Item 1.01 Entry into a Material Definitive Agreement.
Shareholders Agreement
As previously disclosed, on September 21, 2021, Inotiv, Inc., (the "Company",
"Inotiv", "we", "our", "us") entered into a definitive agreement and plan of
merger (the "Merger Agreement") pursuant to which it agreed, subject to certain
closing conditions, to acquire Envigo RMS Holding Corp. ("Envigo") by merger of
Envigo with a newly formed, wholly owned subsidiary of ours (the "Envigo
Acquisition").
The consummation of the Envigo Acquisition is conditioned upon our entering into
a Shareholders Agreement with certain stockholders of Envigo (the "Shareholders
Agreement"), including Jermyn Street Associates LLC ("Jermyn Street") and
Savanna Holdings LLC ("Savanna Holdings and, together with Jermyn Street, the
"Nominating Holders"). The Nominating Holders owned, in the aggregate,
approximately 72.6% of the outstanding voting stock of Envigo. The Shareholders
Agreement provides that, at the effective time of the Envigo Acquisition, (i)
our Board of Directors (the "Board") will consist of our CEO, our Chief Strategy
Officer, our three current independent directors, one person to be designated by
Jermyn Street and one person to be designated by Savanna Holdings, and (ii)
Richard A. Johnson, Ph.D. will tender his resignation from the Board, to be
effective automatically upon notice to Dr. Johnson from the Company that the
Board is prepared to elect the Approved Director as provided in the Shareholders
Agreement. The "Approved Director" is a person designated by our Nominating and
Corporate Governance Committee and approved by the Nominating Holders. After the
consummation of the Envigo Acquisition and for so long as a Nominating Holder
beneficially owns five percent or more of our outstanding voting shares, the
Nominating Holder will have the right to designate one nominee for election to
our Board upon the expiration of the term of the initial designee or any
subsequent designee of that Nominating Holder and to approve our nominee for the
Board seat held by the Approved Director or any subsequent Approved Director
upon expiration of the Approved Director's term. Pursuant to the Shareholders
Agreement, we agreed that we will include the nominees designated by the
Nominating Holders and the Approved Director in management's slate of directors
for the applicable meeting, solicit proxies to approve the election of those
persons to the Board and recommend to our shareholders that those persons be
elected as directors. Board vacancies occurring due to the death, resignation,
retirement, disqualification or removal from office as a member of the Board of
a director designated by a Nominating Holder are to be filled by a person
designated by that Nominating Holder.
The Shareholders Agreement requires the shareholders who are parties thereto to
refrain from selling or otherwise transferring the shares they receive in the
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
On November 5, 2021, the Company completed the Envigo Acquisition by merger of a
wholly owned subsidiary of the Company with and into Envigo. The aggregate
consideration paid to the holders of outstanding capital stock in Envigo in the
merger consisted of cash consideration of $271.0 million, including adjustments
for net working capital and cash balances as provided in the merger agreement of
approximately $13.0 million and $48.0 million, respectively, and 9,036,538
Inotiv common shares. The common shares included in the merger consideration
include 790,620 shares issuable upon the exercise of certain Envigo stock
options that were assumed by the Company in the transaction.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant.
The information in Item 1.01 regarding the Credit Agreement is incorporated by
reference in response to this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
On November 5, 2021, pursuant to the Merger Agreement, the Company issued
8,245,918 of the Company's common shares to the stockholders of Envigo at the
closing of the Envigo Acquisition. The shares were issued in reliance upon the
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(a)(2) of the Securities
Act and Regulation D thereunder as sales by an issuer not involving any public
offering.
Item 4.01 Changes in Registrant's Certifying Accountant.
(a) Decision to Dismiss Independent Registered Public Accountants.
On November 2, 2021, the Audit Committee (the "Audit Committee") of the Board of
Directors of Inotiv, Inc. (the "Company") approved the decision to change its
independent registered public accounting firm. On November 2, 2021, the Company
dismissed RSM US LLP ("RSM") effective upon the completion of RSM's audit of the
Company's consolidated financial statements for the fiscal year ending September
30, 2021 (the "2021 Audit"), which is expected to occur in December 2021. This
decision was made pursuant to the authority of the Audit Committee as specified
in its Charter.
