Exhibit 4.7

SHARE EXCHANGE AGREEMENT

dated as of the 18^th day of February, 2010

AMONG:

The Persons Listed on

SCHEDULE 2.1

(Each, individually a “Sanomune Shareholder” and collectively, the “Sanomune Shareholders”)

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SANOMUNE INC.
a corporation formed under the laws of the Province of Manitoba
(hereinafter referred to as “Sanomune”)

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DIAMEDICA INC.
a corporation incorporated under the laws of the Province of Manitoba
(hereinafter referred to as “DiaMedica”)

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TABLE OF CONTENTS

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WHEREAS the Sanomune Shareholders are the registered and beneficial owners of all the issued and outstanding Sanomune Shares (as defined herein);

WHEREAS DiaMedica is a company whose common shares are listed on the TSXV (as defined herein);

WHEREAS DiaMedica and the Sanomune Shareholders wish to exchange shares on the terms and conditions herein contained; and

WHEREAS following such exchange of shares, DiaMedica will directly own all of the Sanomune Shares and the Sanomune Shareholders will, in the aggregate, own approximately 40% of the issued and outstanding DiaMedica Shares (as defined herein) (excluding any DiaMedica Shares owned by Sanomune Shareholders prior to the completion of the Transaction);

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows.

ARTICLE 1
DEFINITIONS

For all purposes of this Agreement the following capitalized terms shall have the meanings set forth in this Article 1:

“Affiliate” of an entity means any Person directly or indirectly controlling, controlled by or under common control with, such entity.

“Articles” means, with respect to any corporation, such corporation’s articles of incorporation, certificate of incorporation, constating documents or such other similar organizational documents as the same may be amended from time to time.

“Business Day” means a day, excluding Saturday and Sunday, on which banking institutions are open for business in Toronto, Ontario and Winnipeg, Manitoba.

“Canadian GAAP” means accounting principles which are: (a) consistent with the principles promulgated or adopted by the Canadian Institute of Chartered Accountants and its predecessors, in effect from time to time; and (b) applied, unless otherwise required by Canadian GAAP, on a basis consistent with prior periods.

“Change of Control” means the acquisition, directly or indirectly, of beneficial ownership of voting securities that results in a holding of more than 20% of the issued and outstanding voting securities of Sanomune or DiaMedica, as the case may be, by a third party, other than in connection with this Agreement.

“Claim” has the meaning set forth in Section 11.5(a) .

“Closing Date” means March 15, 2010, or such earlier or later date as may be agreed upon in writing by Sanomune and DiaMedica.

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“Closing Time” means 9:00 a.m. (Winnipeg time) on the Closing Date or such other time on the Closing Date as maybe agreed upon by Sanomune and DiaMedica.

“Closing” means the closing of the exchange of shares between the Sanomune Shareholders and DiaMedica, pursuant to the terms of this Agreement at the Closing Time.

“Confidential Information” has the meaning set forth in Section 12.1.

“Control” in respect of a Person (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or by other arrangement.

“Deferoxamine Assets” has the meaning set forth in Section 7.2(i) .

“Deferoxamine Asset Transactions” means the transactions relating to the transfer of the Deferoxamine Assets by Sanomune, including (i) the transfer of Sanomune Common Shares and Sanomune Preferred Shares to a newly incorporated corporation (“Newco”) in exchange for common shares and preferred shares of Newco; (ii) the purchase by Sanomune of the Sanomune Common Shares and the Sanomune Preference Shares held by Newco from Newco in exchange for the issuance of a promissory note (the “Newco Promissory Note”); and (iii) the transfer by Sanomune to Newco of the Deferoxamine Assets in full satisfaction of the Newco Promissory Note.

“DiaMedica Assets” means all assets owned by DiaMedica.

“DiaMedica Financial Statements” has the meaning set forth in Section 5.8(a) .

“DiaMedica Intangible Property” means all of the Intangible Property of DiaMedica.

“DiaMedica Options” means options to acquire DiaMedica Shares.

“DiaMedica Shares” means the common shares in the capital of DiaMedica.

“DiaMedica Stock Option Agreements” means the stock option agreements between DiaMedica and certain of its directors, officers, employees and management company employees pursuant to which an aggregate of 1,962,000 DiaMedica Shares may be issued.

“Direct Claim” has the meaning set forth in Section 11.5(a) .

“Distribution” means: (a) the declaration or payment of any dividend in cash, securities or property on or in respect of any class of securities of the Person or its Subsidiaries; (b) the purchase, redemption or other retirement of any securities of the Person or its Subsidiaries, directly or indirectly; or (c) any other distribution on or in respect of any class of securities of the Person or its Subsidiaries.

“$” means Canadian dollars, unless otherwise specified.

“Environmental Laws” means all applicable Laws relating to the protection of human health and safety, the environment or natural environment (as defined in all such Laws including air, surface water, ground water, land surface, soil, and subsurface strata), or hazardous or toxic substances or wastes, pollutants or contaminants.

“Income Tax Act” means the Income Tax Act (Canada), as amended from time to time.

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“Indebtedness” means all obligations, contingent (to the extent required to be reflected in financial statements prepared in accordance with Canadian GAAP) and otherwise, which in accordance with Canadian GAAP should be classified on the obligor’s balance sheet as liabilities, including without limitation, in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all agreements of guarantee, support, indemnification, assumption or endorsement and other contingent obligations whether direct or indirect in respect of Indebtedness or performance of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agreement to purchase goods, supplies or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise; (d) obligations to reimburse issuers of any letters of credit; and (e) capital leases.

“Indemnified Party” has the meaning set forth in Section 11.5(a) .

“Indemnifying Party” has the meaning set forth in Section 11.5(a) .

“Intangible Property” means all patents, patentable subject matter, copyrights, registered and unregistered trade-marks, service marks, domain names, trade-names, logos, commercial symbols, industrial designs (including applications for all of the foregoing and renewals, divisions, extensions and reissues, where applicable, relating thereto), inventions, licences, sublicences, trade secrets, know how, confidential and proprietary information, patterns, drawings, computer software, databases and all other intellectual property, whether registered or not, owned by, licensed to or used by a Person, in any format or medium whatsoever.

“Laws” mean all federal, provincial, state, municipal or local laws, rules, regulations, statutes, by-laws, ordinances, policies, judgments or orders of any federal, provincial, state, regional or local government or any subdivision thereof or any arbitrator, court, administrative or regulatory agency, commission, department, board or bureau or body or other government or authority or instrumentality or any entity or Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Letter Agreement” means the letter of intent dated November 19, 2009, entered into among DiaMedica, Sanomune and CentreStone Ventures Limited Partnership in connection with the Transaction.

