Mr. Justin Kenna reports

GAMESQUARE TO ACQUIRE ONE OF THE BIGGEST NAMES IN GAMING, FAZE CLAN

Gamesquare Holdings Inc. and FaZe Holdings Inc. (FaZe Clan) have entered into a definitive agreement pursuant to which Gamesquare will acquire FaZe Clan in an arm's-length all-stock transaction.

The acquisition brings together two complementary businesses to create one of the world's leading content, media and entertainment companies focused on gaming, e-sports and youth culture. The combined company will be powered by a progressive end-to-end platform of leading media and agency organizations, gaming and e-sport teams, creative services, and technology capabilities. Combined, FaZe Clan and Gamesquare generated annual revenue of approximately $138-million and achieved a 26.3-per-cent gross margin in 2022. Management expects to realize over $18-million in run-rate cost savings from the FaZe Clan acquisition, supported by reduced duplicate corporate costs and other cost savings. The combined company plans to give guidance once the transaction is closed.

"The gaming community represents one of the largest and most engaged segments of the attention economy," stated Justin Kenna, chief executive officer of Gamesquare. "The acquisition of one of the biggest names in gaming serves as a perfect illustration of how we have built a powerful infrastructure with expansive scale that we can use to leverage the full spectrum of resources within the Gamesquare ecosystem. We are also thrilled to welcome back the founders of FaZe Clan and their fans, one of the most deeply engaged communities born on the Internet."

"I'm confident that with Tommy, Apex and me back in charge of the brand, FaZe Clan will get back to where it was in its peak years," stated Richard "FaZe Banks" Bengtson, who will take on the CEO role of FaZe Clan after the transaction closes. "We grew up on the Internet and understand this brand better than anyone ever could. We are grateful to have found a partner in Gamesquare who sees that value in us and can help execute our vision. We're going to produce first, talk later."

"Joining forces with Gamesquare creates greater scale and exciting opportunities in the emerging market for gaming and youth culture," stated Christoph Pachler, interim CEO of FaZe Clan. "The strength of the FaZe brand and Gamesquare's infrastructure are a powerful combination that will enable FaZe shareholders to benefit from the combined company's long-term value creation potential."

Significant strategic combination and financial rationale

The combination with FaZe Clan continues Gamesquare's strategy of acquiring leading companies focused on e-sports, gaming and youth culture to increase capabilities, grow scale, unlock cost savings, empower fans and creators, and drive value for shareholders.

The combination of FaZe Clan and Gamesquare:

• Returns FaZe Clan's founders to lead the brand and re-establish authenticity:
  • Mr. Bengtson to be CEO of FaZe Clan, which will operate as a wholly owned subsidiary and independent division of Gamesquare;
  • Thomas "FaZe Temperrr" Oliveira to be president of FaZe Clan;
  • Yousef "FaZe Apex" Abdelfattah to be chief operating officer of FaZe Clan;
  • Founders are focused on refreshing the FaZe Clan brand, re-engaging with its core fanbase, and empowering individual FaZe Clan creators and their communities.
• Establishes leading platform connected to e-sports, gaming and youth culture:
  • Creates the top creator network in gaming and e-sports with over 250 million hours of content watched in 2022 across both companies' talent networks;
  • Talent network includes leading gaming, sports and entertainment personalities such as Ninja, TimTheTatman, Max Holloway, Trevon Diggs, FaZe Banks, FaZe Temperrr, FaZe Apex, FaZe Nickmercs, FaZe Rug, FaZe Swagg and more;
  • Combines hyper-engaged global fanbases with over one billion combined social followers, with a core focus on 13-to-34-year-old audiences.
• Leverages Gamesquare's progressive, end-to-end platform to connect global brands with hard-to-reach audiences:
  • Powerful infrastructure supported by award-winning media and agency assets, influential gaming and e-sports teams, leading creative services, and best-in-class, SaaS (software-as-a-service)-based technology assets;
  • Unites powerful portfolio of brand partners, including Porsche, Nike, Jack in the Box, Xfinity, Miller Lite, H-E-B and GHOST;
  • Combination with FaZe Clan enhances Gamesquare's growth potential by increasing brand opportunities across Gamesquare's product offerings.
• Enhances scale and unlocks significant cost-saving opportunities:
  • Management expects to realize over $18-million in run-rate cost savings, supported by reduced corporate costs and focus on driving efficiencies across the organization.

Transaction details

The respective boards of directors of Gamesquare and FaZe Clan have unanimously approved the transaction. The transaction is currently anticipated to close in the fourth quarter of 2023, subject to approval by the FaZe Clan and Gamesquare shareholders and the closing of the private placement described below, as well as the receipt of required regulatory approvals and other customary closing conditions.

On Oct. 19, 2023, Gamesquare, Gamesquare Merger Sub I Inc., a wholly owned subsidiary of Gamesquare, and FaZe Clan entered into an agreement and plan of merger. Subject to the terms and conditions of the merger agreement, Merger Sub will merge with and into FaZe Clan, with FaZe Clan surviving the merger, such that, following the merger, the surviving entity will continue as a wholly owned subsidiary of Gamesquare. In accordance with the applicable provisions of the Delaware General Corporation Law, the separate corporate existence of Merger Sub will then cease.

