Helius Medical Technologies, Inc. - Exhibit 10.4 - Filed by newsfilecorp.com






 

NHC/Clinvue 

PoNS Portable Neurostimulator device 

Commercial Development-to-Supply
Program

 

 

Attention 
Philippe Deschamps, President 
NHC Corporation

208 Palmer Alley,
Newtown PA 18940 

 

 

Date 

October 25, 2013 

Prepared by 
Rick Beaulieu 

Proposal ID: NHC102513, revision B 
Table of Contents 

Ximedica 
55 DuPont Drive 
Providence, RI 02907 
Tel
401.330.3163 
Fax 401.626.3356 
www.ximedica.com 






	NHC/Clinvue 
	PoNS Portable
      Neurostimulation Device Commercial Development Program




	Development Program 	  
	           
       Overview
      	3
      
	             Program
      Objective 	4
      
	           
       Summary
      of Ximedica’s Experience 	4
      
	             Key
      Points 	5
      
	           
       Program
      Communications 	6
      
	             Responsibilities
      	6
      
	           
       Key
      Assumptions 	7
      
	             Project
      Process Summary 	8
      
	           
       Phase
      1B Description 	10
      
	             Phase
      2 Description 	13
      
	           
       Phase
      3 Description 	15
      
	             Project
      Schedule Summary 	18
      
	           
       Project
      Cost Structure 	18
      
	             Authorization
      of Work 	20
      
	           
       Standard
      Business Terms 	21
      



	Confidential 	Page 2
      of 22 






Overview

NHC is in the process of developing a system which is referred
to as the PoNS device. The device has been designed to deliver low-level
electrical current to stimulate the lingual projections of, at least, two
cranial nerves in the tongue through the gold-plated electrodes. The device has
already been through Phase 1 clinical trials and has shown performance efficacy.
This device would be intended for use in the home of a patient. 

CLINVUE provided a description of the product development
efforts to date (ref NHC RFPv1.PDF, rec’d 07/01/13) and has visited Ximedica’s
Providence, Rhode Island facility. NHC/CLINVUE is intending to use a qualified
partner to execute the remaining development cycle activities including design,
development, verification testing and assembly. In addition, NHC/CLINVUE is
intending to rely on Ximedica to maintain design control, assemble the Design
History File (DHF) and plan and conduct other development activities such as
packaging, labeling and other needed development-to-supply activities.
Ultimately, NHC/CLINVUE is considering Ximedica to design, develop and produce a
PoNS product solution suitable for commercial use, according to the requirements
by NHC, and in conformance with established FDA Quality System Regulations and
design control requirements in order to obtain FDA clearance to market the
product. NHC has requested a proposal for executing a fully integrated
development process for this device. 

Ximedica is well suited for this development-to-supply program.
Ximedica has a solid history of designing and developing medical and home
healthcare products such as the type requested by NHC. This work experience
spans: collection of user needs, concept and feasibility work, risk assessment,
detailed design and engineering, specification development, test protocol
development, process validation, maintenance of design control documentation,
and compilation of Design History Files and Device Master Records (DMR). These
programs often include the sourcing of components and subassemblies using our
Approved Vendor List (AVL) and the assembling and delivery of both clinical
units and production units. Ximedica has successfully developed and manufactured
a number of Class II medical devices for clients. In some cases, the
manufacturing was done by Ximedica, in other cases; the client wanted to use
either a known contract manufacturer or wanted to transfer the client’s
manufacturing line. Regardless of this choice, Ximedica has a Quality Management
System that allows for this flexibility, while ensuring efficient program
execution. Unlike the big-box contract manufacturing firms, Ximedica’s
manufacturing flexibility can provide single batch, human-use clinical builds
ranging from a few hundred units to fifty thousand units and has also shipped
between 100-10,000 units on an ongoing monthly basis for our clients. This
flexibility allows our clients to get product manufactured in a controlled,
documented way with disrupting their existing assembly lines with one-time
builds or, if a start-up, creating an approved manufacturing facility from
scratch.

Ximedica has offices in Minneapolis and Hong Kong. The Hong
Kong office supports overseas supply chain activities, when appropriate. 




Objective 

To design, develop and produce a PoNS product solution suitable
for clinical trial and commercial sale according to the requirements by NHC, in
conformance with established FDA Quality System Regulations and design control
requirements, and to help NHC obtain FDA clearance to market the product. 

Summary of Ximedica’s Experience 

Ximedica’s team includes deep experience in research, human
factors & industrial design, over 50 engineers, design assurance, regulatory
professionals, and a manufacturing and supply group focused on NPI (new product
introduction). Our project managers are trained and experienced in medical
device development and work collaboratively and transparently with our clients.
All Ximedica employees have been formally trained in the various activities
associated with their roles and fields of expertise for development and
manufacture of medical products. 

Every project has a core team that is consistent throughout the
entire program to ensure efficient information transfer between disciplines.
That core team is augmented with other product development professionals in the
Ximedica resource pool as needed. Ximedica’s integrated approach to design and
development has been proven to result in successful product outcomes, meet
regulatory compliance rigor and achieve schedule objectives. This vertical
integration of the entire product development process, including manufacturing,
brings efficiencies in resourcing and scheduling. From a client’s
perspective, this also brings unambiguous accountability for the
successful completion of the program. 

For this assignment, Ximedica shall draw together a project
team of professionals with experience throughout the medical device and
scientific products industry including Covidien/Tyco, Boston Scientific
Corporation, Johnson & Johnson, Inc., Smith & Nephew, and Becton
Dickinson to name a few. Ximedica believes strongly that this ability to bring
diversity to the program will generate a superior product for NHC. 




