Blackburn Studios Profit Participation Agreement

Representatives and above must review and accept the Blackburn Studios Profit Participation Agreement before receiving payments.

Blackburn Studios Profit Participation Agreement

Effective Date: [DATE of FORM COMPLETION]

This Profit Participation Agreement (“Agreement”) is entered into between Blackburn HQ Inc., operating Blackburn Studios (“Blackburn HQ”), and the individual accepting this Agreement (“Participant”).

1. Purpose

Blackburn Studios provides eligible community leaders with an opportunity to participate in a level-based profit participation pool.

This Agreement explains the terms governing eligibility, calculation, distribution, and continuation of profit participation.

Profit participation is intended to reward eligible Participants for helping support the growth, strength, and culture of Blackburn Studios.

2. Eligibility

Profit participation is available only to individuals who:

• Hold an officially recognized Blackburn Studios level of Representative or above
• Have received an official promotion email confirming their current level
• Hold Active creator status in Blackburn HQ’s records
• Have accepted the current version of this Agreement
• Are enrolled in the Blackburn HQ Ambassadors Program
• Are actively enrolled in both Blackburn Studios LIVE and Blackburn Studios Shop
• Maintain both LIVE and Shop enrollment throughout the applicable distribution period, except during an approved written exception
• Have provided all required tax and payment information
• Remain in good standing with Blackburn HQ and Blackburn Studios

Creators are not eligible for profit participation unless and until they are officially promoted to Representative and satisfy the full LIVE and Shop enrollment requirements above. Participation in only LIVE or only Shop does not qualify a Participant for profit participation.

Submitting the acceptance form records the Participant’s acceptance of this Agreement but does not activate profit participation or guarantee payment. Profit participation becomes active only after Blackburn HQ completes its eligibility review and records the Participant as Profit Participation Active.

Eligibility does not guarantee that a payment will be available or issued.

3. Nature of Profit Participation

Profit participation is a contractual compensation opportunity.

It is not:

• Equity or stock in Blackburn HQ Inc.
• Ownership in Blackburn HQ or Blackburn Studios
• A partnership, joint venture, or franchise
• A voting right
• A guaranteed wage, salary, commission, dividend, or payment
• A promise that Blackburn HQ will generate a profit

Participation does not give the Participant authority to bind Blackburn HQ, enter into contracts on its behalf, incur expenses on its behalf, or represent that they are an owner or employee of Blackburn HQ.

4. Participation Levels

For each calendar quarter, an eligible Participant is assigned only to the profit participation structure associated with the Participant’s officially recognized Blackburn Studios level as of 12:01 a.m. Central Time on the first day of that quarter. If the Participant first becomes eligible after the quarter begins, the applicable level is the officially recognized level on the Participant’s eligibility effective date. That level is the Participant’s “Quarterly Level.”

Eligible levels include:

• Representative
• Associate
• Manager
• Director
• Vice President
• Chief Executive Staff

Profit participation is level-specific and is not cumulative. A Participant participates only at the Quarterly Level for the entire applicable quarter unless Blackburn HQ expressly corrects a documented administrative error in writing. A promotion, demotion, or other ordinary level change during a quarter affects profit participation beginning with the next calendar quarter. A Participant does not also participate in lower-level pools or allocations because they previously held, recruited into, supervised, or advanced through those levels.

5. Net Income and Distributable Profit

“Net Income” means net income attributable to Blackburn Studios for the applicable distribution period after ordinary and necessary business expenses, refunds, chargebacks, taxes, and other recorded financial obligations attributable to Blackburn Studios have been accounted for using Blackburn HQ’s financial records and established accounting practices.

Net Income is not the same as revenue, gross sales, platform volume, creator earnings, or cash received.