“Lien” means: (a) any encumbrance, mortgage, pledge, hypothec, prior claim, lien, charge or other security interest of any kind upon any property or assets of any character, or upon the income or profits therefrom; (b) any acquisition of or agreement to have an option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement (including a capitalized lease); or (c) any sale, assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse.

“Losses”, in respect of any matter, means all claims, demands, proceedings, losses, damages, liabilities, deficiencies, costs and expenses (including, without limitation, all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising directly or indirectly as a consequence of such matter.

“Market Price” means, in respect of a class of securities, the market price of such class of securities determined in accordance with the policies of the TSXV.

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“Material Adverse Effect” in respect of a Person means any change, effect, event, occurrence, condition or development that has or could reasonably be expected to have, individually or in the aggregate, a material and adverse impact on the business, operations, results of operations, property, assets, capitalization, liabilities or obligations (whether absolute, accrued, conditional or otherwise) or financial condition of such Person, other than any change, effect, event, occurrence or state of facts: (i) relating to the global economy or securities markets in general, or (ii) arising from any action expressly contemplated by this Agreement or any action taken with the prior written consent of the other parties hereto.

“Permitted Liens” means:

“Person” means an individual, partnership, corporation, association, trust, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof.

“Sanomune Assets” means collectively the Sanomune Intangible Property and the Sanomune Tangible Property, but, for greater certainty, excludes the Deferoxamine Assets.

“Sanomune Common Shares” means the common shares in the capital of Sanomune.

“Sanomune Financial Statements” has the meaning set forth in Section 3.9(a) .

“Sanomune Indemnifying Shareholders” has the meaning set forth in Section 3.

“Sanomune Intangible Property” means all of the Intangible Property of Sanomune.

“Sanomune Options” means options to acquire Sanomune Common Shares.

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“Sanomune Preference Shares” means the preference shares in the capital of Sanomune.

“Sanomune Shares” means, collectively, the Sanomune Common Shares and the Sanomune Preference Shares.

“Sanomune Shareholders” means, collectively, the Persons identified in Schedule 2.1 to this Agreement as the registered and beneficial holders of the Sanomune Shares, and “Sanomune Shareholder” shall mean any one of such Persons.

“Sanomune Tangible Property” means all assets owned by Sanomune other than the Sanomune Intangible Property, as set out on Schedule 3.16.

“Sanomune Warrants” means warrants to acquire Sanomune Preference Shares.

“Subsidiary” shall have the meaning set forth in The Securities Act (Manitoba).

“Tax Returns” has the meaning set forth in Section 3.13.

“Tax” or “Taxes” means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative net worth, transfer, profits, withholding, payroll, employer health, employer safety, workers compensation, excise, immovable property and moveable property taxes, and any other taxes, customs duties, fees, assessments or similar charges in the nature of a tax including Canada Pension Plan, Social Security and provincial or state pension plan contributions and workers compensation premiums, together with any interest, fines and penalties imposed by any governmental authority (including federal, provincial, state, municipal and foreign governmental authorities), and whether disputed or not.

“Third Party Claim” has the meaning set forth in Section 11.5(a) .

“Transaction” means the acquisition by DiaMedica of all of the issued and outstanding Sanomune Shares from the Sanomune Shareholders in exchange for an aggregate of 12,806,377 DiaMedica Shares, all as provided for herein.

“TSXV” means the TSX Venture Exchange Inc.

The words “hereof’, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting. All references as to “Sections”, “Subsections”, “Articles”, “Schedules” and “Exhibits” shall be to Sections, Subsections, Articles, Schedules and Exhibits, respectively, of this Agreement unless otherwise specifically provided.

In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein, the words “commencing on” mean “commencing on and including”, the word “from” means “from and including” and the words “to” and “until” each means “to and including”.

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The expression “to the knowledge of” or a similar phrase shall mean the knowledge of the Person based on the receipt of written notice addressed to the Person or the actual knowledge of any senior officer of the Person.

The following Schedules are attached hereto and form part of this Agreement:

ARTICLE 2
AGREEMENT TO EXCHANGE

The parties acknowledge and agree that at the Closing Time, on and subject to the terms and conditions of this Agreement, the number of DiaMedica Shares issuable in exchange for the Sanomune Shares pursuant to Section 2.1 shall be 12,806,377 DiaMedica Shares, at a deemed per share value equal to the Market Price of the DiaMedica Shares on the last trading day immediately prior to Closing.

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DiaMedica agrees to execute and return to each of the Sanomune Shareholders for further handling, joint elections under subsection 85(1) of the Income Tax Act, in the manner prescribed therein, provided that the election is prepared and forwarded to DiaMedica by the Sanomune Shareholder prior to the Closing Date. The parties making such elections agree that compliance with the requirements to ensure the validity of a joint tax election on a timely basis will be the sole responsibility of each of the Sanomune Shareholders making the election and DiaMedica agrees only to execute and to forward such tax elections to such Sanomune Shareholder by courier service and shall not be responsible for the preparation of the elections, verifying the accuracy of the information contained in the elections nor the filing of the elections.

For greater certainty, DiaMedica represents, and based upon such representation, Sanomune and the Sanomune Shareholders acknowledge, that:

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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SANOMUNE

In order to induce DiaMedica to enter into this Agreement and to consummate the transactions contemplated by this Agreement, including the Transaction, Sanomune, and each of CentreStone Ventures Limited Partnership and Genesys Ventures Inc. (together, the “Sanomune Indemnifying Shareholders”), hereby jointly and severally represent and warrant as follows to and in favour of DiaMedica and acknowledge that DiaMedica is relying upon such representations and warranties in connection with such transactions:

Sanomune is a company duly formed and organized and existing under the laws of Manitoba and has the power to own its properties (including its Intangible Property) and to carry on its business as now conducted and currently proposed to be conducted and has made all necessary filings under all applicable company, securities and taxation Laws or any other Laws to which Sanomune is subject, except where the failure to make such filing would not have a Material Adverse Effect on Sanomune. Sanomune is not in violation of its Articles or by-laws, except where such violation would not have a Material Adverse Effect on Sanomune. Sanomune is in good standing under the company or other Laws of each province or other jurisdiction in which it carries on business, except where the failure to have such standing would not have a Material Adverse Effect on Sanomune. No proceedings have been instituted or are pending for the dissolution or liquidation of Sanomune.

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Other than Sanomune U.K. Ltd. (“Sanomune U.K.”), a wholly-owned subsidiary, Sanomune has no Subsidiaries or any other material investments in any other Person. No person has any written or oral 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 or acquisition of any of the issued shares of Sanomune U.K.

All data and information relating to Sanomune described in Schedule 3.4 and provided by Sanomune, at the request of DiaMedica and its agents and representatives, to DiaMedica and its agents and representatives in connection with the Transaction was and is complete and true and correct in all material respects.