 

A particularly relevant development and manufacturing effort is
the J&J VerVTM neurostimulation device (see photo above). This device was a
single-use patch intended to be worn for a week or so. The Verv patch also used
a pulsed carrier waveform to deliver neurostimulation therapy, but used hydrogel
pads instead of an electrode array as the conductive element. The battery-driven
electrical signal produced by the VerVTM patch is within the safety levels described within
the IEC 60601-2-10 standard for Medical Electrical Equipment Part 2: Particular
Requirements for the Safety of Nerve and Muscle Stimulators. The VerVTM
controller was not hard-wired to the patch but communicated via wireless signal.
In a similar fashion to the NHC request, Ximedica codified the design and
created the DHF and DMR and developed the manufacturing line to create clinical
and production units that were sold in Europe. Ximedica serves as the
distribution center for J&J Operations for shipment to the EU.

We are a full service, ISO-13485, 2003 certified as both
medical device developer and a manufacturer. As a contract manufacturer we are
FDA registered and have significant experience in programs which require
creative solutions that balance technical needs with usable, cost-effective
designs. Due to the number of top medical clients Ximedica works with, and given
we create hold and maintain their DHF’s, our Quality Management System is
successfully audited nearly every month, passing muster with the most stringent
auditors.

Key Points 

	• 	
      Single point of contact for program accountability; no
      gaps between disciplines 

	 	 
	• 	
      Track record in the successful development/manufacture of
      medical devices (minimum Class II), either as a turn-key operation or in
      direct partnership with existing suppliers 

	 	 
	• 	
      Proven design capabilities including electronics,
      firmware, mechanical, bio-design, manufacturing processes and process
      development, Industrial Design, testing 

	 	 
	• 	
      Our in house Regulatory experts have a working
      relationship with FDA counterparts and can serve as a resource to
      determine a regulatory path or can ensure the coordinated execution of a
      predetermined regulatory plan. 

	 	 
	• 	
      Ability to create and maintain a formal Design History
      File for delivery to NHC upon completion 

	 	 
	• 	
      Ability to create and maintain a formal Device Master
      Record 

	 	 
	• 	
      Ability to scale production capacity in-house to all but
      the highest volume manufacturing (millions/year) 

	 	 
	• 	
      ISO Certifications: e.g. fully maintained ISO 13485
      approved design process etc. 

	 	 
	• 	
      Fully implemented FDA GMP Quality System for manufacture
      including IQ/OQ/PQ etc. 

	 	 
	• 	
      Ximedica has a Class 8 clean room and relationships with
      sterilization facilities should our clients need sterile product


	 	 
	• 	
      Ximedica maintains a rigorous inventory control procedure
      and can serve as a warehousing and distribution center for finished goods
      

	 	 
	• 	
      If and when the time is right, Ximedica can make the
      transfer to the next manufacturing site smooth. This can include
      generation of needed process validation documentation.







Program Communications 

In addition to the formal review meetings required by Design
Control SOP’s, Ximedica recommends regular and systematic contact with key NHC
and Clinvue staff throughout the program. Below is a list of communications
tools and methods which Ximedica intends to use in order to keep NHC up to date.
This is by no means an exhaustive list and can be modified to suit NHC
preferences and policies. 

	• 	
      Weekly status dashboard memo (includes meeting minutes,
      summary of work completed, issues being chased, decisions made, budget
      status, etc.) 

	 	 
	• 	
      Weekly conference call (street-level task reviews with
      core team; review progress to date, review any new test data or reports
      generated, redirect efforts on an as-needed basis, etc.; WebEx may also be
      utilized during these meetings.) 

	 	 
	• 	
      Regular face-to-face meetings (our experience has proven
      time and time again that getting together in person has significant and
      valuable benefits) 



Responsibilities 

In order to properly frame the project and establish a budget,
listed below are some basic assumptions regarding responsibilities. These
assumptions are meant to establish a baseline understanding between Ximedica and
NHC. As described in the meeting and in a follow up email, Ximedica’s Program
Requirements and Responsibilities form (F-1029) will be completed at the
beginning of the project and will fully document responsibility for activities
and DHF artifacts between NHC and Ximedica. This form also includes references
to which company’s SOP’s or forms will be used and who has signing authority,
etc. 

	NOTE: 	
      Ximedica is willing to take on any of the
      responsibilities assigned to NHC but would require an adjustment to
      this proposal and associated budget and schedule.




NHC 

	1. 	
      NHC shall be responsible for acquiring legal opinions to
      confirm that the product design does not infringe on any
patents.

	 	 
	2. 	
      NHC shall be responsible for collection of Voice of
      Customer (VOC) inputs and generation of a Market Input
    Specification.

	 	 
	3. 	
      NHC shall be responsible for IRB preparation and
      management, as required.

	 	 
	4. 	
      NHC shall be responsible for arranging any clinical
      trials and conducting clinical Design Validation activities, as
      required.

	 	 
	5. 	
      NHC shall be responsible for specifying the function of
      the array and electronic signal needed to affect treatment.

	 	 
	6. 	
      NHC shall be responsible for the clinical effectiveness
      of the system as a whole.

	 	 
	7. 	
      NHC shall be responsible for the Regulatory plan of the
      system, as a whole.

	 	 
	8. 	
      NHC shall be responsible for the review and submission of
      FDA documents.

	 	 
	9. 	
      NHC shall be responsible for the external form factor and
      global architecture of the PoNS assembly as defined in the design
      requirements documentation.







Ximedica 

	10. 	
      Ximedica shall be responsible for planning and preparing
      all filings for the FDA.

	 	 
	11. 	
      Ximedica shall be responsible for selecting the materials
      of the PoNS device assembly and confirming their biocompatibility as
      needed.

	 	 
	12. 	
      Ximedica shall be responsible for generating and
      maintaining all design control-related documentation for the development
      and design verification of the PoNS device using Ximedica’s design control
      processes and formats unless otherwise agreed to with NHC.