Customer sales may be designated final under applicable Blackburn policies; however, any refund, reversal, chargeback, tax adjustment, or accounting entry actually recorded before a quarter is closed will be reflected in Blackburn HQ’s financial records for that quarter. After a quarterly statement is finalized, a later-recorded item will ordinarily be reflected in the period in which it is recorded and will not reopen a prior statement, except to correct a material error, fraud, or legal requirement.

For each applicable distribution period, up to twenty percent (20%) of Blackburn Studios Net Income will be designated for the Blackburn Studios Profit Participation Model, subject to the level allocations and individual allocations described below.

If Blackburn Studios has no positive Net Income for a distribution period, there will be no Distributable Profit or profit-participation distribution for that period.

Distributable Profit will then be allocated under the level structure described in Sections 6 and 7. For clarity, this Agreement does not impose a fee on Creators. Blackburn Studios may separately earn a standard agency or service fee from an applicable platform or partner program. Unless a separate written agreement provides otherwise, the current standard Blackburn Studios agency fee is ten percent (10%) of the applicable agency-side amount and is treated as Blackburn Studios revenue when received.

6. Profit Participation Pool Allocation

For each applicable distribution period, the Profit Participation Model may allocate up to twenty percent (20%) of Blackburn Studios Net Income across the level structure below.

That Distributable Profit will be allocated as follows:

• Representative Pool: 5% of Net Income
• Associate Pool: 5% of Net Income
• Manager Pool: 5% of Net Income
• Director Pool: 1% of Net Income
• Vice President Pool: 2% of Net Income
• Chief Executive Staff Allocation: up to 2% of Net Income

Together, these level allocations establish a maximum program allocation of twenty percent (20%) of Net Income. Amounts reserved for a higher level are not automatically divided equally and are payable only to the extent an eligible Participant has an applicable individual allocation for that level.

The Representative, Associate, and Manager allocations operate as shared pools. Director and Vice President participation is based on the individual percentages stated in Section 7. Chief Executive Staff participation is based on the individual percentage or allocation designated in writing by Blackburn HQ for the applicable role. Any portion of a level allocation that is not payable under these terms remains with Blackburn HQ unless Blackburn HQ designates otherwise in writing.

The percentages above apply to Blackburn Studios Net Income, not revenue, gross sales, platform volume, creator earnings, or cash received.

Blackburn HQ may modify the pool structure, allocation percentages, or distribution method prospectively by providing reasonable notice to affected Participants.

7. Distribution by Participation Level

The method of participation depends on the Participant’s current level. Shared-pool levels are divided as stated below; higher-level allocations are paid at the Participant’s stated individual percentage and are not divided equally among all people at that level.

For the initial version of the Profit Participation Model:

• The Representative Pool will be divided equally among eligible Representatives.
• The Associate Pool will be divided equally among eligible Associates.
• The Manager Pool will be divided equally among eligible Managers.
• Each eligible Director is assigned an individual participation allocation of 0.1% of Blackburn Studios Net Income for an eligible distribution period, subject to the requirements of this Agreement.
• Each eligible Vice President is assigned an individual participation allocation of 0.2% of Blackburn Studios Net Income for an eligible distribution period, subject to the requirements of this Agreement.

The Director level supports up to ten (10) Director allocations. The Vice President level supports up to ten (10) Vice President allocations. At the current individual percentages, ten Director positions at 0.1% each use the full 1% Director allocation, and ten Vice President positions at 0.2% each use the full 2% Vice President allocation. Chief Executive Staff allocations, if any, are established individually in writing by Blackburn HQ and are not presumed to be equal.

Blackburn HQ may change the distribution method or individual allocation structure prospectively, including adopting a performance-based, contribution-based, tenure-based, prorated, fixed-percentage, or blended allocation model, subject to the notice requirements of this Agreement.

Any change will apply only to future distribution periods after reasonable notice is provided.

Except for an individual percentage expressly stated in this Agreement or separately designated in writing by Blackburn HQ for the applicable period, no Participant is guaranteed a fixed individual percentage or equal share in future distribution periods. Any stated individual percentage remains subject to eligibility, positive Net Income, good standing, proration, and prospective program changes made in accordance with this Agreement.