Neither of the audit reports of RSM on the Company's consolidated financial
statements for the fiscal years ended September 30, 2019 and September 30, 2020
contained an adverse opinion or a disclaimer of opinion, and neither such audit
report was qualified or modified as to uncertainty, audit scope or accounting
principles, with the exception of the audit report for the fiscal year ended
September 30, 2020, which was modified to highlight the Company's adoption of
Accounting Standards Codification 842 Leases.
During the fiscal years ended September 30, 2019 and September 30, 2020, and the
subsequent interim period through November 2, 2021, there were no disagreements
between the Company and RSM on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which, if not
resolved to RSM's satisfaction, would have caused it to make reference to the
subject matter of such a disagreement in connection with its audit reports on
the Company's consolidated financial statements for such years. During the
fiscal years ended September 30, 2019 and September 30, 2020, and the subsequent
interim period through November 2, 2021, there were no reportable events, as
defined in Item 304(a)(1)(v) of Securities and Exchange Commission Regulation
S-K ("Regulation S-K").
The Company has provided RSM with a copy of the foregoing disclosures. Attached
as Exhibit 16.1 is a copy of RSM's letter, dated November 5, 2021, stating that
it agrees with such statements.
(b) Decision Regarding New Independent Registered Public Accountants.
On November 2, 2021, the Audit Committee approved the engagement of Ernst &
Young LLP ("EY") as its new independent registered public accountants for the
fiscal year ending September 30, 2022, subject to completion of EY's standard
client acceptance process, including independence procedures and execution of an
engagement letter, to be
effective immediately following the completion by RSM of the 2021 Audit, as
described above. This decision was made pursuant to the authority of the Audit
Committee as specified in its Charter.
During the fiscal years ended September 30, 2019 and September 30, 2020, and the
subsequent interim period through November 2, 2021, neither the Company nor
anyone acting on the Company's behalf consulted with EY on (i) any matters
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered with respect to the Company's consolidated financial statements, and no
written report or oral advice was provided to the Company that EY concluded was
an important factor considered in reaching a decision as to any accounting,
auditing or financial reporting issue, or (ii) any matter that was the subject
of any disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a
reportable event as defined in Item 304(a)(1)(v) of Regulation S-K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On November 5, 2021, Richard A. Johnson, Ph.D. tendered his resignation as a
director of the Company, to be effective automatically upon notice to Dr.
Johnson from the Company that the Board is prepared to elect the Approved
Director as provided in the Shareholders Agreement. Dr. Johnson's resignation
fulfilled one of the Company's obligations under the Shareholders Agreement.
(d) On November 4, 2021, the Board of Directors of the Company (the "Board")
expanded the size of the Board to seven members and appointed Nigel Brown, Ph.D.
and Scott Cragg to the Board pursuant to the terms of the Shareholders
Agreement, which is described in detail in Item 1.01 above.
Dr. Brown will serve on the Audit Committee and the Nominating and Corporate
Governance Committee of the Board and Mr. Cragg will serve of the Compensation
Committee of the Board.
Both of the new directors will be eligible to participate in the Company's
compensation package for non-employee directors, which is comprised of annual
cash retainers and historically has included stock option awards and/or
restricted stock awards. Actual annual pay varies among directors based on Board
committee memberships and committee chair responsibilities. The Company has not
adopted guidelines with respect to non-employee director ownership of common
shares. Effective upon their election to the Board, Dr. Brown and Mr. Cragg each
received a grant of 440 restricted common shares under the Company's 2018 Equity
Incentive Plan, which will vest at the 2023 annual meeting of shareholders of
the Company, in accordance with and subject to the terms of the plan and the
related award agreements.
Directors are reimbursed for their business expenses related to their attendance
at Board and committee meetings. Directors are also encouraged to attend
educational programs related to Board issues and corporate governance, which are
reimbursed by the Company.