	 	 
	13. 	
      Ximedica shall be responsible for unit packaging design
      and specification generation.

	 	 
	14. 	
      Ximedica shall be responsible for designing and
      specifying all labeling including the instructions for use for the
      device.

	 	 
	15. 	
      Ximedica shall be responsible for Usability testing,
      including required documentation, recruitment and compensation of all
      Usability Test subjects, Facility rentals and fee, compilation of test
      reports, etc.



Key Assumptions 

The work scope, schedule and budget for this development
program are based upon the following assumptions. 

	1. 	
      The core circuitry and output wave form characteristics
      for the PoNS device are known and understood. Ximedica assumes that it is
      refining and re-packaging the existing internal components and assemblies
      in order to make the product more readily and consistently manufactured
      and to assure compliance with identified product requirements.

	 	 
	2. 	
      It is assumed that the refined design solution will
      contain data/treatment recording and reporting capabilities.

	 	 
	3. 	
      The PoNS system solution will consist of the following
      discrete “elements”:




	 	a. 	
      Rechargeable PoNS controller unit that generates the
      waveform and is the interface for the user (durable)

	 	 	 
	 	b. 	
      PoNS headset that supports the electrode array in the
      user’s mouth and is connected to the controller unit by a cable
      (durable)

	 	 	 
	 	c. 	
      PoNS mouthpiece device (30 day reusable)

	 	 	 
	 	d. 	
      PoNS Wall chargers for intended markets (durable
    OTS)

	 	 	 
	 	e. 	
      PoNS system packaging/shipping container and
  labels

	 	 	 
	 	f. 	
      PoNS replacement mouthpiece packaging/shipping container
      and labels

	 	 	 
	 	g. 	
      PoNS IFU in 4 languages

	 	 	 
	 	h. 	
      PoNS belt clip, lanyard, arm band, and kick stand
      accessories for the controller unit

	 	 	 
	 	i. 	
      PC-based PoNS Data Manager
Application








Project Process Summary 

Below are the development phases and their general definitions
which Ximedica follows as its primary stage gates. To ensure alignment with
NHC/CLINVUE, Ximedica takes a rigorous approach to declare the responsible
parties for each of the Design History File artifacts required by the FDA. Once
these responsibilities are defined, follow on activities required to finish the
phase (and program) can be assessed and planned. Within the graphic, key
activities and deliverables are shown for reference. Detailed descriptions of
the process and deliverables specific for this work scope will be part of a
detailed proposal.

 


Phase 0 – Research, Product Strategy and Concept Generation
(COMPLETE) 
Conduct voice of the customer
(VOC) research as well as other user and market research. Identify User needs.
Explore options for technical and human factors solutions to meet the stated
objectives of the client, and may also include assessment of the product’s
market potential and the likely acceptance of the device by end users. 

Phase 1 – Concept Development / Requirements Development
(Partially Complete) 
Ongoing user and product
needs development. Conduct predicate device benchmarking. Develop product design
requirements documentation. Concept development including developing product’s
risk analysis, human factors, industrial design, materials evaluation, initial
engineering design, functional proof of principle prototypes and initial product
cost estimation. Perform regulatory due diligence and formulate preliminary
regulatory strategy assessment and plan. 




Phase 2 – Design Development
Convert selected product
design into a fully specified design suitable for ensuring consistent
manufacturing and quality control processes. Construct prototypes to confirm
proper function per established protocols and test criteria. Generate complete
design documentation package and requisite design control evidence. Update
regulatory strategy based upon design choices, intended use(s) profile and risk
assessment.

Phase 3 – Design Verification
Conduct prototype
builds and design verification testing suitable for regulatory submission. Work
shall include reliability testing, shelf life stability testing,
biocompatibility testing, if required, etc. Finalize regulatory strategy and
plan and begin preparing the FDA and/or EU submission package. 

Phase 4 – Process Validation, Design Validation and
Manufacturing Transfer 
Coordinate all activities required to get product
ready for production. Work shall include generation of all manufacturing and
quality procedures and processes, proper structuring of BOMs and Routers,
IQ/OQ/PQ efforts and design validation. Complete and submit FDA/EU submission
package and manage all communications regarding review. 




Phase 1: Concept Development & Technical
Inputs 

Ximedica’s Phase 1 is devoted to defining objectives,
identifying viable design solutions, conducting feasibility bench-testing and
verifying that user requirements can be met. Extended efforts are typically
invested in generating ideal user experience profiles, conducting human factors
and user interface assessments, evaluating and down-selecting technological
options, generating a preliminary understanding of cost drivers and, ultimately,
attempting to quantify all these different influencers via objective
metrics.

In addition, Phase 1 includes planning a preliminary regulatory
submission strategy designed to obtain marketing clearance from FDA and
establishing a detailed development plan which includes hazards analysis, VOC
collection and intellectual property constraints and opportunities. For this
project, NHC has indicated that it has completed or will be responsible for some
of these areas of development and planning. (Refer to Responsibilities Section)


Phase 1A – Concept Generation (complete)


Based on the work done to date with Clinvue, activities
normally required as part of Phase 1A activities have been completed. This work
effort resulted in NHC selecting a preferred industrial design, determining many
of the technical requirements for the system and demonstrated function of the
circuit design and software algorithms. 

Phase 1B – Concept Refinement and Design History
File (DHF) documentation 

Phase 1B will be focused on completing the documentation
required satisfy the transition into Phase 2 Development. This effort will
include establishing the formal design requirements within Ximedica’s design
control process, producing a use-case that will allow a Preliminary Hazards
Analysis and Use Failure Modes and Effects Analysis (UFMEA). Any identified
risks will then be mitigated by additional product requirements. Review of the
Regulatory Strategy and freedom to operate/intellectual property will also
occur. At the end of Phase 1B, requirements are finalized and the program will
be ready to enter Phase 2 for expedient execution. 