8. Participation Period and Level Changes

A Participant’s eligibility begins on the later of:

• The effective date stated in their official promotion email
• The date they accept this Agreement

All required tax and payment information must also be complete before payment can be issued.

A Participant who first becomes eligible after a quarter begins may receive a prorated allocation beginning on the eligibility effective date. The proration will be based on the number of eligible calendar days remaining in the quarter, and the Participant’s officially recognized level on the eligibility effective date becomes the Quarterly Level for the remainder of that quarter.

Eligibility requires continuous active enrollment and good standing in both Blackburn Studios LIVE and Blackburn Studios Shop throughout the entire applicable calendar quarter. Unless Blackburn HQ approves a written exception, a Participant who resigns, withdraws, is removed, becomes inactive, loses either required enrollment, or otherwise becomes ineligible before the final day of the quarter is not eligible for a profit-participation allocation for that quarter.

Blackburn HQ may approve a written exception or temporary leave for circumstances such as health-related leave or a platform-imposed restriction outside the Participant's reasonable control. An exception is not automatic and must be confirmed in writing by Blackburn HQ. Eligibility may resume prospectively when full LIVE and Shop enrollment is restored and confirmed by Blackburn HQ.

A promotion, demotion, or other ordinary level change during a quarter does not split or prorate that quarter between levels. The Participant remains assigned to the Quarterly Level for that quarter, and the new level applies beginning on the first day of the next calendar quarter, provided the Participant remains eligible.

9. Payment Conditions

A Participant must satisfy all applicable requirements before receiving payment.

Payments are subject to:

• Continued eligibility
• Available Distributable Profit
• Good standing
• Acceptance of the current Agreement
• Complete and accurate tax documentation
• Complete and accurate payment information
• Compliance with Blackburn HQ policies

Blackburn HQ may hold a payment until missing or inaccurate information is corrected.

A held payment is not guaranteed and remains subject to this Agreement.

Minimum Payment Threshold. Blackburn HQ will issue a profit-participation payment only when the Participant’s total approved, unpaid allocation is at least fifty dollars ($50.00).

An approved allocation below $50.00 will be recorded and carried forward without interest until the Participant’s approved unpaid balance reaches the threshold. The minimum threshold affects payment timing only; it does not convert an unapproved estimate into an earned or guaranteed amount.

If participation ends after an approved carry-forward balance has been established, Blackburn HQ will include that approved balance in the next regular payment cycle regardless of whether it reaches $50.00, subject to accurate payment and tax information and any lawful offset or correction under this Agreement.

10. Payment Timing

Profit participation will be calculated on a quarterly basis.

Each distribution period will end on the final day of the applicable calendar quarter.

After the quarter closes, Blackburn HQ’s bookkeeper will prepare the quarterly close and preliminary calculations of Net Income, Distributable Profit, eligibility, and each Participant allocation. Blackburn HQ’s CPA will independently review the completed calculation package before Blackburn HQ authorizes distributions. No dashboard, estimate, informal message, or preliminary calculation is final before this review and authorization are complete.

Blackburn HQ will use commercially reasonable efforts to complete the close, review, emailed statements, and approved distributions within sixty (60) days after the end of the applicable quarter.

Blackburn HQ may reasonably delay payment when necessary to:

• Complete or correct financial records
• Resolve refunds, disputes, chargebacks, or accounting errors
• Verify eligibility
• Obtain required tax or payment information
• Comply with legal or tax requirements

A delay will not eliminate a Participant’s approved allocation unless the Participant is determined to have been ineligible for that distribution period.

Blackburn HQ will send a standardized quarterly statement to the Participant’s email address on file. The statement will identify the applicable quarter, Quarterly Level, eligibility determination, calculation method, approved allocation, carried-forward balance, payment issued, and any material correction or hold.