Sanomune has the capacity, right, authority and power to enter into this Agreement and each agreement, document and instrument to be executed and delivered by Sanomune pursuant to this Agreement and to carry out the Transaction and other transactions contemplated hereby or thereby. The execution, delivery and performance by Sanomune of this Agreement and each such other agreement, document and instrument contemplated herein have been duly authorized by all necessary action of the Sanomune directors, the Sanomune Shareholders and Sanomune and no other action on the part of the Sanomune directors, the Sanomune Shareholders or Sanomune, as applicable, is required in connection therewith. Except as disclosed in Schedule 3.5, the execution, delivery and performance by Sanomune of this Agreement and each such other agreement, document and instrument contemplated herein does not and will not require the authorization approval or consent of, or any filing with any governmental authority or agency or any other Person, and the execution, delivery and performance by Sanomune of this Agreement and each such other agreement, document and instrument contemplated herein, does not and will not result in: (a) a breach of or conflict with the Articles or by-laws of Sanomune; (b) a breach of or a conflict with any Laws applicable to Sanomune; (c) a breach of, constitute a default under, accelerate any obligation under, or give rise to a right of termination of any indenture, agreement, contract, instrument, Lien, lease, permit, authorization, order, writ, judgement, injunction, decree, determination or arbitration award to which Sanomune is a party or by which the property of Sanomune is bound or affected; (d) result in the creation or imposition of any Lien on any equity interest in Sanomune; or (e) result in the dissolution or winding-up of Sanomune.

Other than as specifically contemplated pursuant to the Deferoxamine Asset Transactions, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon Sanomune to issue any equity securities or any securities convertible or exchangeable, directly or indirectly, into any equity securities of Sanomune.

There are no agreements or restrictions which in any way limit or restrict the transfer to DiaMedica of any of the Sanomune Shares other than share transfer restrictions contained in Sanomune’s Articles and in the shareholders agreement dated October 15, 2007, between the Sanomune Shareholders and Sanomune (the “Sanomune Shareholders Agreement”). Other than the Sanomune Shareholders Agreement, there are no other shareholders agreements, pooling agreements, voting trusts or other agreements or understandings with respect to the voting of Sanomune Shares or any of them. At or prior to the Closing, the share transfer restrictions in Sanomune’s Articles and in the Sanomune Shareholders Agreement, and the provisions of the Sanomune Shareholders Agreement which require the approval of Sanomune Shareholders by special resolution in order to complete the Transaction, will have been complied with or terminated.

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There are no outstanding loans or other liabilities of Sanomune to the Sanomune Shareholders, or any of them, or to any previous Sanomune Shareholder.

Since September 30, 2009, Sanomune has not (except as disclosed in this Agreement):

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Other than in the ordinary course of business or in connection with the transactions contemplated hereby (including the Transaction), since September 30, 2009, Sanomune has not incurred any: (i) Indebtedness (other than the Newco Promissory Note); or (ii) Liens upon any of the Sanomune Assets, other than Permitted Liens.

Sanomune is not indebted to any director, officer, employee or consultant of Sanomune, except for amounts due as normal compensation or reimbursement of ordinary business expenses.

All returns, declarations, reports, estimates, statements, schedules or other information or documents with respect to Taxes (collectively, “Tax Returns”) required to be filed by or with respect to Sanomune have been filed within the prescribed time, with the appropriate tax authorities and all such Tax Returns are true, correct, and complete in all material respects. No Tax Return of Sanomune is being audited by the relevant taxing authority, and there are no outstanding waivers, objections, extensions, or comparable consents regarding the application of the statute of limitations or period of reassessment with respect to any Taxes or Tax Returns that have been given or made by Sanomune (including the time for filing of Tax Returns or paying Taxes) and Sanomune has no pending requests for any such waivers, extensions, or comparable consents. Sanomune has not received a ruling from any taxing authority or signed an agreement with any taxing authority that could reasonably be expected to have a Material Adverse Effect on Sanomune. Sanomune does not owe any Taxes to the federal government of Canada, a provincial government, a municipal government or any other governmental authority.

The Sanomune Assets are owned legally and beneficially by Sanomune with good and marketable title thereto, free and clear of all Liens whether contingent or absolute, except for the Liens set out in Schedule 3.15 and Permitted Liens. Sanomune is the sole and unconditional owner of, and has good and marketable title, to the Sanomune Assets. The Sanomune Assets include all assets necessary for the conduct of the business of Sanomune as currently conducted and currently proposed to be conducted. All of the Sanomune Assets which are material to the operation of the business of Sanomune are in good operating condition and repair (normal wear and tear excepted) and are usable in the ordinary course of business.

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Schedule 3.16 sets out a true, complete and accurate list of the Sanomune Tangible Property.

(a)

(b)

Sanomune has all necessary and required licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, provincial, state or local, required to own and lease its properties and assets and to conduct its business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on Sanomune. Sanomune is not in default, nor has it received any notice of any claim of default, with respect to any such license, permit, consent, concession or authorization. No registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind are required by virtue of the execution and delivery of this Agreement, or of the consummation of the transactions contemplated hereby (including the Transaction): (a) to avoid the loss of any license, permit, consent, concession or other authorization or any asset, property or right pursuant to the terms thereof, or the violation or breach of any Law applicable thereto, or (b) to enable Sanomune to hold and enjoy the same immediately after the Closing Date in the conduct of its business as conducted prior to the Closing Date. Notwithstanding the foregoing, Sanomune has not yet applied for or received requisite regulatory approvals for conducting clinical trials in Canada, the United States or elsewhere.

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Sanomune is not in default under, or in violation of, and has not violated (and failed to cure) any Law including, without limitation, laws relating to the issuance or sale of securities, the environment and occupational health and safety, privacy and intellectual property, or any licenses, franchises, permits, authorizations or concessions granted by, or any judgment, decree, writ, injunction or order of, any governmental or regulatory authority, applicable to its business or any of its properties or assets, except where such default or violation would not have a Material Adverse Effect on Sanomune. Sanomune has not received any notification alleging any violations of any of the foregoing with respect to which adequate corrective action has not been taken.

Sanomune does not have any employees or independent contractors and there are no agreements, written or oral, between Sanomune and any other party relating to payment, remuneration or compensation for work performed or services provided or payment relating to a Change of Control or other event in respect of Sanomune. Sanomune is in compliance with all applicable Laws respecting labour, employment, fair employment practices, work place safety and health, terms and conditions of employment, and wages and hours. There are no charges of employment discrimination or unfair labour practices pending or threatened and to the knowledge of Sanomune, there exists no valid basis for any such claim. There are no pending claims, complaints or charges that have been filed against Sanomune under any labour or employment laws or dispute resolution procedure (including, but not limited to, any arbitration or similar proceedings) of which Sanomune has received written notice. Sanomune has not received any written notice indicating that any of its employment policies or practices is currently being audited or investigated by any federal, provincial, state or local government agency.

