EWELLNESS HEALTHCARE CORPORATION AND EVOLUTION PHYSICAL THERAPY, INC.
COOPERATIVE OPERATING AGREEMENT

 

OPERATING AGREEMENT

 

THIS COOPERATIVE OPERATING AGREEMENT (hereinafter “COA”), is made and entered
into effective April 1, 2015, by and among: eWellness Healthcare Corporation
(hereinafter “EWC”), a Nevada corporation located at 11825 Major Street, Culver
City, California 90230 and Evolution Physical Therapy, Inc. (hereinafter “EPT”),
a California corporation located at 11825 Major Street, Culver City, California
90230 (collectively referred to in this agreement as the “Parties”). The purpose
of this operating agreement is to allow EPT to offer EWC’s telemedicine exercise
platform known as www.phzio.com to selected physical therapy patients of EPT.
This COA is not a software or intellectual property licensing agreement and does
not provide any rights or ownership of the www.phzio.com platform or EWC’s
business methods to EPT. The term of this agreement is 5 years with an automatic
renewal for an additional 5 years upon consent by both Parties. The extent of
this Operating Agreement becomes null and void and shall be renegotiated if
Darwin Fogt is no longer positioned as CEO of EWC during this term.

 

SECTION 1

OPERATING CAPITAL ADVANCES

 

1.1    Operating Capital Advances. EWC agrees to provide Operating Capital
Advances (hereinafter “OCA”) to EPT in order for EPT to operate EWC telemedicine
platform www.phzio.com and to offer it to selected physical therapy patients of
EPT’s. EWC shall advance the requested capital, via a written Capital Advance
Request (hereinafter “CAR”) from EPT to EWC. EWC will make its best efforts to
provide the requested capital within 5 business days of the receipt of any CAR
by EPT. No interest will be charged by EWC for any CAR advances. CAR requests
can be made to EWC by EPT for the specific following uses specifically
associated with operating the www.phzio.com platform and associated physical
therapy treatments: computer equipment, office and or facilities monthly rental
payments, physical therapist (hereinafter “PT”) and or physical therapy
assistant, (hereinafter “PTA”), administrative staff, patient induction
equipment, office supplies, utilities including: power, gas, telephone and
internet services, parking and other associated operating costs. It is assumed
that the operation of the www.phzio.com platform by EPT will generate positive
cash flow within 90 days from the start of patient program inductions.

 

SECTION 2

ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS

 

2.1    Profits/Losses. For financial accounting and tax purposes, the net
profits or net losses that are generated by EPT operating EWC’s www.phzio.com
platform shall be determined on an monthly basis and shall be allocated to the
Parties in proportion to the following formula: In consideration of EWC
provisioning the phzio.com platform and for making the above noted OCA, EWC
shall receive 75% of the Net Patient Insurance Reimbursements (hereinafter
“NPIR”) associated with EPT operating EWC’s www.phzio.com platform and EPT shall
receive 25% of the net patient insurance reimbursements. NPIR is calculated to
be gross reimbursements received by EPT though the use of EWC’s www.phzio.com
platform, less any costs associated with operations related to the www.phzio.com
platform by EPT. The initial NPIR payments to EWC will be for the partial or
repayments any CAR advances. Once the www.phzio.com platform becomes cash flow
positive, EPT will remit to EWC on the 1st of each month a net profit/loss
statement and all NPIR fees that are due to EWC by EPT. EWC may elect to allow
EPT to retain some operating funds in order to smooth out any cash flow needs by
EPT to operate the www.phzio.com platform.

 

 

 

 

SECTION 3

INITIAL OPERATING BUSINESS ASSUMPTIONS & CONFLICT OF INTEREST

 

3.1    Initial Business Operating Assumptions. The Parties have developed the
following Initial Business Operating Assumptions (hereinafter “IBOA”), which
created the basis for executing this COA. The IBOA assume that a majority of EPT
www.phzio.com patients (at least for the initial year of operations) will have
PPO insurance that will reimburse for in-office PT visits, and at least
initially will not reimburse (insurance plans will be billed for the
telemedicine visits regardless of weather they are reimbursed or not) for the
www.phzio.com telemedicine visits. Thus, www.phzio.com patients will complete 3
on-line www.phzio.com and one in-office PT visits each week during the 26-week
program. It is assumed that at a minimum, EPT initially anticipates that it can
induct 80 new patients per month per www.phzio.com Program Induction Office
(hereinafter “PIO”).