Phase 1B Process 

	1. 	
      Conduct a kickoff meeting with the NHC team. Confirm
      objectives, design requirements, schedule objectives, etc. NHC to deliver
      a representative PoNS device and its control circuitry to Ximedica offices
      for detailed review. Meeting is anticipated to be held at the Ximedica
      office or via WebEx.

	 	 
	2. 	
      Review the preliminary System Design Specification (SDS)
      document and any other DHF documentation produced to date.

	 	 
	3. 	
      Review the current state of design information provided
      by NHC: product architecture and concept design, component layout,
      internal frame construction, human interface locations and overall system.
      Particular attention will be paid to the interfaces and connections
      between the controller, head piece and the disposable.

	 	 
	4. 	
      Conduct an interim review with NHC. Present refined
      concepts, layouts and evaluations accomplished to date. This meeting could
      be held via WebEx.








	5. 	
      Identify and list areas of the design which should be
      prototyped and tested as assemblies or subassemblies before integration
      into the complete product configuration. This would include product
      features, functions and/or structural areas which may not be fully
      understood or known to meet requirements. It is anticipated that we will
      need to prototype the following system
details:




	 	a. 	
      Confirm new reduced size architecture and components
      still provide anticipated function

	 	 	 
	 	b. 	
      Confirm refined circuit design works as
  intended




	6. 	
      Design feasibility models for the relevant assemblies or
      subassemblies in order to evaluate the primary mechanics, user interfaces
      and device characteristics. These prototypes would be in rough form and
      only intended to prove critical functions.

	 	 
		
      The prototypes would include the following
    elements:




	 	a. 	
      Representative materials

	 	 	 
	 	b. 	
      Representative mechanisms

	 	 	 
	 	c. 	
      Representative user interfaces for primary
    functions



The prototypes would not include
the following elements: 

	 	d. 	
      Production-grade materials

	 	 	 
	 	e. 	
      Show-quality form and
finishing




	7. 	
      Conduct an interim review with NHC. Present feasibility
      designs and receive permission to build feasibility prototypes. This
      meeting could be held via WebEx.

	 	 
	8. 	
      Upon approval from NHC, construct feasibility models for
      each area identified. This shall include ordering components, inspecting
      all critical features or dimensions, and fitting and assembling
    parts.

	 	 
	9. 	
      Update and refine the models based on initial test
      results and issues discovered as a result of initial testing.

	 	 
	10. 	
      Review any new information and the preferred production
      configuration with NHC. NHC to confirm design approach and provide input
      for any design modifications or enhancements.

	 	 
	11. 	
      Prepare and conduct several simulated use review
      sessions. These sessions are anticipated to focus on reviewing
      non-functional concept models with patients who would typically use the
      device. These sessions should also be structured as part of Formative
      Usability documentation. Work should include:




	 	a. 	
      Protocol generation (study plan, interview scripts,
      interview location prep, etc)

	 	 	 
	 	b. 	
      Institutional Review Board (IRB) preparation and
      approval, if required

	 	 	 
	 	c. 	
      Recruitment of participants (likely 8 - 10
      participants)

	 	 	 
	 	d. 	
      Conducting interviews, recording interviews

	 	 	 
	 	e. 	
      Compilation of interview findings and
  observations

	 	 	 
	 	f. 	
      Report and conclusions regarding concepts acceptance and
      opportunities for improvement

	 	 	 
	 	g. 	
      Ximedica would expect to witness this
  session




	12. 	
      Generate a list of improvements which will be required in
      the Phase 2 design. Confirm that there are no high-risk concerns within
      this list.

	 	 
	13. 	
      Update and illustrate the anticipated production
      configuration and industrial design based on the results of feasibility
      testing and the list of improvements.

	 	 
	14. 	
      In parallel with the above activities and in compliance
      with design control and project planning methods, generate the
      following:








	 	a. 	
      Refined System Design Specification

	 	 	 
	 	b. 	
      Preliminary Quality Plan

	 	 	 
	 	c. 	
      Initial Risk Assessment

	 	 	 
	 	d. 	
      [NHC Responsibility] Regulatory submission
      strategy and requirements

	 	 	 
	 	e. 	
      Master Project Schedule




	15. 	
      Conduct a Phase 1 design review w/ NHC including
      signatures and detailed meeting minutes and action item list. This meeting
      is anticipated to be held at the Ximedica offices or via WebEx.

	 	 
	16. 	
      Based on NHC’s feedback and direction, Ximedica shall
      update the follow-on phase processes, schedules, budget and deliverables
      in order to continue the development cycle.

	 	 
	17. 	
      After meeting details have been properly recorded and
      organized, populate Ximedica’s Design History File
(DHF).



Phase 1B Deliverables:

	• 	Initial functional evaluations
  
	• 	Initial component
      searching/sourcing 
	• 	Listing of areas to be
      functionally prototyped and tested 
	• 	Feasibility model designs 
	• 	Feasibility models; one per each
      area identified 
	• 	Simulated use protocols,
      recruiting records and interview reports 
	• 	List of improvements required
  
	• 	Updated product configuration
  
	• 	Updated Industrial Design 
	• 	System design specification

	• 	Hazards analysis and Use FMEA
  
	• 	Updated Ximedica proposal, budget
      and schedule for next work scope 






Phase 2: Product Development 

The goal of Phase 2 is to update the product design based on
the feasibility solutions identified and tested during Phase 1. This phase will
concentrate on completing engineering activities and fully specifying the
production design solution. At the conclusion of this phase, the overall product
design will have been proven to meet requirements and shall be ready to go into
formal design verification testing. The primary result of this phase is a
production-representative prototype and specification package. 