There is no suit, claim, action, proceeding or, to the knowledge of Sanomune, investigation pending or, to the knowledge of Sanomune, threatened against or affecting Sanomune, or any of its assets or properties, or against any director or officer of Sanomune in his capacity as a director or officer thereof, or which could result in criminal liability or any quasi-criminal or administrative penalty, or delay or prevent the consummation of the transactions contemplated hereby (including the Transaction), at law or in equity or before any governmental authority or instrumentality or before any arbitrator of any kind.

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Since September 30, 2009, no change has occurred in the business, operations, results of operations, assets, capitalization, liabilities or obligations (whether absolute, accrued, conditional or otherwise), or condition (financial or otherwise) of Sanomune, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on Sanomune.

Sanomune does not have any employee benefit plans (or any plan which may be in any way regarded as an employee benefit plan) of any nature whatsoever nor has it ever had any such plans.

Sanomune does not have (nor has it ever had) any inventory of any nature whatsoever.

Sanomune does not have (nor has it ever had) any insurance of any nature whatsoever relating to it or its directors or officers or otherwise.

Sanomune’s head office is located at 7-1250 Waverly Street, Winnipeg, Manitoba, R3T 6C6, and, aside from its counsel’s office, such address is the only location where its company books and records are located.

Complete and correct copies of the Articles, and of all amendments thereto, of Sanomune have been previously delivered to DiaMedica. The corporate records of Sanomune provided to DiaMedica contain complete and accurate records in all material respects of all meetings and consents in lieu of meetings of the Sanomune directors (and its committees) and Sanomune Shareholders since the incorporation of Sanomune, and of all actions, decisions and consents thereof. Except as reflected in such corporate records, there are no material minutes of meetings or consents in lieu of meetings of the Sanomune directors and Sanomune Shareholders or actions, decisions or consents thereof.

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place, whether written or oral, to which Sanomune is a party or is otherwise bound that would now or hereafter, in any way limit the business, use of assets or operations of Sanomune.

Sanomune is not a “reporting issuer” (or the equivalent status) in any province or territory of Canada and there is not a published market in respect of any of its securities. No order has been issued ceasing or suspending trading or prohibiting the issue of any securities of Sanomune and no such proceedings are pending, or to the knowledge of Sanomune, threatened.

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Sanomune is in compliance with all regulatory orders, directives and decisions that have application to Sanomune except where such non-compliance would not have a Material Adverse Effect on Sanomune and Sanomune has not received notice from any governmental or regulatory authority that Sanomune is not in compliance with any such regulatory orders, directives or decisions.

To Sanomune’s knowledge, Sanomune has not been and is not currently in violation of any Environmental Law. No property owned, operated, leased, maintained or used by Sanomune has been or is currently the subject of, and Sanomune has not received any notice of, any claim, or judicial or administrative proceeding relating to or alleging any violation of any Environmental Law, and Sanomune is not aware of any facts which could give rise to any such claim or judicial or administrative proceeding. All facilities and operations of Sanomune and its Subsidiaries are presently in compliance with all applicable Environmental Law.

For the purposes of Article XIII(4) of the Canada-Switzerland Income Tax Convention, the Sanomune Shares do not derive their value principally from immovable property situated in Canada.

The execution and delivery by Sanomune of this Agreement and any other agreement contemplated by this Agreement will result in legally binding obligations of Sanomune enforceable against Sanomune in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SANOMUNE SHAREHOLDERS

Each of the Sanomune Shareholders severally (and not jointly or jointly and severally) represents and warrants, but only as to himself, herself or itself, to DiaMedica as follows:

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The Sanomune Shareholder has the capacity to own the Sanomune Shares owned by him or it, to enter into this Agreement and to perform his, her or its obligations under this Agreement.

This Agreement and any other agreement contemplated by this Agreement has been duly authorized (if the Sanomune Shareholder is not an individual), executed and delivered by the Sanomune Shareholder and will result in legally binding obligations of such Sanomune Shareholder enforceable against such Sanomune Shareholder in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

Except for the consents set forth in Schedule 3.5 hereto, which shall be obtained on or before the Closing Date, the execution and delivery of this Agreement, the transfer of the Sanomune Shares by the Sanomune Shareholder and the performance, observance or compliance with the terms of this Agreement by such Sanomune Shareholder will not violate, constitute a default under, conflict with, or give rise to any requirement for a waiver or consent under:

With respect to Sanomune Shareholders not residing in Canada, the Sanomune Shareholder is knowledgeable of, or has been independently advised as to, the applicable securities Laws of its jurisdiction of residence or the securities Laws otherwise applicable to the Sanomune Shareholder, and:

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The Sanomune Shareholder is:

in the case of (c), the Sanomune Shareholder further covenants and agrees with DiaMedica as set forth in Schedule 4.5 hereto.

The Sanomune Shareholder is the registered and beneficial owner of the Sanomune Shares set out beside his, her or its name in Schedule 2.1, free and clear of any Liens, except those restrictions on transfer arising under Sanomune’s Articles and under the Sanomune Shareholders Agreement. Upon the completion of the Closing, except for the rights of DiaMedica pursuant to this Agreement with respect to the Sanomune Shares, there will be no outstanding options, calls or rights of any kind binding on any Sanomune Shareholder relating to or providing for the purchase, delivery or transfer of any of his, her or its Sanomune Shares.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DIAMEDICA

DiaMedica hereby represents and warrants as follows to and in favour of Sanomune and each of the Sanomune Shareholders, and DiaMedica acknowledges that Sanomune and each of the Sanomune Shareholders is relying upon such representations and warranties in connection with the transactions contemplated by this Agreement, including the Transaction:

DiaMedica is a corporation duly incorporated, organized and validly existing under the laws of the province of Manitoba and has the corporate power to own its properties and to carry on its business as now conducted and currently proposed to be conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other Laws to which DiaMedica is subject, except where the failure to make such filing would not have a Material Adverse Effect on DiaMedica. DiaMedica is in good standing under The Corporations Act (Manitoba). DiaMedica is not in violation of its Articles or by-laws. DiaMedica does not have any Subsidiaries. No proceedings have been instituted or are pending for the dissolution or liquidation of DiaMedica.

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The execution, delivery and performance by DiaMedica of this Agreement does not and will not require the authorization, approval or consent of, or any filing with, any governmental authority or agency or any other Person, except those required by applicable securities laws and the rules and policies of the TSXV.

Since September 30, 2009, no change has occurred in the business, operations, results of operations, assets, capitalization or condition (financial or otherwise) of DiaMedica, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on DiaMedica.