 

3.2    Best Effort by EPT and EWC. The Parties shall make a best-efforts to
build the business set out in the IBOA. In the event that the business developed
through this COA is significantly different than the IBOA, then the Parties can
mutually agree to change certain provisions of this COA in order to keep the
same dynamics in place for both Parties.

 

3.3    Conflicts of Interest Waiver. It is understood by the Parties that Darwin
Fogt, MPT is the President & CEO of EWC and is President of EPT. Both Parties
waiver this conflict of interest in cooperatively building the IBOA. It is
acknowledged by both Parties that due to this conflict and other issues the
percentage of the NPIR is significantly higher for EWC than is anticipated to be
earned with other third parties PT firms that EWC may cooperate with in the
future.

 

SECTION 4

INDEMNIFICATION

 

4.1    Indemnification. The Parties shall indemnify any person who was or is a
party defendant or is threatened to be made a party defendant, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Parties) by
reason of the fact that he is or was a Party of the Parties, Manager, employee
or agent of the Parties, or is or was serving at the request of the Parties,
against expenses (including attorney’s fees), judgments, fines, and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding if the Parties determine that he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Parties, and with respect to any criminal action proceeding, has no
reasonable cause to believe his/her conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of “no lo Contendere” or its equivalent, shall not in itself create a
presumption that the person did or did not act in good faith and in a manner
which he reasonably believed to be in the best interest of the Parties, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his/her conduct was lawful. EPT agrees to add EWC under its
indemnity insurance policies.

 

 

 

 

SECTION 5

GENERAL PROVISIONS

 

5.1    Amendments. Amendments to this Agreement may be proposed by any Party. A
proposed amendment will be adopted and become effective as an amendment only on
the written approval of all of the Parties.

 

5.2    Governing Law. This Agreement and the rights and obligations of the
parties under it are governed by and interpreted in accordance with the laws of
the State of California (without regard to principles of conflicts of law).

 

5.3    Entire Agreement; Modification. This Agreement constitutes the entire
understanding and agreement between the Parties with respect to the subject
matter of this Agreement. No agreements, understandings, restrictions,
representations, or warranties exist between or among the Parties other than
those in this Agreement or referred to or provided for in this Agreement. No
modification or amendment of any provision of this Agreement will be binding on
any Party unless in writing and signed by all the Parties.

 

5.4    Attorney Fees. In the event of any suit or action to enforce or interpret
any provision of this Agreement (or that is based on this Agreement), the
prevailing party is entitled to recover, in addition to other costs, reasonable
attorney fees in connection with the suit, action, or arbitration, and in any
appeals. The determination of who is the prevailing party and the amount of
reasonable attorney fees to be paid to the prevailing party will be decided by
the court or courts, including any appellate courts, in which the matter is
tried, heard, or decided.

 

5.5    Further Effect. The parties agree to execute other documents reasonably
necessary to further effect and evidence the terms of this Agreement, as long as
the terms and provisions of the other documents are fully consistent with the
terms of this Agreement.

 

5.6    Severability. If any term or provision of this Agreement is held to be
void or unenforceable, that term or provision will be severed from this
Agreement, the balance of the Agreement will survive, and the balance of this
Agreement will be reasonably construed to carry out the intent of the parties as
evidenced by the terms of this Agreement.

 

5.7    Captions. The captions used in this Agreement are for the convenience of
the parties only and will not be interpreted to enlarge, contract, or alter the
terms and provisions of this Agreement.

 

5.8    Notices. All notices required to be given by this Agreement will be in
writing and will be effective when actually delivered or, if mailed, when
deposited as certified mail, postage prepaid, directed to the addresses first
shown above for each Party or to such other address as a Party may specify by
notice given in conformance with these provisions to the other Parties.

 

IN WITNESS WHEREOF, the parties to this Agreement execute this Cooperative
Operating Agreement as of the date and year first above written.

 

PARTIES:

 

eWellness Healthcare Corporation   [image_002.jpg]

Douglas C. MacLellan, Chairman

  Signature       Evolution Physical Therapy, Inc.     Darwin Fogt, MPT  
Signature