Benzinga | May 3, 2021 08:33AM EDT

VOXX International Corporation Announces Exclusive Distribution Agreement Between EyeLock Subsidiary And GalvanEyes Partners LLC; GalvanEyes To Pay EyeLock $10M With Annual Fee Up To $5M

VOXX International Corporation (NASDAQ:VOXX) (the "Company" or "VOXX"), a leading manufacturer and distributor of automotive and consumer technologies for the global markets, today announced that EyeLock LLC ("EyeLock"), the Company's majority-owned subsidiary has entered into a four (4) year exclusive distribution agreement (the "Agreement") with GalvanEyes LLC ("GalvanEyes"), a Florida LLC managed by VOXX's largest shareholder, Beat Kahli.

As announced on November 2, 2020, the Company had entered into a Standstill Agreement with Avalon Park International and K?hli Holding AG, the Swiss holding company founded by Beat Kahli, who is also President and CEO of Avalon Park Group. That agreement was based on Mr. Kahli and related affiliates submitting an Indication of Interest to potentially acquire a stake in EyeLock, whereby VOXX would retain significant ownership, preserving a future upside for its shareholders.

The parties have entered into an Agreement whereby GalvanEyes LLC will become the exclusive distributor of EyeLock products in the EU, Switzerland, Puerto Rico, Malaysia, and Singapore, with the exception of any existing customer relationships. EyeLock has also granted GalvanEyes exclusive distribution rights in the United States for the residential real estate market and specific U.S. Government agencies, and non-exclusive distribution rights in all other territories and verticals with the Company's consent. In consideration of the exclusivity being granted, GalvanEyes has agreed to pay EyeLock $10.0 million with an annual fee of up to $5.0 million, with payments made on a quarterly basis. Any gross profit generated by GalvanEyes on the sale of EyeLock products by GalvanEyes will be deducted from the annual fee.

Within this Agreement, a put/call arrangement has been established, whereby GalvanEyes has the right to put the exclusivity back to EyeLock after the initial two (2) year period, for a 20.0% interest in EyeLock. In turn, EyeLock has the ability to call the exclusivity at any time during this Agreement, which would result in a 20.0% equity interest given to GalvanEyes. Should there be an initial public offering of EyeLock, or capital event resulting in a material change of control of EyeLock prior to the expiration of the two (2) year period, the put/call options can be exercised by the parties.

Pat Lavelle, President and CEO of VOXX International Corporation stated, "From the onset of our process, we had been looking to bring on a strategic partner to help move EyeLock technology into untapped markets quicker. With Beat Kahli and the team assembled, we have achieved that goal, while maintaining the upside we believe EyeLock possesses for our shareholders. This strategic alliance will also substantially reduce VOXX's cash burn and EyeLock's EBITDA loss."

Lavelle continued, "Acceptance and use of biometrics are intensifying on a global basis and across many industries; and iris authentication is by far the most secure. We have been working closely with several companies over the past few years and believe we are on the cusp of more widespread adoption. With GalvanEyes as our strategic partner, we expect to see new opportunities emerge, especially given their vast customer network and knowledge of our solutions, after rigorous due diligence. This has been a great working relationship to date, and we look forward to continuing to build value for EyeLock's customers, and all VOXX shareholders."