DiaMedica is a “reporting issuer” under the securities legislation of the provinces of British Columbia, Alberta, Manitoba, Ontario and Québec and is not in default of such legislation or any regulation thereunder. No order has been issued ceasing or suspending trading or prohibiting the issue of the DiaMedica Shares and no such proceedings are pending or to the knowledge of DiaMedica, threatened. DiaMedica is in material compliance with continuous disclosure requirements under applicable securities laws, and has prepared and filed all material documents required to be filed by it with applicable securities regulatory authorities in connection with its status as a “reporting issuer” as required to be filed by it in connection with such status (collectively the “DiaMedica Public Record”) and such documents, as of the date they were filed, complied with applicable Laws and did not fail to state a material fact required to be stated in order to make the statements contained therein not misleading in light of the circumstances in which they were made. No change which resulted in a Material Adverse Effect has occurred in relation to DiaMedica that is not disclosed in the DiaMedica Public Record and DiaMedica has not filed any confidential material change reports as part of the DiaMedica Public Record that continue to be confidential. DiaMedica is not aware of any deficiencies in the filing of any documents or reports with any securities regulatory authority that would cause it to be placed on the list of defaulting reporting issuers maintained by any securities regulatory authority.

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The DiaMedica Shares are listed for trading on the TSXV. DiaMedica is in material compliance with applicable securities Laws and all TSXV Policies.

Since September 30, 2009, DiaMedica has not (except as disclosed in this Agreement, or in the DiaMedica Public Record):

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Complete and correct copies of the Articles and by-laws, and of all amendments thereto, of DiaMedica have been previously delivered to Sanomune. The minute book of DiaMedica contains complete and accurate records in all material respects of all meetings and consents in lieu of meetings of the board of directors (and its committees) and shareholders of DiaMedica since incorporation. Except as reflected in such minute books, there are no minutes of meetings or consents in lieu of meetings of the board of directors (or its committees) or of the shareholders of DiaMedica.

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All data and information provided by DiaMedica, at the request of Sanomune and its agents and representatives, to Sanomune and its agents and representatives in connection with the Transaction was and is complete and true and correct in all material respects.

Other than as set out herein and in connection with the DiaMedica Options (including the DiaMedica Stock Option Agreements), there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon DiaMedica to issue any shares or any securities convertible or exchangeable, directly or indirectly, into any DiaMedica Shares. There are no shareholders’ agreements, pooling agreements, voting trusts, preemptive rights, or other agreements or understandings with respect to the voting of DiaMedica Shares, or any of them.

There are no outstanding loans or other liabilities of DiaMedica to any shareholder or to any previous shareholder of DiaMedica.

Other than in the ordinary course of business or in connection with the transactions contemplated hereby (including the Transaction), since September 30, 2009, DiaMedica has not incurred any: (i) Indebtedness; or (ii) Liens upon any of the DiaMedica Assets.

DiaMedica is not indebted to any director, officer, employee or consultant of DiaMedica, except for amounts due as reimbursement of ordinary business expenses.

All Tax Returns required to be filed by or with respect to DiaMedica have been filed within the prescribed time, with the appropriate tax authorities and all such Tax Returns are true, correct, and complete in all material respects. No Tax Return of DiaMedica is being audited by the relevant taxing authority, and there are no outstanding waivers, objections, extensions, or comparable consents regarding the application of the statute of limitations or period of reassessment with respect to any Taxes or Tax Returns that have been given or made by DiaMedica (including the time for filing of Tax Returns or paying Taxes) and DiaMedica has no pending requests for any such waivers, extensions, or comparable consents. DiaMedica has not received a ruling from any taxing authority or signed an agreement with any taxing authority that could reasonably be expected to have a Material Adverse Effect on DiaMedica. DiaMedica does not owe any Taxes to the federal government, a provincial government, a municipal government or any other governmental authority.

DiaMedica has good title to all DiaMedica Assets, free of all Liens except for Permitted Liens.

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All material contracts entered into by DiaMedica and disclosed in the DiaMedica Public Record are valid, binding and in full force and effect as to DiaMedica, and DiaMedica is not in breach or violation of, or default under, the terms of any such agreements, except where such breach, violation or default would not have a Material Adverse Effect on DiaMedica, and no event has occurred which constitutes or, with the lapse of time or the giving of notice, or both, would constitute, such a breach, violation or default by DiaMedica.

DiaMedica owns or has legal right to use the DiaMedica Intangible Property currently used in the conduct of the business of DiaMedica, and, to DiaMedica’s knowledge, the ownership or use thereof and any other intellectual property rights owned or used by DiaMedica does not infringe upon the proprietary rights of any other Person.

DiaMedica has all necessary and required licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, provincial, or local, required to own and lease its properties and assets and to conduct its business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on DiaMedica. DiaMedica is not in default, nor has it received any notice of any claim or default with respect to any such license, permit, consent, concession or authorization. No registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind is required by virtue of the execution and delivery of this Agreement, or of the consummation of the transactions contemplated hereby (including the Transaction): (a) to avoid the loss of any license, permit, consent, concession or other authorization or any asset, property or right pursuant to the terms thereof, or the violation or breach of any Law applicable thereto, or (b) to enable DiaMedica to hold and enjoy the same immediately after the Closing Date in the conduct of its business as conducted prior to the Closing Date.

DiaMedica is not in default under, or in violation of, and has not violated (and failed to cure) any Law including, without limitation, laws relating to the issuance or sale of securities, the environment, occupational health and safety, privacy and intellectual property, or any licenses, franchises, permits, authorizations or concessions granted by, or any judgment, decree, writ, injunction or order of, any governmental or regulatory authority, applicable to its business or any of its properties or assets, except where such default or violation would not have a Material Adverse Effect on DiaMedica. DiaMedica has not received any notification alleging any material violations of any of the foregoing with respect to which adequate corrective action has not been taken.

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There is no suit, claim, action, proceeding or, to the knowledge of DiaMedica, investigation pending or, to the knowledge of DiaMedica, threatened against or affecting DiaMedica, or any of its assets or properties, or any officer or director thereof in his capacity as an officer or director thereof, or which could result in criminal liability or any quasi-criminal or administrative penalty, or delay or prevent the consummation of the transactions contemplated hereby (including the Transaction), at law or in equity or before any governmental authority or instrumentality or before any arbitrator of any kind.

DiaMedica does not have any employee benefit plans (or any plan which may be in any way regarded as an employee benefit plan) of any nature whatsoever nor has it ever had any such plans.

DiaMedica does not have (nor has it ever had) any inventory of any nature whatsoever.

Other than set out in Schedule 5.26, DiaMedica does not have (nor has it ever had) any insurance of any nature whatsoever relating to it or its directors or officers or otherwise.