A statement is confidential financial information under Section 18. The Participant is responsible for keeping their email address current and reviewing each statement promptly.

No distribution is due for a quarter in which Blackburn Studios has no positive Net Income.

11. Taxes

The Participant is responsible for reporting and paying all taxes associated with payments received under this Agreement.

Blackburn HQ may report payments using the tax forms required by applicable law.

The Participant must provide accurate and current tax information through the Blackburn HQ Ambassadors Program or another system designated by Blackburn HQ.

Blackburn HQ may withhold payments or apply backup withholding when required by law.

12. Independent Relationship

Nothing in this Agreement creates an employment relationship.

The Participant is not entitled to employee wages, benefits, paid leave, unemployment benefits, workers’ compensation benefits, or other employee benefits solely because of this Agreement.

The Participant controls whether, when, where, and how they participate, subject to Blackburn HQ’s standards concerning brand use, community safety, legal compliance, and eligibility.

The parties acknowledge that the actual nature of their working relationship, rather than the title used in this Agreement, determines legal classification.

13. Good Standing

To remain eligible, the Participant must remain in good standing.

Good standing may include:

• Following the Blackburn Way
• Complying with applicable Blackburn HQ and Blackburn Studios policies
• Acting honestly and professionally
• Protecting confidential or private information
• Avoiding fraud, manipulation, harassment, or harmful conduct
• Maintaining accurate account, tax, and payment information
• Not being suspended, removed, or otherwise declared ineligible

Blackburn HQ may temporarily suspend eligibility while reviewing a possible policy violation.

Before authorizing each quarterly distribution, Blackburn HQ may conduct a documented participation-status review limited to the requirements of this Agreement, including official level, continuous LIVE and Shop enrollment, Ambassador enrollment, activity status, policy compliance, good standing, and current tax and payment information.

If Blackburn HQ suspends or denies eligibility, it will provide written notice identifying the general basis, effective date, and any available corrective action. The Participant may provide relevant records or a written response within ten (10) business days. Blackburn HQ will review timely information in good faith and provide a written determination. Immediate suspension may remain in effect during review when Blackburn HQ reasonably identifies fraud, safety, legal, platform, confidentiality, or material brand risk.

This participation-status review governs eligibility for this contractual program only and is not an employee performance evaluation.

14. Inactivity, Resignation, Suspension, or Removal

A Participant may lose eligibility upon:

• Resignation from Blackburn Studios
• Withdrawal, removal, or loss of enrollment from either Blackburn Studios LIVE or Blackburn Studios Shop, unless Blackburn HQ approves a written exception
• Removal from an eligible level
• Suspension
• Inactivity under applicable program standards
• Failure to maintain good standing
• Failure to provide required tax or payment information
• Violation of this Agreement or other applicable policies

Unless Blackburn HQ approves a written exception, participation ends on the effective date of the status change. A Participant who becomes ineligible before the final day of a quarter receives no allocation for that quarter. A departure or status change after a quarter ends does not eliminate an allocation already approved for a completed quarter, subject to corrections, overpayments, fraud, legal requirements, and the other terms of this Agreement.

Former Participants have no right to allocations for future quarters and no right to estimates or unapproved amounts. Any approved carry-forward balance from a completed eligible quarter will be handled under the minimum-payment provision in Section 9.

15. No Transfer or Assignment

A Participant may not sell, transfer, pledge, assign, or give their participation rights to another person or entity.

Profit participation rights do not pass to heirs, beneficiaries, creditors, or third parties except where required by law or expressly approved in writing by Blackburn HQ.

16. Corrections and Overpayments

Blackburn HQ may correct calculation, accounting, eligibility, or payment errors.

If a Participant receives an overpayment, Blackburn HQ may:

• Deduct the amount from a future payment
• Request repayment
• Use another lawful method to recover the amount

Blackburn HQ will make reasonable efforts to explain material corrections.