Process:

	1. 	
      Conduct phase kickoff meeting.

	 	 
	2. 	
      Continue to refine and develop the design based on NHC’s
      feedback from the Phase 1 review.

	 	 
	3. 	
      Detail mechanical components in 3D CAD in sufficient
      detail to make production-representative prototypes.

	 	 
	4. 	
      Detail PCB specifications and other electromechanical
      components and assemblies.

	 	 
	5. 	
      Refine embedded software functions per established
      requirements.

	 	 
	6. 	
      Conduct tolerance analysis of all critical to fit and
      critical to function areas within the assembly. Generate a report and
      update any design details as required.

	 	 
	7. 	
      Conduct Design FMEA. Update Use FMEA as
  required.

	 	 
	8. 	
      Review design details with NHC and receive approval to
      construct prototypes.

	 	 
	9. 	
      Establish Ximedica interface with prototype component
      suppliers.

	 	 
	10. 	
      Construct an engineering prototype build and conduct
      testing.




	 	a. 	
      Procure and/or fabricate prototype parts for the complete
      assembly of the system (plastic parts, machined parts, etc.)

	 	 	 
	 	b. 	
      Assemble four (4) functioning “first pass” main unit
      assemblies and 10 disposable assemblies

	 	 	 
	 	c. 	
      Generate test protocols for evaluating the prototype
      assemblies.

	 	 	 
	 	d. 	
      Test prototypes for proper function versus design
      specifications.




	11. 	
      Conduct review with NHC to evaluate prototypes. Generate
      a list of improvements that are required. Review meeting shall be
      conducted via WebEx.

	 	 
	12. 	
      Refine engineering details.

	 	 
	13. 	
      Adjust prototype design and repeat testing as
      required.

	 	 
	14. 	
      Conduct review with NHC to evaluate prototypes. Generate
      a list of improvements that are required. Review meeting shall be
      conducted via WebEx.

	 	 
	15. 	
      Design and prototype preliminary packaging, labeling and
      Instructions for Use (IFU’s).

	 	 
	16. 	
      In parallel with above activities, prepare and conduct
      several review sessions with representative users. These sessions would
      focus on reviewing the prototypes and/or updated user interfaces from the
      above steps with typical users of the device. These sessions would also be
      structured as part of Exploratory (Formative) Usability documentation.
      Work should include:




	 	a. 	
      Protocol generation (study plan, interview scripts,
      interview location prep, etc)

	 	 	 
	 	b. 	
      Recruitment of participants (number of participants and
      site locations TBD)

	 	 	 
	 	c. 	
      Conducting and recording
interviews








	 	d. 	
      Conducting simulated use evaluations of the concept
      models

	 	 	 
	 	e. 	
      Compilation of interview findings and
  observations

	 	 	 
	 	f. 	
      Report and conclusions regarding concepts acceptance and
      opportunities for improvement




	17. 	
      Finalize engineering and 3D CAD design for all components
      and assemblies. Confirm that there are no high-risk concerns within this
      list. Generate updated engineering calculations or FEA reports as required
      to support decisions.

	 	 
	18. 	
      Finalize PCB designs, electromechanical component specs
      and software functions.

	 	 
	19. 	
      Generate and release 2D drawings for all components and
      assemblies. Drawings to include identification of all major and critical
      dimensions, material and surface finish callouts and any key inspection
      criteria, etc.

	 	 
	20. 	
      Complete product packaging specifications.

	 	 
	21. 	
      Generate draft of Instructions for Use.

	 	 
	22. 	
      Update key documents and
plans:




	 	a. 	
      Bill of Materials (BOM)

	 	 	 
	 	b. 	
      Cost estimates (COGs)

	 	 	 
	 	c. 	
      System Design Specification (SDS)

	 	 	 
	 	d. 	
      Test Protocols

	 	 	 
	 	e. 	
      Draft Design Verification
Plan




	23. 	
      Based on NHC’s feedback and direction, Ximedica shall
      update the follow-on phase processes, schedules, budget and deliverables
      in order to continue the development cycle.

	 	 
	24. 	
      Request and receive quotes for short-run quantity
      components.

	 	 
	25. 	
      Conduct a Phase 2 design review w/ NHC including
      signatures and detailed meeting minutes and action item
  list.



Phase 2 Deliverables:

	• 	Presentation of developments
  
	• 	3D CAD files 
	• 	PCB design files 
	• 	Tolerance Analysis 
	• 	“First Pass” Engineering
      prototypes, two main unit assemblies and 10 disposable assemblies 
	• 	Prototype test reports and data
    
	• 	Formative Usability Testing
      protocol, interviews and reports 
	• 	Preliminary packaging and
      labeling design 
	• 	Design FMEA 
	• 	Updated Use FMEA 
	• 	Formative Usability testing
      reports 
	• 	Finalized CAD files and drawings
    
	• 	2D drawing package 
	• 	PCB spec package 
	• 	Electromechanical component specs
    







	• 	Embedded software programming specs 
	• 	Product packaging specification package 
	• 	Draft Instructions for Use 
	• 	Updated BOM 
	• 	Updated COGS estimates 
	• 	System Design Specification (SDS) 
	• 	Test protocols 
	• 	Draft Design Verification Plan 
	• 	Updated test protocols 
	• 	Updated Ximedica proposal, budget and schedule
      for next work scope 
	• 	Phase 2 design review report



Phase 3/Phase 4: Design Verification and
Manufacturing Preparation 

The goal of this phase is to construct production-quality
assemblies, including their packaging and labeling, and formally verify that the
design generated during Phase 2 is fully capable of meeting the established
design requirements.