Mr. Cragg is a principal of Jermyn Street Associates LLC, which is a party to
the Shareholders Agreement as a Nominating Holder. Mr. Cragg was designated for
election to the Board by Jermyn Street Associates LLC. Dr. Brown was designated
for election to the Board by Savanna Holdings LLC.
(e) On November 4, 2021, the Company's shareholders approved an amendment to the
Company's 2018 Equity Incentive Plan to increase the number of shares available
for awards thereunder by 1,500,000 shares and to make certain corresponding
changes to the plan.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On November 4, 2021, the Company's shareholders approved an amendment to the
Company's Second Amended and Restated Articles of Incorporation to increase the
number of authorized Common Shares from 20,000,000 shares, consisting of
19,000,000 Common Shares and 1,000,000 Preferred Shares, to 75,000,000 shares,
consisting of 74,000,000 Common Shares and 1,000,000 Preferred Shares. The
amendment was effective on November 4, 2021.
Item 5.07 Submission of Matters to a Vote of Security Holders
On November 4, 2021, the Company held a special meeting of shareholders. A total
of 11,917,450 of the Company's common shares outstanding and entitled to vote
were present at the meeting in person or by proxy. The following is a summary of
matters voted on at the meeting:
A proposal to approve an amendment to the Company's Second Amended and
a. Restated Articles of Incorporation to increase the number of authorized shares
of the Company to 75,000,000 shares, consisting of 74,000,000 Common Shares
and 1,000,000 Preferred Shares (the "Authorized Share Increase Proposal"):
Vote Type Voted
For 11,795,172
Against 110,312
Abstain 11,966
A proposal to approve the issuance of the Company's Common Shares pursuant to
b. the Merger Agreement, pursuant to NASDAQ Rule 5635(a) (the "Merger Share
Issuance Proposal"):
Vote Type Voted
For 11,889,053
Against 16,329
Abstain 12,068
A proposal to approve an amendment to the Company's 2018 Equity Incentive Plan
c. to increase the number of Company's Common Shares available for awards
thereunder by 1,500,000 shares and to make corresponding changes to certain
limitations in the Plan:
Vote Type Voted
For 11,365,318
Against 425,988
Abstain 126,144
A proposal to approve the issuance of the Company's Common Shares issuable
d. upon conversion of the Company's 3.25% Convertible Senior Notes due 2027,
pursuant to NASDAQ Rule 5635(a):
Vote Type Voted
For 11,570,362
Against 333,582
Abstain 13,506
Item 7.01 Regulation FD Disclosure.
On November 4, 2021, the Company issued a press release with respect to the
shareholder approval of the Envigo Acquisition, a copy of which is attached to
this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
On November 5, 2021, the Company issued a press release with respect to the
closing of the Envigo Acquisition, a copy of which is attached to this Current
Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
The information in these press releases shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses or Funds Acquired.
The Company intends to file the financial statements required by Item 9.01(a) as
part of an amendment to this Current Report on Form 8-K not later than 71
calendar days after the date that this Current Report on Form 8-K is required to
be filed.
(b)Pro Forma Financial Information.
The Company intends to file the pro forma financial information required by Item
9.01(b) as part of an amendment to this Current Report on Form 8-K not later
than 71 calendar days after the date that this Current Report on Form 8-K is
required to be filed.
(c)None.
(d)Exhibits
The following exhibits are being filed as part of this report:
Exhibit No. Description
3.1 Second Amended and Restated Articles of Incorporation of Inotiv,
Inc., as amended
10.1 Shareholders Agreement, dated November 5, 2021, by and among
Inotiv, Inc. and the shareholders signatory thereto
10.2 Credit Agreement, dated as of November 5, 2021, by and among
Inotiv, Inc, certain subsidiaries of Inotiv, Inc., the lenders
party thereto and Jefferies Finance LLC, as administrative agent
and collateral agent
10.3 Inotiv, Inc. 2018 Equity Incentive Plan, as amended through
November 4, 2021
16.1 Letter from RSM US LLP
99.1 Press Release, dated November 4, 2021
99.2 Press Release, dated November 5, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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INOTIV, INC. 
