Investor set forth above:

(v)	“bank” means a bank named in Schedule I or II of the Bank Act (Canada);

(w)	“Canadian financial institution” means

	(i)	an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

	(ii)	a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(x)	“control person” has the same meaning as in securities legislation except in Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island and Quebéc where control person means any person that holds or is one of a combination of persons that holds

	(i)	a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or

	(ii)	more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of the issuer;

(y)	“director” means:

	(i)	a member of the board of directors of a company or an individual who performs similar functions for a company, and

	(ii)	with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company;

(z)	“eligibility adviser” means

	(i)	a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed, and

	(ii)	in Saskatchewan and Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not

		A.	have a professional, business or personal relationship with the issuer, or any of its directors, executive officer, founders, or control persons, and

		B.	have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months;

(aa)	“executive officer” means, for an issuer, an individual who is

	(i)	a chair, vice-chair or president,

	(ii)	a vice-president in charge of a principal business unit, division or function including sales, finance or production,

	(iii)	an officer of the issuer or any of its subsidiaries and who performs a policy-making function in respect of the issuer, or

	(iv)	performing a policy-making function in respect of the issuer;

(bb)	“financial assets” means cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation.;

(cc)	“founder” means, in respect of an issuer, a person who,

	(i)	acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and

	(ii)	at the time of the trade is actively involved in the business of the issuer;

(dd)	“foreign jurisdiction” means a country other than Canada or a political subdivision of a country other than Canada;

(ee)	“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;

(ff)	“investment fund” has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure;

(gg)	“jurisdiction” means a province or territory of Canada except when used in the term foreign jurisdiction;

(hh)	“non-redeemable investment fund” means an issuer,

	(i)	where contributions of securityholders are pooled for investment,

	(ii)	where securityholders do not have day-to-day control over the management and investment decisions of the issuer, whether or not they have the right to be consulted or to give directions, and

	(iii)	whose securities do not entitle the securityholder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the issuer;

(ii)	“person” includes

	(i)	an individual,

	(ii)	a corporation,

	(iii)	a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

	(iv)	an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

(jj)	“regulator” means, for the local jurisdiction, the Executive Director as defined under securities legislation of the local jurisdiction;

(kk)	“related liabilities” means

	(i)	Liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

	(ii)	Liabilities that are secured by financial assets;

(ll)	“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

(mm)	“spouse” means, an individual who,

	(i)	is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

	(ii)	is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

	(iii)	in Alberta, is an individual referred to in paragraph (i) or (ii) above, or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta);

(nn)	“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary;

(oo)	An issuer is an affiliate of another issuer if:

	(i)	one of them is the subsidiary of the other, or

	(ii)	each of them is controlled by the same person, and

(pp)	A person (first person) is considered to control another person (second person) if:

	(i)	the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation,

	(ii)	the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interest of the partnership, or

	(iii)	the second person is a limited partnership and the general partner of the limited partnership is the first person.

All monetary references are in Canadian dollars.

SCHEDULE “D”

TERM SHEET

ADIRA ENERGY CORP.

PRIVATE PLACEMENT OF UNITS
(THE “OFFERING”)

Issuer:	Adira Energy Corp. (“ Adira ” or the “ Corporation ”)

Jurisdiction:	Canada and such other international jurisdictions (excluding the USA) (collectively, the “ Jurisdictions ”) as are agreed to between Adira and Sandfire Securities Inc.

Offering:	A minimum of US$2,000,000 by the issuance of 8,000,000 units (each a “ Unit ”) subject to reduction at the Corporation’s sole discretion provided the conditions of the Securities Exchange Agreement (as hereinafter defined) are met, each Unit consisting of one common share (“ Common Share ”) in the capital of Adira and one half of one transferable Common Share purchase warrant (each whole such purchase warrant a “ Warrant ”). Each whole Warrant shall be exercisable into one additional Common Share of Adira (“ Warrant Share ”) at an exercise price of US$0.50 per Warrant Share for a period of two years from the closing of the Offering (“ Closing ”).

Price:	The subscription price is US$0.25 per Unit (the “ Subscription Price ”).

