NeuLion, Inc. (TSX:NLN) signed a definitive agreement to acquire DivX LLC from Parallax Capital Fund, L.P. managed by Parallax Capital Partners, LLC and StepStone Group LP for $65.8 million on January 2, 2015. Under the terms of the agreement, NeuLion, Inc. will issue 35.89 million shares of its common stock and a two-year convertible promissory note in the initial principal amount of $25 million subject to working capital credit of $2 million. The Note will be convertible into shares of NeuLion's common stock at a conversion price of approximately $1.045 per share. The Note will bear interest at the rate of 6% per annum and will mature on January 2, 2017. Under the terms, Parallax Capital will not solicit any bids until the agreement is terminated. James Hale, DivX's Chairman and John Coelho, a member of DivX's Board of will join the NeuLion's Board of Directors. As a result, NeuLion will expand its board to 11 seats. Upon closing of the transaction, Nancy Li, NeuLion's Chief Executive Officer, will become Executive Vice Chairman of the NeuLion Board of Directors and will drive the technology vision for the company, and Kanaan Jemili, DivX's Chief Executive Officer, will be appointed Chief Executive Officer of NeuLion. The management teams and employees of both companies will be combined. NeuLion will now have offices and sales reach throughout North America, Europe and Asia.

The transaction is subject to approval by the Toronto Stock Exchange, shareholders of NeuLion, Inc. and certain other customary conditions. The transaction has been approved by the Board of Directors of DivX, LLC and NeuLion, Inc. the Board of Directors of DivX, LLC resolved to recommend Parallax Capital regarding the approval and adoption of the agreement. The transaction is expected to close in the first quarter of calendar 2015. NeuLion management expects the transaction to be accretive on a GAAP operating income basis for 2016 and immediately accretive on a non-GAAP adjusted EBITDA basis.

Douglas A. Schaaf, Jason Rednour, Michael Tran, Jeremy M. Rocklage and Erika Mayshar of Paul Hastings LLP acted as legal advisors to Parallax Capital and DivX, LLC. Frank Lee and Ronelle Porter of Loeb & Loeb LLP acted as legal advisors to NeuLion, Inc. KPMG Corporate Finance LLC acted as a financial advisor to Parallax Capital. Needham & Company acted as financial advisor to NeuLion, Inc. and provided a fairness opinion to the Board of Directors on the transaction.