DiaMedica’s head office is located at 8-1250 Waverly Street, Winnipeg, Manitoba, R3T 6C6, and such address is the only location where its corporate books and records are located.

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place, whether written or oral, to which DiaMedica is a party or is otherwise bound that would now or hereafter, in any way limit the business, use of assets or operations of DiaMedica.

DiaMedica is in compliance with all regulatory orders, directives and decisions that have application to DiaMedica except where such non-compliance would not have a Material Adverse Effect on DiaMedica and DiaMedica has not received notice from any governmental or regulatory authority that DiaMedica is not in compliance with any such regulatory orders, directives or decisions.

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To DiaMedica’s knowledge, DiaMedica has not been and is not currently in violation of any Environmental Law. No property owned, operated, leased, maintained or used by DiaMedica has been or is currently the subject of, and DiaMedica has not received any notice of, any claim, or judicial or administrative proceeding relating to or alleging any violation of any Environmental Law, and DiaMedica is not aware of any facts which could give rise to any such claim or judicial or administrative proceeding. All facilities and operations of DiaMedica are presently in compliance with all applicable Environmental Law.

The execution and delivery by DiaMedica of this Agreement and any other agreement contemplated by this Agreement will result in legally binding obligations of DiaMedica enforceable against DiaMedica in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by Law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

ARTICLE 6
COVENANTS

Each of Sanomune, the Sanomune Shareholders and DiaMedica shall cooperate to prepare and file any filings required under any applicable laws or rules and policies of the TSXV or other regulatory bodies relating to the transactions contemplated hereby (including the Transaction). DiaMedica covenants and agrees to take, in a timely manner, all commercially reasonable actions and steps necessary in order that (i) effective as at the Closing Date, the DiaMedica Shares issuable pursuant to the Transaction will be listed and posted for trading on the TSXV; (ii) when received, DiaMedica shall provide Sanomune with copies of the conditional and final approval of the TSXV respecting the Transaction and, the listing and posting for trading of the DiaMedica Shares; and (iii) the distribution of DiaMedica Shares to the Sanomune Shareholders is exempt from the prospectus and registration requirements of applicable securities laws.

Each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement (including the Transaction) and to cooperate with each other in connection with the foregoing, including using commercially reasonable efforts to:

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Upon reasonable notice, Sanomune shall afford to DiaMedica’s directors, officers, counsel, accountants and other authorized representatives and advisers complete access (or, where necessary, the provision of the information requested), during normal business hours and at such other time or times as the parties may reasonably request, from the date hereof and until the earlier of the Closing Date and the termination of this Agreement, to Sanomune’s properties, books, contracts and records as well as to management personnel of Sanomune as DiaMedica may require or may reasonably request.

Sanomune and the Sanomune Shareholders covenant and agree that, during the period from the date of this Agreement until the earlier of the Closing Date and the date this Agreement is terminated in accordance with its terms, unless DiaMedica shall otherwise consent in writing (such consents not to be unreasonably withheld or delayed), except as required by Law or as otherwise expressly permitted or specifically contemplated by this Agreement or by the Deferoxamine Asset Transactions:

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DiaMedica covenants and agrees that during the period from the date of this Agreement until the earlier of the Closing Date and the date this Agreement is terminated in accordance with its terms, unless Sanomune, otherwise consents in writing (such consent not to be unreasonably withheld or delayed), except as required by Law or as otherwise expressly permitted or specifically contemplated by this Agreement:

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ARTICLE 7
CONDITIONS TO OBLIGATION TO CLOSE

The obligations of DiaMedica to issue DiaMedica Shares in exchange for the Sanomune Shares on the Closing Date, and the obligations of each Sanomune Shareholder to transfer and assign to DiaMedica their respective Sanomune Shares in exchange for the DiaMedica Shares, all pursuant to Article 2, is subject to compliance with respective agreements and covenants of DiaMedica and the Sanomune Shareholders herein contained, and to the satisfaction, on or prior to the Closing Date, of the following conditions:

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The agreements, certificates, documents, and other evidence of compliance described in this Section 7.1 shall be in form and substance satisfactory to DiaMedica and the Sanomune Shareholders, acting reasonably, and shall, except as otherwise provided, be delivered at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by DiaMedica and the Sanomune Shareholders.

DiaMedica’s obligation to issue DiaMedica Shares in exchange for the Sanomune Shares on the Closing Date pursuant to Article 2 is subject to compliance by Sanomune and the Sanomune Shareholders with their agreements and covenants herein contained and to the satisfaction, on or prior to the Closing Date, of the following additional conditions:

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The agreements, certificates, documents, other evidence of compliance and opinions described in this Section 7.2 shall be in form and substance satisfactory to DiaMedica, acting reasonably, and shall, except as otherwise provided, be delivered to DiaMedica at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by DiaMedica.

The obligations of each of the Sanomune Shareholders to transfer and assign to DiaMedica their respective Sanomune Shares in exchange for the DiaMedica Shares pursuant to Article 2 is subject to compliance by DiaMedica with its agreements herein contained and to the satisfaction, on or before the Closing Date of the following additional conditions:

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The agreements, certificates, documents and other evidence of compliance described in this Section 7.3 shall be in form and substance satisfactory to the Sanomune, acting reasonably, and shall, except as otherwise provided, be delivered to Sanomune at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by Sanomune.

ARTICLE 8
TERMINATION

This Agreement may be terminated by written notice given by the terminating party to the other parties hereto:

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In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith have no further force or effect and there shall be no obligation on the part of the parties hereunder except with respect to (i) Section 9.1, Article 11, Article 12 and Article 13, which will survive such termination, and (ii) a breach arising from the fraud or willful misconduct of any party.

At any time prior to the Closing Time, each of the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of another party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby.

ARTICLE 9
TRANSACTION COSTS

In the event of the termination of this Agreement pursuant to Section 8.1 hereof, all costs of the transactions contemplated hereby incurred by Sanomune, the Sanomune Shareholders and DiaMedica, as the case may be, including in connection with this Agreement and the Transaction, including legal fees, financial advisor fees and all disbursements by such parties and their advisors shall be born and paid by the party incurring the costs, whether or not such transactions are completed. For greater certainty, following completion of the transactions contemplated hereby, including the Transaction, Sanomune (and not the Sanomune Shareholders) shall be responsible for the costs of preparing and filing the Tax Return for the deemed year-end resulting therefrom.

Sanomune shall be responsible for preparing the pro forma financial statements of Sanomune reflecting the combination of Sanomune and DiaMedica in the form required by the TSXV or the relevant securities regulatory authorities, and prior to Closing, shall, at the expense of DiaMedica, assist in preparing any other documentation reasonably requested by DiaMedica.