	
      NOTE: 
	
      It is assumed that this phase overlaps with Phase 2 by
      one month. Prudent tooling and manufacturing fixtures must be
      designed and released early, with some risk, to achieve the build,
      Design Verification and lot release of the 200 systems for the planned
      September 2014 clinical trial. 



Process:

	1. 	
      Commission all molds and tooling (if any required) for
      component procurement and assembly. It is assumed that this phase will use
      rapid-prototyping methods and/or sources, such as Class 103 molds, for all
      components with lead times no longer than six weeks. It may be possible to
      use these short- run tools for Design Validation test units and possibly
      for initial distribution units.

	 	 
	2. 	
      Establish formal control of supply chain. Conduct vendor
      quality audits as required. Enter all suppliers into Approved Vendor
      Listing database. Enter all components and vendors into ERP
  system.

	 	 
	3. 	
      Generate manufacturing procedures and in-process
      inspection procedures. Establish final functional verification tests for
      sub-assemblies. Conduct a preliminary Process FMEA.

	 	 
	4. 	
      Update the master design verification plan for evaluation
      of all functions and features. This plan shall describe all the tests to
      be conducted as part of the formal Design Verification effort. Update and
      generate any supporting verification protocols. Tests shall include all
      performance testing including:




	 	a. 	
      Measurement System Analyses (where appropriate)

	 	 	 
	 	b. 	
      Functional Performance per design requirements (accuracy,
      repeatability, sensitivity, etc)

	 	 	 
	 	c. 	
      Submission to environmental conditions

	 	 	 
	 	d. 	
      Lifecycle tests

	 	 	 
	 	e. 	
      Packaging validation








	 	f. 	
      Ship testing

	 	 	 
	 	g. 	
      Shelf life testing

	 	 	 
	 	h. 	
      Biocompatibility testing

	 	 	 
	 	i. 	
      EMC / Electrical safety testing

	 	 	 
	 	j. 	
      Software validation testing

	 	 	 
	 	k. 	
      Other evaluations depending on design requirements and
      relevant standards.




	5. 	
      Order enough components to construct 500 main units and
      1,000 disposable assemblies. (This quantity may change once the Master
      Verification test plan is drafted.) The goal is to produce the DV and
      clinical assemblies in one batch. Once Design Verification is achieved,
      the batch will be suitable for the clinical testing. This will be
      documented using Ximedica’s Human Use Build protocol.

	 	 
	6. 	
      Receive and inspect all components.

	 	 
	7. 	
      Build and inspect units in order to conduct design
      verification testing. These units would have traceable
      production-equivalent components and functions. All work will be
      maintained under proper quality and document controls.

	 	 
	8. 	
      Conduct design verification testing and confirm function
      per the published test protocols.

	 	 
	9. 	
      Similar to the usability review activities of Phase 2,
      prepare and conduct several product test sessions with representative
      users. These sessions would focus on testing the physical prototypes and
      the draft labeling and IFU’s with clinical users. These sessions would
      also be structured as part of Full Product Validation Study
      documentation.

	 	 
	10. 	
      Compile results and generate test reports.

	 	 
	11. 	
      Prepare reports and documentation requested by the
      Regulatory Affairs team at NHC to support their FDA/EU submission
      package.

	 	 
	12. 	
      Update any specifications or processes that were found
      inadequate during testing. All edits shall be made via formal document
      control processes. Repeat testing if required.

	 	 
	13. 	
      Complete Instructions for Use and their
      specifications.

	 	 
	14. 	
      Finalize Bill of Materials and Cost of Goods estimate, if
      necessary.

	 	 
	15. 	
      Based on NHC’s feedback and direction, Ximedica shall
      update the follow-on phase processes, schedules, budget and deliverables
      in order to continue the development cycle. Where there is divergence from
      the original plan and budget, this update should provide
    explanation.

	 	 
	16. 	
      Conduct a Phase 3 design review w/ NHC including
      signatures and detailed meeting minutes and action item
  list.







Phase 3 Deliverables:

	
      • 
	
      Manufacturing Procedures

	
      • 
	
      Inspection documentation

	
      • 
	
      Process FMEA

	
      • 
	
      Tooling and fixtures.

	
      • 
	
      Final Instructions for Use

	
      • 
	
      Summative Usability Testing protocol, interviews and
      reports

	
      • 
	
      500 fully traceable main units

	
      • 
	
      1,000 fully traceable disposable assemblies

	
      • 
	
      Design Verification test protocols and results

		
      o
	
      Design requirements confirmation testing

		
      o
	
      Mechanical and tolerance limit testing

		
      o
	
      Environmental exposure testing

		
      o
	
      Shelf life testing

		
      o
	
      Biocompatibility testing

	
      • 
	
      Reports and information supporting NHC’s FDA submission
      package

	
      • 
	
      Finalized Bill of Materials

	
      • 
	
      Updated Cost of Goods

	
      • 
	
      Phase 3 design review report

	
      • 
	
      200 main units and 400 disposable units suitable for
      NHC’s clinical trial







Project Schedule Summary 

Below is a top-level milestones schedule. Ximedica plans to
resource this program appropriately to complete all aspects (“full” version of
the PoNS controller) by Phase 3, design verification. We expect that with robust
staffing, and our specific prior experience designing headsets and mouth
pieces/guards, we can develop a reasonable solution for NHC in the limited time
requested. Should delays occur which necessitate the delivery of a “lite”
version of the PoNS controller, additional software development and finalization
time is expected to be needed. It is estimated that this additional activity
will require an additional two months for software finalization and another 2
months to perform limited design verification activates to address added or
changed functions. This schedule is intended as a reference point in order to
establish context. A formalized and complete Gantt chart will be generated with
NHC during project initiation.