At the effective time of the merger, and subject to the terms and conditions of the merger agreement, each issued and outstanding share of FaZe Clan common stock will be converted into the right to receive 0.13091 share of Gamesquare's common stock (the exchange ratio), subject to the treatment of fractional shares in accordance with the merger agreement. The shares issued as merger consideration will be registered on a registration statement on Form F-4. At the effective time of the merger, and subject to the terms and conditions of the merger agreement, each issued and outstanding share of restricted common stock granted under any FaZe Clan stock plan, whether vested or unvested, will be converted into Gamesquare restricted common stock, and each outstanding option and warrant issued by FaZe Clan, whether or not vested or exercisable, will be converted into, respectively, a Gamesquare option or warrant, in each case as adjusted by the exchange ratio. As of July 31, 2023, FaZe Clan has 76,329,689 issued and outstanding shares of common stock, and 11,536,121 shares reserved for issuance pursuant to FaZe Clan's outstanding stock options.

The merger agreement contains customary representations, warranties and covenants. In addition, this transaction has been entered into in the ordinary course of business and will not constitute a non-arm's-length transaction or a related-party transaction, pursuant to the policies of the TSX Venture Exchange and applicable securities laws.

The merger agreement may be terminated under certain circumstances, including, but not limited to, by either Gamesquare or FaZe Clan, if the merger has not been consummated on or before Dec. 31, 2023, if a final and non-appealable order is entered permanently restraining or otherwise prohibiting the transactions contemplated by the merger agreement, if FaZe Clan's or Gamesquare's stockholder approval has not been obtained at the respective stockholder meetings to be called to consider the merger and related transactions, or upon a material uncured breach of the respective obligations, covenants or agreements by the other party that would cause the closing conditions in the merger agreement not to be satisfied.

Neither FaZe nor Gamesquare has incurred any broker/finder fees in connection with the merger agreement.

The merger agreement provides that the parties will take such action as necessary to cause nine directors to be appointed to Gamesquare's board of directors, effective as of the effective time of the merger, with six to be designated by Gamesquare, two to be designated by FaZe Clan and one to be mutually agreed by Gamesquare and FaZe Clan.

Upon completion of the transaction, current Gamesquare shareholders will own approximately 55 per cent of the combined company, while current FaZe Clan shareholders will own approximately 45 per cent.

In support of the merger agreement, Gamesquare has secured a $10-million commitment from Goff & Jones Lending Co. LLC to purchase shares of Gamesquare's common stock to the extent necessary to complete the Gamesquare private placement as described below, pursuant to the terms of that certain backstop agreement dated concurrently with the merger agreement.

Financing condition to closing

In addition, in connection with the merger, Gamesquare is to complete: (i) a private placement in public equity with certain accredited institutional investors to raise $10-million through the sale of Gamesquare common stock, subject to reduction based on applicable stock exchange rules, which financing is supported by the backstop obligation; and (ii) Gamesquare shall have entered into an asset-based loan facility agreement with SLR Digital Finance LLC, as lender, having a three-year term and providing for maximum aggregate borrowings thereunder at any one time of not less than $10-million.

Advisers

Oak Hills Securities Inc. served as Gamesquare's exclusive financial adviser and BakerHostetler is its legal adviser. FaZe Clan's legal adviser is Sullivan & Triggs LLP. Current Capital Securities LLC rendered a fairness opinion to the board of directors of FaZe Clan in connection with the transaction.

About Gamesquare Holdings Inc.

Gamesquare is a vertically integrated, digital media, entertainment and technology company that connects global brands with gaming and youth culture audiences. Gamesquare's end-to-end platform includes GCN, a digital media company focused on gaming and e-sports audiences; Cut+Sew (Zoned), a gaming and lifestyle marketing agency in the United States; Code Red Esports Ltd., a United Kingdom based e-sports talent agency; Complexity Gaming, a leading e-sports organization; Fourth Frame Studios, a creative production studio; Mission Supply, a merchandise and consumer products business; Frankly Media, for programmatic advertising; Stream Hatchet, for live streaming analytics; and Sideqik, a social influencer marketing platform.

About FaZe Holdings Inc.

FaZe Holdings (FaZe Clan) is one of the most prominent and influential gaming organizations in the world. Created by gamers, for gamers, FaZe began in 2010 by a group of Internet kids who turned their passion into a successful career path and formed a die-hard community along the way. Today, FaZe Clan represents a vast roster of creators who aim to inspire the next generation in making their dreams a reality.

FaZe Clan operates across multiple verticals designed to reimagine gaming, sports, culture and entertainment. FaZe has partnered with blue-chip brands such as Porsche, GHOST, DraftKings and McDonald's, and record-breaking fashion and lifestyle collaborations featuring Nike, Takashi Murakami, Lyrical Lemonade, NFL, Champion and more -- all centred around its top-tier talent collective with gaming rooted at the core. Reaching over 500 million followers across social platforms globally, FaZe Clan's roster consists of world-class gamers, streamers, content creators and e-sports professionals known for delivering disruptive, original content. Its gaming division houses 10-plus competitive e-sports teams with titles including Call of Duty, Counter-Strike, Halo, FIFA and more. With a combined total of over 40 world championships to date, FaZe has brought home dozens of trophies with historic wins like the 2022 CS:GO PGL Antwerp Major, 2021 Call of Duty League Championship and 2023 CS:GO Intel Grand Slam.

For the quarter ended June 30, 2023 (unaudited):

• Total assets -- $43,688,000;
• Total liabilities -- $15,659,000.

For the year ended Dec. 31, 2022:

• Revenues -- $70,021,000;
• Net profit -- loss of $168,534,000;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) -- loss of $33.56-million.

Note: $115-million of 2022 losses were non-operational, one-time transaction costs.

We seek Safe Harbor.