ARTICLE 10
NOTICES

Any notice or other communication in connection with this Agreement shall be deemed to be delivered if in writing (or in the form of a fax) addressed as provided below: (a) when actually delivered or faxed to said address, or (b) in the case of a letter, three Business Days shall have elapsed after the same shall have been deposited in the Canadian mails, postage prepaid and registered or certified:

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If to DiaMedica, then to the following address:

DiaMedica Inc.
8-1250 Waverley Street
Winnipeg, Manitoba
R3T 6C6
Fax: 204-453-3745
Attention: Mr. Eric Johnstone, Vice President, Finance

or at such other address as DiaMedica shall have specified by notice actually received by the addressor;

If to Sanomune or the Sanomune Shareholders then to the following address:

Sanomune Inc.
7-1250 Waverley Street
Winnipeg, Manitoba
R3T 6C6
Fax: 204-453-1293
Attention: Mr. Rick Pauls, President

or at such other address as Sanomune or the Sanomune Shareholders shall have specified by notice actually received by the addressor;

ARTICLE 11
INDEMNIFICATION

All covenants, agreements, indemnities, representations and warranties made herein to DiaMedica, Sanomune or the Sanomune Shareholders or in any other document referred to herein or delivered to DiaMedica, Sanomune or the Sanomune Shareholders pursuant hereto shall be deemed to have been relied on by DiaMedica, Sanomune or the Sanomune Shareholders, as the case may be, notwithstanding any investigation made by DiaMedica, Sanomune or the Sanomune Shareholders, and shall survive the execution and delivery of this Agreement and the deliveries described in Article 7 for a period of two years following the Closing Date; except that the representations and warranties of Sanomune and the Sanomune Indemnifying Shareholders set out in Sections 3.1, 3.2, 3.3, 3.5, 3.6 and 3.7 (and any corresponding representations and warranties set out in the closing certificates of Sanomune and the Sanomune Indemnifying Shareholders to be provided pursuant to Section 7.2(f)), and the representations and warranties of each Sanomune Shareholder set out in Sections 4.1, 4.2, 4.3, 4.4, 4.5 and 4.6, shall survive and continue in full force and effect without limitation of time.

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DiaMedica agrees to indemnify and save harmless the Sanomune Shareholders from all Losses suffered or incurred by the Sanomune Shareholders as a result of or arising directly or indirectly out of or in connection with:

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Each Sanomune Shareholder’s aggregate liability to the DiaMedica Indemnified Persons for any and all Losses in respect of any and all causes of action, event, or other circumstances arising out of this Agreement shall be limited to an amount equal to the value of the DiaMedica Shares received by such Sanomune Shareholder in consideration of the transfer and assignment of their Sanomune Shares, to be calculated as the Market Price of the DiaMedica Shares on the last trading day immediately prior to Closing multiplied by the number of DiaMedica Shares received by such Sanomune Shareholder. No Sanomune Indemnifying Shareholder shall be required to indemnify the DiaMedica Indemnified Parties for any Losses resulting from a breach of or inaccuracy of a particular representation or warranty after the expiry of the survival period in respect of such particular representation or warranty, except in respect of a Claim or Third Party Claim for which notice is delivered in accordance with this Agreement prior to the expiry of the survival period in respect thereof.

With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have 60 days to make such investigation of the Claim as is considered necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or prior to the expiration of such 60-day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim, failing which the matter shall be referred to binding arbitration in such manner as the parties may agree or shall be determined by a court of competent jurisdiction.

With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defence of the Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified Party’s out-of-pocket expenses as a result of such participation or assumption. If the Indemnifying Party elects to assume such control, the Indemnified Party shall have the right to participate in the negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and the representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to the actual or potential differing interests between them (such as the availability of different defences), in which case the Indemnifying Party shall pay the reasonable fees and expenses of one such counsel. If the Indemnifying Party, having elected to assume such control, thereafter fails to defend the Third Party Claim within a reasonable time, the Indemnified Party shall be entitled to assume such control, in which case the Indemnifying Party shall pay the reasonable fees and expenses of one such counsel, and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim. If any Third Party Claim is of a nature such that the Indemnified Party is required by applicable Law or the order of any court, tribunal or regulatory body having jurisdiction to make a payment to any Person (a “Third Party”) with respect to the Third Party Claim before the completion of settlement negotiations or related legal proceedings, as the case may be, the Indemnified Party may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnified Party, reimburse the Indemnified Party for such payment. If the amount of any liability of the Indemnified Party under the Third Party Claim in respect to of which such payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall, forthwith after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifying Party. If such a payment, by resulting in settlement of the Third Party Claim, precludes a final determination of the merits of the Third Party Claim and the Indemnified Party and the Indemnifying Party are unable to agree whether such payment was reasonable in the circumstances having regard to the amount and merits of the Third Party Claim, such dispute shall be submitted to arbitration pursuant to The Arbitration Act (Manitoba).

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If the Indemnifying Party fails to assume control of the defence of any Third Party Claim, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the liability of the Indemnifying Party shall be limited to the proposed settlement amount if any such consent is not obtained for any reason.

The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, and shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it become available).

The provision of this Article 11 shall apply to any Claim for breach of any covenant, representation, warranty or other provision of this Agreement or any agreement, certificate or other document delivered pursuant hereto (other than a claim for specific performance or injunctive relief) with the intent that all such Claims shall be subject to the limitations an other provisions contained in this Article 11.

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ARTICLE 12
CONFIDENTIALITY

All information of Sanomune as to its proprietary technology, scientific and clinical data, regulatory process, intellectual and other properties, title, assets and affairs, including information delivered in oral, electronic or written format, which (1) has not become generally available to the public, (2) was not available to DiaMedica or its representatives on a non-confidential basis before the date of the Letter Agreement or (3) does not become available to DiaMedica or its representatives on a non-confidential basis from a person who is not otherwise bound by confidentiality obligations to Sanomune with respect to such information and not otherwise prohibited from transmitting such information, shall be kept strictly confidential by DiaMedica and its representatives (the “Confidential Information”). No Confidential Information may be released to third parties without the consent of Sanomune, except that Sanomune hereto agrees that it will not unreasonably withhold such consent to the extent that such Confidential Information is compelled to be released by legal process or is required to be released to regulatory bodies and/or included in public documents to satisfy the disclosure requirements in order to consummate the transactions contemplated herein or otherwise. In the event of the Termination of this Agreement, DiaMedica shall, upon request, promptly return all Confidential Information to Sanomune.

ARTICLE 13
MISCELLANEOUS

Except as otherwise expressly provided herein, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each of Sanomune, the Sanomune Shareholders and DiaMedica, or in the case of a waiver, by the party against whom the waiver is to be effective. Any amendment or waiver effected in accordance with this Section 13.1 shall be binding upon the Sanomune, the Sanomune Shareholders and DiaMedica pursuant to this Agreement.

