CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Related Person Transactions
FaZe’s audit committee has the primary responsibility for reviewing and approving or disapproving “related person transactions,” which are transactions between FaZe and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. The charter of the audit committee of FaZe provides that the audit committee will review and approve in advance any related person transaction.
FaZe has adopted a policy for the review and approval of related person transaction, which will require, among other things, that:
The audit committee will review the material facts of all related person transactions.
In reviewing any related person transaction, the audit committee will take into account, among other factors that it deems appropriate, whether the related person transaction is on terms no less favorable to FaZe than terms generally available in a transaction with an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
In connection with its review of any related person transaction, FaZe will provide the audit committee with all material information regarding such related person transaction, the interest of the related person and any potential disclosure obligations of FaZe in connection with such related person transaction.
If a related person transaction will be ongoing, the audit committee may establish guidelines for the management of FaZe to follow in its ongoing dealings with the related person.
Related Person Transactions
Collaboration Agreement with Snoop Dogg
On February 17, 2022, Legacy FaZe Clan Inc. (“Legacy FaZe”) entered into a collaboration agreement with Spanky’s Clothing Inc., Cordell Broadus, Boss Lady Entertainment and SMAC Entertainment for an initial term of two years, pursuant to which Calvin Cordozar Broadus, Jr. became a member of FaZe’s talent network and joined the board of directors on the Closing Date of the Business Combination and agreed to (i) exclusively, except for companies not in direct competition with FaZe, promote FaZe for three years, and (ii) grant FaZe license to use his name and likeness in connection with certain content and services to be produced by him for FaZe, including (w) social media posts, (x) brand campaigns with FaZe sponsors, (y) hosting of events and (z) merchandise collaborations. Calvin Cordozar Broadus, Jr. is the Chief Executive Officer of Spanky’s Clothing Inc. Cordell Broadus is the son of Calvin Cordozar Broadus, Jr. Shante Broadus, the spouse of Calvin Cordozar Broadus, Jr., is the Chief Executive Officer of Boss Lady Entertainment. Constance Schwartz-Mornio, the manager of Calvin Cordozar Broadus, Jr., is the Chief Executive Officer of SMAC Entertainment. The Company granted Legacy FaZe’s restricted stock, which converted into Company restricted stock awards, equal in value to (i) $1,857,154 to Calvin Cordozar Broadus, Jr., (ii) $247,615 to Cordell Broadus, (iii) $247,615 to Boss Lady Entertainment and (iv) $247,615 to SMAC Entertainment, each of which will vest as follows: (x) one-third on August 17, 2022, (y) one-third in monthly installments through February 17, 2023 and (z) one-third in monthly installments through February 17, 2024. In addition, FaZe agreed to consider in good faith further equity bonuses and committed $50,000 in value for community outreach, including for the Snoop Youth Football League, scholarships or other charitable causes.
Founder Shares and Private Placement Units
In June 2020, B. Riley Principal 150 Sponsor Co., LLC (the “Sponsor”) purchased an aggregate of 4,312,500 Founder Shares from B. Riley Principal 150 Merger Corp. (“BRPM”) in exchange for a capital contribution of $25,000, or approximately $0.006 per share. The Founder Shares automatically converted into 4,312,500 shares of Common Stock in connection with the Merger. Pursuant to the Sponsor Support Agreement, 50% of the Founder Shares are subject to forfeiture following Closing if certain price-based vesting conditions are not met during the five-year period beginning on the date that is 90 days after the Closing and ending on the fifth anniversary of the Closing Date.
The Sponsor purchased an aggregate of 520,000 Private Placement Units in connection with BRPM’s initial public offering, at a price of $10.00 per unit, or $5,200,000 in the aggregate. Each Private Placement Unit consisted