Condition:	The Offering is taking place in contemplation of the acquisition (the “ Acquisition ”) by AMG Oil Ltd. (“ AMG ”) of all of the issued and outstanding common shares and share purchase warrants of Adira, including those being offered pursuant to the Offering. The Acquisition will be completed pursuant to a securities exchange agreement (the “ Securities Exchange Agreement ”) to be entered into among Adira, the principal shareholders of Adira and AMG. Completion of the Offering is a condition to the closing of the Acquisition. The closing of the Offering is conditional upon the fulfillment of all of the conditions to closing of the Acquisition as will be set forth in the Securities Exchange Agreement, save and except the condition that the Offering will have completed (the “ Acquisition Conditions to Closing ”). Subscriptions to the Offering are irrevocable by subscribers.

Escrow:	The Subscription Price will be held in escrow until the Closing. If the Closing is not completed by September 30, 2009, the Subscription Price shall be returned. Funds will be released to Adira upon closing of the Offering.

Exchange:	The Units will be exchanged (the “ Exchange ”) for units (“ Successor Units ”) in AMG or the successor entity resulting from the Acquisition (the “ Successor ”), concurrent with the Closing of the Acquisition. Each subscriber will receive one Successor Unit for each Unit purchased in the Offering. The Successor Units will be comprised of common shares in the Successor (“ Successor Shares ”) and warrants to

	purchase Successor Shares (“ Successor Warrants ”). The Successor Warrants shall contain acceleration provisions such that, in the event that the weighted average trading price of the Successor Shares listed on an exchange exceeds US$1.00 per Successor Share for a period of 20 consecutive trading days (the 20th day of such trading period, the “ Acceleration Date ”) the expiry date of the Successor Warrants shall be accelerated to that date which is 30 days after the Acceleration Date. In the event the exchange the Successor is listed on is Canadian, the Successor Share price with respect to the Acceleration Date shall be in Canadian dollars. The exchange rate shall be the Canadian dollar equivalent of US$1.00 on the Closing.

Closing:	Closing of the Offering and issuance of the Common Shares and Warrants shall take place immediately prior to the closing of the Acquisition upon satisfaction of all Acquisition Conditions to Closing. The Closing is expected to occur on or before 5:00 p.m. (Toronto time) no later than June 30, 2009.

Agents’ Compensation:	Sandfire and any other person engaged to and in the sale of the Units (each an “ Agent ”) will receive a cash commission equal to 7% of the aggregate gross proceeds of the issue of Units resulting from orders which the Agent has introduced and confirmed to the Company, a success fee of $10,000 payable on Closing and compensation warrants (each an “ Agent Warrant ”) which will entitle the Agent to purchase a number of Common Shares equal to 7% of the number of Units issued resulting from orders which the Agent has introduced and confirmed to Adira, at a price of US$0.25 per Common Share for a period of 24 months following closing of the Offering. The Agent Warrants will be exchanged for warrants to acquire common shares in the Successor upon completion of the Acquisition. In addition, Adira shall be responsible for the expenses of Sandfire up to a maximum of $5,000 (plus GST if applicable) and the legal fees of Sandfire up to a maximum of $10,000 (plus GST if applicable).

Exemptions Relied Upon:	The sale of the securities contemplated in this Term Sheet are to be effected in reliance upon the “accredited investor” exemption found in s. 2.3 of National Instrument 45-106- Prospectus Exempt Distributions .

Terms of the Acquisition:	Upon completion of the Acquisition steps will be taken to change the name of AMG to “Adira Energy Corp.” and change its board of directors to be comprised of five appointees of Adira, one appointee of AMG to be approved by Adira, and one additional member designated by the board following the closing of the Acquisition. The closing of the Acquisition is subject to a number of other conditions precedent including the satisfactory completion of due diligence by both Adira and AMG. Further details are included in the LOI and the Securities Exchange Agreement.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our report dated July 3, 2009, with respect to the consolidated financial statements of Adira Energy Corp. as at and for the period ended April 30, 2009 included in this Shell Company Report on Form 20-F, filed with the U.S. Securities and Exchange Commission.

“De Visser Gray LLP”

Chartered Accountants
Vancouver, BC, Canada
September 4, 2009