	Phase 	Approx Duration 
	Phase 1B: Concept Refinement & documentation 	~ 2 months 
	Phase 2: Product Development 	~ 4 months 
	Phase 3/4: Design Verification and Batch Qualification* 	~ 5 months 
	 Requalification efforts if software is not completed
      by DV 	~ 4 months 
	Total Duration (Phases 1 – 3) 	~ 10 months
  



* Overlaps Phase 2 by 1 month 

Project Cost Structure

As mentioned above, Ximedica plans to resource this program
appropriately to finish the development (“full” version of the PoNS controller)
by Phase 3, design verification. Based on our conversations, schedule is of the
utmost importance and the only way to achieve the September delivery is to staff
the program robustly. Despite our experience with similar devices, headsets,
mouth guards and the like, work must be completed quickly and efficiently and
without major delays or issues. Should delays occur which necessitate the
delivery of a “lite” version of the PoNS controller, additional software
development and finalization time is expected to be needed. The additional
months and budget to complete the “full” version should be thought of as a
contingency to the planned budget and schedule. Ximedica bills as incurred and
value delivered is reported weekly and budget used to date is reported monthly.
The budget shown below should be considered a “robust” estimate and will be
revised as the unknown details unfold and future risks are mitigated.

The budget estimates below represents a pragmatic estimate for
the phases described based on Ximedica’s current knowledge of the project’s
objectives and deliverables and related past experiences. Alternative budget
scenarios are shown to provide a holistic consideration of possible outcomes. On
the low end of the range is the “Goal” budget. This is a function of things
generally going smoothly, efficient client interactions and last minute changes
and requirements are inconsequential. On the other extreme, the “Conservative”
budget describes what could happen if the opposite occurs. The former sets
functional goals for the entire team (internal and external), while the latter
provides a more buffered outlook for business and stakeholder reporting. Typically, neither extreme
is likely, with the real outcome somewhere in between. Hence, the Pragmatic
scenario.




Pragmatic Budget by Phase


	** All values in thousands 
	Phase 1B 
	Phase 2 
	Phase 3/ 4 
	2nd
      Software 
DV Cycle 
	Design & Development 
Service
      Charges: 	$492.0 
	$996.0 
	$960.0 
	$499.0 

	Prototype / Production
      
Charges: 	$5.0 
	$15.0 
	$120.0 
	$60.0 

	Capital Expenditures 
(molds,
      fixtures, etc): 	$- 
	$- 
	$250.0 
	$- 

	External Labs & Testing
      
Services: 	$- 
	$50.0 
	$55.0 
	$25.0 

	Miscellaneous Expenses &
      
Travel 	$2.0 
	$4.0 
	$4.0 
	$2.0 

	Phase Total 	$499.0 	$1,065.0 	$1,389.0 	$586.0





	**All values in
      thousands 	 	 	Goal 	 	 	 	Pragmatic 	 	 	 	Conservative  	 
	Average Monthly
      FTE loading: 	 	 	6
	 	 	 	7
	 	 	 	7
	 
	Duration (mo.):
	 	 	10
    	 	 	 	10
    	 	 	 	14
    	 
	Design &
      Development Service Charges: 	 	$	 1,900.0 	 	 	$	 2,448.0 	 	 	$	 2,946.0 	 
	Prototype/Production Charges: 	 	$	 100.0 	 	 	$	 140.0 	 	 	$	 200.0 	 
	Capital
      Expenditures (molds, fixtures, etc): 	 	$	 220.0 	 	 	$	 250.0 	 	 	$	 250.0 	 
	External Labs
      & Testing  Services: 	 	$	 70.0 	 	 	$	 105.0 	 	 	$	 131.0 	 
	M iscellaneous
      Expenses & Travel: 	 	$	 5.0 	 	 	$	 10.0 	 	 	$	 12.0 	 
	Program
      Total: 	 	$	 2,295.0 	 	 	$	 2,953.0 	 	 	$	 3,539.0 	 






Scenario Based Budgets for Program 

Authorization of Work 

Due to the accelerated nature of this effort, it is recommended
that the entire planned amount be funded. To initiate work, please forward a
purchase order referencing the Proposal ID# and Revision level (found on
the cover page of this document) for a not-to-exceed value of the Phase 1-3
budget shown above. A project initiation deposit of $300,000 shall be invoiced
immediately and shall be due upon receipt. This deposit shall be credited to the
project at the end of the work scope. 

Invoices shall be posted on a monthly basis based on the work
accomplished. Billings in excess of the PO amount shall not be permitted without
prior written authorization from the client.

Refer the attached Standard Business Terms for additional
information and conditions. Ximedica cc: C. Sullivan 

	XIMEDICA, LLC 	NeuroHabilitiation Corporation 
	 	 
	By:   /s/ Rick
      Beaulieu                                  
       	By:   /s/ Philippe
      Deschamps                             
       
	 	 
	Name:   Rick
      Beaulieu                                     
      	Name:   Philippe
      Deschamps                                 
	 	 
	Title:   VP, Product
      Development                
       	Title: 
       CEO                                                                
	 	 
	Date: 
       3/7/2014                                                
       	Date:  
      3/7/2014                                                          






Standard Business Terms and Conditions 

Agreement. A purchase order referencing the Proposal ID # and
Revision level or a signed copy of the Proposal will signify acceptance of these
terms and form an agreement between your company and Ximedica. 

Project Cost Estimates. XIMEDICA’S estimate of project costs
and schedules is based on the scope and schedule of the project as mutually
agreed. Project costs and schedules outlined in a specific proposal are valid
for 30 days from the date of the proposal. If CLIENT’S approval process extends
beyond this period, XIMEDICA reserves the right to review the estimated costs
and schedule, and make revisions to them if necessary. 