Except for a material calculation error, fraud, duplicate payment, legal requirement, or inaccurate eligibility information, an issued quarterly statement will not be retroactively recalculated because of a later level change, later departure, or later-recorded transaction.

17. Program Changes

Blackburn HQ may modify, pause, replace, or end the Profit Participation Model on a prospective basis.

Material changes may include changes to:

• Eligibility requirements
• Pool percentages
• Distribution methods
• Payment schedules
• Documentation requirements
• Level structures

Blackburn HQ will provide written notice of any material change at least thirty (30) days before the change takes effect.

Notice will be sent by email to the Participant’s email address on file with Blackburn HQ.

Changes will apply only to future distribution periods and will not reduce or eliminate an allocation already earned for a completed distribution period.

Participants are responsible for keeping their email address current.

18. Confidentiality

Nonpublic financial information, payment calculations, internal records, business strategies, and individual Participant information must be treated as confidential unless Blackburn HQ authorizes disclosure or disclosure is required by law.

This section does not prohibit a Participant from discussing their own compensation or exercising any legal right that cannot lawfully be waived.

19. Records and Electronic Acceptance

Electronic acceptance of this Agreement has the same effect as a handwritten signature to the extent permitted by law.

Blackburn HQ may maintain electronic records showing:

• The Participant’s name and email address
• The Agreement version accepted
• The date and time of acceptance
• The Participant’s acknowledged level
• Applicable account tags or status
• Quarterly Level and eligibility determination
• Bookkeeper preparation and CPA review records
• Quarterly statements, carry-forward balances, payments, holds, corrections, and written notices

The Participant is responsible for saving or printing a copy of the Agreement for their records.

20. Statement Questions and Calculation Review

A Participant who believes a quarterly statement contains an error must email Studios@BlackburnHQ.com within thirty (30) calendar days after the statement is sent and identify the specific item disputed, the reason, and any supporting records. General disagreement with the program structure, eligibility requirements, or a properly applied written rule is not a calculation error.

Blackburn HQ will acknowledge a timely written question and review it with the bookkeeper and, when appropriate, the CPA. Blackburn HQ will provide a written response or status update within thirty (30) calendar days after receiving sufficient information to evaluate the question.

Blackburn HQ may pay any undisputed approved amount while a disputed item is reviewed. Nothing in this section waives any right or remedy that cannot lawfully be waived.

21. Governing Law

This Agreement will be governed by the laws of the State of Texas, without regard to conflict-of-law principles.

Any dispute-resolution, arbitration, venue, jury-waiver, class-action-waiver, or attorney-fee provisions should be added only after legal review.

22. Entire Agreement

This Agreement, together with any incorporated Blackburn HQ policies or written program terms, contains the understanding between the parties concerning profit participation.

It replaces prior verbal or written statements concerning the same subject.

If any provision is found unenforceable, the remaining provisions will continue to apply to the fullest extent permitted by law.

23. Acceptance

By submitting the Profit Participation Agreement Acceptance form, the Participant confirms that they:

• Have read and understood this Agreement
• Had the opportunity to save and review it before accepting
• Understand that profit participation is not equity, ownership, voting rights, or guaranteed compensation
• Understand that profit participation is level-specific and non-cumulative; the Quarterly Level is generally fixed on the first day of the quarter; and payments depend on continuous eligibility, available Distributable Profit, good standing, required tax documentation, the $50.00 minimum-payment threshold, and this Agreement
• Understand that active enrollment and good standing in both Blackburn Studios LIVE and Blackburn Studios Shop are required for profit participation eligibility, unless Blackburn HQ approves a written exception
• Agree to be bound by the current version of this Agreement

Nothing in this Agreement creates an employer-employee relationship. Participants operate independently and are responsible for their own business activities, schedules, methods, expenses, insurance, and tax obligations, except as otherwise required by law.