The Sanomune Shareholders hereby severally and irrevocably appoint Matthew Sheedy as their agent and attorney to take any action that is required or to execute and deliver any documents on their behalf, including without limitation, for the purposes of all Closing matters and deliveries of documents and do and cause to be done all such acts and things as may be necessary or desirable in connection with the transactions contemplated hereby (including the Transaction). Such appointment is coupled with an interest and is irrevocable. Without limiting the generality of the foregoing, Mr. Sheedy may, on behalf of himself and the Sanomune Shareholders, extend the Closing Date, modify, waive or confirm satisfaction of such conditions (including the condition set out in Section 7.3(g) hereof) as are contemplated herein, negotiate, settle and deliver the final forms of this Agreement and any other documents that are necessary or desirable to give effect to such transactions. The Sanomune Shareholders hereby acknowledge and agree that any decision or exercise of discretion required to be made by Mr. Sheedy under this Agreement, shall be final and binding upon the Sanomune Shareholders so long as such decision or exercise was made bona fide. DiaMedica shall have no duty to enquire into the validity of any document executed or other action taken by Mr. Sheedy on behalf of the Sanomune Shareholders pursuant to this Section 13.2.

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Notwithstanding any other provision in this Agreement, the parties agree that nothing in this Agreement shall preclude DiaMedica from completing a public or private offering of up to an aggregate of $4,000,000 in equity securities, through a combination of DiaMedica Shares, units or securities convertible into DiaMedica Shares, or entering into any agreement in connection with such an offering. In the event that such an offering or agreement is completed or entered into, as the case may be, prior to the Closing Time, the representations, warranties and covenants of DiaMedica set out in this Agreement, including, without limitation, the representations in Section 5.4, 5.9(j) and 5.9(n), and the covenants in Sections 6.5(ix) and 6.5(xvi), shall be deemed be amended or adjusted to the extent required by the terms of such offering or agreement.

Each of Sanomune, the Sanomune Shareholders and DiaMedica hereby agrees to submit to the non-exclusive jurisdiction of the courts in and of the Province of Manitoba and to the courts to which an appeal of the decisions of such courts may be taken, and consents that service of process with respect to all courts in and of the Province of Manitoba may be made by registered mail to it at the address set forth in Article 10.

This Agreement shall be governed by and construed in accordance with the laws of the Province of Manitoba and the federal laws of Canada applicable therein without giving effect to any choice or conflict of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

Sanomune, the Sanomune Shareholders and DiaMedica, upon the request of any other party hereto, whether before or after the Closing, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary or desirable to effect complete consummation of the transactions contemplated hereby, including the Transaction.

Time is of the essence of this Agreement.

This Agreement may not be assigned by any of the parties hereto without the prior written consent of the other parties hereto, such consents not to be unreasonably withheld or delayed.

Each of the Sanomune Shareholders acknowledges that he, she or it has had independent legal advice regarding the execution of this Agreement, or has been advised of his or its respective right to obtain independent legal advice, and if he, she or it has not in fact obtained independent legal advice, such Sanomune Shareholder acknowledges herewith that he or it understands the contents of this Agreement and that he or it is executing the same voluntarily and without pressure from the other parties or anyone on their behalf.

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Sanomune and the Sanomune Shareholders shall not make any public announcement concerning this Agreement or the matters contemplated herein, their discussions or any other memoranda, letters or agreements between the parties relating to the matters contemplated herein without the prior consent of DiaMedica, which consent shall not be unreasonably withheld, and DiaMedica shall not make any public announcement concerning this Agreement or the matters contemplated herein, its discussions or any other memoranda, letters or agreements between the parties relating to the matters contemplated herein without the prior consent of Sanomune, which consent shall not be unreasonably withheld, provided that no party shall be prevented from making any disclosure which is required to be made by law or any rules of a stock exchange or similar organization to which it is bound. Prior to the making of any public announcement or the dissemination press release, DiaMedica or Sanomune, as the case may be, shall provide the other with a reasonable opportunity to review and provide comments regarding such announcement or press release.

This Agreement, and the Schedules hereto, sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby and supersedes any prior written or oral understandings with respect thereto, including, without limitation, the Letter Agreement. This Agreement may be executed by facsimile and in one or more counterparts thereof, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.

This Agreement is subject to regulatory approval, including, without limitation, that of the TSXV.

[Remainder of page blank]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

SCHEDULE 2.1
SANOMUNE SHAREHOLDERS

SCHEDULE 3.4
SANOMUNE INFORMATION

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- 3 -

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SCHEDULE 3.5
AUTHORIZATION

Special resolution of the Sanomune Shareholders, which shall include the consent of CentreStone LP.

SCHEDULE 3.14
MATERIAL CONTRACTS

Management Services Agreement dated August 1, 2007 between Sanomune Inc. and Genesys Venture Inc.

SCHEDULE 3.15
TITLE TO PROPERTY

None.

SCHEDULE 3.16
SANOMUNE TANGIBLE PROPERTY

None.

SCHEDULE 3.16
SANOMUNE INTANGIBLE PROPERTY

PATENTS

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AGREEMENTS

Exclusive licence agreement dated October 1, 2005 (“Licence Agreement”), between Sanomune and the University of Manitoba (“UofM”) for the technical information, know-how, processes, compositions, devices, methods, formulas, protocols, techniques, software, designs, drawings, or data created by the inventors at the UofM before the effective date of the Licence Agreement and relating to therapeutic uses of glandular kallikrein in humans which are not covered by patent rights, but which are necessary for practicing the patent rights and related patents.

SCHEDULE 4.5
RESIDENCE (SANOMUNE SHAREHOLDERS)

Each of the Sanomune Shareholders whose name appears in Section 4.5(c) of the Share Exchange Agreement hereby further agrees and covenants with DiaMedica as follows:

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SCHEDULE 5.26
INSURANCE (DIAMEDICA)

Great American Insurance Company Policy No. CDO5916363 effective May 23, 2007 to May 23, 2008.

Great American Insurance Company Policy No. CDO5916363 effective May 23, 2008 to May 23, 2009.

Great American Insurance Company Policy No. CDO5916363 effective May 23, 2009 to May 23, 2010.

SCHEDULE 7.2(I)
DEFEROXAMINE ASSETS

PATENTS

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AGREEMENTS

Exclusive licence agreement dated October 22, 2008 between the Sanomune and HealthPartners Research Foundation for the patents specified above, any converted provisional, continued prosecution application, substitution, divisional, continuation, reexamination application and Continuation-in-Part, any foreign patent application corresponding thereto, each patent (including inventor’s certificates) that issues or reissues from any of these patent applications, and for clarity, includes the full term of any such patent together with the benefit of any patent term restoration, supplemental protection certificate or other extension of the patent terms as may be available, and any improvements.