Adjustments may also be necessary as a result of changes in
project scope and/or delays initiated by CLIENT. XIMEDICA assumes no
responsibility for the impact on cost and/or schedule resulting from these and
other circumstances beyond XIMEDICA’S control. If changes in this project are
made that result in an increase in XIMEDICA’S time and expenses, XIMEDICA will
notify CLIENT for CLIENT’S approval.

Any additional services, travel, expenses, meetings and/or
conferences requested by CLIENT which are not identified in the approved project
proposal will be considered an additional expense and will be billed
accordingly. 

Payment for Work. Upon proposal acceptance, a prepayment equal
to the estimated average amount to be billed on a monthly basis through the
course of the project must be forwarded to XIMEDICA. This deposit will be
applied to the final payment due for project services rendered. 

Invoices are issued monthly for work in progress and will
include amounts for billable time, plus out-of-pocket and other expenses
incurred during that period. All out-of-pocket and other project-related
expenses (except billable time) will be invoiced at cost plus 15% to cover
administration and handling. Invoices may not correspond to a particular phase
completion date. 

Amounts do not include applicable federal, state, or local
taxes. These will be applied where appropriate and will be CLIENT’S
responsibility. Payment terms are net 30 days from the date of the invoice. A
service fee of 1.5% per month will be added to all accounts more than 45 days
past due, and CLIENT is responsible for all collection and attorneys’ fees and
costs required to collect unpaid amounts. 

Project Cancellation CLIENT may cancel a project at any
time, provided that XIMEDICA receive written notice at least 30 days prior to
the intended date of cancellation. XIMEDICA will be entitled to payment for work
delivered, and billable work in progress, plus expenses, through the date of
cancellation. Notwithstanding termination of the project, the following
provisions will survive: Payment for Work, Ownership of Work, Confidentiality,
Claims, Disclaimer, and Limitation of Liability. 

Ownership of Work. The results of the project for which
XIMEDICA has been contracted will be delivered to and become CLIENT’S property
upon payment in full of CLIENT’S outstanding balance for services and expenses.
This project work includes all reports, designs, information, inventions, trade
secrets, hardware, software, and other work product (“Project Work”) developed
for the CLIENT, and all intellectual property rights embodied in or related to
the Project Work. Unless otherwise set forth in the quotation, XIMEDICA hereby
grants to CLIENT a worldwide, perpetual, royalty-free, non-exclusive license to
any intellectual property owned XIMEDICA contained in any project work or other
work product delivered to CLIENT in connection with the Project Work. 

Client Responsibilities CLIENT is fully responsible for the
accuracy, content, validation and testing of the Project Work, for ensuring that
the Project Work does not infringe on the intellectual property rights of any
third parties, and for securing patent protection if appropriate.

Confidentiality Both parties agree to hold in confidence any
confidential information disclosed by the other party, including but not limited
to, trade secrets, proprietary, technical, developmental, operating, financial,
performance, cost, know-how, process, client and prospect information, and all
samples, models, reports, tables, data and prototypes containing or disclosing
such information, that is (a) marked or accompanied by documents clearly and
conspicuously designating the information as “confidential” or the equivalent,
or (b) identified by the disclosing party in writing as confidential before,
during or promptly after the disclosure (“Confidential Information”).
Confidential Information shall only be used by the recipient for the purposes of
this proposal, and XIMEDICA will ensure that its subcontractors are directed
accordingly. Both parties warrant that they have the rights to any property or
confidential information disclosed to the other. Confidential Information does
not include information: (a) generally available to or known to the public, (b)
previously known to the recipient, (c) independently developed by the recipient
outside the scope of this Agreement, (d) lawfully disclosed by a third party, or
(e) disclosed pursuant to a court order.

Claims. CLIENT agrees to indemnify and hold harmless XIMEDICA
and its subcontractors for any damages, costs, or losses that are suffered as a
result of any claim arising directly or indirectly out of the services performed
or materials provided by
XIMEDICA to CLIENT in connection with this project, including but not limited to product liability and intellectual property claims by third parties, except in the case of knowing infringement or misappropriation of third party intellectual property
by XIMEDICA. This obligation is conditioned on XIMEDICA providing CLIENT with (i) prompt notice of a claim, (ii) reasonable cooperation in any defense of the claim, and (iii) the right to control the defense and settlement of the claim. 








Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, XIMEDICA MAKES NO WARRANTIES OR REPRESENTATIONS IN CONNECTION WITH THIS AGREEMENT AND DISCLAIMS ALL OTHER WARRANTIES, INCLUDING, WITHOUT LIMITATION, MERCHANTABILITY, QUALITY, FITNESS
FOR PARTICULAR PURPOSE OR USE, TITLE, AND NONINFRINGEMENT, AND ANY WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE. CLIENT ACKNOWLEDGES THAT SERVICES ARE PROVIDED ON AN “AS IS” BASIS.


Limitation of Liability. IN NO EVENT SHALL XIMEDICA BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE, OR SPECIAL DAMAGES RELATED TO THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER, REGARDLESS OF THE NATURE OF THE CLAIM, EVEN
IF XIMEDICA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE TOTAL LIABILITY OF XIMEDICA FOR DAMAGES UNDER THIS AGREEMENT WILL NOT EXCEED THE TOTAL AMOUNT OF FEES PAID HEREUNDER BY CLIENT TO XIMEDICA FOR THE SERVICES RENDERED THAT GIVES RISE
TO THE LIABILITY. 


These terms and conditions supersede any terms and conditions appearing on CLIENT’S purchase orders or associated documents. Work will not begin on any project until this document has been read and agreed by representatives of XIMEDICA and
CLIENT, and a commitment to commence the project has been made in the form of a purchase order referencing the proposal or a signed copy of the proposal. No modification to this project proposal will be binding on XIMEDICA unless in writing and
signed by a duly authorized representative of XIMEDICA and the CLIENT.